Andrew Rubin, Esq.

Macy's tells Martha Stewart: contract breach not a good thing

New Jersey businesses usually like to resolve their disputes out of court. By utilizing alternative dispute resolution methods, like mediation and arbitration, businesses and corporations can avoid costly court fees and negative publicity. However, sometimes avoiding litigation at all costs is neither practical nor economical. Just ask Ms. Manners herself, Martha Stewart.

The American business superstar has made her living by teaching the rest of us how to entertain with the best of them. But, the proverbial "hostess with the mostest" has also made a name for herself as a woman who knows when to put good graces aside and stand up for herself and her business empire. Her company, Martha Stewart Living Omnimedia Inc., will have to do just that today as it heads to court to face a breach of contract claim leveled by Macy's Inc.

The department store filed the complaint against Martha Stewart back in January, just one month after it learned the home goods empress planned to open up mini-shops to sell wares inside of J.C. Penney stores. One of the shop-in-stores would be just down the street from Macy's New York City flagship.

Macy's has said that the shops within J.C. Penney stores violate a 2006 contract that guaranteed Martha Stewart would sell her branded bedding, towels and cookware exclusively at Macy's through 2018.

It is unclear exactly what Macy's hopes to accomplish with the lawsuit. The department store may wish to bar Martha Stewart from selling goods at its rival, J.C. Penney, or it may prefer that the two companies buy Macy's out of the existing contract.

Regardless of the specifications, if a ruling is handed down in favor of Macy's, J.C. Penney could be put in a tough spot. The retailer is already struggling as it is in the midst of a thus-far unsuccessful attempt to reinvent itself, and it appears to have already invested quite a bit in the Martha Stewart venture--which could potentially lead J.C. Penney to file a claim against the home goods brand, too.

All of these companies have much at stake in this dispute, making it very important to have legal counsel that will consider the short- and long-term effects of litigation.

Source: Crain's New York, "Macy's court battle with Martha begins Friday," Adrianne Pasquarelli, July 12, 2012

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