JC Penney CEO Ron Johnson knew that if he signed the deal with Martha Stewart, he would be putting the company in jeopardy by creating a conflict with Macy's, its corporate rival. This stems from Martha Stewart's current deal with the retailing giant.

This was made known through Johnson's testimony in the case Macy's has instituted against JC Penney and Martha Stewart Living Omnimedia Inc. He was asked about an email he wrote to Martha Stewart telling the household icon that she would have to 'break' her agreement with Macy's if he was to 'pull off' a deal with her.

After the December 2011 announcement by Martha Stewart and JC Penney of the launch of the Martha Stewart boutiques, Macy's sued the two companies. Macy alleges that with the deal, Stewart had breached its contract to sell products in specific categories exclusively at Macy's.

The case is being heard before Justice Jeffrey Oing in New York state court in Manhattan without a jury.