Martha Stewart Loses Bid to Dismiss Macy's Claims in Penney-Related Suit

Friday, 12 Apr 2013 01:57 PM

By Alexandra Ward

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Martha Stewart's company, entrenched in a lawsuit between two of the nation's largest retailers, lost a bid Thursday to dismiss Macy's claims that it violated their contract by signing a deal with rival J.C. Penney in December 2011.

A New York State Supreme Court justice on Thursday rejected a motion by Martha Stewart Living Omnimedia lawyers, who argued that the exclusive contract with Macy's in certain bath and bedding products did not extend to design work it did for J.C. Penney, which does not carry the home designer's name.

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Macy's filed a lawsuit against Martha Stewart's company after it announced plans in December 2011 to open mini "Martha Stewart" stores within J.C. Penney. The plan was part of Penney CEO Ron Johnson's attempt to revamp the franchise. Johnson was ousted Monday.

A judge is expected to rule Friday whether to temporarily block J.C. Penney from selling Martha Stewart goods in these mini-stores. A preliminary injunction is already in place.

"When given the opportunity to present our case, (Martha Stewart Living) lawyers will show that... (the company) is a design house committed to designing beautiful, high-quality products and that our contract with Macy's permits us to license our designs to all retailers so that consumers can buy them wherever they shop," Martha Stewart Living said in a statement Thursday.

Martha Stewart and Penney are using what they believe is a loophole in the agreement between Macy's and Martha Stewart to move forward with their deal. It's a provision that allows Martha Stewart to sell some of the products that it offers in Macy's stores at Martha Stewart shops, too.

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According to Martha Stewart lawyers, because the Macy's agreement doesn't specify that Martha Stewart stores have to be "stand alone" locations, the mini shops within Penney's stores would not violate the contract.

Related stories:

Martha Stewart Testifies in Trial Over Her Brand

J.C. Penney CEO Sought to ‘Pull Off Martha,’ E-Mail Shows

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