Hermès Faces Class Action Suit Over Birkin Sales Practices

[MonsoonBirkin]

Much of the "juicy stuff" that haters are hoping to see from Hermes being forced to release company records at Discovery is a naive fantasy imo and not applicable to proving the plantiff's case.

Hm, what makes you say this? From my understanding of civil law I thought discovery could certainly include business records that would include training manuals, orientation videos, and definitely subpoenas of staff members... is this incorrect? I wasn't aware that you're a lawyer (congrats if you are because law school is no joke!) but if you--or anyone else here is--I welcome hearing what limitations would be placed on discovery.

Considering how many companies have been caught with their pants down during the discovery phase, I'm not so sure "naive fantasy" is the right way to put it. You're right that it may never get to that phase--probably won't--but H wouldn't be exempt from disclosing relevant materials.

 

[acrowcounted]

Hm, what makes you say this? From my understanding of civil law I thought discovery could certainly include business records that would include training manuals, orientation videos, and definitely subpoenas of staff members... is this incorrect? I wasn't aware that you're a lawyer (congrats if you are because law school is no joke!) but if you--or anyone else here is--I welcome hearing what limitations would be placed on discovery.

Considering how many companies have been caught with their pants down during the discovery phase, I'm not so sure "naive fantasy" is the right way to put it. You're right that it may never get to that phase--probably won't--but H wouldn't be exempt from disclosing relevant materials.

Relevant information, yes. Full client purchase histories, including which clients got which bags (as another poster suggested earlier), no.

 

[haute okole]

I think most people distill the conversation down to spending because of the belief that, generally speaking, it is the most heavily weighted factor for a bag offer. Is that something you disagree with? And as you implied (correct me if I'm wrong since I def don't want to put words in one's mouth) is the pressure SAs place on clients to spend in certain depts a myth?

I'd appreciate @haute okole further clarifying her position because she shared the words of an SA that did make it sound like spending was not at all a factor. Kindness was the sole factor for that SA. If I've misunderstood this and it was a turn of phrase, then I welcome any correction, there.

I also wonder what you meant by "fairness" as it relates to H's B/K allocation as you said in an earlier comment. Can you cite any example of an Hermes practice that you say is "fair" that isn't ALSO a good business decision? And when a fairer system exists altogether--including the one promoted by the lawsuit of laying out any available items on the floor for any customer willing to pay the price... is that really an apt word for its corporate ethos? Pre-emptorily going to say that H has no obligation to be fair (pending lawsuit not withstanding). You used the word, though, and I'm interested in your choice of it.

Ha, to quote Kevin Lee from the Real Housewives, “This is Beverly Hills, Baby! She, she, she, Poo, Poo, Poo!” Just kidding. I can only tell you about my first hand experience and my conversations with my SA. Not only has he never pressured me, but he is also not taking any new clients. I have never asked him, but I doubt he has to ask his set of clients to buy more to meet his sales goals.

Regarding discovery, it is VERY broad but there are privileges and exceptions that make certain documents and/or witnesses not discoverable ie trade secrets, lawyer/client, etc. This can be a huge trial within a trial which require a document depository and discovery referees…

 

[fabdiva]

This is just my speculation because I am not affiliated with Hermes or their attorneys. I am familiar with Corporate defense litigation and typically Hermes will have an insurer who will hire litigation counsel. Plaintiffs have no attorneys fees because their attorneys appear to be contingency fee attorneys and will only collect a fee when/if they win. The Plaintiffs attorneys collectively would take 33 1/3% of the award pre trial. If there is a judgment after trial commences, Plaintiffs attorneys are entitled to 40% of the judgement. Plaintiffs, the two individuals so far, are responsible for all costs such as filing fees, photo copying costs, depositions costs, etc. Costs can be substantial and anybody who joins this class should be aware that they will shoulder costs. If plaintiffs lose, the plaintiffs must pay the cost of litigation and Hermes’ attorneys fees.

Hermes insurers will pay for the defense of the case and money awarded to Plaintiffs if the claim and award are covered claims under the insurance. Insurers typically recommend settling a case for “nuisance value” just to get rid of a case because the cost of litigation is burdensome even when Plaintiffs have a meritless Complaint. In a Federal Action, I would not be surprised if Hermes’ insurer recommends settling the case for $50k just to make the case go away. I also would not be surprised, given the publicity, that Hermes would rather fight for a dismissal.

Edit to add, Hermes trade secrets are not discoverable and that will be a whole separate fight if Plaintiffs fight the trade secret issue. Business practices that are not trade secrets are discoverable.

I agree with 99% of this. I do corporate defense litigation. I think the one caveat I would say, is that generally trade secrets are not discoverable. Hermes has to establish whatever information it is seeking to protect is a trade secret, i.e. customer information. Once that burden is met, it shifts to the plaintiff to establish that the trade secret is necessary for the fair adjudication of the claims.

 

[haute okole]

I agree with 99% of this. I do corporate defense litigation. I think the one caveat I would say, is that generally trade secrets are not discoverable. Hermes has to establish whatever information it is seeking to protect is a trade secret, i.e. customer information. Once that burden is met, it shifts to the plaintiff to establish that the trade secret is necessary for the fair adjudication of the claims.

