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J.C. Penney Asks Court to Dismiss Suit

Retailer was sued in April by design firm Hudson + Broad over the Plexiglas LED square used in its “Fair and Square” campaign.

NEW YORK — J.C. Penney Co. Inc. on Wednesday asked a court to dismiss a lawsuit filed by design firm Hudson + Broad over the Plexiglas LED square used in the retailer’s “Fair and Square” campaign.

This story first appeared in the May 31, 2012 issue of WWD.  Subscribe Today.

Hudson + Broad, based here, filed the suit on April 25 in Manhattan’s U.S. District Court alleging breach of contract and misappropriation of trade secrets. The firm is seeking $20 million in compensatory damages and an additional $20 million in punitive damages.

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Hudson + Broad said that by spring, Penney’s had stopped communicating with the firm. Nor did the court receive acknowledgment of the lawsuit from Penney’s. Because Penney’s failed to meet the statutory deadline set by the Federal Rules of Civil Procedure, the Clerk for the Southern District of New York on Tuesday filed a certificate of default against J.C. Penney.

Penney’s answered back on Wednesday, asking the court to vacate the certificate of default. Penney’s also entered a motion to have the complaint dismissed by the court.

Hudson + Broad said it will respond vigorously to both motions, adding it is confident of the merits of the case. “We will respond with the appropriate arguments to the court by July 13,” said James Maharg, president of Hudson + Broad. Penney’s has until July 27 to respond to Hudson + Broad before the case goes before a judge.

Maharg said he was asked by Penney’s in December to develop a unique fixture with the promise that the proprietary product, if accepted, would only be ordered from Hudson + Broad and that the concept would not be misappropriated and bid out to other manufacturers. Penney’s approved an initial order of 1,800 units for 700 stores. According to the suit, J.C. Penney’s procurement department on April 3 told Hudson + Broad that the retailer had sourced the custom-designed proprietary fixtures elsewhere.

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Asked for comment on the case, a Penney’s spokeswoman said, “We don’t comment on pending litigation.”

In the meantime, Hudson + Broad has taken its message public — on YouTube. In one video, Maharg tells Penney’s chief executive officer Ron Johnson, “Ron, I’m asking you to stand by your mission statement. You said you’re simply going to treat other people the way we want to be treated ourselves.” In another video directed at Penney’s spokeswoman Ellen DeGeneres, Maharg said, “Ellen, you should be aware that we filed a lawsuit against J.C. Penney. Recently you said publicly, as Penney’s spokeswoman, ‘We’re simply going to treat people as we’d like to be treated ourselves, fair and square.’ I’d like to ask you, Ellen, to ask Ron Johnson, is the way J.C. Penney treated Hudson + Broad, fair and square?”