Hermès Faces Class Action Suit Over Birkin Sales Practices

[Grand Maven]

Plaintiffs Fight Hermès’ Bid to Escape Birkin Bag Scheme Lawsuit

The dismissal-centric arguments put forth by Hermès in response to the Birkin centric lawsuit are “lack merit,” according to the plaintiffs.

www.thefashionlaw.com

 

[luckyadanosii]

Sorry I don't understand.

the plaintiffs take issue with Hermès’ claim that they have fatally failed to allege that it maintains monopoly power “in any well defined market.”

And

And even if it did, they have, in fact, “adequately defined” the market in which Hermès has market power: “Plaintiffs plead that [Hermès’ has] market power in the relevant luxury bag market, and alternatively, [they] plead a ‘submarket,’ [as] the uniqueness of the Birkin bag can create a submarket, a concept related to single-market brands.”

How does Hermes have a defined monopoly? Are they arguing about the Birkin's popularity itself? They think the marketing and resale value (submarket?) is what makes Hermes a monopoly? The other Hermes bags cost as much as other brands... and others have limited bags that cost as much as Birkins.

Like not being funny. The same popularity and submarket exist for Build-A-Bear, with less $$$. Does Build-A-Bear have a monopoly over teddy bears because people want them more...

I don't know what this argument is supposed to do.

 

[MonsoonBirkin]

I get the confusion, @luckyadanosii , since I share it too. The one facet of this lawsuit I never quite understood was the monopoly/anti-trust aspect. I think there was playing fast and loose with that definition of saying "monopoly over the Birkin" and "significant market power in the wider handbag market." Both of those things might be true but then it doesn't answer the question of, "so what?" A news article gave an update of the hearing and quotes the following:

[Judge Donato] also told the plaintiffs' attorneys, "You're going to have to spell out how competition is being affected adversely."

Judge Donato went on to say, "No client says I had an Hermes belt shoved down my throat, but I really wanted a Prada belt."

He added that Hermes can run its business any way it wants, including producing five Birkins a year and charging millions of dollars for them.

He also suggested the business model is pro-competition because anyone who doesn't want to play along can purchase luxury bags elsewhere.


The plaintiff's attorneys asked to amend their lawsuit and return in three weeks.

It wouldn't surprise me if that amended lawsuit comes back and mentions how the plaintiffs themselves routinely chose Hermes items over other brands because it came attached with being "one step closer on the Hermes journey to a quota bag." While I think there are some who claim they'd have bought every H item they have regardless of a B or K offer, and they truly love what they own above and beyond a love for other brands, I definitely think the H game incentivizes people to buy H items even if they like other brand items more. I'll raise my hand and say I'm one of them--I like my Hermes bangle, sure, but I walked away feeling really dumb that I didn't buy an actual gold bangle. Same with my twilly. It's fine, but I paid more than what I personally deemed it worth, esp as I like Emilio Pucci's designs more. Clearly I'm just an anecdote, but if there were enough such customers, would that prove the anti-competition claim necessary for this lawsuit? Don't know the answer. Normally firms have overpriced hired guns in the form of statisticians and data analysts to make this claim in the trial phase, but if you can't open the judge's eyes to the possibility of harmed competition in the pre-trial phase, that goes out the window.

I don't think the plaintiffs are quite conveying to the judge the problem that it ISN'T that Hermes is making 5 birkins and charging millions for them (which agreed--they can do. Yay free market). The issue is the artificial constraint on supply, selling what the company KNOWS is below market value, and doing so as a way of inducing customers to buy ancillary items. Is THAT part okay? This question isn't rhetorical. I don't think the judge quite understands this part, but that's also the fault of the plaintiffs if he does't.

In any case, it's likely this lawsuit is going to get tossed. I'm looking forward to reading the amended complaint in 3 weeks' time. It'll hopefully be the plaintiffs revealing more of their cards knowing they have to shoot their last shot here. I doubt it'll be enough but at least it'll bring the popcorn.

