Martha Stewart Living, Macy's Reach Long-Awaited Settlement - In House
In House - The FindLaw Corporate Counsel Blog

Martha Stewart Living, Macy's Reach Long-Awaited Settlement

Martha Stewart Living Omnimedia Inc. and Macy's reached a settlement in a breach of contract lawsuit, bringing an end to Macy's claims against Stewart's company for allegedly violating an exclusivity agreement by selling products at rival chain J.C. Penney.

But the confidential settlement leaves Macy's suit against J.C. Penney intact.

Exclusivity Agreement

Martha Stewart and J.C. Penney announced a partnership in 2011 to open Martha Stewart home shops at hundreds of J.C. Penney stores. Under the deal, Stewart would design kitchen, bed and bath products to be sold in shops-within-a-store at larger J.C. Penney stores. J.C. Penney also obtained a nearly 17% share of Martha Stewart Living Omnimedia Inc., reports The Deal Pipeline.

Last year, Macy's filed a lawsuit against both Martha Stewart and J.C. Penney over the partnership allowing J.C. Penney to sell Martha Stewart-branded products. Macy's claimed the partnership breached an exclusive agreement Macy's had with Stewart dating back to 2006 that remains in effect until 2018.

Revised J.C. Penney Agreement

To mollify Macy's, J.C. Penney and Martha Stewart revised their agreement in October. Pursuant to the new agreement, J.C. Penney will significantly scale back the Martha Stewart merchandise featured in its stores. J.C. Penney also gave up its 17 percent stake in Stewart's company, reports The New York Times.

Under the revised agreement, J. C. Penney will not sell kitchen, bed and bath products designed by Martha Stewart that were sold under the label "JCP Everyday." However, it will continue to market other Martha Stewart merchandise, including window treatments, lighting, seasonal holiday items and rugs under the label "MarthaHome."

Macy's v. J.C. Penney

Macy's aims to stop J.C. Penney from selling any products designed by Martha Stewart even if her name doesn't appear on the items or their marketing. Earlier this year, Manhattan Supreme Court Justice Jeffrey Oing ruled that J.C. Penney could sell products made by Stewart's company, but not those with her brand on it, leading to the generic "JCP Everyday" moniker. Macy's is in the process of appealing that ruling.

Macy's settlement with Stewart will not affect its outstanding claim against J.C. Penney, so this pastel-hued battle is far from over.

Related Resources: