Judge threatens J.C. Penney on party ware sales

A New York State Supreme Court judge told

A New York State Supreme Court judge told J.C. Penney Co. Tuesday that it could be liable for damages if it's selling Martha Stewart Living Omnimedia Inc.'s plastic partyware in violation of a court order obtained by Macy's Inc. The three companies returned to court to continue battle over who has the right to sell Martha Stewart goods. (April 9, 2013) (Credit: AP )

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J.C. Penney Co. may be subject to damages if it's selling Martha Stewart Living Omnimedia Inc.'s plastic partyware in violation of a court order obtained by Macy's Inc., a New York State judge said Tuesday.

Macy's, claiming the exclusive right to sell certain categories of Martha Stewart-branded goods, sued J.C. Penney for carrying some of the same merchandise. Macy's this week sought to renew a motion to enforce an injunction it obtained in July, claiming that the partyware is in an exclusive category and that stocking it at J.C. Penney stores violates the court order.

Macy's Monday accused J.C. Penney of selling products in the exclusive categories on its website under the name "Martha Stewart Celebrations," including plastic champagne flutes, wineglasses and pitchers, and asked New York State Supreme Court Justice Jeffrey K. Oing in Manhattan to declare that the products violate the injunction.

"I am not entirely sure that the defendants are taking this as seriously as we are," Michael A. Platt, an attorney at Jones Day who is representing Macy's, told the judge Tuesday before putting two plastic pitchers on the bench to show their similarities. "They should be pulled from the shelves."

DAMAGES WARNING

Oing Tuesday said he would allow attorneys for Texas-based J.C. Penney and New York-based Martha Stewart Living to look into the matter and would listen to oral arguments on the issue on Thursday, April 11.

He declined Tuesday to hear Cincinnati-based Macy's request to argue for an order enforcing the injunction, saying he wants Macy's to finish its case first, while warning that J.C. Penney may be subject to damages if he determines the objects fall under his July sale ban.

"I'd like to still be considered holding the cards," Oing said. "My desire right now is for you to finish your case."

The three sides returned to court Tuesday to resume a trial of Macy's lawsuits following a monthlong break during which mediation efforts ordered by Oing were unsuccessful.

The trial, which began Feb. 20, has included testimony from Martha Stewart, Macy's chairman Terry Lundgren and former J.C. Penney chief executive Ron Johnson, who was ousted Monday.

STAKE ACQUIRED

J.C. Penney in December 2011 acquired a 17 percent stake in Martha Stewart Living for $38.5 million.

Macy's, which has sold Martha Stewart-branded home goods since 2007, sued her company in January 2012, saying it had the exclusive right to sell items in certain categories including bedding and cookware.

Macy's sued J.C. Penney about three months later.

Lawyers for Macy's, the second-biggest U.S. department store chain, have argued that J.C. Penney is trying to "reap the rewards" of its work with the Martha Stewart brand, which the chain says it rebuilt after Stewart's release from prison in 2005, when her products were sold at Kmart and Sears.

Martha Stewart Living has defended its agreement with J.C. Penney, accusing Macy's of breach of contract and saying the retailer stocked and priced Martha Stewart products in a manner that favors private-label brands. Martha Stewart Living also said Macy's couldn't have exercised a five-year renewal option in January 2012 because of the breach.

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