Martha Stewart loses bid to dismiss Macy's contract claim

NEW YORK Thu Apr 11, 2013 7:27pm EDT

Martha Stewart (C) holds a camera as she departs the New York state Supreme Court after testifying in Manhattan March 5, 2013. REUTERS/Lucas Jackson

Martha Stewart (C) holds a camera as she departs the New York state Supreme Court after testifying in Manhattan March 5, 2013.

Credit: Reuters/Lucas Jackson

NEW YORK (Reuters) - Martha Stewart's company lost a bid on Thursday to dismiss Macy's Inc's claim that it violated their contract when it designed certain products for J.C. Penney Co Inc, even if the products do not carry the Martha Stewart brand.

New York State Supreme Court Justice Jeffrey Oing's ruling may affect whether J.C. Penney can sell Martha Stewart-designed home goods in bedding, bath and cookware under a "JCP Everyday" label.

The judge is expected to rule Friday on whether to temporarily block Penney from selling Martha Stewart-designed goods that Penney manufactured in that "Everyday" packaging.

A preliminary injunction already in place bars J.C. Penney from selling Martha Stewart brand products in certain categories.

A Citi analyst on Tuesday estimated the inventory already in a warehouse could be worth $100 million.

Oing also pushed again for the sides to settle, rather than leaving the matter in his hands.

"This is a business deal that you should not have courts getting involved in," Oing said. "It's getting to a point where the clock can't be turned back. The ship is ready to sail."

Macy's sued J.C. Penney and Martha Stewart Living Omnimedia Inc after the two companies announced plans in December 2011 to open "Martha Stewart" stores within J.C. Penney.

The plans were part of Ron Johnson's attempt to re-invent J.C. Penney after he became chief executive in November 2011. Johnson, who came under fire after sales fell 25 percent at the department store last year, was ousted on Monday.

Macy's claims Martha Stewart Living granted it the exclusive right to manufacture and sell Martha Stewart home goods in some categories under a 2006 agreement that, with a renewal last year, runs until 2018.

The cases are Macy's Inc v Martha Stewart Living Omnimedia Inc, 650197/2012, and Macy's Inc v J.C. Penney Corp, 652861/2012, New York State Supreme Court, New York County.

(Reporting by Karen Freifeld; editing by Leslie Gevirtz and Matthew Lewis)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (4)
justinolcb wrote:
dang it Martha! you n court

Apr 11, 2013 4:25pm EDT  --  Report as abuse
justinolcb wrote:
dang it Martha! you n court

Apr 11, 2013 4:25pm EDT  --  Report as abuse
justinolcb wrote:
opps, you n courts jus dont seem to get along!

Apr 11, 2013 4:26pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.