Hero Lawsuit

Case: 1:21-cv-00340 Document #: 1 Filed: 01/20/21 Page 1 of 38 PageID #:1
UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
HERO GROUP INC., a New York corporation, )

)
Plaintiff, )
) Case No. 21-cv-340
v. )
)
DDB CHICAGO INC., a Delaware corporation, )
) JURY TRIAL DEMANDED
Defendant )
)
PLAINTIFF’S COMPLAINT
Plaintiff, HERO GROUP INC. (“Plaintiff” or “HERO Group”), hereby files its Complaint as
against Defendant DDB CHICAGO INC. (“Defendant” or “DDB”), and in support thereof, states as
follows:
NATURE OF ACTION
1. This action involves a classic bait and switch, where a large company, Defendant DDB,
exploited Plaintiff HERO Group, a certified small, disadvantaged minority owned business, to win a
lucrative contract and become the primary advertising contractor for the United States Army (the
“Army”).
2. At stake was a $4 billion, ten (10)-year advertising contract with the Army where DDB,
as part of one of the largest advertising agencies in the United States, would serve as the primary
contractor, while being required to use subcontractors for a significant portion of the work (the “Prime
Contract”).
3. The fundamental benefit of the bargain between the parties was that HERO Group
would help DDB win the Prime Contract and that, in exchange, DDB would award HERO Group
significant work as a subcontractor.
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4. This made perfect sense as, consistent with the goals of the Small Business
Administration’s 8(a) program, and pursuant to applicable regulations, statutes and guidelines
governing federal contracting, DDB was obligated to subcontract out a significant percentage
(approximately forty percent (40%)) of the work under the Prime Contract to various small businesses
and certified minority owned businesses (of which HERO Group is both).
5. DDB promised and agreed with HERO Group that HERO Group would obtain
significant work as a subcontractor once DDB was awarded the Prime Contract.
6. Beginning in January 2017, and in reliance on these promises and agreements, HERO
Group spent nearly two (2) years working to provide assets and assistance to DDB to enable it to land
the Prime Contract.
7. HERO Group performed this work pursuant to a written teaming agreement which,
among other things, required that DDB identify HERO Group to the Army as an official subcontractor
of DDB and further provided that DDB would award paying work to HERO Group as a subcontractor
once DDB was awarded the Prime Contract.
8. Considering that DDB was required to subcontract out approximately forty percent
(40%) of the work from the Prime Contract to small businesses, there was approximately $1.6 billion
in work that would be outsourced to various sub-contractors, specifically including HERO Group.
9. DDB, chiefly through its Chief Executive Officer Paul Gunning (“Gunning”),
repeatedly promised HERO Group that HERO Group would be a “preferred vendor,” that DDB would
“run a lot of money” through HERO Group, that DDB wanted HERO Group to “drive [DDB’s] small
business program,” and that HERO Group would receive significant work, up to the maximum of fees
allowed under the definition of what constitutes a small business.
10. In reliance upon these promises and on the teaming agreement, HERO Group, at its own
cost and expense, provided DDB with its services, work product, expertise, intellectual property, ideas,
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status and insights as a certified small, disadvantaged minority owned business, the value of HERO
Group’s Chief Executive Officer Joseph Anthony’s (“Anthony”) prior experience working with his
former agency as a subcontractor on earlier prime contracts for the Army, and further information
derived from Anthony and HERO Group’s unique familiarity with Army culture, including how to
address the Army’s advertising needs.
11. These assets were invaluable to DDB in its efforts to obtain and service the Prime
Contract.
12. On or around November 20, 2018, DDB was awarded the Prime Contract.
13. At DDB’s request, HERO Group then continued to provide substantial assistance and
intellectual property to DDB in its servicing of the Prime Contract.
14. Yet, DDB was unwilling to sign a subcontractor agreement with HERO Group until
January 8, 2020. When DDB did finally propose a subcontract and engage in discussions with HERO
Group regarding that agreement, DDB informed HERO Group that the subcontract as proposed was
essentially a take it or leave it proposition and that HERO Group would not be permitted to receive any
work as a subcontractor unless and until it executed the subcontract. Presenting HERO Group with no
other option, DDB instructed HERO Group that under no circumstance would HERO Group ever
receive any work under the Prime Contract until HERO Group signed the subcontract as is. However,
at the same time, DDB assured HERO Group that the execution of the subcontract was a mere formality
and that work for HERO Group from the Prime Contract would be forthcoming.
15. Cementing the subcontract as little more than a sham, to this day, DDB has not provided
HERO Group a single task order or other arrangement for paying work related to the Prime Contract
and HERO Group has not earned a single dollar from the parties’ years of work together.
16. Moreover, in further breach of its agreements with and representations and promises to
HERO Group, DDB never identified HERO Group to the Army as one of its sub-contractors.
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17. Having never identified HERO Group to the Army in contravention of DDB’s
representations and promises to HERO Group, DDB froze this minority owned business and its
minority owners out of any work or other benefits under the Prime Contract.
18. Accordingly, after DDB got what it wanted from HERO Group, and was awarded the
Prime Contract, its “partnership” with HERO Group turned out to be little more than a fraudulent ruse.
19. DDB’s actions were in contravention of its representations and promises to HERO
Group and the parties’ agreements, causing great and significant harm to HERO Group.
20. Plaintiff seeks damages in the amount of One Hundred Million Dollars
($100,000,000.00) from DDB, which is equivalent to the value of the work to be subcontracted to
HERO Group under the Prime Contract had DDB honored its promises, representations, and
agreements to HERO Group.
THE PARTIES
21. Plaintiff HERO Group is a New York corporation with its principal place of business in
New York, New York.
22. Upon information and belief, Defendant DDB is a Delaware corporation with its
principal place of business in Chicago, Illinois.
JURISDICTION AND VENUE
23. This Court has diversity jurisdiction over this action pursuant to 28 U.S.C. § 1332
because the Defendant is not a citizen of any state of which Plaintiff is also a citizen and the amount in
controversy exceeds $75,000.00 exclusive of interest and costs.
24. Defendant is subject to personal jurisdiction in this Court and venue is proper in this
Judicial District pursuant to 28 U.S.C. §§ 1391(b)(1) and 1391(b)(2), as it is a resident of Chicago,
Illinois where this Judicial District is located, and a substantial amount of the events giving rise to this
action occurred in this Judicial District.
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FACTUAL BACKGROUND
Dramatis Personae
25. Plaintiff HERO Group d/b/a HERO Collective is a full-service creative and digital
agency based in New York City that specializes in targeting the Generation Z “Zoomer” and Millennial
consumer groups.
26. HERO Group is a certified small, disadvantaged minority owned business based in New
York City.
27. Minority owned and managed, HERO Group offers an integrated suite of marketing and
communication services ranging from brand strategy, event marketing, digital marketing, creative
services, social media, data analytics and technology. HERO Group’s mission is to help clients and
brand partners leverage their marketing investments to not only achieve their business goals but to also
have a positive impact on society.
28. HERO Group services companies large and small, including, among several others,
such multi-national corporations as Pfizer, Johnson and Johnson, Owens Corning and Mattel.
29. HERO Group’s executives have extensive experience working both directly with the
Army and with larger advertising firms who previously serviced the Army.
30. Anthony is the Chief Executive Officer, owner, and founder of HERO Group.
31. Upon information and belief, Defendant DDB is a subsidiary of DDB Worldwide
Communications Group, LLC, a worldwide marketing communications network, itself owned by
Omnicom Group, Inc., one of the world’s largest advertising holding companies.
32. Defendant DDB holds itself out as “a full-service advertising agency with a team of 300
hundred people offering our clients full service in-house capabilities ranging from strategic planning,
research and analytics, account and project management, to creative services including ideation, design
and production across all forms of media.”
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33. Gunning was the Chief Executive Officer of Defendant DDB until approximately June
2018, when it appears he became the President and Chief Operating Officer of an entity identified in
the signature block of Gunning’s emails as DDB U.S. At all times relevant, Gunning was either DDB’s
Chief Executive Officer or the President and Chief Operating Officer of DDB U.S.
34. The Army is the land service branch of the United States Armed Forces.
The Prime Contract
35. In or around 2016, following an internal audit by the Army Audit Agency, which found
that in 2016 millions of dollars in “ineffective marketing campaigns” were conducted on behalf of
Army recruitment, the Army sought a new advertising firm. The Army thereafter initiated a bidding
process for a contract for services in support of the Army’s Marketing and Advertising Program.
36. At the time, the Army was contracted with McCann Worldgroup, which had been its
advertising firm for approximately 12 years.
37. Valued at $4 billion, this new ten (10)-year contract for services in support of the Army
was one of the most sought-after contracts in advertising.
38. Upon information and belief, consistent with the goals of the Small Business
Administration’s 8(a) program and pursuant to applicable regulations, statutes and guidelines
governing federal contracting, the Army mandates that a significant percentage of the work on its lead
advertising contract be performed by certified small businesses and minority owned businesses.
39. HERO Group was aware that the coveted Prime Contract was coming up for renewal.
40. Considering its relatively small size, HERO Group itself was not a candidate for the
Prime Contract as a lead contractor.
41. However, as a certified small, disadvantaged minority owned business, HERO Group
was an ideal subcontractor for the Prime Contract.
42. Anthony, HERO Group’s founder and owner, also maintained direct and personal
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connections and familiarity with the Army. Indeed, Anthony’s late father is a decorated US Army
veteran of the Vietnam War, receiving both the Purple Heart and Bronze Star for his service as part of
the 1st Battalion, 27th Infantry Wolfhounds.
43. Based upon size, bandwidth and public profile, HERO Group deduced that DDB was a
serious contender for the Prime Contract.
44. In or around 2016, HERO Group, by and through its owner, Anthony, contacted DDB’s
CEO, Gunning, to setup a conference call.
45. Following a series of calls between Anthony and Gunning, HERO Group was formally
invited to Chicago to discuss DDB’s official bid to the Army.
46. In or around January 2017, Anthony and Kwadwo Tufuoh, a HERO Group executive,
traveled to Chicago to attend a DDB-led briefing concerning DDB’s official bid to the Army.
47. During the meeting, Gunning advised Anthony that DDB desired for HERO Group to
team up with DDB throughout the process of DDB’s efforts to obtain the Prime Contract and, as part
of this collaboration, HERO Group should sign a teaming agreement with DDB in connection with
HERO Group’s participation in the development of DDB’s official bid to the Army.
The Teaming Agreement
48. On or around January 6, 2017, HERO Group and DDB executed a written teaming
agreement in connection with the parties’ respective roles and obligations concerning their mutual
approach for DDB to submit a written proposal as prime contractor for the “U.S. Army’s Recruitment
Advertising Program” (i.e. the coveted Prime Contract) (the “Teaming Agreement”). A true and
correct copy of the fully executed Teaming Agreement is attached hereto as Exhibit “A”.
49. The Teaming Agreement makes clear up front that, should DDB obtain the Prime
Contract, HERO Group would be proposed as a subcontractor to the Army and that, in the event the
Army awarded the Prime Contract to DDB, HERO Group would perform work as a subcontractor.
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50. Specifically, in the two WHEREAS clauses of the Teaming Agreement, DDB set forth
the following:
 “[T]he above identified parties, [DDB and HERO Group] because of their diverse
capabilities, have determined that they would benefit from a teaming agreement
between their respective organizations, in order to develop the best management
and technical approach for the U.S. Army’s Recruitment Advertising Program
(hereinafter referred to as the “Project”), in order to create a proposal or proposals
to be submitted by the team parties respecting the Project which may result in one
or more contracts to the party representing the Prime Contractor identified therein.
The parties agree DDB will be proposed as the prime contractor (“Prime
Contractor”) and the Company [HERO Group] will be proposed as a
subcontractor for the services identified in Exhibit A (“Subcontractor”) for
the Project as identified herein;”
 “DDB and Company [HERO Group] have agreed as set forth in the attached Exhibit
A to a division of the responsibilities covering work to be performed by the
Subcontractor in the event of an award of a contract;”.
See Exhibit “A” at pg. 1, WHEREAS Clauses. (Emphasis added).
51. Consistent with DDB’s representations and HERO Group’s corresponding expectations
that HERO Group would be awarded work as a subcontractor should the Army award the Prime
Contract to DDB, the Teaming Agreement requires the parties to exert their best efforts to jointly
produce and submit a proposal promoting the selection of DDB as the prime contractor for the “U.S.
Army’s Recruitment Advertising Program” (the “Proposal”). See Ex. “A” at ¶1(b).
52. Further consistent with DDB’s representations and promises that HERO Group would
be awarded work as a subcontractor should the Army award the Prime Contract to DDB, the Teaming
Agreement expressly sets forth that DDB was obligated to use its best efforts to promote the Army’s
acceptance of HERO Group as a subcontractor: “Each party will exert its best efforts as jointly deemed
reasonable to produce the proposal or proposals referenced above which will promote the selection of
DDB as the Prime [sic] and the acceptance of Company [HERO Group] as the subcontractor for
the work assigned to each herein, and each party will continue to exert such best efforts toward this
objective throughout any and all negotiations concerning a proposed contract or subcontract which may
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follow the submission of such proposal proposals.” (Id.). (Emphasis supplied).
53. Reflecting HERO Group’s understanding that DDB and HERO Group would both
benefit from their work together, as opposed to the work solely benefitting DDB, the Teaming
Agreement expressly provides in two additional places that DDB was obligated to include and identify
HERO Group to the Army as its subcontractor for purposes of the Prime Contract:
 DDB, as the proposed prime contractor, intends to submit a proposal or proposals

