NEW YORK — The legal grudge match pitting Macy’s Inc. against Martha Stewart Living Omnimedia Inc. and J.C. Penney Co. Inc. finally goes to trial Wednesday — and it could last two-and-a-half weeks.
This story first appeared in the February 20, 2013 issue of WWD. Subscribe Today.
Presiding Judge Jeffrey Oing took care of pretrial scheduling issues Tuesday in what could be described as a two-and-a-half-hour last-ditch effort by both sides to gain the slightest advantage. The case is scheduled to go until March 8.
Macy’s filed the initial contract dispute just more than a year ago over Martha Stewart’s 2011 deal with Penney’s to create Martha Stewart-branded shops-in-shop this spring. Penney’s also bought a 16.6 percent stake in MSLO. But Macy’s said the deal breached its contract with the home goods firm, which gave Macy’s the right to sell certain Martha Stewart-branded wares.
Macy’s sued both parties, claiming the Penney’s contract is illegal, and is asking for a permanent injunction and damages. For the moment, Penney’s, which is retooling its merchandising and retail strategy for all of its stores, can move forward with Stewart shops-in-shop; however, it can’t sell certain home goods, under a court ruling from last summer.
On Tuesday, Judge Oing listened to a slew of lengthy arguments from the cavalry of lawyers, who pinpointed some of the more substantive questions of the case, which range from defining the meaning of “exclusivity” to examining Stewart’s role in the design process of the branded goods.
The first major bone of contention Tuesday was related to a contract Penney’s inked with Sephora for a shop-in-shop. Lawyers for Macy’s asked the court for access to the contract, arguing that it would illuminate Stewart’s relationship with Penney’s.
If the Sephora and Stewart contracts are identical, it could strengthen Penney’s case, said the judge, who waited to order the defense to produce the Sephora deal.
One issue the judge did rule on is whether Glenn Sheets, Macy’s expert witness on accounting, would take the stand on Wednesday. Sheets will provide an analysis of monetary damages he believes Macy’s is entitled to should the retailer win the case. The defense argued against the accountant’s inclusion, as no monetary losses have been suffered to date, but the judge sided with Macy’s.
“This does not mean the plaintiff is going to prevail,” Oing noted, explaining that he wants to give the litigants “their day in court.” Although few issues were decided, Oing said Michael Francis, Penney’s former president, and Steven Lawrence, a former Penney’s merchant and executive vice president, would not be required to testify in court, as they have already submitted depositions.
Checking two names off the hefty witness list likely won’t make much of a dent in the case, however. More than 60 names populate the joint list, which could make for a protracted trial. Dealing with the hectic schedules of executives such as Stewart, Macy’s chief executive officer Terry J. Lundgren and Penney’s ceo Ron Johnson may also prove difficult. A Macy’s spokesman said Lundgren, Johnson and Stewart will likely testify next week.
Even so, Oing assured the court that he does not anticipate the trial extending beyond the March 8 deadline.
“I’m rather impatient,” he told the lawyers, who fidgeted anxiously before him. “I will have no trouble in this case to say ‘Move it along.’”