Martha Stewart Living Seeks to Appeal Macy’s Suit Ruling

Martha Stewart Living Omnimedia Inc. (MSO) filed a notice of appeal in a lawsuit by Macy’s Inc. in New York state Supreme Court in Manhattan, according to court records.

Macy’s sued in January to stop New York-based Martha Stewart Living from executing a sales agreement that was announced in December with Plano, Texas-based J.C. Penney Co. (JCP), saying it has the exclusive right to sell Martha Stewart-branded products in certain categories.

Justice Jeffrey K. Oing in Manhattan last month granted Cincinnati-based Macy’s a preliminary injunction blocking New York-based Martha Stewart Living from taking any steps under the agreement with J.C. Penney.

Martha Stewart Living is seeking reversal “on the grounds that the Supreme Court granted plaintiffs’ motion for a preliminary injunction based on an erroneous interpretation” of the pact with Macy’s Merchandising Group and “an incorrect application of the legal standards for a preliminary injunction,” according to a court filing dated today.

Oing said that Macy’s (M) had shown that it was likely to prevail on its breach-of-contract claim as it had established that Martha Stewart Living’s agreement with J.C. Penney was “mutually incompatible” with the Macy’s pact when it concerns exclusive products, and would suffer “irreparable harm” if those products were sold at J.C. Penney.

‘Good Faith’

Martha Stewart Living argued in the court documents filed today that sales under the J.C. Penney agreement aren’t slated to start until March and Macy’s hasn’t shown it’s being harmed by preparations.

“The record in fact shows that since the announcement of the JCP agreement, MSLO has continued to work in good faith with MMG, sales of Martha Stewart collection items at Macy’s have not declined, and overall Macy’s sales have increased considerably,” lawyers for Martha Stewart Living said in the court documents.

J.C. Penney acquired a 17 percent stake in Martha Stewart Living for $38.5 million as the U.S. department-store chain seeks to revive sales with new mini-stores dedicated to the home goods brand.

Martha Stewart Living said last month J.C. Penney agreed to pay at least $282.9 million in sales commission over a 10-year period under an amended agreement, a $110.5 million increase from the terms disclosed in December. The amended pact also added new products.

Jim Sluzewski, a spokesman for Macy’s, declined to comment on today’s filings in a telephone interview.

The case is Macy’s Inc. v. Martha Stewart Living Omnimedia Inc., 650197/2012, New York state Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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