Penney Sued For Allegedly Breaking Contract With 'Square' Designer

Date : 04/25/2012 @ 12:01PM
Source : Dow Jones News
Stock : J.C. Penney Company Holding Company (JCP)
Quote : 5.58  -0.15 (-2.62%) @ 5:16PM

Penney Sued For Allegedly Breaking Contract With 'Square' Designer

JC Penney (NYSE:JCP)
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J.C. Penney Co. (JCP) is being sued by a lighting design firm that alleges the retailer reneged on an agreement to build the new lighted-square frames that grace the retailer's entrances.

Hudson & Broad of New York alleges that Penney contracted the firm to design and make the squares but, after only a limited amount were manufactured, Penney told Hudson & Broad it no longer needed its services. The suit, which was filed Wednesday, alleges breach of contract and misappropriation of trade secrets. It was filed in U.S. District Court for the Southern District of New York and seeks $40 million in compensatory and punitive damages. A J.C. Penney spokeswoman didn't immediately respond to a request for comment.

"I clarified several times with Penney that what we were doing was proprietary," said James Maharg, president of Hudson & Broad.

The squares are part of the cosmetic changes being made by Penney, which envisions multiple stores-within-stores at its locations, a mock town square in the center and generally improved looks at the locations. The illuminated squares, among other measures, are meant to represent its new strategy of offering "fair and square" deals.

The changes, which also include no longer offering coupons and very little discounting, are coming under former Apple Inc. (APPL) retail chief Ron Johnson, who became chief executive in November.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com




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