MWW PR Lawsuit: MWW Public Relations Group Sued by Scholastic

FRANKFURT KURNIT KLEIN & SELZ, P.C.Craig B. Whitney, Esq.Tyler Maulsby, Esq.488 Madison AvenueNew York, New York 10022Tel.: (212) 980-0120Fax: (212) 593-9175Attorneysfor Scholastic Inc.

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

xSCHOLASTIC iNC.,

Case No.Plaintiff,

COMPLAINT-against

MWW GROUP,

Defendant.

xPlaintiff Scholastic, Inc. (“Plaintiff’ or “Scholastic”), by its attorneys, Frankfurt Kurnit

Klein & Selz, PC, for its complaint (the “Complaint”) against defendants MWW Group

(“Defendant” or “MWW”) alleges as follows:

NATURE OF THE ACTION

1. This is an action arising from Defendant’s failure to honor its clearly stated

payment obligations to Scholastic under a contract for the creation of educational materials and

related services (the “Agreement”).

2. Beginning in May of 2012, Scholastic and MWW entered into the Agreement,

whereby Scholastic agreed to create certain sponsored educational materials and provide related

services for MWW’s client. In exchange, MWW agreed to pay Scholastic for the contracted

educational materials and related services.

Case 1:16-cv-02906-JPO Document 1 Filed 04/19/16 Page 1 of 7

3. The Agreement between Scholastic and MWW was amended several times to

include additional projects, all ofwhich Scholastic completed to MWW’s satisfaction.

4. Beginning in December 2014, however, MWW fell behind on its payment

obligations to Scholastic. To date, MWW owes Scholastic $699,377.01 on a total of seven (7)

unpaid invoices. There is no dispute that Scholastic delivered all of the agreed-upon materials

and related services and that MWW agreed to pay Scholastic for these materials and services. To

date, however, MWW has refused to honor its outstanding obligations to Scholastic.

JURISDICTION AND VENUE

5. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.

§ 1332(a)(1) because the matter in controversy exceeds the sum of $75,000 and is between

citizens of different states.

6. This court has personal jurisdiction over Defendant MWW because it

systematically and routinely conducts business within New York State. In addition, MWW

explicitly agreed to exclusive jurisdiction in the State ofNew York to resolve any claims arising

in connection with the Agreement.

7. Venue is proper in this Court under 28 U.S.C. § 1391 because a substantial part of

the events giving rise to Scholastic’s claim occurred in the Southern District ofNew York.

PARTIES

8. Plaintiff Scholastic is a New York corporation with its principal place of business

at 557 Broadway, New York, New York 10012.

9. Defendant MWW is an advertising and public relations agency with offices across

the United States. Upon information and belief, MWW is a Delaware corporation, and has its

principal place of business at One Meadowlands Plaza, East Rutherford, New Jersey 07073.

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FACTUAL ALLEGATIONS

TheAgreement

10. On May 8, 2012, Scholastic and MWW executed the Sponsored Educational

Materials Agreement, whereby Scholastic agreed to create certain educational materials for

MWW that featured MWW’s client, Samsung, and provide related services. A copy of the

Agreement is attached as Exhibit A.

11. The first paragraph of the Agreement stated that the agreement was “by and

between Scholastic Inc.. . . and MWW Group. . . .“ See Ex. A. MWW assumed sole

responsibility to pay Scholastic and agreed to “pay all invoices received from Scholastic within

30 days of the billing date.” Ex. A ¶2.

12. The Agreement was amended several times to include additional projects

(together the “Amendments” and each an “Amendment”). Copies of the relevant Amendments

are attached as Exhibits B-i through B-4. The relevant Amendments included:

• Amendment 5, dated December 2, 2014, whereby MWW agreed to payScholastic an additional $360,000 for a project titled “Samsung &Operation Military Kids” (See Ex. B-i);

• Amendment 6, dated October 22, 2014, whereby MWW agreed to payScholastic an additional $350,000 for a project titled “Samsung & CampFire” (See Ex. B-2);

• Amendment 7, dated December 17, 2014, whereby MWW agreed to payScholastic an additional $214,781 for a project titled “Samsung MilitaryCurriculum” (See Ex. B-3); and

• Amendment 8, dated April 29, 2015, whereby MWW agreed to payScholastic $914,113 for a project titled “Samsung Mobile App AcademiesYear 4” (See Ex. B-4).

13. Each Amendment expressly stated that the terms of the Agreement remained “in

full force and effect” which included MWW’ s sole responsibility to pay Scholastic within thirty

days of the billing date.

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14. In each Amendment, MWW agreed to pay Scholastic according to the following

schedule: one-third (1/3) of the total payment upon signing of the Amendment; one-third (1/3) of

the total payment upon delivery by Scholastic of the first draft of the specified project to MWW;

and one-third (1/3) of the total payment upon completion of the project. See Exs. B-1—B-4.

MWW’s Failure to Pay Scholastic

15. Scholastic performed all of its obligations under the Agreement and submitted

invoices to MWW in a timely fashion.