for the Project and will include the Company [HERO Group] as the proposed
subcontractor for that portion of the work assigned in the Statement of Work
attached and identified as Exhibit A and subject to the conditions stated in this
Agreement and Exhibit A. (See Ex. A., ¶1(a));
 It is understood that DDB will, in any proposal which it submits and in all pertinent
discussions with respect thereto, identify Company [HERO Group] as the proposed
subcontractor for the services identified in Exhibit A, and will state in such proposal
or discussions the relationship of the parties as set forth in the attached Exhibit A.
(See Ex. A., ¶1(c)).
54. The Teaming Agreement expressly provides in at least four (4) separate provisions that
DDB was obligated to identify and/or secure acceptance of HERO Group as a subcontractor to the
Army. See Ex. “A”, First WHEREAS CLAUSE and ¶¶ 1(a), 1(b) and 1(c).
55. Accordingly, DDB was expressly obligated, including within the Proposal submitted to
the Army, to (i) include and identify HERO Group as a subcontractor to the Army; (ii) further state
DDB’s contractual relationship with HERO Group to the Army; and (iii) identify to the Army the
parties’ contractual relationship as forth in Exhibit A to the Teaming Agreement.
56. Moreover, DDB expressly acknowledged and agreed that HERO Group’s suite of
proffered services and capabilities were appropriate and a good fit for the anticipated work for the
Army. DDB agreed to Exhibit A to the Teaming Agreement, which provides that:
HERO Group Inc. is a full service creative and digital agency that specializes in
both Gen Z and Millennial consumer groups. Being a minority-owned agency we
also offer multi-cultural:
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Digital Creative
- Social Media Marketing - Creative Development