 

[textilegirl]

I get the confusion, @luckyadanosii , since I share it too. The one facet of this lawsuit I never quite understood was the monopoly/anti-trust aspect. I think there was playing fast and loose with that definition of saying "monopoly over the Birkin" and "significant market power in the wider handbag market." Both of those things might be true but then it doesn't answer the question of, "so what?" A news article gave an update of the hearing and quotes the following:



It wouldn't surprise me if that amended lawsuit comes back and mentions how the plaintiffs themselves routinely chose Hermes items over other brands because it came attached with being "one step closer on the Hermes journey to a quota bag." While I think there are some who claim they'd have bought every H item they have regardless of a B or K offer, and they truly love what they own above and beyond a love for other brands, I definitely think the H game incentivizes people to buy H items even if they like other brand items more. I'll raise my hand and say I'm one of them--I like my Hermes bangle, sure, but I walked away feeling really dumb that I didn't buy an actual gold bangle. Same with my twilly. It's fine, but I paid more than what I personally deemed it worth, esp as I like Emilio Pucci's designs more. Clearly I'm just an anecdote, but if there were enough such customers, would that prove the anti-competition claim necessary for this lawsuit? Don't know the answer. Normally firms have overpriced hired guns in the form of statisticians and data analysts to make this claim in the trial phase, but if you can't open the judge's eyes to the possibility of harmed competition in the pre-trial phase, that goes out the window.

I don't think the plaintiffs are quite conveying to the judge the problem that it ISN'T that Hermes is making 5 birkins and charging millions for them (which agreed--they can do. Yay free market). The issue is the artificial constraint on supply, selling what the company KNOWS is below market value, and doing so as a way of inducing customers to buy ancillary items. Is THAT part okay? This question isn't rhetorical. I don't think the judge quite understands this part, but that's also the fault of the plaintiffs if he does't.

In any case, it's likely this lawsuit is going to get tossed. I'm looking forward to reading the amended complaint in 3 weeks' time. It'll hopefully be the plaintiffs revealing more of their cards knowing they have to shoot their last shot here. I doubt it'll be enough but at least it'll bring the popcorn.

That’s the interesting part I think; I’m not so sure that the plaintiffs could prevail on that supply constraint issue any better than, as you say, they could successfully assert that Hermes shouldn’t be allowed to make only five Birkins and charge whatever price they wanted for them. I’m not so sure that Hermes is constraining the scarf market with a $550 silk 90 cm scarf. 🤷‍♀️ Sometimes the legal system simply won’t provide relief for what ails you; bring on the popcorn!

 

[haute okole]

Lol, how embarrassing for the Plaintiffs’ counsel with all their high hopes of getting the BIG BUCKS against Hermes for their Class Action of 3 whiners. Obviously, nobody else in California, or anywhere else, thinks this is valid enough to step up and declare their victimhood. Boohoo, I can’t get a Birkin at an Hermes store, judge, please through the book at Hermes so these three can get relief. Plaintiffs counsel has spent more on ads trying to recruit more “aggrieved” than they will likely see in recovery. Because of the press this suit has received, and the insurance money and money Hermes has, I doubt a settlement will be offered by Hermes.

BTW, I would have more respect for the actual Plaintiffs if they hired good attorneys. Their complaint alone was an embarrassment and a waste of judicial resources.

 

[880]

Sorry I don't understand.

the plaintiffs take issue with Hermès’ claim that they have fatally failed to allege that it maintains monopoly power “in any well defined market.”

And

And even if it did, they have, in fact, “adequately defined” the market in which Hermès has market power: “Plaintiffs plead that [Hermès’ has] market power in the relevant luxury bag market, and alternatively, [they] plead a ‘submarket,’ [as] the uniqueness of the Birkin bag can create a submarket, a concept related to single-market brands.”

How does Hermes have a defined monopoly? Are they arguing about the Birkin's popularity itself? They think the marketing and resale value (submarket?) is what makes Hermes a monopoly? The other Hermes bags cost as much as other brands... and others have limited bags that cost as much as Birkins.

Like not being funny. The same popularity and submarket exist for Build-A-Bear, with less $$$. Does Build-A-Bear have a monopoly over teddy bears because people want them more...

I don't know what this argument is supposed to do.

💯

 

[880]

I was really surprised to see this thread pop up again. @luckyadanosii ’s build a bear analogy is perfect.

To recap what has been stated numerous times in the last 45 pages :

Plaintiffs have never proven the birkin has market or monopoly power. Hermes sells other popular bags like the Kelly or Constance or the Bolide. There are also alternatives at Hermes and elsewhere, as well as other popular bags, like the Chanel classic flap, Gucci; LVMH; Duclos; etc etc.

Plaintiffs also cannot prove there is harm to competition in the tied market. This practice does NOT cause harm to other competitors who sell the shoes or RTW in the luxury marketplace. IMO this should have been dismissed at pretrial for failure to state a claim, but I’m no antitrust expert.

