Martha Stewart’s company, Martha Stewart Living Omnimedia, has been ordered by a judge in New York to enter mediation with Macy’s and J.C. Penney over a dispute regarding rights to sell merchandise branded by the homemaker icon and entrepreneur.

A trial in the New York State Supreme Court began on February 20^th, but the judge presiding over the trial, Justice Jeffrey Oing, ruled that mediation must occur before April 8^th.  At that point, the non-jury trial will resume. 

According to Judge Oing, “It’s getting very close to a moment we don’t want to get to. It’s reached a critical point in this trial where the business people should take a step back and find some common ground.”

Terry Lundgren, the Chairman of Macy’s, testified that he had not engaged in conversation with Ms. Stewart since December of 2011, at which point he hung up on her.  The telephone call had been initiated by Ms. Stewart to inform Lundgren that her products would also be sold at J.C. Penney rather than exclusively at Macy’s. 

That next day, J.C. Penney publically announced that it held a 17% stake in Martha Steward Living, at the price of $38.5 million.  At the same time, J.C. Penney had been rolling out new incentives to improve sells, including building smaller stores that were dedicated to the Martha Stewart brand, among others. The announcement spurred a lawsuit against Martha Stewart’s company by Macy’s in January of 2012, as the department store claimed exclusive rights to sell Martha Stewart items in particular categories such as cooking and bedding.  It had been selling the Martha Stewart brand for four years. 

Three months after Macy’s sued Martha Stewart’s company, it filed a lawsuit against J.C. Penney, as well.  According to the attorneys who represent Macy’s, J.C. Penney is attempting to “reap the rewards” of Macy’s intensive work on building the Martha Stewart brand, which was sold primarily in Kmart stores after Martha Stewart served her prison sentence. 

Martha Stewart Living claims that the lawsuits are unfounded, particularly since Macy’s is guilty of breach of contract due to stocking and pricing products in such a way that places Martha Stewart products at a disadvantage compared to their own private-label brands.  Stewart’s company also insists that Macy’s was not able to renew its contract in January 2012 due to this breach.