Judge Refuses to Intervene in Ad Firm Fight : Litigation: AC&R; Advertising Inc., a national ad agency, has accused former employees in a new Costa Mesa firm of stealing customers. The case remains to be decided.

A federal judge Tuesday denied a request by AC&R; Advertising Inc., a national ad agency, to restrain a Costa Mesa firm started by former AC&R; employees from allegedly stealing its customers.

Since its founding in January, Esprit Communications, an ad agency specializing in health-care clients, has snagged several of AC&R;’s major medical accounts, including Beckman Instruments, a giant Fullerton-based manufacturer of medical devices.

Other companies that have left AC&R; for Esprit include Baxter Caremark, an Illinois-based subsidiary of Baxter Healthcare Corp. that manufactures home infusion therapy equipment; Stanford University Hospital; Intercommunity Medical Center, a Covina hospital, and Health Care Alliance, a joint venture among SmithKline Beecham Pharmaceuticals, SmithKline Beecham Clinical Laboratories and Beckman Instruments that is designed to serve hospitals.

Also, UCI Medical Center, a former AC&R; client, reports that it is in final negotiations to move its ad account to Esprit.

Beckman Instruments estimated that it generated about $2 million a year in business for AC&R;, while Caremark estimated that its contract with AC&R; was producing about $1.5 million in billings for the firm.

Esprit’s founder is Frank Addis, who resigned in October as AC&R;’s executive vice president in Irvine and managing director of the company’s health-care group.

Addis formed a partnership with two other former key executives of the AC&R; health-care group in Irvine: Martie Higgins, a former medical account supervisor, and Elizabeth Hargreaves, who had succeeded Addis as vice president in charge of health care. AC&R;’s associate creative director, Peter Jacoby, also joined the new team.

The three left AC&R; in mid-January, Higgins said. Several other AC&R; employees followed in succeeding weeks to Esprit.

AC&R; was known as Cochrane Chase, Livingston & Co. until 1988, when it merged into the West Coast offices of AC&R;/DHB & Bess, a New York agency. AC&R;, in turn, is owned by Saatchi & Saatchi, the giant London-based agency.

In February, AC&R; sued Esprit in federal court in Los Angeles, alleging unfair competition. The contents of the lawsuit have been sealed by the court at the request of AC&R;, said Debra Hope Lewis, Esprit’s Newport Beach attorney.

While the merits of the lawsuit have not been decided, the court has refused to grant AC&R;’s request to restrain Esprit from “soliciting and accepting as clients former AC&R; clients,” Lewis said.

After previously denying a request for a restraining order, U.S. District Judge James M. Ideman on Tuesday also denied AC&R;’s request for a preliminary injunction against Esprit.

In his order, Ideman wrote that the “defendants, who are a small company of four individuals, will most likely be forced out of business by a preliminary injunction at this time.”

He also said: “It appears that the plaintiff is attempting to hold defendants liable for alleged breaches by its own clients, instead of suing those clients.”

Maggie Heim, an attorney for AC&R;, declined to comment on the suit.

Jack Gerken, AC&R;’s vice president of public relations, declined to discuss any clients that had been lost to Esprit. “We cannot talk about who is with us and who left us,” he said.

Esprit officials denied Tuesday that the firm has actively solicited AC&R;’s clients. They said clients with whom they formerly worked have naturally gravitated to the new company.

Higgins said she and her partners left AC&R; primarily because they wanted to start a company that would work only in the health-care specialty: “With AC&R; being a full-service consumer agency, they didn’t have a complete focus on health care.”

Patrick Shea, director of marketing communications for Baxter Caremark, said when the people who were “the heart” of the AC&R; medical group left, it was natural for Caremark to follow.

He said AC&R; “made overtures to hang onto the account, but they really didn’t have anything to hold onto it with.”

Bob Crittendon, director of communications for Beckman Instruments, said Esprit “never solicited our business.”