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Legal Matters
6 Months Ended
Jun. 30, 2012
Legal Matters

10. Legal Matters

On May 15, 2012, the Company settled the class action lawsuit, titled Hutt v. Martha Stewart Living Omnimedia, Inc. et al. Under the terms of the settlement, the Company supplemented the disclosures made in the proxy statement for its 2012 annual meeting of stockholders and provided limited confirmatory discovery to the plaintiff. In addition, the Company has agreed to pay the plaintiff’s reasonable attorneys’ fees, the amount of which has not been determined and is subject to Court approval. The Company does not anticipate that the payment of attorneys’ fees will have a material adverse impact on its financial position or results of operations.

On January 23, 2012, Macy’s, Inc. and Macy’s Merchandising Group, Inc. (together, the “Macy’s plaintiffs”) filed a lawsuit against the Company in the Supreme Court of the State of New York, County of New York, titled Macy’s, Inc. and Macy’s Merchandising Group, Inc. v. Martha Stewart Living Omnimedia, Inc. as more fully described in the 2011 Form 10-K. On April 20, 2012, the Macy’s plaintiffs filed an amended motion for a preliminary injunction. On July 13, 2012, the Court held oral argument on such motion and decided to grant a limited preliminary injunction in favor of the Macy’s plaintiffs. On July 31, 2012, the Court entered an order that enjoins the Company, its agents, servants, employees and all other persons acting under the jurisdiction, supervision and/or direction of the Company from performing under the Company’s agreement with J. C. Penny Corporation, Inc. as it relates to the manufacture, marketing, distribution, or sale of any Martha Stewart-branded products in categories that are denominated as “Exclusive Product Categories” in the agreement between the Company and Macy’s Merchandising Group, Inc. If the preliminary injunction becomes permanent, some of the future benefits the Company anticipates receiving from its relationship with J. C. Penney Corporation, Inc. could be reduced. The Company continues to believe that it has meritorious defenses to the claims made by the Macy’s plaintiffs and that it has meritorious counter-claims. It is evaluating whether to appeal the Court’s decision and intends to vigorously defend its position in such litigation.

The Company is party to legal proceedings in the ordinary course of business, including product liability claims for which the Company is indemnified by its licensees. None of these proceedings, individually or in the aggregate, is deemed material.