Hermès Faces Class Action Suit Over Birkin Sales Practices

[haute okole]

This a very interest and eye opening take that I had never considered. I give everyone the benefit of the opnion that people are inherently good and SAs only “enjoy” the power to say no to someone who they feel deserves a no. Whereas, there is discomfort in saying no to eager fans and thus the curt and uncomfortable behavior from SAs that can be interpreted as rudeness. My hard line stance on this lawsuit is that this is a Federal Court lawsuit. This is a huge deal, in front of a serious venue that deals with serious legal issues. @Veritybelle accurately stated, there are some things the law and courts will not compensate you for. Although you never know, I doubt the court will order Hermes to sell Plaintiffs or anyone else a Birkin when they walk in the door. That is essentially what Plaintiffs are requesting.

 

[MonsoonBirkin]

The amended complaint has dropped. IMO, it's better in terms of its clarity and argumentation. My stray thoughts:

It clarified what in the world it meant by various markets. