Minority owned New York ad agency HERO Group (aka HERO Collective) filed suit against Omnicom-owned agency DDB in Illinois Northern District Court court this week, alleging DDB “exploited” HERO to win the U.S. Army contract and didn’t pay it for two years of work.
Chicago-based Swanson, Martin & Bell and Beverly Hills-based Singh, Singh & Trauben filed the breach-of-contract lawsuit Wednesday on behalf of the digital marketing agency.
HERO Group, which is a Black owned creative and digital innovation studio and specializes in building brands through purpose driven messaging to millennials and Gen-Z, claims misrepresentation, breach of contract, and fraud.
The suit is seeking $100 million in damages based on an estimate of the revenue HERO Group would have earned if it worked with DDB, which won the account in 2018, on the entire 10-year contract, the suit claims.
HERO Group founder and CEO Joe Anthony told Reel Chicago that former DDB U.S. president Paul Gunning brought him in to help pitch the account in late 2016, as a subcontactor based on his past Army work with agencies, McCann and Leo Burnett. minority certified
According to the suit, Anthony claims Gunning promised to make his agency DDB’s primary partner if they won the review. Their agreement would satisfy the federal government legal requirement that approximately 40% of the Army business to small and disadvantaged, or minority-owned, businesses.
“At first, we signed a ‘Teaming Agreement’ where DDB engaged us as a business partner and should we win, we were guaranteed assignments commensurate with their own. The review took years and was contested by McCann and WPP. We [Hero] provided creative and strategic support across the board,” Anthony told Reel Chicago.
The suit further claims that HERO performed work for DDB from 2017 to 2020 but never received payment or additional assignments. “We agreed to sign the Teaming Agreement with DDB because we believed the Army had an understanding and was party to the contract and partner(s). The Army could intervene on our behalf if we needed it.”
Anthony’s suit claims that DDB’s pitch deck used a “substantial portion” of HERO Group’s own proposals, like “Real Life Iron Man.”
Anthony further detailed how he and Gunning formed a close relationship during the course of the pitch. “I became a kind of consigliere to Paul, providing him with counseling, strategy and ideas.”
After the account win, the suit claims HERO never received any additional assignments or payments from 2017 to 2020.
“We were strung along for six months before the subcontractor agreement finally arrived. But when we looked it over it, the agreement was stripped of any specificity. The language was different from the Teaming Agreement. The principle deal points were gone.”
Anthony further noted, “In the Teaming agreement we made an investment together. We didn’t work for DDB. We felt a semblance of relative ownership of the win. Our work had an impact and we weren’t compensated. They [DDB] treated us as an at-will subcontractor.”
It was then in May 2020, Anthony felt the urgency to reach out to the Army. But he claims, the Army never heard of him or HERO. “When we still hadn’t heard anything it forced me to reach out to the Army to intervene. We were shocked when they replied they never heard of HERO. We began to realize we were never disclosed. There was never an intention to keep us on board.”
Anthony told Reel Chicago he didn’t realize DDB had dropped HERO until he received a message from the Army claiming that DDB could not find work that fit Hero Group’s capabilities, which specializes in digital, events and content.
“The contract says they [Army] must approve every subcontractor. Once Army let us know that we weren’t presented to them we put two and two together. We suspected fraud. And here we are — suing,” Anthony said.
Aside from his complaint against DDB, Anthony believes there is a bigger issue at stake – essentially big agencies and their holding companies vs. small businesses, especially those owned by people of color.
“These [federal] contracts are very lucrative. Too much latitude is given to big agencies, which ultimately leads to dollars not making their way to the hands of those who truly need it.”
The bigger issue is money and power are being kept with large agencies and not trickling down to small businesses. Five percent must go to black and brown businesses. That’s $200 million. Very rarely do these companies comply.”
He shared his frustration with the current system more, “Why engage partners at inception, then move away? Try to find ways to get rid of us. We have strong evidence and have individuals who will come forward and support our position.”
Anthony also noted he wants to see broader changes. “We [small businesses] are struggling to survive. For them [large agencies] to not make good on promises during a pandemic is unforgivable.”
Reel Chicago reached out to a DDB Chicago for comment. Their official response is, “We don’t comment on ongoing litigation.”