Hermes Wins Second Dismissal in Birkin Bag Antitrust Lawsuit
Luxury fashion house Hermes has successfully convinced a U.S. judge to dismiss for a second time a lawsuit alleging the company violates antitrust law. The plaintiffs, three Hermes shoppers in California, claimed that Hermes unlawfully forces buyers to spend thousands of dollars on other products before they can purchase one of the brand's highly coveted Birkin handbags.
U.S. District Judge James Donato, presiding in San Francisco, rejected the consumers' claims on Wednesday, asserting that Hermes' practices do not constitute an antitrust violation. In his order, Donato stated, "It may be, as plaintiffs suggest, that Hermes reserves the Birkin bag for its highest-paying customers, but that in itself is not an antitrust violation." The judge's decision effectively concludes the matter, as he dismissed the proposed class action with prejudice, meaning the lawsuit cannot be refiled.
The lawsuit, initially filed last year, centered on the accusation that Hermes engaged in "tying," a practice where the purchase of one product (the Birkin bag) is restricted to customers who have established a sufficient sales history with the company. The consumers argued that the widely advertised retail price of a Birkin bag was merely an "illusion," masking a "hidden lottery system" that compels them to acquire substantial amounts of "ancillary products" from Hermes just to "qualify" for the mere chance to buy a Birkin. Furthermore, the plaintiffs alleged that Hermes and its sales staff were aware that many customers induced to purchase these additional items would ultimately not secure a Birkin bag.
In response to the allegations and in seeking the dismissal, Hermes countered by informing Judge Donato that sales of its handmade Birkin bags, which can command prices in the thousands of dollars, take place within a highly competitive market. This argument aligns with previous skepticism expressed by Judge Donato during a hearing last year, when he dismissed an earlier version of the lawsuit. At that time, the judge notably informed the plaintiffs' lawyers that if Hermes "chooses to make five Birkin bags a year and charge a million to them, it can do that," underscoring a company's right to manage its production and pricing.
Neither Hermes, its legal representatives, nor the attorneys for the plaintiffs immediately responded to requests for comment following the recent dismissal. This ruling reinforces the notion that a luxury brand's strategy of creating exclusivity and demand through limited availability, even if it encourages related purchases, does not inherently violate antitrust regulations.