- Community Management - Art/Creative Direction
- Content Strategy - Branding
- Content Production - Production (Print, Video, Digital)
- Sentiment Analysis & Reporting - Copywriting
- VI/VX Design & Research
Experiential/Events Strategy
- Sponsorships - Target & Audience Insights

- Event Production - Trend Analysis
- Sports & Entertainment - Brand & Consumer Strategy
- Staffing - Positioning/Comp/Market
- Mobile Marketing - Qualt & Quant.
57. The obligations between the parties are clear – if awarded the Prime Contract, DDB
would be the prime contractor with the Army and DDB would subcontract out some or all of the
services identified in Exhibit A to the Teaming Agreement directly to HERO Group.
58. These obligations were fundamental and critical to the Teaming Agreement, the benefit
of the bargain between the parties, and the parties’ entire relationship.
59. Indeed, to further implement the agreed benefit of the bargain and exchange of value
and services between the parties, the Teaming Agreement expressly provided that, if DDB was awarded
the Prime Contract, DDB would award a subcontract to HERO Group for HERO Group to perform
paying work in the areas described in Exhibit A to the Teaming Agreement:
 If as a result of Company’s [HERO Group] acceptance of this Agreement

and participation in the preparation of the proposal on the Project, a contract
is awarded to DDB as the Prime Contractor (the “Contract”), DDB will, to
the extent permitted by Government approvals, rules, regulations and
applicable law, enter into negotiations to award a subcontract to
Company as Subcontractor for its areas of participation as set forth in
Exhibit A (“the Subcontract”). (See Ex. “A” at ¶5(a)). (Emphasis supplied).
 The Subcontract will be subject to applicable Government regulations and
terms of the prime contract. The Subcontract will commence on the date the
Contract commences and, unless otherwise terminated in accordance with
its provisions, will terminate when the Contract terminates, including any
renewal or extension periods. (See Ex. “A” at ¶5(c))
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 Upon award of the Subcontract, the parties shall in good faith negotiate
a mutually agreeable fee for Subcontractor’s services that will be
consistent with and no greater than Subcontractor’s services for similar
services for its other government contracts, and shall be subject to
Government rules, regulations and applicable law. (See Ex. “A” at ¶5(d)).
(Emphasis supplied).
60. In reliance upon the Teaming Agreement, HERO Group expended significant time and
resources to assist DDB in developing the joint Proposal to the Army, including traveling to Chicago
on multiple occasions and spending tens of thousands of dollars for which it was never reimbursed.
61. Throughout the parties’ development of the Proposal, in addition to independent work
developed by HERO Group, DDB directly assigned HERO Group various tasks, including requesting
that HERO Group create and deliver a presentation deck(s).
62. In each instance, without exception, HERO Group successfully completed every task
requested by DDB (and all tasks required under the Teaming Agreement, including, without limitation,
as required in Section 1 of Teaming Agreement entitled “Responsibilities of the Parties”), including
providing a substantive presentation deck(s) and other intellectual property, ideas, and materials.
The Submission of the Proposal
63. On or about March 1, 2017, DDB submitted the Proposal to the Army.
64. On the same day, Gunning wrote an email to HERO Group stating: “[i]t was a daunting
process but the finished piece is something I am very proud of. Thank you for your partnership in
this effort.” (Emphasis supplied).
65. In that same email, Gunning further added that if the process were to advance, HERO
Group would help DDB prepare for oral presentations and in doing so: “this is where your [HERO
Group’s] previous experience will be vital and where I will look for you [HERO Group] to make a
serious impact on our pitch.”
66. Despite HERO Group’s direct and extensive participation in the development of the
final Proposal, HERO Group was never provided a copy of the Proposal.
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67. Upon information and belief, the final Proposal DDB submitted to the Army
incorporated some or all of HERO Group’s ideas, strategic insights, creative materials, and intellectual
property.
68. On May 19, 2017, in connection with the submission and Proposal process, DDB invited
HERO Group to a “creative check in,” whereby the parties exchanged ideas in connection with the
Army’s so-called “discern” phase of their recruitment process.
69. One of the topics being discussed was a path towards understanding the “conversion
funnel” of how military advertising is structured in order to “convert” someone to consider joining the
Army and how the Army breaks down the recruitment process into unique phases, with one phase
known as the “discern phase.”
70. Because the Army needs approximately eighty thousand (80,000) new recruits per year
for mission preparedness, converting people who might not otherwise consider joining the Army is of
paramount importance.
71. DDB assigned various agencies to different phases, with HERO Group assigned to the
“discern phase.”
72. On or about May 30, 2017, at DDB’s direct request, HERO Group submitted its twenty-
three (23) page pitch deck comprised of “discern phase” concepts.
73. Upon information and belief, DDB used all or substantial portions of HERO Group’s
ideas, strategic insights, creative materials, and intellectual property related to the discern phase in
DDB’s overall work for the Army.
74. While the Army was considering the Proposal submitted by DDB, McCann Worldgroup
was in the process of protesting the Army’s election not to renew the McCann Worldgroup advertising
contract.
75. HERO Group remained essential to DDB’s ongoing process in seeking to secure the
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Prime Contract, with Gunning referring to HERO Group and Anthony as “a partner in my Army bid”
in a July 25, 2018 email.
76. Indeed, when Gunning learned of McCann Worldgroup’s protest being denied in the
days leading up to the award of the Prime Contract, Gunning sent an unsolicited email to Anthony on
November 15, 2018 exclaiming: “Here we go buddy!!! Decision has to be days away!!!”
DDB is Awarded the Prime Advertising Contract
77. On November 20, 2018, the U.S. Department of Defense released the following
statement:
DDB Inc., Chicago, Illinois, was awarded a $4,000,000,000 hybrid (cost, cost-plus-award-
fee, cost-plus-fixed-fee, and firm-fixed-price) contract for services in support of the U.S.
Army Marketing and Advertising Program. Bids were solicited via the internet with five
received. Work locations and funding will be determined with each order, with an
estimated completion date of Nov. 18, 2028. U.S. Army Mission and Installation
Contracting Command, Fort Knox, Kentucky, is the contracting activity (W9124D-19-D-
0001).
78. DDB was awarded the Prime Contract. HERO Group’s work in connection with
preparing the Proposal was clearly successful.
79. On January 2, 2019, in response to Gunning’s direct request that HERO Group advise
DDB in writing as to HERO Group’s preferred positioning as a subcontractor, Anthony wrote Gunning
an extensive list of areas of operation that HERO Group was ready, willing, and able to fulfill
subcontractor responsibilities for.
80. DDB did not respond to HERO Group’s list.
81. On January 30, 2019, to effectively plan as required to fulfill the influx of orders as a
subcontractor to the Prime Contract, HERO Group followed up in writing to inquire as to the status of
its subcontractor agreement as set forth in the parties’ Teaming Agreement.
82. As the parties had extensively discussed, and as further reflected within the parties’
Teaming Agreement, the parties had agreed that a substantial amount of business would be directed to
HERO Group per year from the Prime Contract up to the maximum allowed under the definition of
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what constitutes a small business.
83. Indeed, during at least two in-person meetings (a lunch in New York City on May 9,
2018 and in Paul Gunning’s office in February 2019), and during phone calls throughout this time
frame, DDB’s CEO Gunning expressly promised HERO Group’s Anthony that HERO Group would
be a “preferred vendor,” that DDB would “run a lot of money” through HERO Group, and that DDB
wanted HERO Group to “drive [DDB’s] small business program.”
84. Advance notice of work orders from the Prime Contract was therefore critical for HERO
Group to effectively assume its position as a subcontractor.
85. Yet, DDB did not provide specific updates to HERO Group as to when HERO Group
would commence work as subcontractor.
86. Upon information and belief, the ten (10) year term for the Prime Contract commenced
on or around March 5, 2019.
87. On the very same day, March 5, 2019, DDB, through Gunning, wrote Anthony to
request further patience from HERO Group, stating “we have 10 years together. Stay with me.”
88. On March 28, 2019, Mayor Rahm Emanuel issued a press release publicly
congratulating DDB for being officially selected by the Army to lead its marketing and advertising
program.
89. In the press release, Mayor Rahm Emanuel stated that “DDB’s Chicago office is
expected to grow by 200 employees as a result of this contract with a potential term and value of ten
