Judge Denies Extending Preliminary Injunction Against JCP, Martha Stewart

PHOTO: Martha Stewart arrives at New York State Supreme Court in New York, March 5, 2013.Seth Wenig/AP Photo
Martha Stewart arrives at New York State Supreme Court in New York, March 5, 2013.

The judge presiding over Macy's lawsuit against Martha Stewart and J.C. Penney ruled on Friday to allow the sale of Martha Stewart merchandise in J.C. Penney stores.

Judge Jeffrey Oing of the Supreme Court of the State of New York only gave a partial ruling in a case involving Stewart and two of the country's best-known retailers.

Macy's and J.C. Penny are still battling over the right to sell Stewart's products. In the meantime the judge has decided J.C. Penney can sell some of her home goods, over the objection of Macy's which says it has the exclusive on her sheets, towels and cookware.

Macy's sued Martha Stewart Living for breach of contract in 2012, saying an agreement to sell products at J.C. Penney in 2011 ran counter to Stewart's deal with Macy's in 2006. Macy's then sued J.C. Penney last year, saying it interfered with its contract.

The parties were ordered into mediation but failed to reach an out of court agreement by the deadline of April 8. Judge Oing has said he would prefer the retailers to come to some accord.

These sales, though a bit of good news for the embattled J.C. Penney, might have to stop for good depending on the final outcome of the case.

On Monday, J.C. Penney announced that it was replacing former CEO Ron Johnson with his predecessor, Myron Ullman.

Read more: JCP Leads Top 7 Recent CEO Disasters

The items covered by today's ruling do not carry Stewart's name but were designed for J.C. Penney by her company. Macy's had wanted the judge to ban its rival from selling anything connected to Martha Stewart and plans to appeal. The ruling frees up about $100 million worth of merchandise J.C. Penney had sitting in storage.

Read more: J.C. Penney Moves Forward with Martha Stewart Rollout Despite Macy's Lawsuit

Martha Stewart, 71, testified on March 5, saying she believes her company was permitted to sell products with her name in places besides Macy's.

"There were categories that were non-exclusive to Macy's that we could sell in other department stores," she said in court last month.

J.C. Penney Co. CEO Ron Johnson and Macy's Chief Executive Terry Lundgren have also testified.

"We are disappointed in today's decision, which is, by its nature, a preliminary ruling and not a final determination of Macy's claims," according to a statement provided by a Macy's spokesman. "We disagree with the court's decision to deny extending the preliminary injunction, and plan to file an immediate appeal. We are confident of a successful outcome in the appeal and ultimately in the litigation."

Macy's points out that the court's original preliminary injunction, granted in July 2012, remains in effect. That injunction prevents the sale of Martha Stewart-branded and Martha Stewart-promoted projects in Macy's exclusive categories at J.C. Penney, Macy's said.

A spokesman for J.C. Penney said the company was "pleased with the court's ruling to allow the sale of jcp everyday merchandise in our stores."

Martha Stewart Living has argued its contract with Macy's allowed it to sell Martha Stewart branded products that were in exclusive categories if they were sold within Martha Stewart Living Omnimedia stores in J.C. Penney.