Martha Stewart takes the stand in Macy’s-J.C. Penney trial saga

Judge says the companies should have settled the case long ago

And the saga marches on.

This week marks the third in the courtroom battle between Macy’s Inc. and J.C. Penney Co. over who has the right to sell Martha Stewart Living Omnimedia (MSLO) products in their stores. And the judge on the case seems to be losing his patience.

Yesterday, as it appeared the trial could take longer than expected, Justice Jeffrey Oing made it clear the financial impact on the companies involved would not influence his decision. “I’ve got to decide this case,” he said yesterday. “And how it falls, it falls.”

The quick recap: The battle began back in 2011 when J.C. Penney announced it purchased 17 percent of MSLO and planned to open Martha Stewart Living shops within its stores. In early 2012, Macy’s sought preliminary injunction against MSLO to block the deal. Macy’s claimed MSLO breached its contract with Macy’s when it entered into the agreement because Macy’s had an exclusive right with MSLO to sell Martha Stewart Living products. MSLO and J.C. Penney argued that the deal didn’t breach MSLO’s contract with Macy’s because they say that contract allows MSLO to sell Martha Stewart Living products in stand-alone stores—and they say the shops within J.C. Penney fall into that category. Macy’s didn’t buy it, and filed suit against J.C. Penney in August. The trial began two weeks ago.

Last week, Macy’s CEO Terry Lundgren took the stand, telling the jury that he was “sick to his stomach” after a phone conversation with Martha Stewart in which the home-goods diva told him of the J.C. Penney deal. J.C. Penney CEO Ron Johnson took the stand late last week to defend his company’s contract with MSLO. Stewart herself is set to take center stage—er, testify—today.

Oing has already placed a temporary block on J.C. Penney to prevent it from selling any Martha Stewart products, which it has scheduled to start doing in the spring under the JCP Everyday brand. If the trial doesn’t conclude by the end of this week, it likely won’t resume until sometime in April, due to court and lawyer schedules.

While lawyers for the already financially struggling J.C. Penney argued this could be a “big problem” for J.C. Penney, Oing said yesterday, "I warned you guys to get together and settle this case.”

Read more about the case’s latest developments on Thomson Reuters and Bloomberg.

For InsideCounsel’s ongoing coverage of the drama, see:

Macy’s CEO” “sick to my stomach” over J.C. Penney deal

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

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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Cathleen Flahardy

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