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Macy's claims breach of contract over Martha Stewart goods

There was the possibility that a business dispute between J.C. Penney Co., Macy's Inc. and Martha Stewart Living Omnimedia Inc. might get resolved during a month of court-recommended mediation, but alas, not so. The parties are back in court, and testimony is underway in a non-jury trial.

The companies are fighting over which department store has the rights to purvey Martha Stewart's line of home products. When it became known that J.C. Penney had plans of selling Martha Stewart merchandise, Macy's named J.C. Penney and Stewart's company in a lawsuit, pointing to a contract that apparently gives Macy's exclusive rights to sell the Stewart line.

Heavy-hitting executives, along with Stewart herself, have testified so far.

The litigation comes as J.C. Penney tries to turn around a business trajectory that one major shareholder has called "something very close to disaster." Pershing Square Capital Management, which is the retailer's largest shareholder, is managed by William Ackman. He recently spoke at a conference organized by Thomson Reuters and declared that "some very big mistakes had been made," but that Ron Johnson, who heads up J.C. Penney, was working hard to revamp the business.

It would appear that J.C. Penney's Martha Stewart announcement is part of that risky turnaround.

The kind of risk and struggle illustrated in this story are common to many business disputes. If they can, business owners and shareholders would undoubtedly prefer to avoid litigation, but sometimes going to court is unavoidable. In these cases, Los Angeles business owners need a solid legal strategy to protect their reputations and their profits.

Source: Los Angeles Times, "Macy's, J.C. Penney in court after talks on Martha Stewart wares fail," Tiffany Hsu, April 8, 2013

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