years and $4 billion.”
90. On May 30, 2019, the Army released General Order No. 2019-18, wherein Secretary of
the Army Mark. T. Esper announced that the Army Marketing and Research Group, effective August
1, 2019, was to be relocated to Chicago, Illinois.
///
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Ron Davis
91. On or around May 30, 2019, in a surprise move that dramatically altered the close
working relationship between DDB and HERO Group throughout the process of securing the Prime
Contract for DDB, DDB hired Ron Davis (“Davis”), “McCann’s Former Head of Government
Contracts to Work on the Army Business,” as covered by AdWeek in a section entitled Revolving Door.
92. Davis previously headed the Army work for McCann Worldgroup, the prior prime
advertising contractor for the Army.
93. Davis was the Senior Vice President, Director of Contracts at McCann Worldgroup
when an internal governmental audit found millions of dollars in “ineffective marketing programs”
during the fiscal year 2016.
94. In direct response to this audit, Congress enacted the John S. McCain National Defense
Authorization Act for Fiscal Year 2019, directing the Secretary of the Army to submit a report on “the
recommendations contained in the audit conducted by the Army Audit Agency of the Army’s
Marketing and Advertising Program concerning contract oversight and return on investment” to the
Committees on Armed Services of the Senate and House of Representatives.
95. Davis was the Senior Vice President, Director of Government Contracts at McCann
Worldgroup when James Ortiz was the marketing director at the U.S. Army Marketing and Advertising
Program. Notably, in or around April 2018, James Ortiz retired as the director of marketing at the U.S.
Army Marketing and Advertising Program “less than four months after Adweek broke news 1 of an
allegedly improper relationship between himself and an account executive at McCann Worldgroup.” 2
1
https://www.adweek.com/agencies/4-billion-u-s-army-review-has-been-compromised-sources-
claim/ (attached as Exhibit “B” hereto).
2
https://www.adweek.com/agencies/u-s-army-marketing-executive-involved-in-mccann-
conflict-of-interest-controversy-retires/(attached as Exhibit “C” hereto).
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96. Nonetheless, or possibly because of this, on or around May 30, 2019, DDB hired Davis
to continue this work, but at a new company (DDB), serving as Senior Vice President, Government
Contracts, including (and perhaps exclusively) to work on the Prime Contract and its related
subcontracts.
97. Contemporaneously, Gunning continued to represent to HERO Group that work was
forthcoming, even emailing Anthony on June 14, 2019 stating: “Joe, might have the ice breaker.
Connecting you with Justin for some digital work. Relatively basic but it’s a start.” The “Justin”
Gunning was referring to was, upon information and belief, Justin Hood, DDB’s Senior Vice President,
Digital.
98. Davis was connected with HERO Group in or around July 2019, whereby Davis
promised HERO Group in July 2019 that there was plenty of work to go around, to be patient, and that
his hands were currently tied by the inherently slow bureaucracy of the Army.
99. In reliance upon the Teaming Agreement, and its express obligations to DDB to “award
a subcontract to [HERO Group]”, which subcontract was to “commence on the date the [Prime]
Contract commence[d],” (See Ex. “A” at ¶¶5(a) and 5(c)), HERO Group requested a subcontract from
DDB.
100. In response, DDB presented HERO Group with an onerous, one-sided subcontract.
DDB represented to HERO Group that it must execute the subcontract prior to being awarded any work
as a subcontractor.
101. In response to DDB’s mandate that the subcontract DDB presented be signed as a
prerequisite to HERO Group receiving any work as a subcontractor under the Prime Contract, HERO
Group sought a modicum of certainty in the subcontract with respect to the prospect of future work as
a subcontractor under the Prime Contract. HERO Group’s requests sought to conform the subcontract
to the parties’ Teaming Agreement and DDB’s repeated representations that HERO Group would in
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fact receive work as a subcontractor.
102. This was particularly important to HERO Group as HERO Group maintained
heightened staffing and preparedness in advance of taking on work as a subcontractor.
103. However, except to assure HERO Group that future work from the Prime Contract
would be forthcoming, DDB did not readily provide a meaningful response to HERO Group’s requests
for the certainty of future work being integrated into DDB’s boilerplate subcontract and, as a result,
the parties continued forward pursuant to the terms of the Teaming Agreement, with HERO Group
continuing to travel to Chicago (at its own expense) to participate in strategy meetings.
104. However, contemporaneous with DDB’s representations to HERO Group that work for
HERO Group from the Prime Contract would be forthcoming, DDB rejected HERO Group’s
suggestion that the subcontract expressly require DDB to provide work to HERO Group consistent
with the Teaming Agreement.
105. Instead, DDB informed HERO Group that the subcontract was essentially a take it or
leave it proposition and that HERO Group would not be permitted to receive any work as a
subcontractor unless and until it executed the subcontract, with the subcontract serving as a prerequisite
to DDB’s provision of future work.
106. DDB presented HERO Group with no other option, instructing HERO Group that under
no circumstance would HERO Group ever receive any work under the Prime Contract until HERO
Group signed the subcontract as is.
107. Nonetheless, at the same time, DDB continued to assure HERO Group that the
execution of the subcontract was a mere formality and, as Davis represented to HERO Group in writing
on or around September 17, 2019, DDB “look[ed] forward to this long-term relationship and
collaborating with Hero to address the Army needs."
108. Indeed, in October of 2019, DDB, through Davis, represented to HERO Group that work
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for HERO Group from the Prime Contract would be forthcoming the very next month. Davis made
these representations to HERO Group during an in-person meeting in DDB’s offices on or around
October 23, 2019 that representatives of HERO Group (including Anthony) traveled to Chicago to
attend.
109. Accordingly, on or around January 7, 2020, in reliance upon DDB’s prior and ongoing
promises and representations that work would be forthcoming upon HERO Group’s execution of the
subcontract, and in further reliance upon DDB’s material representations that DDB had already
identified HERO Group as a subcontractor to the Army, HERO Group, more than one year after DDB
was awarded the Prime Contract, executed the subcontract (the “Subcontract”). A true and correct
copy of the Subcontract is attached hereto as Exhibit “D”.
110. In ultimately executing the Subcontract, even though it did not require DDB to do (or
refrain from doing) anything, HERO Group relied upon DDB's representations and promises to HERO
Group that DDB had already identified HERO Group as a subcontractor to the Army, which
representations and promises were also set forth in the Teaming Agreement.
111. Conversely, among other obligations, HERO Group was required to increase its staff
and continue preparatory work in the chance that work was forthcoming from DDB.
112. To date, DDB has provided no paid work to HERO Group as a subcontractor under the
Prime Contract.
DDB’s Material Breaches
113. After executing the Subcontract, DDB, in response to HERO Group’s requests for
updates on work, strung HERO Group along with a series of promises, delays, and alleged extenuating
circumstances, during which time DDB offered no task orders or other paying work to HERO Group
as a subcontractor.
114. In or around the second quarter of 2020, United States Senator Charles Schumer, on
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behalf of HERO Group and Anthony, specifically inquired into the Army’s oversight of the Prime
Contract, DDB’s subcontracting, and the Army’s compliance with its statutory requirements to ensure
that a certain percentage of its lead advertising contract be paid out to certified small businesses and
minority owned businesses.
115. On July 2, 2020, Brigadier General Christine A. Beeler responded to Senator Schumer
noting, among other things, that “DDB did not list HERO Group as a subcontractor for any work in
any proposal documentation submitted in response to the solicitation or any task orders thereafter.” A
true and correct copy of Brigadier General Christine A. Beeler’s July 2, 2020 correspondence is
attached hereto as Exhibit “E”.
116. Within the July 2, 2020 correspondence, Brigadier General Christine A. Beeler
underscored that had DDB listed HERO Group as a subcontractor, the Army would have been able to
assist: “Had the HERO Group been listed as subcontractor, the Army would be in a position to address
the matter directly with DDB pursuant to regulatory authority” and that “[i]n the event that DDB
notifies the Army of its plan to use Hero Group as one of their subcontractors, the Army will utilize
these regulatory tools to ensure proper oversight is provided.” See Ex. “E”.
117. Senator Schumer continued to inquire and, on August 18, 2020, the Deputy to the