Absolutely agree

 

[textilegirl]

@MonsoonBirkin, I've been thinking more about your question regarding whether Hermes artificially restricts its supply, and I wanted to add that in some ways, I think France and French culture restrict supply. It would seem that the entire country shuts down in August and during certain holiday periods. It's my understanding that it's actually illegal to eat lunch at your desk (I seem to recall some kerfluffle about this recently and there was considerable pushback from the workforce). I don't think the notion of 'overtime' is common, and many shopkeepers close up during the middle of the day to take their lunch breaks. The culture is very different from what we are used to in the US and I suspect the differences may be a factor in how one interprets Hermes' actions in this regard. Do I think that in the face of increasing demand Hermes would require or even ask it's employees to work during August, even if they offered incentivizing compensation for them to do so? No, I don't because I don't think it's a cultural norm in France to work the hours we here in the States often do. (Just look at the recent Yellow Vest and other protests against Macron's pension reform agendas.). If the answer is to open more production facilities and hire more workers it would seem that Hermes has done that, although perhaps not in time to meet the desires of the plaintiffs in this case. (And the facilities look gorgeous!)

Just some further thoughts...

 

[Grand Maven]

I agree with 99% of this. I do corporate defense litigation. I think the one caveat I would say, is that generally trade secrets are not discoverable. Hermes has to establish whatever information it is seeking to protect is a trade secret, i.e. customer information. Once that burden is met, it shifts to the plaintiff to establish that the trade secret is necessary for the fair adjudication of the claims.

Would revealing trade secrets damage Hermes? Surely it's better to settle than to show the world what you're cooking with?

 

[haute okole]

I am not Fab Diva, trade secrets are not discoverable in the US. Corporate manuals, bylaws, operations etc are discoverable even if they prove embarrassing to Hermes and helpful to Plaintiffs.

Also, please note that these Plaintiffs are wacky because they are LA residents suing a corporation domiciled in France and their New York offices, but chose a San Francisco courthouse. I mean, hello! I am sure the San Francisco judge is going to eyeroll all over the place.

 

[Veritybelle]

@MonsoonBirkin, I've been thinking more about your question regarding whether Hermes artificially restricts its supply, and I wanted to add that in some ways, I think France and French culture restrict supply. It would seem that the entire country shuts down in August and during certain holiday periods. It's my understanding that it's actually illegal to eat lunch at your desk (I seem to recall some kerfluffle about this recently and there was considerable pushback from the workforce). I don't think the notion of 'overtime' is common, and many shopkeepers close up during the middle of the day to take their lunch breaks. The culture is very different from what we are used to in the US and I suspect the differences may be a factor in how one interprets Hermes' actions in this regard. Do I think that in the face of increasing demand Hermes would require or even ask it's employees to work during August, even if they offered incentivizing compensation for them to do so? No, I don't because I don't think it's a cultural norm in France to work the hours we here in the States often do. (Just look at the recent Yellow Vest and other protests against Macron's pension reform agendas.). If the answer is to open more production facilities and hire more workers it would seem that Hermes has done that, although perhaps not in time to meet the desires of the plaintiffs in this case. (And the facilities look gorgeous!)

Just some further thoughts...

I'd also add that Hermès has built its reputation for quality by insisting on its production standards. By their very nature those standards are not the easiest to scale, and thus place a natural limit on production. H is under no obligation to lower standards or change its processes (which, after all, are what make a Birkin a Birkin) in order to increase supply just because consumers wish more Birkings were available. As it is posters have commented elsewhere, unfavourably, that there have been QC issues associated with the recent increase in production. So, even if the plaintiffs could establish their case (which I doubt), it's really not clear to me what remedy would actually be possible, or effective.

On the issue of pressure to buy in other métiers, I honestly feel that I have never experienced undue sales pressure of any kind and certainly not with an implied link to the availability of a QB. My SA will show me other options in whatever department I happen to be shopping, and she will remember my previous unfulfilled enquiries and offer new items relevant to those enquiries as they come into the boutique, and she will always ask if there is anything else I'd like to look at. She will also show me things I haven't enquired about if she thinks I might like them. None of these things is the slightest bit unusual or inappropriate - it's a sales relationship. I think this shows some of the cultural difference @textilegirl and others have described - it reflects a tradition of highly qualified sales associates, who know their clients and are valued for their ability to suggest items that will appeal to each client's taste and interest. It's a collaborative relationship, not one in which the sales associate is a minimally trained assistant whose main job is to retrieve items from out the back at the client's request and them ring them up at checkout. The only time I find these customs slightly frustrating is when I am considering a non quota bag and several colour options may be available to me. I don't necessarily want to play a guessing game about which colours are out the back and which I would prefer, and then go through the process of my SA bringing options out one at a time. In that situation, I do want to see them all at once and then decide!

