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Macy’s sues Martha Stewart Living for breach of contract

Homemaking maven Martha Stewart might be headed toward more legal trouble. She’s being sued for breach of contract by Macy’s Inc., which alleges that her company, Martha Stewart Omnimedia Inc., entered into an agreement with Macy’s rival J.C. Penney Co. Inc to sell certain products in its stores.

According to Macy’s, a 2006 agreement with Martha Stewart Living granted the department store company the exclusive right to manufacture and sell certain products. But last month, J.C. Penney announced plans to open shops selling Martha Stewart products in shops within its stores. Macy’s is seeking a preliminary injunction to stop Martha Stewart from violating the contract as well as an order to seal the lawsuit and motion. Macy’s said it had renewed its agreement to exclusively sell Martha Stewart products for another five years.

Macy’s said it went to court to enforce the original agreement that Martha Stewart Living signed in 2006, “in which the right for Macy’s to sell product exclusively in these categories was clearly outlined,” the department store company said in a statement.

Although Martha Stewart Living said it doesn’t usually comment on legal matters, a company statement pointed out Macy’s intent to extend its contract with Martha Stewart Living to feature and promote the company’s products — its No. 1 home brand, according to Martha Stewart Living — in Macy’s stores.

The New York state Supreme Court filing doesn’t detail the products in question, but J.C. Penney’s CEO said last month that the partnership with Martha Stewart Living “will be transformational” for the department store chain. It agreed to acquire a 17 percent stake in the brand for $38.5 million, or $3.50 a share, according to a joint statement by the companies.

Will the breach of contract case put an end to the deal with J.C. Penney, which is hoping to revive its sales with new mini stores promoting Martha Stewart products? That remains to be seen, but Stewart herself would likely admit an unwillingness to step into any more legal hot water.

Source: Thomson Reuters, “Macy’s sues Martha Stewart Living,” Jan. 23, 2012

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