July 13 (Bloomberg) -- Macy’s Inc. was granted a preliminary injunction in its lawsuit against Martha Stewart Living Omnimedia Inc. over an agreement to sell products in J.C. Penney Co. stores.
Justice Jeffrey K. Oing of New York state Supreme Court in Manhattan said after a hearing today that he was granting Macy’s motion for a preliminary injunction blocking Martha Stewart Living from taking any steps under the agreement with J.C. Penney on making, marketing, distributing or selling certain Martha Stewart-branded products involved in the dispute, including bedding, bath, kitchen textiles, dinnerware and cookware.
Macy’s sued in January to stop New York-based Martha Stewart Living from executing a sales agreement that was announced in December with J.C. Penney, saying it has the exclusive right to sell Martha Stewart-branded products in certain categories.
Oing said that Macy’s 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.
“The scales tilt in favor of Macy’s,” Oing said.
J.C. Penney, based in Plano, Texas, 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 yesterday said 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 adds new products.
“Macy’s is pleased with the court’s granting of a preliminary injunction,” Jim Sluzewski, a spokesman for the company, said in an e-mailed statement. “We expect to continue to exclusively sell Martha Stewart-branded merchandise in categories such as cookware, kitchen utensils, bed and bath for the term of our contract, which currently extends to January 2018.”
The judge’s ruling is preliminary and Martha Stewart Living will continue to defend its “legal and commercial position,” Sarah Brown, a spokeswoman for the company, said in a statement.
“We continue to believe that we have not breached our agreement and that extending our brand to a wide array of retailers is beneficial to all our partners,” she said.
Darcie Brossart, a spokeswoman for J.C. Penney, didn’t respond immediately to a request for comment.
The parties are scheduled to return to court in November, and Oing told them to prepare for a trial in the case around that time.
“I think we are teed up and ready to go,” the judge said.
The case is Macy’s Inc. v. Martha Stewart Living Omnimedia Inc., 650197/2012, New York State Supreme Court, New York County (Manhattan).
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