 

[Sevenatenine]

@MonsoonBirkin, I've been thinking more about your question regarding whether Hermes artificially restricts its supply, and I wanted to add that in some ways, I think France and French culture restrict supply. It would seem that the entire country shuts down in August and during certain holiday periods. It's my understanding that it's actually illegal to eat lunch at your desk (I seem to recall some kerfluffle about this recently and there was considerable pushback from the workforce). I don't think the notion of 'overtime' is common, and many shopkeepers close up during the middle of the day to take their lunch breaks. The culture is very different from what we are used to in the US and I suspect the differences may be a factor in how one interprets Hermes' actions in this regard. Do I think that in the face of increasing demand Hermes would require or even ask it's employees to work during August, even if they offered incentivizing compensation for them to do so? No, I don't because I don't think it's a cultural norm in France to work the hours we here in the States often do. (Just look at the recent Yellow Vest and other protests against Macron's pension reform agendas.). If the answer is to open more production facilities and hire more workers it would seem that Hermes has done that, although perhaps not in time to meet the desires of the plaintiffs in this case. (And the facilities look gorgeous!)

Just some further thoughts...

I also want to add that ramping up production to meet the demand of the last few years is near impossible, as their bag artisans take like 4 yrs (I think that's what my SA said but it's been so long so if anyone else knows please correct me!) to be ready to produce on their own. I saw on the H website that they recruit "more than 200 every year" for their leather school, but that doesn't mean they're all going to work on bags, they probably also work on belt/leather rtw, etc.

So each year, they've been producing more with the new artisans being available each year but it's not going to be enough to scale to the demand that's been exploding for the past few years. I agree that they're not limiting supply on purpose.

 

[HeartHermes]

I also want to add that ramping up production to meet the demand of the last few years is near impossible, as their bag artisans take like 4 yrs (I think that's what my SA said but it's been so long so if anyone else knows please correct me!) to be ready to produce on their own. I saw on the H website that they recruit "more than 200 every year" for their leather school, but that doesn't mean they're all going to work on bags, they probably also work on belt/leather rtw, etc.

So each year, they've been producing more with the new artisans being available each year but it's not going to be enough to scale to the demand that's been exploding for the past few years. I agree that they're not limiting supply on purpose.

I've heard the same, that their artisans are not permitted to make a Birkin or Kelly (and probably some other bags) until they've been in training or working with Hermes for 4–5 years. So, I wouldn't think that they could suddenly scale up production overnight or even over a few months. Their bags, though wonderful, are luxury items, so I think it would be foolish of Hermes to risk producing inferior goods, thus damaging their reputation, just to meet an increased demand for a few of their most popular bags.

 

[fabdiva]

Would revealing trade secrets damage Hermes? Surely it's better to settle than to show the world what you're cooking with?

That depends on if they have anything to hide. The plaintiffs would have to show why they're entitled to the information. Discovery can't be used as a fishing expedition. But first they have to get pass a Motion to Dismiss which I'm sure Hermes will be filing.

 

[KristinS]

Agree 100% with you and with @Neeya above. I can just see plaintiffs twisting themselves into a pretzel trying to conflate reading TPF at home with a coercion by the boutique. They cannot accept that with a big brand, for profit, luxury business, the playing field isn’t level for everyone in this rarified group.

Plaintiff A is clearly unhappy she cannot get a second Birkin upon request even though it appears she stopped shopping after obtaining the first. Another poster in this thread wrote that once ‘loyalty’ has been established, it should not have to be renewed (presumably in defense of the plaintiff, idk). If we carried this kind of logic to its natural conclusion, Hermes would be obligated to sell former clients a QB a year upon request indefinitely. More than one SA and SM has spoken to me about fairness which they define as allowing those who don’t have a bag to get a shot. This would be one of many explanations why even those clients who do love the brand and who do spend have to wait (esp. if they have bags already). It may also be why some newcomers to the brand have reported surprisingly greater luck. Most likely, circumstances differ depending on the individual situation.

plaintiff B seems to have simply gone to Hermes multiple times to ask for a QB without demonstrating any interest, never mind purchasing, any other items. He’s a newcomer to the brand who isn’t interested beyond the single transaction. Why would any business want a one time client like him. Why should hermes be obligated to sell to him, when there are, yes, more deserving clients (clients who have the potential and inclination to grow) still waiting.

Those who complain that they are coerced to buy ancillary product should simply not take out their wallets in the Boutique.

Plaintiff B was also involved in a prior class-action lawsuit with Robinhood (I think) While this tidbit of info doesn’t mean he’s litigious, one can certainly infer he’s not afraid or a willing (rather than leading) partner. It’s also interesting the selection of the legal counsel for this lawsuit … covering employment, personal injury to class-action law? Not the type of law firm I’d select with a lack of specialization, but then again, I’m sure this was shopped around and declined by many reputable firms.

 

[haute okole]

Lol, if Plaintiffs are willing to get passed all the international treaty requirements needed to simply serve Hermes France with the Complaint. Just to serve the complaint on an International Defendant costs a Kelly to go.

 

[addiCCted]

how is it relevant whether Hermes stock is artificially or organically low? Even if Hermes slows down production on purpose, is that somehow illegal? Every company should have the right to increase or decrease their production. Is that not right? It’s THEIR business. It’s called strategy. Is it now unethical or illegal to have strategy?