16. At no time did MWW object to any of Scholastic’s work in connection with the

Agreement or the Amendments.

17. MWW also never objected to any of the amounts stated in any of the invoices that

Scholastic sent to MWW in connection with the Agreement or the Amendments.

18. Despite MWW’s acceptance of the amounts owed to Scholastic, to date there are

seven invoices that remain unpaid totaling $699,377.01. The invoices range from over four-

months late to well over one year overdue. The amounts owed are as follows:

Invoice No. Invoice Date. Original Amount Remaining Amount

1023368 Dec. 12,2014 $116,666.67 $19,137.32

10158627 Dec. 12,2014 $116,666.67 $11,370.68

10426914 Jan. 28, 2015 $116,666.67 $16,666.66

10616125 Feb. 19, 2015 $120,000.00 $120,000.00

11626001 Aug. 27, 2015 $71,593.68 $71,593.68

11601577 Aug. 27, 2015 $305,904.33 $155,904.33

11976256 Nov. 9, 2015 $304,704.34 $304,704.34

Total: $699,377.01

Copies of the invoices referenced above are attached as Exhibit C.

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Scholastic’s Attempts to Collect Payment

19. For the past several months, Scholastic has attempted to collect the above

amounts owed by MWW.

20. In January 2016, following months of unsuccessful attempts to collect the

amounts owed, Scholastic again notified MWW of the outstanding amounts due and requested a

timeline for when MWW would be able to complete payment. On January 11, 2016, MWW

informed Scholastic: “we will not be making any additional payments on the account as we are in

a dispute with Samsung.” MWW further advised that Scholastic “should contact Samsung

directly for payment on all amounts outstanding.” As noted above, Samsung is not a party to the

Agreement and all payment obligations under the Agreement flow directly from MWW to

Scholastic.

21. Indeed, after the January 11 communication, Scholastic reminded MWW that the

Agreement was between Scholastic and MWW and that MWW was solely responsible for

payment to Scholastic. Scholastic subsequently reached out to MWW on multiple occasions

seeking payment, including attempting to contact MWW’s Executive Vice President and General

Counsel directly, but MWW refused to respond to any communication from Scholastic.

22. On April 4, 2016, Scholastic’s counsel wrote to MWW providing final notice

prior to filing this lawsuit that MWW must pay Scholastic by April 12, 2016. MWW ignored the

letter and has not paid the amounts owed.

FIRST CAUSE OF ACTION(Breach of Contract)

23. Scholastic incorporates Paragraphs 1 through 22 as fully set forth herein.

24. On or about May 8, 2012, Scholastic entered into the Agreement with MWW, in

addition to subsequent Amendments that included the terms of the Agreement.

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25. The Agreement (including the Amendments) constitutes a valid contract and

obligates MWW to pay Scholastic for the educational materials and services specified therein.

26. Scholastic satisfied its obligations under the Agreement by delivering the

specified educational materials and services to MWW.

27. MWW has breached its obligation to Scholastic under the Agreement by failing to

pay Scholastic for the agreed-upon materials and services that Scholastic delivered to MWW.

28. As a result ofMWW’s breach, Scholastic has been damaged in the amount of

$699,377.01.

SECOND CAUSE OF ACTION(Account Stated)

29. Scholastic incorporates Paragraphs 1 through 28 as if fully set forth herein.

30. On or about December 12, 2014, January 28, 2015, February 19, 2015, August 27,

2015 and November 9, 2015, Scholastic rendered to MWW accounts of the educational materials

and services provided and moneys owed to Scholastic. See Ex. C.

31. The invoices were delivered to, accepted, and retained by MWW without

objection.

32. An account was stated between Scholastic and MWW for the educational

materials and services provided.

33. Upon the account stated, there is an unpaid balance owed to Scholastic from

MWW in the amount of $699,377.01.

34. No part of the $699,377.01 has been paid, despite repeated demands by

Scholastic.

35. No part of the $699,377.01 has been disputed by MWW.

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36. There is due and owing to Scholastic by MWW the sum of $699,377.01 and all

interest thereon.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff respectfully requests that this Court enter a judgment:

(a) Finding MWW has breached its obligations under the Agreement (includingsubsequent Amendments);

(b) Awarding damages in an amount to be determined at trial, but not less than$699,377.01;

(c) Awarding pre-judgment and post-judgment interest, to the fullest extent allowableat law or in equity, on all damages;

(d) Awarding costs and disbursements of this action, including attorneys’ fees; and

(e) Granting such other and further relief as this Court deems just and proper.

Dated: New York, New YorkApril 19, 2016

FRANKFURT KURMT KLEIN & SELZ, P.C.

By: Is! Craig B. WhitneyCraig B. WhitneyTyler Maulsby

488 Madison AvenueNew York, New York 10022Tel.: (212) 980-0120Fax: (212) [email protected]@fkks.com

Attorneys for PlaintffScholastic Inc.

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