Macy’s, Penney dispute goes into mediation

Martha Stewart has testified that she was surprised a dispute involving Macy’s and J.C. Penney ended up in court.
Pool photo by David Handschuh/Daily News via Associated Press
Martha Stewart has testified that she was surprised a dispute involving Macy’s and J.C. Penney ended up in court.

NEW YORK — A New York State Supreme Court judge has ordered Macy’s, J.C. Penney, and Martha Stewart Living into mediation in a bid to resolve a dispute over a partnership with the Martha Stewart brand.

The development came Thursday as the companies were wrapping up the third week of a trial over whether Macy’s has exclusive rights to sell some Martha Stewart-branded merchandise, including bedding, cookware, and bath items.

Macy’s Inc. sued Martha Stewart Living Omnimedia Inc. for allegedly breaching their longstanding contract when it signed a deal with J.C. Penney Co. in December 2011. That deal was for opening Martha Stewart mini shops in most of Penney’s stores this spring.


Macy’s also sued Penney, claiming it had no regard for Macy’s contract with Martha Stewart Living and that Penney was out to steal a business Macy’s had worked to develop.

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The two lawsuits were consolidated for a bench trial presided over by Judge Jeffrey Oing.

Witnesses have included Macy’s chief executive Terry Lundgren, Penney’s CEO Ron Johnson, and Martha Stewart.

In July, Macy’s won a preliminary injunction against Martha Stewart Living that would prevent it from selling Martha Stewart branded housewares and other exclusive products at Penney. In August, the judge let Penney open Martha Stewart shops as long as items under exclusive contract with Macy’s were not sold.

Penney said Thursday that it won’t sell products that are being designed by Martha Stewart and are deemed exclusive by Macy’s before April 8, when the hearings are to resume.


Penney plans to sell products that are part of Macy’s exclusive agreement in May, but the goods will be branded under ‘‘JCP Everyday,’’ a new brand reserved for the Martha Stewart merchandise. Macy’s lawyers are seeking to extend the injunction to cover products labeled JCP Everyday.

Penney also plans to sell products such as curtains and stationery that are not part of the exclusive Macy’s contract under the label ‘‘Martha.’’

Also Thursday, officials at Martha Stewart Living confirmed Stewart and Lundgren had their first conversation since Dec. 6, 2011, when Stewart called Lundgren to inform him she had signed a deal with Penney. Lundgren testified last week that he was so shocked that Stewart did not approach him in advance about the deal that he hung up on her.

Stewart testified Tuesday that she was ‘‘quite flabbergasted’’ Lundgren hung up on her.

On Thursday, Stewart and Lundgren had ‘‘a productive conversation regarding the ongoing contract dispute,’’ Martha Stewart Living said prior to the judge’s order that the parties enter mediation.


‘‘We view today’s actions as a positive step forward and welcome a prompt and fair resolution,’’ the statement added.