Commanding General for the Army, Wade C. Cole, also wrote Senator Schumer, confirming that
although applicable regulations “provide the Army with regulatory remedies when a contractor fails to
comply with an approved action plan or subcontracting plan,” it could not assist or pursue any
regulatory remedies because “HERO Group was not listed [by DDB] in the Small Business
Participation Plan or subcontracting plan submitted to the Army.” A true and correct copy of Deputy
to the Commanding General Wade C. Cole’s August 18, 2020 correspondence is attached hereto as
Exhibit “F”.
118. Indeed, the Army confirmed that although “DDB was apprised of concerns with HERO
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Group,” DDB, in turn, confirmed that Hero Group, “was not a part of its Small Business Participation
Plan.” See Ex. “F”.
119. Notably, both letters expressly advised that, but for DDB’s failure to identify HERO
Group as a subcontractor to the Army, the Army could have reviewed and addressed the matter
appropriately and provided a remedy for HERO Group. See Exs. “E” and “F”.
120. Following HERO Group’s review of these letters, HERO Group realized, for the first
time, that DDB had materially misrepresented to HERO Group that DDB had in fact identified HERO
Group as a subcontractor to the Army and further breached the Teaming Agreement by virtue of this
failure to identify HERO Group as a subcontractor to the Army.
121. Worse yet, according to the August 18, 2020 letter from the Deputy to the Commanding
General, DDB’s position was ostensibly that DDB “attempted to find a place for HERO Group;
however, DDB found that HERO Group’s experience and capabilities did not fit any of DDB’s needs
based on currently issued task orders.” See Ex. “F”.
122. The position that DDB appears to have taken with the Army is wrong, in bad faith, and
directly contradicts the fact that DDB agreed in both the Teaming Agreement and Subcontract that
HERO Group’s proposed services, which were comprehensively outlined in a list that was attached
and incorporated into both agreements, were well suited to, and a good fit for, DDB’s needs under the
Prime Contract.
123. Attachment 13 to the Subcontract sets forth a schedule of HERO Group’s Subcontractor
Services and Supplies that was consistent with the list attached as Exhibit A to the Teaming Agreement.
DDB had reviewed the Prime Contract in advance of the Subcontract and in advance of agreeing to
Attachment 13 to the Subcontract.
124. DDB was therefore well aware of what was required under the Prime Contract, and
agreed that HERO Group’s listed services, as attached to the Subcontract, fit DDB’s needs under the
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Prime Contract. DDB’s agreement to Attachment 13 to the Subcontract confirmed that DDB accepted
and agreed that HERO Group’s specified services were appropriate and necessary to service the Prime
Contract.
125. DDB’s statement(s) to the Army also directly contradicted Davis’s September 17, 2019
written confirmation to HERO Group that DDB “look[ed] forward to this long-term relationship and
collaborating with Hero to address the Army needs."
126. DDB’s false statement(s) to the Army that HERO Group’s services and capabilities did
not fit DDB’s needs under the Prime Contract further reflect and deepen DDB’s fraud. DDB
extensively relied upon HERO Group to obtain the Prime Contract in the first place and had already
confirmed in the Teaming Agreement and in the Subcontract that the suite of services provided by
HERO Group were appropriate and necessary, with Davis further confirming this in a subsequent
writing.
127. Further demonstrating the knowing falsehoods within DDB’s statement(s) to the Army,
at no point in time after the Army awarded the Prime Contract to DDB did DDB ever once advise
HERO Group that HERO Group’s capabilities were inappropriate or insufficient for servicing the
Prime Contract.
128. Accordingly, DDB not only materially breached the Teaming Agreement by failing to
identify HERO Group as a subcontractor to the Army, it also clearly lied to the Army by
misrepresenting that HERO Group’s experience and capabilities did not fit DDB’s needs under the
Prime Contract.
129. These breaches and misrepresentations harmed HERO Group by preventing it from
availing itself of the very recourse to the Army for which it clearly contracted.
130. Compounding all of this was the fact that, unbeknownst to HERO Group, DDB had
already materially breached the Teaming Agreement by failing to identify HERO Group as a
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subcontractor to the substantial detriment of HERO Group, and that these failures had occurred even
prior to DDB being awarded the Prime Contract, and well prior to the execution of the Subcontract.
131. Yet, as DDB presented it to the HERO Group, the entire foundation of the Subcontract
was the fundamental prospect that DDB could, at least in certain circumstances, provide HERO Group
with work under the Prime Contract.
132. This was, at all relevant times, false.
133. Accordingly, based upon DDB’s failure to identify HERO Group as a subcontractor to
the Army, the Subcontract was fraudulently induced and the byproduct of unilateral mistake arising
out of this fraud.
134. Because DDB never identified HERO Group as a subcontractor to the Army, DDB
could not subcontract work from the Prime Contract to HERO Group.
135. DDB was, at all times, well aware of this fact in fraudulently inducing the Subcontract.
136. As such, DDB clearly entered the Subcontract with the intent to assume no obligations
as, having failed to identify HERO Group to the Army as a subcontractor as DDB had agreed it would
do, any obligation to award work would have been impossible for DDB to perform.
137. This further renders the Subcontract illusory and a sham.
138. Moreover, after the Subcontract was entered, DDB continued to fail to identify HERO
Group as a subcontractor to the Army despite the condition precedent in the Subcontract that: “Pursuant
to FAR 52.244-2 Prime Contractor will request the consent from Customer [the Army] to execute this
contract with Subcontractor [HERO Group], consequently the Customer [the Army] will have official
knowledge of its [HERO Group] role as Subcontractor.”
139. DDB had no present intention to perform these obligations. DDB’s intention was solely
to lull and induce HERO Group into its unilateral mistake of entering into the sham and illusory
Subcontract.
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140. Indeed, the entire time HERO Group was strung along, from January 2017 through the
submission of the Proposal to the Army, and even after the award of the Prime Contract, each and every
one of DDB’s promises and representations relating to future work under the Prime Contract was a
knowing and fraudulent misrepresentation of fact upon which HERO Group reasonably relied to its
detriment.
141. Upon information and belief, to date, DDB has executed and/or promised several
subcontractor agreements to various third parties, including potentially subcontractors identified to the
Army in the Proposal.
142. Upon information and belief, some or all of the subcontractors identified in the Proposal
and/or the subcontractors to which DDB has actually provided task orders and/or work are, in fact,
companies wholly or partially owned and/or controlled directly by DDB and/or its parent companies.
143. Upon information and belief, DDB is potentially either subverting the black letter edict
of the small business and diversity subcontractor requirements or, at the very least, shredding their
spirit and intent. Because the pertinent regulations require DDB to subcontract work to small
businesses, DDB is taking action to guarantee that it will, at the very least, recoup a significant portion
of the worth of those subcontracts back via its ownership interest in, and control and influence over,
those subcontractors.
144. HERO Group is a truly independent small business and minority owned.
145. Although DDB was outwardly happy to be affiliated with HERO Group to win the
Prime Contract, it never officially designated HERO Group as a subcontractor with the Army. This
was part of DDB’s overall scheme to use, and then discard, HERO Group, a certified small,
disadvantaged minority owned business, rather than award HERO Group business, and likely as part
of its overall plan to use subcontractors in which it maintains an ownership interest to recapture through
the back door large portions of the value of the subcontracts.
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COUNT I
RESCISSION - MISREPRESENTATION
(Subcontract)
146. Plaintiff HERO Group repeats and re-alleges each and every allegation contained in
paragraphs 1 through 145 above as if fully set forth herein.
147. To induce HERO Group’s execution of the Subcontract, DDB materially represented to
HERO Group that DDB had identified HERO Group as a subcontractor to the Army in connection with
the Proposal and DDB’s dealings with the Army.
148. Based upon DDB’s direct representations to HERO Group, HERO Group mistakenly
believed at the time the parties executed the Subcontract that DDB had identified HERO Group as a
subcontractor to the Army, both in the Proposal and thereafter.
149. DDB knew at the time the parties executed the Subcontract that DDB had in fact not
identified HERO Group as a subcontractor to the Army and knew that HERO Group was relying upon
