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Macy's Sues Martha Stewart for Breach of Contract

CNBC and wires
Monday, 23 Jan 2012 | 5:17 PM ET

Macy's is suing Martha Stewart Living Omnimedia for breach of contract by agreeing to sell certain products through J.C. Penney that Macy's considered exclusive.

J.C. Penney bought a minority stake in the domestic diva's company for $38.5 million in December.

Steven Senne

As part of the 10-year deal, J.C. Penney planned to create Martha Stewart retail stores within most of its stores starting in February 2013. The stores will carry home goods and other items that will be chosen by Martha Stewart and her team, and marketed by J.C. Penney.

That got Macy's attention.

Macy's says Martha Stewart Living granted it the exclusive right to make and sell certain products under a 2006 agreement, according to a New York state Supreme Court filing Monday.

Macy's is seeking a preliminary injunction stopping Martha Stewart from violating the contract. It also is seeking an order sealing the lawsuit and motion, saying it is prohibited from disclosing certain information.

The court filing does not detail the products in question.

Martha Stewart Living agreed "to grant Macy's the exclusive right to manufacture and sell Martha Stewart branded products in certain exclusive product categories," Robert Micheletto, a partner at Jones Day who represents Macy's, wrote in court papers.

"In direct violation of the terms of the agreement, MSLO recently announced it has entered into an agreement with" J.C. Penney to sell Martha Stewart products that fall into Macy's exclusive product categories, the papers claim.

Martha Stewart Living did not immediately return a call for comment. Neither did JC Penney or Macy's. The case is Macy's Inc. v. Martha Stewart Living Omnimedia, Inc., 650197/2012, New York state Supreme Court (Manhattan).

The Associated Press and Reuters contributed to this report.

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