Klein & Wilson

Legal battle between Macy's and Martha Stewart Living heats up

As some Orange County residents who are in tune with the business world may know, the contract dispute between Macy's and Martha Stewart Living Omnimedia is continuing to rage on. Earlier this week, the two major companies were set to go to court over Martha Stewart Living's business contract with another retailer. The nonjury trial is expected to continue into early next month.

The issue at hand concerns a pact between Martha Stewart Living Omnimedia and J.C. Penney Co. Macy's is claiming that J.C. Penney and Martha Stewart Living engaged in business talks about selling Martha Stewart Living merchandise but failed to tell Macy's, which already had an agreement with Martha Stewart Living.

About a year ago, Macy's sued Martha Stewart Living to keep the company from creating a contract with J.C. Penney. Macy's argued that its agreement to sell Martha Stewart Living products was exclusive, adding that the department store helped renew Martha Stewart's brand after her prison sentence. Martha Stewart Living executives disagreed, saying Macy's breached the contract they had. A judge first granted Macy's request to block the agreement between Martha Stewart Living and J.C. Penney.

Martha Stewart Living, however, says the agreement was not the Macy's had exclusive rights to sell its products, but that Macy's has the exclusive right to sell Martha Stewart Living merchandise in certain exclusive categories. Before Macy's filed their lawsuit, Martha Stewart Living announced that J.C. Penney bought a 17 percent stake in the company.

This situation, on a large scale, shows the importance of have clear contracts when doing business deals. As both businesses undoubtedly did in this case, Orange County companies should have experienced attorneys review their contracts to make sure they are airtight. Ending up in costly litigation is something most businesses hope to avoid, and having a clear and detailed contract is a good place to start. It will be interesting to see how this trial unfolds.

Source: Crain's New York Business, "Macy's and Martha Stewart Living head to court," Feb. 19, 2013

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