It is a bit of a strange story, in that Macy’s is suing Martha Stewart Living Omnimedia – with which they have a contract to exclusively sell MSLO products – for breach of contract while also extending that same contract. The new contract will run until 2018 after a five-year extension was agreed between the companies.
The breach of contract lawsuit, though, is being filed to block MSLO from entering into a different contract with JC Penney, which would grant Macy’s rival retailer the ability to sell Martha Stewart merchandise. This is where the case takes another interesting turn – JC Penney took a major stake in MSLO in December 2011 and made it clear that they intended to open specialized shops inside their stores for Martha Stewart products.
Macy’s lawsuit has two goals. The first is to prevent JC Penney from selling MSLO goods. Macy’s will try to accomplish this with an injunction that would prevent MSLO from violating the terms of their (now extended) deal. The second goal is to keep the matter private, as Macy’s would like an order that seals the details of the case so that prohibited information is not released.
For Macy’s, they are trying to protect their interests as a company, and many business owners would take this course of action if a similar situation were to arise with their company. Contracts, in many cases, are established to mutually benefit multiple parties – but sometimes in business that isn’t a straightforward proposition. This story exemplifies that notion, and it also shows how a well-prepared entity with proper legal representation can secure its business interests.
Source: Reuters, “Macy’s sues Martha Stewart Living,” Jan. 23, 2012