RR Donnelley lawsuit: Martha Stewart Living should pay $7.7 million for broken printing deal

Jonathan Bilyk May 20, 2015, 12:16pm

Chicago-based printer R.R. Donnelley & Sons has sued the publisher of several of Martha Stewart’s magazines, alleging Stewart’s media company violated the term of its printing deal with Donnelley, costing the printer more than $7 million.

Donnelley brought the action on May 19 in Cook County Circuit Court against the New York-based Martha Stewart Living Omnimedia (MSLO), a conglomerate overseeing production of Martha Stewart’s media empire.

Those media products include magazines bearing Stewart’s name, including “Martha Stewart Living” and “Martha Stewart Weddings.”

According to the Donnelley complaint, MSLO and Donnelley struck a deal under which Donnelley would print the magazines, and MSLO “guaranteed Donnelley $28.6 million in manufacturing revenue” through June 2017.

However, in October 2014, MSLO shifted production of the magazines, including the functions of “advertising sales and circulation” to Des Moines, Iowa-based media production and publication company Meredith Corporation. The complaint alleges, following the shift, Meredith contacted Donnelley and informed the printer they “would not honor the pricing terms agreed to by” Martha Stewart’s company.

This, Donnelley asserts, has forced it to grant Meredith discounts on Stewart’s magazines and other titles Donnelley prints for Meredith “in order to mitigate its damages and retain its work printing the MSLO magazines.”

Donelley said these discounts have come despite language in its agreement with MSLO, which Donnelley alleges would require “obligations” performed on behalf of MSLO by “other parties” to be “performed on the same terms and conditions agreed to by MSLO and Donnelley.”

Donnelley said the “new, discounted pricing scheme” it has operated under since Meredith assumed control of some of the aspects of the Martha Stewart titles will cost Donnelley more than $5.6 million through the end of Donnelley’s printing contract in 2017.

Additionally, Donnelley said the discounted pricing it felt compelled to offer Meredith for its additional publications, to retain its printing work for the Martha Stewart magazines, will cost the printer an additional loss of more than $2.1 million through Decemeber 2022.

In all, Donnelley estimated its losses from MSLO’s alleged violation of the printing contract would total more than $7.7 million.

Donnelley said it “has made multiple demands to MSLO to agree to pay the aforementioned lost profits,” but to date, it alleges Martha Stewart’s company has refused.

In all, the two-count breach of contract complaint asks the court to award more than $7.74 million in damages.

Donnelley is represented in the action by attorneys Jeffrey L. Widman, Terence G. Banich and Allison B. Hudson, of the firm of Shaw Fishman Glantz & Towbin, of Chicago.

More News