Macy's Case Summary

Martha Stewart and Macy’s signed a contract saying that Macy’s could sell Martha Stewart branded products in Macy’s stores, including exclusive items like kitchenware and bedding. Over the years, Macy’s has made a massive profit from this line. Without consent, Stewart and JcPenneys made a deal saying that JcPenneys could sell home décor products out of Martha Stewart store-within-a-store locations at Penney’s stores. Macy’s sued them both for a breach of contract, and violating the terms of its original contract with Martha Stewart Living. Macy’s wanted JcPenneys to take certain items off of their shelves and demanded compensation for loss of profits. JcPenneys and Martha Stewart responded that the agreement they encountered with one

another was an exception that was included in the contract with Macys and Martha Stewart. JcPenneys gave up all of their core home décor products and was left with items like rugs and window treatments. The decision of the case between Macy’s and the other two parties (JcPenneys and Martha Stewart), was that JcPenneys interfered with an exclusive contract between Macy’s and Martha Stewart Living Omnimedia.

Macy’s won the case. JcPenneys disagreed and appealed the case. The case went to the New York appeals court. The New York Supreme Court Appellate Division, First Judicial Department, restored claims alleging that JcPenneys persuaded Stewart to reveal confidential information about its contract with Macy’s and engaged in unfair competition. The appeals court said that JcPenney’s desire to have Martha Stewart’s company breach its contract with Macy’s was intentional, but declined to award punitive damages. The appeal decision was made by Judge Jeffrey K Oing, who after a six-week bench trial in 2013, rule that J.C. Penney had interfered with the contract between Stewart and Macy’s, paying the way for Macy’s to claim lost profit-related damages in the high-profile case. Macys was represented by Theodore Grossman of Jones Day, and he said that J.C. Penney is now in a worse position for having appealed. During the course of the trial, the top executive from all three companies took a stands including Macy’s CEO Terry Lundgren, and former J.C. Penney CEO Ron Johnson. J.C. Pennney argued on appeal that the contract between Stewart’s company and Macy’s was vague and did not prevent a side deal allowing J.C. Penney to set up mini Martha Stewart stores within J.C.

Penney locations. The appellate court reversed the trial’s court dismissal of two claims. The case between these companies went back and forth. After a bench trial but before the court rendered its final decision, Macy’s settled its case against Stewart, leaving all claims against J.C. Penney before us. J.C. Penneys did not have to pay for punitive damages. I disagree with the decision of the case between these two parties. I feel that JcPenneys ought to have been punished with punitive damages to make them pay for the crime they committed. It will also deter them from committing this crime again in the future with other retailer companies.