There was some good news today for Martha in the trial with Macy’s.
First, it may be useful to back up a bit: The case is actually made up of several different claims, including breach of contract, breach of confidentiality, unfair competition, and tortious interference. In some claims, Macy’s has won injunctions, which are essentially temporary smaller rulings in Macy’s favor while the larger issues are resolved permanently in the courtroom. For example, in one injunction, the judge ruled that Martha may NOT sell items in JC Penney stores until the issue of exclusivity has been resolved completely. Macy’s asked the judge to broaden that existing injunction to include items that were designed by MSLO designers but did NOT have Martha’s name on them. These items are instead branded as “jcp Everyday”. Martha insists that these items–$100 million worth of them are already at distribution centers awaiting shipment to JC Penney stores–do NOT violate the exclusivity clause of her contract with Macy’s. Good News: Today, the judge sided with Martha, so these “jcp Everyday” items will begin appearing in JC Penney stores very soon!
However, the judge ruled that the trial would continue on to the next phase. You see, up to this point, Macy’s has been doing all the talking, as they present their case that MSLO violated the exclusivity clause of their contract. Today, the judge took into account all that Macy’s has presented thus far and agreed that may in fact be true. That’s the bad news. The good news is that the trial now shifts to a new phase; one in which MSLO gets to present THEIR side of the story to counter Macy’s claim. Go get ’em, Team Martha!
It is important to note that the judge in this case is still imploring the three parties involved to reach a settlement among themselves, without a judge’s ruling. Contract disputes such as this one are not entirely uncommon, and are often resolved with a financial settlement. In this case, JC Penney and MSLO could buy-out Macy’s contract (or just the exclusivity clause of the contract) although that seems unlikely, given the degree to which Macy’s seems to rely on the Martha Stewart Collection to generate traffic in its stores. By allowing the trial to go forward, and relying on the judge’s ruling, either party risks losing entirely.