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Macy's Inc. Prepping for Trial

Retailer filed a pretrial memorandum late Monday night detailing its contract dispute case against Martha Stewart and J.C. Penney Co. Inc.

PREPPING FOR TRIAL: Macy’s Inc. filed a pretrial memorandum late Monday night detailing its contract dispute case against Martha Stewart and J.C. Penney Co. Inc. Macy’s, which has the exclusive right to sell Martha Stewart-branded products, sued Martha Stewart Living Omnimedia Inc. and Penney’s last summer after Stewart inked a deal with Penney’s to create Martha Stewart shops-in-shop. Penney’s also bought a 16.6 percent stake in Martha Stewart Living Omnimedia.

Macy’s, which is seeking to stop the sales agreement between its department store rival and Stewart, won an early victory in July in New York State Court. Presiding Judge Jeffrey Oing awarded Macy’s a preliminary injunction against Martha Stewart, barring the sale of certain home goods at Penney’s. However, the judge also ruled, at a separate hearing, that Penney’s could go forward with its plan to set up Martha shops-in-shop this spring.

The case, which is set to go to trial in New York State court on Feb. 20, will ultimately decide the fate of the cantankerous contract dispute.

In its pretrial documents, Macy’s claimed that it has gathered evidence “documenting” tortious inference by Penney’s as well as a “mass of correspondence” between its rivals, in which Penney’s “demanded and MSLO transmitted Macy’s confidential, proprietary information.” Court papers further allege that negotiations between the defendants were “concealed” from Macy’s until after their deal was signed in late 2011.

Judge Oing will also have to wrestle with Martha Stewart’s counterclaims, which include the claim that Macy’s breached its own agreement by “failing to fulfill the contractual obligation to maximize net sales [of Martha Stewart products].”

For its part, Macy’s is looking for a permanent injunction, damages and attorney’s fees.