DDB’s representations, promises and contractual obligations that DDB had identified HERO Group as
a subcontractor to the Army in entering into the Subcontract.
150. DDB neither incurred any legal detriment, assumed any new legal obligation nor
conferred any legal benefit upon HERO Group under the Subcontract.
151. Had HERO Group known that DDB had not identified HERO Group as a subcontractor
to the Army, HERO Group would not have executed the Subcontract and the parties would have
continued to operate under the Teaming Agreement.
152. As a result of DDB’s intentional and knowing misrepresentations, HERO Group is
entitled to rescind the Subcontract.
153. HERO Group’s damages due to its execution of the Subcontract include, but are not
limited to, damages stemming from each of DDB’s misrepresentations, for an amount which has not
yet been ascertained but not less than $100,000,000.00 to be proven at trial.
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COUNT II
RESCISSION - UNILATERAL MISTAKE
(Subcontract)
155. In seeking to solicit and secure HERO Group’s services, expertise, HERO Group’s
status and insights as a certified small, disadvantaged minority owned business, the benefits of
Anthony’s prior experience working with his former agency as a subcontractor on earlier prime
contracts for the Army, and HERO Group’s familiarity with Army culture, DDB’s representatives and
agents expressly represented and promised HERO Group that DDB would expressly identify HERO
Group as a subcontractor to the Army, including within DDB’s bid and Proposal as submitted to the
Army.
156. In addition, DDB memorialized its representations and promises to HERO Group that
DDB would expressly identify HERO Group as a subcontractor to the Army in the Teaming Agreement
itself. See Ex. “A”, WHEREAS CLAUSE No. 1 and ¶¶ 1(a), 1(b) and 1(c).
157. To induce HERO Group’s execution of the Subcontract, DDB materially represented to
HERO Group that DDB had identified HERO Group as a subcontractor to the Army in connection with
the Proposal and DDB’s dealings with the Army.
158. Based upon DDB’s direct representations to HERO Group, HERO Group mistakenly
believed at the time the parties executed the Subcontract that DDB had identified HERO Group as a
subcontractor to the Army, both in the Proposal and thereafter.
159. DDB knew at the time the parties executed the Subcontract that DDB had in fact not
identified HERO Group as a subcontractor to the Army and knew that HERO Group was relying upon
DDB’s representations, promises and contractual obligations that DDB had identified HERO Group as
a subcontractor to the Army in entering into the Subcontract.
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161. Had HERO Group known that DDB had not identified HERO Group as a subcontractor
to the Army, HERO Group would not have executed the Subcontract and the parties would have
continued to operate under the Teaming Agreement.
162. As a result of DDB’s misrepresentations, HERO Group is entitled to rescind the
Subcontract.
163. HERO Group’s damages due to its execution of the Subcontract include, but are not
limited to, damages stemming from each of DDB’s misrepresentations, for an amount which has not
yet been ascertained but not less than $100,000,000.00 to be proven at trial.
COUNT III
DECLARATORY JUDGMENT
(Subcontract Unenforceable for Lack of Consideration and Impossibility of Performance)
165. This is a claim by HERO Group for declaratory judgment under the Declaratory
Judgment Act, Title 28 United States Code §§ 2201 and 2202 that the Subcontract is void and
unenforceable for lack of consideration.
167. DDB provided no consideration for the purported Subcontract.
168. Because the purported Subcontract lacks any consideration, the Subcontract is void and
unenforceable.
169. In addition, DDB clearly entered the Subcontract with the intent to assume no
obligations as, having failed to identify HERO Group to the Army as a subcontractor as DDB had
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represented, any obligation to award work would have been impossible for DDB to perform.
170. An actual controversy exists between HERO Group and DDB regarding the validity and
enforceability of the Subcontract, for which there was no consideration.
171. This declaratory judgment action is brought pursuant to 28 U.S.C. §§ 2201 and 2202.
172. Based upon the foregoing, Plaintiff HERO Group requests that the Court enter judgment
finding that the purported Subcontract is void and unenforceable due to a lack of consideration.
COUNT IV
BREACH OF CONTRACT
(Teaming Agreement)
174. On or around January 6, 2017, HERO Group and DDB entered into the Teaming
Agreement in connection with the parties’ respective roles and obligations concerning their mutual
approach for DDB to submit the Proposal to the Army in an effort to secure the Prime Contract.
Army.
itself. See Ex. A., ¶1(c).
177. DDB was fully apprised and understood the importance of its representations related to
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the identification of HERO Group as a subcontractor to the Army, for without such identification,
HERO Group could not be given work from the Prime Contract.
178. Notwithstanding DDB’s express obligation to identify HERO Group as a subcontractor,
DDB materially breached the Teaming Agreement by failing to identify HERO Group as a
subcontractor in the Proposal to the Army,
179. In fact, as confirmed in the two letters from the Army to Senator Schumer, DDB failed
to identify HERO Group in any respect to the Army.
180. DDB further breached the Teaming Agreement by failing to execute a subcontractor
agreement with HERO Group at the time of the commencement of the Prime Contract.
181. DDB further breached the Teaming Agreement by failing to direct any task orders to
HERO Group and/or give HERO Group any paying work under the Prime Contract at any time.
182. In addition, DDB also breached its obligation under the Teaming Agreement to exert its
best efforts to promote the acceptance of HERO Group as the subcontractor for the work assigned
under the Prime Contract.
183. HERO Group has performed all conditions, covenants, and promises required on its part
to be performed in accordance with the terms and conditions of the Teaming Agreement.
184. As a natural, anticipated and direct consequence of DDB’s material breaches of the
parties’ Teaming Agreement, DDB caused substantial harm to HERO Group in lost revenue and further
damaged HERO Group by preventing the Army from engaging in any review or corrective action in
connection with the Prime Contract concerning HERO Group.
185. As a direct and proximate result of DDB’s breaches and wrongful acts, HERO Group
has suffered and will continue to suffer significant harm and damages, including, but not limited to,
damages stemming from each of DDB’s breaches of the parties’ Teaming Agreement, for an amount
which has not yet been ascertained but not less than $100,000,000.00 to be proven at trial.
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COUNT V
FRAUD
(Subcontract)
187. DDB affirmatively led HERO Group to believe that DDB had identified HERO Group
as a subcontractor to the Army, either in the Proposal or thereafter.
188. DDB, at all times herein, knew that these representations as to the identification of
HERO Group as a subcontractor to the Army in addition to DDB’s representations as to its then current
ability to provide subcontractor work to HERO Group pursuant to the Prime Contract were false when
made.
189. DDB made these knowingly false representations of fact to induce HERO Group to trust
in DDB and to execute the Subcontract.
190. In reasonable reliance on these false representations, HERO Group proceeded to execute
the onerous, one-sided and unenforceable Subcontract.
191. DDB’s representations and promises in this regard, were critical and relied upon by
HERO Group in proceeding to execute the onerous, one-sided and unenforceable Subcontract.
192. HERO Group would not have executed the Subcontract had it known the truth, that
DDB had already materially breached the Teaming Agreement by failing and/or refusing to identify
HERO Group as a subcontractor to the Army, either in the Proposal or thereafter.
193. HERO Group acted in justifiable reliance upon the DDB’s material misrepresentations,
promises and assurances as, at the time DDB made such representations, HERO Group did not know
of the falsity of the representations and could not, in the exercise of reasonable diligence, have
discovered the falsity of the representations in connection with DDB’s confidential Proposal as
submitted directly to the Army and never shared with HERO Group.
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195. As a direct and proximate result of HERO Group’s justifiable reliance upon DDB’s
fraudulent misrepresentations, HERO Group has suffered severe economic damages, for an amount
which has not yet been ascertained but not less than $100,000,000.00 to be proven at trial.
196. DDB’s conduct was done intentionally and willfully with the purpose and design to
defraud HERO Group. DDB knew that its conduct would cause HERO Group great financial harm.
DDB’s conduct was wanton, willful, and completely devoid of any legitimate purpose. Left unchecked,
DDB will seek to defraud and cause harm to others. As a result, HERO Group is entitled to an award
of punitive damages to both punish DDB and to dissuade it from engaging in similar wrongful conduct
in the future all in amount subject to proof at trial.
