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So much dirt was flying that even Martha Stewart couldn’t clean it all up.
Kicking off a three-week courtroom battle, Macy’s attorneys accused JCPenney CEO Ron Johnson of mounting a futile plot to trick Macy’s CEO Terry Lundgren into dropping its own exclusive home-goods line with Stewart.
Lawyers pointed to a stack of e-mails as evidence of Johnson’s failed scheme to aggressively hype Penney’s new Stewart tie-up in the press, thereby overshadowing her long-running Macy’s line.
“We put Terry in a corner,” Johnson gloated in one message to hedge-fund tycoon Bill Ackman, Penney’s largest shareholder, on Dec. 7, 2011.
That was the day after Penney made the surprise announcement that it had cut a $200 million licensing deal with Stewart while pouring $38.5 million into her cash-strapped company.
“Normally when that happens and you get someone on the defensive they make bad decisions,” Johnson wrote in the e-mail. “This is good.”
Johnson’s plan flopped the following month, when Macy’s renewed its Martha contract for another five years — then sued to block Stewart from putting her name on most of the new Penney line.
Legal eagles for Penney and Stewart countered yesterday that Johnson’s e-mails were taken out of context, and they spent most of their opening arguments sifting through the finer points of Stewart’s Macy’s contract.
In particular, they argued her Macy’s contract leaves a legitimate opening for the plan to open “store-within-a-store” shopping areas inside Penney stores.
“This didn’t have to be and shouldn’t be a blown-up claim by big personalities and a vendetta against Martha Stewart and Ron Johnson,” Mark Epstein, a lawyer for Penney, told New York Supreme Court Justice Jeffrey Oing in opening arguments yesterday.
Attorneys for Macy’s charge that Johnson was reveling in a Machiavellian streak of his own, alleging that he aggressively hunted down a copy of Stewart’s confidential contract with Macy’s even though Stewart’s adviser Blackstone said showing it to Penney would be illegal.
Eric Seiler, a lawyer for Martha Stewart, claimed Johnson was entitled to see the contract because Penney was negotiating its big investment in Martha Stewart Living Omnimedia.
Likewise, Penney’s lawyer Epstein accused Macy’s of equally underhanded legal tactics, including a last-minute ploy to wreak havoc on its home-goods launch slated for May.
Macy’s only recently attacked Stewart’s right to supply goods to Penney stores — even though it had known for months about the plan to brand the goods “JCP Everyday,” Epstein said.
Macy’s wants to “have the boat turn and to go back to China so there will be nothing on the shelves,” Epstein said.
Martha Stewart’s lawyer contended Macy’s has exaggerated its role in the rehabilitation of her brand.
“This would be like Macy’s taking credit for Thanksgiving because they support the parade every year,” Seiler said.