Be Careful What You Write In Emails.

Be careful what you write in emails – your opponent might read them someday.   

Ron Johnson is the chief executive officer of J.C. Penney.  According to a published news report, he engaged in discussions with Martha Stewart to sell some of her items in J.C. Penny stores, despite Ms. Stewart having an exclusive contract with Macy’s.  Mr. Johnson reportedly tried to side-step the contract by creating independent Martha Stewart stores within J.C. Penney stores.

According to the report, while independent stores are allowed under the Macy’s contract, J.C. Penney did not lease space to Martha Stewart Living Omnimedia (MSLO).  Instead, Mr. Johnson reportedly testified in court that J.C. Penney, and not MSLO, would set prices for the merchandise, decide when it would be promoted, employ the people who sold the goods, own the goods, source the goods, book the sales, bear the risk and own the shop, J.C. Penney nonetheless insists that any space displaying the Martha Stewart mark and containing Martha Stewart merchandise qualifies as an MSLO store.

It was reported that Mr. Johnson insisted that he was not inducing Ms. Stewart to breach her contract with Macy’s.  However, he admitted in an email to Ms. Stewart that her contract with Macy’s was “a major impediment” to their deal to sell her goods in J.C. Penney stores and, in a separate email, he reportedly said, “Macy’s deal is key. We need to find a way to break the renewal right.”

The emails, which emerged in a New York courtroom where Macy’s has accused J.C. Penney of inducing Martha Stewart to breach her contract with Macy’s, do not bode well for Mr. Johnson and J.C. Penney.  Macy’s is also attempting to block J.C. Penney from opening Martha Stewart stores in J.C. Penney stores.

The judge has ordered the parties to pursue mediation to resolve the matter.

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