Macy's, Martha Stewart Living Reach Settlement

, The Litigation Daily

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It's been six months since Macy's Inc. wrapped up its well-publicized bench trial against Martha Stewart Living Omnimedia Inc. and J.C. Penney Corporation. Rather than wait any longer for a decision from New York Supreme Court Justice Jeffrey Oing, Macy's and MSLO have taken matters into their own hands and reached a confidential settlement. J.C. Penney isn't part of the deal, however, and Oing could still put the rival retailer on the hook for millions of dollars in damages.

Macy's announced the settlement on Thursday, saying it resolved its claims that MSLO breached a distribution deal by partnering with J.C. Penney. The deal does not resolve tortious interference claims Macy's brought against J.C. Penney. In a statement of its own, MSLO said that "the terms of our settlement are confidential, will not be disclosed, and are not deemed to be material to MSLO."

Theodore Grossman of Jones Day represents Macy's. MSLO has Eric Seiler of Friedman Kaplan Seiler & Adelman. J.C. Penney has Mark Epstein of Munger Tolles & Olson.

Macy's has sold Martha Stewart–branded home goods since 2007. In 2011 MSLO struck a deal to sell certain categories of goods at J.C. Penney stores. As part of the deal, J.C. Penney got a 17 percent stake in MSLO and two seats on MSLO's board. Macy's brought suit against MSLO in January 2012, claiming the J.C. Penney deal breached it's own deal with Stewart's company. Three months later, Macy's sued J.C. Penney. MSLO brought breach of contract counterclaims, alleging that it was Macy's that breached by displaying Martha Stewart–branded items in a way that favored other brands.

Oing consolidated the cases for a bench trial on the issue of liability. Witness examinations were held in March and April of 2013, and the judge finally heard closing arguments at the end of July.

Macy's and J.C. Penney haven't settled, though J.C. Penney did agree in October to revise its 2011 distribution agreement with MSLO. Grossman, Macy's lawyer, claimed victory at the time, since the revised deal cemented the terms of a preliminary injunction Oing granted to Macy's in 2012.

Thursday's deal between Macy's and MSLO is broader. It resolves Macy's breach of contract claim, as well a counterclaim that MSLO raised at trial.

Grossman declined to comment. Seiler, MSLO's lawyer, was not immediately available for comment.

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