(Editor’s Note: CJRW, which had declined to comment for this article before publication, has since offered a response, which we have added to the end of this column.)
Facing a $1.3 million breach-of-contract suit from longtime Little Rock adman Gary Heathcott, marketing agency CJRW is taking a few weeks to answer the legal complaint and may be considering settlement talks, several observers suggest.
“They asked for some extra time and we provided it,” Heathcott told Arkansas Business after CJRW attorney David L. Williams filed an unopposed motion for extension of time in the case, which is before Pulaski County Circuit Judge Tim Fox.
The new response deadline is the end of January. CJRW could decide to fight it out in court or to pursue settlement negotiations, but Heathcott said there have been no talks on a deal so far.
The colorful and politically connected former chief of Heathcott Associates in Little Rock filed his suit on Dec. 18 after a nasty a public breakup with CJRW in fall 2017. CJRW tossed Heathcott out of its offices at 300 Main St. downtown and stopped paying him after allegations of bad behavior and crude language became a gossipy topic in Little Rock advertising and government circles.
Heathcott was pulled from the state lottery ad account, a fact confirmed in email communications discovered through a state Freedom of Information Act request, after an episode at a lottery commercial film shoot where Heathcott was accused of using crude language.
Heathcott, who now lives in San Antonio and has denied ever being abusive to lottery employees, signed a contract and several revisions with CJRW after selling his client list to the firm in 2015. He also helped several of his employees make the transition to CJRW’s staff; one of them, Jill Joslin, is now the agency’s president.
Heathcott generated millions of dollars’ worth of business and should still get commissions and $234,000 in annual salary until September 2021, the end of the latest contract, his suit says.
CJRW contends that Heathcott, who ran Gov. Asa Hutchinson’s advertising for his first gubernatorial campaign, broke employee handbook rules and was obligated by contract language to abide by established procedures. Heathcott says the firm had no employee handbook.
One legal question is whether Heathcott was strictly a consultant or had the trappings of an employee. “The contract says that CJRW was paying Heathcott’s health insurance and his wife’s, which sort of suggests employee,” one Little Rock media executive said, seeking anonymity so he could speak freely. On the other hand, the heading is “CONSULTING AGREEMENT.”
Contract language gives Heathcott unusual exclusive rights to end the agreement. CJRW has said it will not comment on the lawsuit.
Heathcott certainly brought in business. CJRW was under pressure to keep its hold on the state Department of Parks & Tourism ad contract, now some $15 million a year. Darin Gray, CJRW’s CEO, is a former state parks commissioner.
“Heathcott played the key role in helping CJRW win all the new state ad business,” a competing executive said. That’s “why they initially decided to buy Heathcott, whose influence with the governor would help.” CJRW succeeded, securing the account for up to seven years with a pitch by Heathcott in 2016.
He also pitched and won the state’s Affordable Care Insurance Marketplace account, worth some $5 million, taking that from Mangan Holcomb Partners. Next was a $34.5 million, five-year Arkansas Scholarship Lottery account (also previously held by Mangan), and a $2 million ad account with the Arkansas Economic Development Commission, previously a client of Stone Ward.
Through Heathcott, “CJRW brought in an out-of-state tourism website expert, Miles Partnership of Florida … to help them win the website portion of the account,” the ad exec said. “They took the website away from another incumbent agency, Aristotle Inc.” CJRW now has the state’s six largest advertising accounts, the rival exec said: Parks & Tourism, the insurance marketplace, the lottery, Stamp Out Smoking (Arkansas Department of Health), the Parks & Tourism website and AEDC.
The executive and two others consulted by Arkansas Business speculated that CJRW may have come to see Heathcott as an expense it could do without once the contracts were salted away, particularly since profits from some of the work may have been smaller than expected.
Both sides in the case may have good PR reasons to settle, another Little Rock adman said:
“Gary shouldn’t want some of his past behavior recounted by witnesses, and CJRW doesn’t want a lawsuit shining light on the underbelly of how state marketing contracts are awarded.”
Darin Gray’s Response
Gray responded Tuesday, Jan. 14, to the article above, saying it “contains numerous inaccuracies from Mr. Heathcott and unnamed sources.” He said that lawsuits are resolved in court based on evidence and witness testimony, “not tried in the media” on the basis of quotations from “unidentified competitors” and the person bringing suit.
“For that reason, CJRW has previously declined to comment on the lawsuit. But CJRW’s position on Heathcott’s complaint is:
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“CJRW intends to vigorously defend the lawsuit, believes it is without merit, and looks forward to presenting its defenses in court as soon as possible.
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“CJRW was not surprised by the lawsuit filing. Through his attorney, Heathcott previously sent a draft of the complaint in July of 2018.
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“CJRW investigated the allegations and evaluated Heathcott’s claims with its attorneys, determined they had no legal or factual merit, and on August 10, 2018 rejected any settlement consideration.
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“The lawsuit raises the same claims that CJRW previously evaluated and rejected.
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“Mr. Heathcott delayed over one year after his contract was terminated before filing suit.”
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