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Macy’s claims J.C. Penney and Martha Stewart teamed up to steal customers

A lawyer for Macy’s said the two parties schemed to create the partnership that harmed Macy’s

A lawyer for Macy’s Inc. is making some harsh accusations against J.C. Penney Co. Inc. and Martha Stewart Living Omnimedia Inc. (MSLO).

Theodore Grossman told a judge yesterday that J.C. Penney and MSLO schemed to develop a partnership that was in violation of the contract Macy’s had with MSLO.

The case dates back to January 2012, when Macy’s sought preliminary injunction against MSLO after the latter entered an agreement with J.C. Penney to open Martha Stewart Living shops within its stores. The suit claimed the media and merchandising company breached its contract with Macy’s when it entered into an agreement with J.C. Penney because Macy’s had an exclusive agreement with MSLO to sell Martha Stewart Living products. Macy’s filed suit against J.C. Penney in August, and the trial began this week.

According to Grossman, J.C. Penney used loopholes within the Macy’s-MSLO contract so it could sell Martha Stewart products in its stores, which is in breach of the contract Macy’s had with MSLO.

"We're here to protect our rights. Rights that we paid for. Rights that we worked on. Rights that we took tremendous risks for," Grossman told the New York Supreme Court. Macy’s wants J.C. Penney to stop selling Martha Stewart merchandise in its stores.

J.C. Penney’s lawyer Mark Epstein said his client did nothing wrong. “J.C. Penney acted honorably and appropriately in all respects," he said in his opening statement.

According to the Macy’s-MSLO contract, MSLO can open its own stores and sell any products exclusive to Macy’s within those stores. However, Macy’s argues that the shops within J.C. Penney are not standalone stores.

A lawyer for MSLO said the J.C. Penney shops do not breach its contract with Macy’s. "There's been an effort here to transform the contract into something it is not," Eric Seiler said.

The trial is expected to last about two weeks.

Read more of InsideCounsel’s coverage of this case:

Macy’s sues J.C. Penney over Martha Stewart Living contract

Judge temporarily blocks Martha Stewart Living from selling at J.C. Penney

Martha Stewart Living brings Macy’s battle to a boil

Macy’s seeks injunction in spat with Martha Stewart

Macy’s sues Martha Stewart Living

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