By Adam Pincus
The department store retailer Macy’s filed a lawsuit Friday seeking to prevent the multigenerational real estate firm Kaufman Organization from displaying an Amazon advertisement on billboard space adjacent to Macy’s 119-year-old flagship store on 34th Street at Herald Square in Manhattan.
Macy’s claims Kaufman is prevented from displaying an ad from a retail competitor “forever” due to an alleged restrictive covenant that runs with the land, according to the court filing, available here. Kaufman, for its part, believes the property documents do not prevent it from leasing the billboard to a competitor such as Amazon, the suit says. Macy’s fears an Amazon ad at 1313 Broadway, a holdout building from the days when Macy’s was assembling parcels in the early 1900s to build its iconic department store, would be economically devastating. Macy’s has advertised on the site for 60 years, the suit says.
“The damages to Macy’s customer goodwill, image, reputation and brand, should a ‘prominent online retailer’ (especially, Amazon) advertise on the billboard are impossible to calculate… the negative impact on Macy’s would be immeasurable,” the suit court filing says.
The suit is only the position of Macy’s and court filings are not necessarily accurate or complete. Kaufman has not responded to the suit, according to a review of court records. Amazon is not named as a defendant in the action.
Macy’s latest 10-year lease with Kaufman expired on August 31, 2021, and the large red Macy’s star was taken down. But Macy’s claims that since 1963, and despite the expiration of the latest lease, the restrictive covenant prevents the owner of 1313 Broadway from allowing a Macy’s competitor to advertise on the billboard. Macy’s claims the restriction bars advertising on the building that, “refer[s] directly or indirectly to any establishment selling at retail or directly to any customer.”
The suit says that in May 2021, in anticipation of renewing the lease, which was first signed in some form in 1948, Macy’s reached out to the landlord, and that the Kaufman representative said the firm was in discussions with a very “prominent online retailer.” The suit said, “There was little doubt that [the Kaufman representative] was talking about Amazon on the call.”
Then according to the complaint, after Macy’s reached out in June with no resolution, “On August 20, 2021, counsel for Defendant wrote Macy’s counsel informing Macy’s that [Kaufman] did not believe that it was bound by the Restrictive Covenant, that it has ‘the right to license the sign space to any off-site advertisers’ without restrictions, and that it ‘will proceed with alternative advertisers.'”
Macy’s is asking a judge to confirm that the restrictive covenant is valid and in effect, and to prevent Kaufman from putting up an ad from Amazon or any other retailer.
“Akin to a conquering enemy, it would be as if a competitor hung its ‘flag’ on top of Macy’s flagship department store and announced victory. This cannot happen and the court should grant Macy’s a preliminary injunction so that it will not happen,” the court filing says.
Macy’s filed the suit under the name Macy’s Retail Holdings, LLC, and is suing Kaufman under the name Rockaway KB Company LLC.
Direct link to Acris document. link