But, you don’t need to be an expert in this field to know that if you have to spend more to buy a birkin, that’s not antitrust. It’s a successful business strategy. Just bc you have the money and want one, doesn’t mean you are entitled bc it’s a limited quantity. Life isn’t fair. As @haute okole says, antitrust law is about protecting other competitors, not ensuring every spoiled Karen one percenter or failed aspirational shopper can get their hearts desire. You can also buy a birkin at a reseller and pay less than retail. I’ve done it multiple times myself.

The fact that there is no definitive formula, like buy two belts and three shoes only, in order to get a bag also makes this a non starter. Plaintiffs are ridiculous, but their lawyers are worse than ambulance chasers.

 

[MonsoonBirkin]

In hindsight I'm wondering if the plaintiffs would have had better luck filing this under consumer protection law. I think there's a FAR better case to be made that dangling a B or K offer with no transparency or definitive formula on how to acquire said item is deceptive and unfair to the consumer.

After all, in every other field I can think of, "being a loyal customer" is either achieved through a clearly defined rewards program or the perks issued are one-off and are not generally an integral part of the business model (the whole "here's a table on a busy night"-reward).

In some ways, it's a shame that this will likely get dismissed and Hermes's practices won't be held under scrutiny. The predatory nature of the H Game is something I find distasteful, but I recognize that's not the same thing as illegal. But I don't think a corporation should, by law, be allowed to make insinuations that if one purchases furniture, they'll get an exotic Kelly pochette, only to reneg/gaslight the consumer. 🤷‍♀️

 

[Gourmetgal]

In hindsight I'm wondering if the plaintiffs would have had better luck filing this under consumer protection law. I think there's a FAR better case to be made that dangling a B or K offer with no transparency or definitive formula on how to acquire said item is deceptive and unfair to the consumer.

After all, in every other field I can think of, "being a loyal customer" is either achieved through a clearly defined rewards program or the perks issued are one-off and are not generally an integral part of the business model (the whole "here's a table on a busy night"-reward).

In some ways, it's a shame that this will likely get dismissed and Hermes's practices won't be held under scrutiny. The predatory nature of the H Game is something I find distasteful, but I recognize that's not the same thing as illegal. But I don't think a corporation should, by law, be allowed to make insinuations that if one purchases furniture, they'll get an exotic Kelly pochette, only to reneg/gaslight the consumer. 🤷‍♀️

Excellent points. It does seem more of a consumer rip-off and abuse especially because the purchase requirement is so arbitrary. Definitely a turn-off to the brand.

 

[haute okole]

Excellent points. It does seem more of a consumer rip-off and abuse especially because the purchase requirement is so arbitrary. Definitely a turn-off to the brand.

Here is the secret sauce to getting what you want, spend money, be lovely, spend money. Very simple. If you don’t have the money, patience or do not want to spend the money and you act like an entitled Karen, chances are low that you will get what you want. If you are an entitled Karen and pretend you are not, trust that the entitled Karen overtakes the conversation because the yuck can’t help itself. Look in the mirror first before blaming anyone around you. Like energy attracts like energy. If you are frustrated, move on to a different SA or store. Don’t be a victim.

 

[Gourmetgal]

Here is the secret sauce to getting what you want, spend money, be lovely, spend money. Very simple. If you don’t have the money, patience or do not want to spend the money and you act like an entitled Karen, chances are low that you will get what you want. If you are an entitled Karen and pretend you are not, trust that the entitled Karen overtakes the conversation because the yuck can’t help itself. Look in the mirror first before blaming anyone around you. Like energy attracts like energy. If you are frustrated, move on to a different SA or store. Don’t be a victim.

I’m sure there are customers who’ve played the game for years, spent so much money and want to justify it all will feel it’s unfair that the rules will change or Hermes will be found guilty of manipulating them. No one likes to be duped.

 

[haute okole]

I’m sure there are customers who’ve played the game for years, spent so much money and want to justify it all will feel it’s unfair that the rules will change or Hermes will be found guilty of manipulating them. No one likes to be duped.

I do have empathy for those who have had bad experiences at Hermes. I, too, have had experiences at one of the stores that left me feeling frustrated and humiliated, FSH. But I moved on, walked into Beverly Hills and have had a great time for over a decade. My comment is directed towards the plaintiffs and anyone who actually believe that they and their attorneys are in this because they seek fair treatment and a Birkin. After litigating in California courts for 2 decades, Federal and State, one can recognize a money grab. This is it. This does not seek any kind of justice for aggrieved victims. This is just a complete waste of judicial resources. These plaintiffs should have gone to Judge Judy.

 

[papertiger]

There are lots of games going on at H IMO, even SAs who just love the power of being able to say "no".

