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J.C. Penney interfered with Macy’s deal with Martha Stewart: judge

Posted by: Admin | Posted on: June 16th, 2014 | 0 Comments

NEW YORK (Reuters) – J.C. Penney’s pact with Martha Stewart Living Omnimedia to sell a line of home goods interfered with an exclusive deal between the celebrity’s company and Macy’s, a New York judge ruled on Monday.

In his ruling, however, Justice Jeffrey Oing of New York state court limited the damages that Macy’s could obtain.

Oing said Penney might be liable for damages over designs that Martha Stewart Living prepared for Penney and sold under a “JCP Everyday” label.

But, Oing said, despite bad behavior by Penney’s officials, Macy’s failed to prove by “clear, unequivocal and convincing evidence” that it was entitled to punitive damages.

“The behavior exhibited by JCP’s top executives, with JCP board ratification, has been less than admirable,” the judge said.

He noted that Penney terminated its chief executive officer, Ron Johnson, on April 8, 2013, before the trial ended, and called him “a casualty of his own hubris.”

The judge said JCP, its board and top executives were “publicly ridiculed and humiliated,” and that the strategy was a “colossal” failure that placed Penney on the verge of financial collapse. “These significant facts are a sufficient deterrent to JCP and other companies from acting in a similar way in the future,” the judge said.

The judge referred the issue of damages to a referee or special hearing officer.

Macy’s sued Penney and Martha Stewart Living after the two announced a partnership in December 2011. Macy’s said the agreement breached its contract with Martha Stewart that included exclusive rights to Martha Stewart-branded cookware, bedding and bath products.

In October, Penney and Martha Stewart Living announced a revised agreement that eliminated Stewart’s products in home goods categories to which Macy’s claimed exclusive rights.

In early afternoon trading, Macy’s shares were unchanged at $57.40, while JCPenney was down 7 cents at $8.54.

The case is Macy’s Inc v Martha Stewart Living Omnimedia Inc, 650197/2012, New York State Supreme Court, New York County.

(Reporting By Karen Freifeld; Additional reporting by Jonathan Stempel in New York; Editing by Richard Chang)

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