COUNT VI
FRAUD IN THE INDUCEMENT/PROMISSORY FRAUD
(Teaming Agreement and Subcontract)
197. HERO Group repeats and re-alleges each and every allegation contained in paragraphs
1 through 172 above as if fully set forth herein.
Army.
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200. DDB further represented and promised HERO Group that if DDB was awarded the
Prime Contract from the Army, DDB would give task orders and work to HERO Group under the Prime
Contract.
the identification of HERO Group as a subcontractor, for without such identification, HERO Group
could not be given work from the Prime Contract.
HERO Group in proceeding to expend significant capital on, among other things, jointly developing
the Proposal for DDB’s benefit, specifically in the amount of the $4,000,000,000.00 in fees effectively
awarded to DDB under the Prime Contract.
203. Moreover, DDB’s representations and promises were further relied upon by HERO
Group in connection with HERO Group hiring additional staff, turning down third-party contracts and
generally expending thousands of working hours on both the joint development of the Proposal, post-
submission efforts to secure the Prime Contract and DDB’s preparation and performance of the Prime
Contract.
204. DDB was, at all times, well aware of the significant costs and expenses associated with
HERO Group’s expenditures of time and money in this regard, including HERO Group’s expectation
of work under the Prime Contract.
HERO Group in proceeding to execute and perform the Teaming Agreement.
206. At the time DDB made the foregoing material representations and promises to HERO
Group, DDB had no intention of performing under the terms of the Teaming Agreement.
207. In addition to the Teaming Agreement, to induce HERO Group’s execution of the
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unenforceable Subcontract, DDB materially represented to HERO Group that DDB had identified
HERO Group as a subcontractor to the Army in connection with the Proposal and DDB’s dealings with
the Army.
HERO Group in proceeding to execute the onerous, one-sided, and unenforceable Subcontract.
209. The entire foundation of the Subcontract was the fundamental prospect that DDB could
provide HERO Group with work under the Prime Contract.
210. This was, at all times relevant, false.
could not subcontract work from the Prime Contract to HERO Group. DDB was, of course, at all times
relevant, well aware of this fact in inducing the Subcontract.
HERO Group in proceeding to execute the Subcontract.
213. At the time DDB made the foregoing material representations and promises to HERO
Group, DDB had no intention of performing under the terms of the Subcontract.
214. DDB made such representations promising future action with no intention of performing
or with an affirmative intention of not performing on such promises.
216. HERO Group acted in justifiable reliance upon DDB’s material misrepresentations and
assurances, as, at the time DDB made such representations, HERO Group did not know of DDB’s
complete lack of intention to perform under both the Teaming Agreement and Subcontract, and could
not, in the exercise of reasonable diligence, have discovered DDB’s affirmative intention of not
performing.
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217. In deciding to enter into the Teaming Agreement with DDB and in deciding to execute
the Subcontract, HERO Group relied upon DDB’s representations in this regard.
material and false misrepresentations, HERO Group has suffered and will continue to suffer significant
harm and damages, including, but not limited to, damages stemming from each of DDB’s fraudulent
misrepresentations, for an amount which has not yet been ascertained but not less than $100,000,000.00
to be proven at trial.
COUNT VII
NEGLIGENT MISREPRESENTATION
(Teaming Agreement and Subcontract)
Army.
222. DDB further represented and promised HERO Group that if DDB was awarded the
Prime Contract from the Army, DDB would give task orders and work to HERO Group under the Prime
Contract.
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the identification of HERO Group as a subcontractor, for without such identification, HERO Group
could not be given work from the Prime Contract.
HERO Group in proceeding to expend significant capital on, among other things, jointly developing
the Proposal for DDB’s benefit, specifically in the amount of $4,000,000,000.00 in fees effectively
awarded to DDB under the Prime Contract.
225. Moreover, DDB’s representations and promises were further relied upon by HERO
Group in connection with HERO Group hiring additional staff, turning down third-party contracts and
generally expending thousands of working hours on the joint development of the Proposal, post-
submission efforts to secure the Prime Contract and DDB’s preparation and performance of the Prime
Contract.
226. DDB was, at all times relevant, well aware of the significant costs and expenses
associated with HERO Group’s expenditures of time and money in this regard, including HERO
Group’s expectation of work under the Prime Contract.
227. In addition to the Teaming Agreement, to induce HERO Group’s execution of the
unenforceable Subcontract, DDB materially represented to HERO Group that DDB had identified
HERO Group as a subcontractor to the Army in connection with the Proposal and DDB’s dealings with
the Army.
HERO Group in proceeding to execute the onerous, one-sided, and unenforceable Subcontract.
229. The entire foundation of the Subcontract was the fundamental prospect that DDB could
provide HERO Group with work under the Prime Contract.
230. This was, at all times relevant, false.
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could not subcontract work from the Prime Contract to HERO Group. DDB was, of course, at all times
relevant, well aware of this fact in inducing the Subcontract.
232. DDB either knew of its misrepresentations, made the misrepresentations with
knowledge as to their falsity, or made the misrepresentations under circumstances in which it ought to
have known of their falsity.
234. HERO Group acted in justifiable reliance upon DDB’s material misrepresentations and
assurances, as, at the time DDB made such representations, HERO Group did not know of DDB’s
complete lack of intention to perform under both the Teaming Agreement and Subcontract, and could
not, in the exercise of reasonable diligence, have discovered DDB’s affirmative intention of not
performing.
235. In deciding to enter into the Teaming Agreement with DDB and in deciding to execute
the Subcontract, HERO Group relied upon DDB’s representations in this regard.
material and false misrepresentations, HERO Group has suffered and will continue to suffer significant
harm and damages, including, but not limited to, damages stemming from each of DDB’s negligent
misrepresentations, for an amount which has not yet been ascertained but not less than $100,000,000.00
to be proven at trial.
COUNT VIII
BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING
(Subcontract)
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238. The law implies a duty of good faith and fair dealing within every contract.
239. The doctrine of good faith and fair dealing comes into play when a party abuses
discretion afforded to it under a contract’s terms by acting arbitrarily, capriciously, or in a manner
inconsistent with the reasonable expectation of the parties.
240. Where one party has discretion under a contract, it may not wield that discretion in a
manner that would defeat the benefit or purpose of the contract for the other party, or in a manner which
would not have been anticipated at the time of contracting.
241. In the alternative, to the extent the Subcontract is deemed to be a valid agreement, there
was a clear understanding and assumption under the Subcontract that DDB would use its discretion to
subcontract work under the Prime Contract to HERO Group.
242. Nonetheless, DDB failed to exercise its contractual discretion reasonably and with
improper motive, DDB made absolutely no effort to provide HERO Group with work under the Prime
Contract and, in fact, undertook affirmative steps to prevent HERO Group from obtaining such work
in direct contravention of the Subcontract.
243. DDB breached the implied duty of good faith and fair dealing in both the Teaming
Agreement and the Subcontract.
244. HERO Group has performed all conditions, covenants, and promises required on its part
to be performed in accordance with the terms and conditions of the Teaming Agreement.
245. As a natural, anticipated and direct consequence of DDB’s breaches of the covenant of
good faith and fair dealing, DDB caused substantial harm to HERO Group in lost revenue and further
damaged HERO Group by preventing the Army from engaging in any review or corrective action in
connection with the Prime Contract concerning HERO Group.
246. As a direct and proximate result of DDB’s breaches of the covenant of good faith and
fair dealing, HERO Group has suffered and will continue to suffer significant harm and damages,
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including, but not limited to, damages in an amount which has not yet been ascertained but not less
than $100,000,000.00 to be proven at trial.
REQUEST FOR RELIEF
WHEREFORE, Plaintiff, HERO GROUP INC., respectfully requests that this Court enter
judgment in its favor and as against Defendant, DDB CHICAGO INC., as follows:
i. For rescission of the Subcontract;

