There is an interesting trial going on in New York involving Macy’s, Martha Stewart, and J.C. Penney.
Martha Stewart and Macy’s signed a contract several years ago in which Macy’s obtained the exclusive rights to sell Martha Stewart products in various categories like linens, home décor, and cookware. The exclusivity part of the deal meant that Martha Stewart couldn’t sell her products through any other “department store.”
Enter J.C. Penney. It wanted to sell Martha Stewart products, and she wanted to sell her products in its stores. But the Macy’s contract seemed to pose an insurmountable obstacle. Then the lawyers for Martha Stewart and J.C. Penney had a bright idea.
The Macy’s contract allowed Martha Stewart to sell her products through Martha Stewart stores. So the lawyers decided it would be OK if Martha Stewart sold her products at J.C. Penney if it was done as part of a Martha Stewart “boutique.” They called it a “store-within-a-store.” Through that little bit of clever lawyering, they claimed that Martha Stewart wouldn’t be selling her products in another department store, which would run afoul of the Macy’s contract.
Macy’s, of course, didn’t see things that way and sued. And it doesn’t appear that the judge sees things that way either. Last July, he granted Macy’s an injunction, essentially rejecting Martha Stewart’s and J.C. Penney’s interpretation of the contract. One retail analyst has said that this trial could be a “fatal blow” to the already floundering J.C. Penney.
Martha Stewart and J.C. Penney could have avoided this mess if their lawyers had told them “no,” that Martha Stewart couldn’t sell the same products she was selling at Macy’s at J.C. Penney because of her contract with Macy’s.
What can we learn from this? You want a lawyer who can think creatively and strategically to find ways for you to accomplish your objectives. You want your lawyer to find ways to say “yes” when you ask whether you can do something. But sometimes you need your lawyer to tell you “no,” because sometimes that’s the right answer.