H does an unofficial acquisition reward scheme (often used in marketing). Because it's unofficial (even arbitrary) it also appeals to people who are 'optimistic chancers' (sadly, the same psyche as potential compulsive gamblers). Hearing others got lucky (sometimes mistaken or misleadingly stated) brings a kind of divine/fortunate factor to the (roulette) table. There is no amount of common sense, excel spreadsheet evidence or other statistical data that these people will believe because they have a pet unicorn at home. Couple that with those that are often entitled in every other way and everyday (I don't like the term 'Karen' - but that's basically the type). Now we have a hybrid, the 'entitled chancer'. Privileged people who still chase unicorns ( coz one unicorn is never enough ).

Using the law to make a company sell a person something (when they haven't been discriminated against on any personal grounds) would be at the expense of another client, someone who'd better help facilitate the sustainability of the business and its partners longterm, and is ridiculous. Bags are not just lined-up, sitting round the back, the Q-bags are nearly always already reserved and spoken for.

The problem is obviously not with loyal or established customers, nor new clients that love Hermes and would like a bag. Their scarves, RTW, homeware, equestrian etc is generally 1/3 priced more than other luxury brands (bar a few notables) but it is really good quality and everyday durable, wearable, serviceable and just lovely to use (not just have). The problem is simple, it's about only wanting a Q-bag from H - and wanting it 'now'.

The only thing that makes sense to a new customer that just wants a bag is buy one from a long-standing, highly reputed reseller and still have it authenticated by a professional third party.

 

[allanrvj]

There are lots of games going on at H IMO, even SAs who just love the power of being able to say "no".

H does an unofficial acquisition reward scheme (often used in marketing). Because it's unofficial (even arbitrary) it also appeals to people who are 'optimistic chancers' (sadly, the same psyche as potential compulsive gamblers). Hearing others got lucky (sometimes mistaken or misleadingly stated) brings a kind of divine/fortunate factor to the (roulette) table. There is no amount of common sense, excel spreadsheet evidence or other statistical data that these people will believe because they have a pet unicorn at home. Couple that with those that are often entitled in every other way and everyday (I don't like the term 'Karen' - but that's basically the type). Now we have a hybrid, the 'entitled chancer'. Privileged people who still chase unicorns ( coz one unicorn is never enough ).

Using the law to make a company sell a person something (when they haven't been discriminated against on any personal grounds) would be at the expense of another client, someone who'd better help facilitate the sustainability of the business and its partners longterm, and is ridiculous. Bags are not just lined-up, sitting round the back, the Q-bags are nearly always already reserved and spoken for.

The problem is obviously not with loyal or established customers, nor new clients that love Hermes and would like a bag. Their scarves, RTW, homeware, equestrian etc is generally 1/3 more than other luxury brands (bar a few notables) but it is really good quality and everyday durable, wearable, serviceable and just lovely to use (not just have). The problem is simple, it's about only wanting a Q-bag from H - and wanting it 'now'.

The only thing that makes sense to a new customer that just wants a bag is buy one from a long-standing, highly reputed reseller and still have it authenticated by a professional third party.

word

 

[haute okole]

There are lots of games going on at H IMO, even SAs who just love the power of being able to say "no".

H does an unofficial acquisition reward scheme (often used in marketing). Because it's unofficial (even arbitrary) it also appeals to people who are 'optimistic chancers' (sadly, the same psyche as potential compulsive gamblers). Hearing others got lucky (sometimes mistaken or misleadingly stated) brings a kind of divine/fortunate factor to the (roulette) table. There is no amount of common sense, excel spreadsheet evidence or other statistical data that these people will believe because they have a pet unicorn at home. Couple that with those that are often entitled in every other way and everyday (I don't like the term 'Karen' - but that's basically the type). Now we have a hybrid, the 'entitled chancer'. Privileged people who still chase unicorns ( coz one unicorn is never enough ).

Using the law to make a company sell a person something (when they haven't been discriminated against on any personal grounds) would be at the expense of another client, someone who'd better help facilitate the sustainability of the business and its partners longterm, and is ridiculous. Bags are not just lined-up, sitting round the back, the Q-bags are nearly always already reserved and spoken for.

The problem is obviously not with loyal or established customers, nor new clients that love Hermes and would like a bag. Their scarves, RTW, homeware, equestrian etc is generally 1/3 priced more than other luxury brands (bar a few notables) but it is really good quality and everyday durable, wearable, serviceable and just lovely to use (not just have). The problem is simple, it's about only wanting a Q-bag from H - and wanting it 'now'.

The only thing that makes sense to a new customer that just wants a bag is buy one from a long-standing, highly reputed reseller and still have it authenticated by a professional third party.