ii. For a declaration that the Subcontract is unenforceable;
iii. For breach of the parties’ Teaming Agreement and the contractual obligations contained
therein and that Plaintiff be awarded all actual and compensatory damages suffered from
these breaches in an amount to be determined at trial, plus interest and costs;
iv. For compensatory damages against Defendant due to its breaches of the Teaming
Agreement;
v. For an award of not less than $100,000,000.00 for general damages according to proof;
vi. For punitive damages based upon Defendant’s fraud;
vii. For costs of suit according to proof; and
viii. That the Court grants such other and further relief as this Court deems just, proper, and
equitable under the circumstances.
JURY DEMAND
Plaintiff demands a jury on all issues so triable.
DATED: January 20, 2021 Respectfully submitted,
HERO GROUP INC.
By: /s/ Drew M. Schilling

One of its attorneys
Drew M. Schilling, Esq. (ARDC #6288755)

Edward J. Keating, Esq. (ARDC #6330220)
Swanson, Martin & Bell, LLP
330 North Wabash Avenue, Suite 3300
Chicago, Illinois 60611
(312) 321-9100
[email protected]
[email protected]
and
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Thomas K. Richards, Esq.

Singh, Singh & Trauben, LLP
400 South Beverly Drive, Suite 240
Beverly Hills, California 90212
(310) 856-9705
[email protected]
-38-

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Case: 1:21-cv-00340 Document #: 1 Filed: 01/20/21 Page 1 of 38 PageID #:1

UNITED STATES DISTRICT COURT

HERO GROUP INC., a New York corporation, )

significant work as a subcontractor.

the Prime Contract.

once DDB was awarded the Prime Contract.

allowed under the definition of what constitutes a small business.

address the Army’s advertising needs.

intellectual property to DDB in its servicing of the Prime Contract.

agreements to HERO Group.

New York, New York.

principal place of business in Chicago, Illinois.

JURISDICTION AND VENUE

controversy exceeds $75,000.00 exclusive of interest and costs.

Judicial District pursuant to 28 U.S.C. §§ 1391(b)(1) and 1391(b)(2), as it is a resident of Chicago,

action occurred in this Judicial District.

have a positive impact on society.

Communications Group, LLC, a worldwide marketing communications network, itself owned by

and production across all forms of media.”

The Prime Contract

advertising firm for approximately 12 years.

was one of the most sought-after contracts in advertising.

Prime Contract as a lead contractor.

was an ideal subcontractor for the Prime Contract.

the 1st Battalion, 27th Infantry Wolfhounds.

serious contender for the Prime Contract.

CEO, Gunning, to setup a conference call.

invited to Chicago to discuss DDB’s official bid to the Army.

The Teaming Agreement

See Exhibit “A” at pg. 1, WHEREAS Clauses. (Emphasis added).

follow the submission of such proposal proposals.” (Id.). (Emphasis supplied).

 DDB, as the proposed prime contractor, intends to submit a proposal or proposals

parties’ contractual relationship as forth in Exhibit A to the Teaming Agreement.

- Social Media Marketing - Creative Development

- Sponsorships - Target & Audience Insights

services identified in Exhibit A to the Teaming Agreement directly to HERO Group.

paying work in the areas described in Exhibit A to the Teaming Agreement:

 If as a result of Company’s [HERO Group] acceptance of this Agreement

that HERO Group create and deliver a presentation deck(s).

as required in Section 1 of Teaming Agreement entitled “Responsibilities of the Parties”), including

The Submission of the Proposal

this effort.” (Emphasis supplied).

serious impact on our pitch.”

Army’s so-called “discern” phase of their recruitment process.

known as the “discern phase.”

three (23) page pitch deck comprised of “discern phase” concepts.

DDB’s overall work for the Army.

in a July 25, 2018 email.

DDB is Awarded the Prime Advertising Contract

preparing the Proposal was clearly successful.

subcontractor responsibilities for.

80. DDB did not respond to HERO Group’s list.

its subcontractor agreement as set forth in the parties’ Teaming Agreement.

what constitutes a small business.

wanted HERO Group to “drive [DDB’s] small business program.”

Group to effectively assume its position as a subcontractor.

would commence work as subcontractor.

on or around March 5, 2019.

years and $4 billion.”

1, 2019, was to be relocated to Chicago, Illinois.

advertising contractor for the Army.

during the fiscal year 2016.

Committees on Armed Services of the Senate and House of Representatives.