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Commercial dispute between Macy's and J.C. Penney ends

The battle between Macy's and J.C. Penney has been resolved after a judge handed down an anticlimactic ruling on June 16. While the judge did find that J.C. Penney had improperly interfered with the deal between Martha Stewart Living Omnimedia Inc. and Macy's Inc., he also ruled that Macy's had not proved that it should receive punitive damages.

According to reports, the dispute started 2 1/2 years ago after J.C. Penney made a deal in December 2011 in which it spent $38.5 million for a 17 percent stake in Martha Stewart Living. The purchase was reportedly part of a plan that would allow J.C. Penney to make a comeback. Macy's sued Martha Stewart Living the following month, however, alleging breach of contract. Macy's claimed that a deal the company made with Martha Stewart Living gave Macy's exclusive rights to Martha Stewart Living merchandise in the dinnerware, kitchen textiles, bedding, bath products and cookware categories. Macy's filed suit again J.C. Penney several months later in August 2012.

The chief executive officer of J.C. Penney has since lost his job, and the judge presiding over the cases said that this, coupled with the embarrassment that J.C. Penney executives and directors suffered during the trial, was punishment enough. He did leave the door open for Macy's to be awarded damages for lost profit. However, he referred that aspect of the case to another party.

This case is a clear example of how important it is for Maryland businesses entering into legally=binding contracts to understand all the terms of the contract as well as the possible consequences if the terms are violated. In breach of contract situations, it may be necessary for a company to pursue business litigation against the offending party to regain lost profits.

Source: Bloomberg, "J.C. Penney Interfered With Macy-Stewart Deal, Judge Says" Chris Dolmetsch, Jun. 16, 2014

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