Blog: Disorder in the Court

Martha Stewart

Martha Stewart

Big-time court cases bring out the urge for me to play prosecutor. Thus, the Macy’s v. Martha Stewart and J.C. Penney trial, now in its third week, has me—figuratively, at least—at the trial, seated before judge and witness stand, ready to put the heat on the defendants.

The trial has produced at least two memorable moments thus far. The first is Terry Lundgren’s testimony of the now-infamous phone call on Dec. 6, 2011, right after Ms. Stewart’s company, Martha Stewart Living Omnimedia, completed the J.C. Penney deal. What joy to have been a fly on the wall when Mr. Lundgren hung up on Ms. Stewart.

Memorable Moment Number Two was when, in her testimony, Ms. Stewart said she believed that her company was allowed to design home products for J.C. Penney even in the face of the Macy’s contract. In another part of her testimony, however, she said she didn’t participate in the negotiations with Macy’s. How, then, did she know what the Macy’s contract allowed or didn’t allow, if she wasn’t involved in putting it together?

Having put these episodes aside, if it please The Court, I would like to take the unusual step of putting Ms. Stewart and Ron Johnson, J.C. Penney’s battle-crunched CEO, on the stand together. I do this because my questions to them are the same.

First, Ms. Stewart and Mr. Johnson: Didn’t you consider, before entering into this deal, that Macy’s might, just might, react by suing you? Did you think that Mr. Lundgren was going to greet this news over the phone with, “Well, them’s the breaks?”  Hanging up on you, Ms. Stewart, was probably the most polite thing he could do. Suing was in the cards all along.

Given that fact, Ms. Stewart and Mr. Johnson, I now ask this: Ms. Stewart, your company’s financials have been bloodcurdling for some time. Mr. Johnson, you reached this deal with Ms. Stewart while concocting one of the most ambitious and dangerous remakes of a retailer in the industry’s history—one that has, thus far, produced some of the worst financial results since humans began to count money, and now has J.C. Penney shareholders and media pundits building your personal guillotine.

Facing the certain pressures of having to pay attorneys’ fees, plus the possibility that you would also have to pay damages to Macy’s, why did the two of you think that this deal made any sense?

Your Honor, I rest my case.—David Gill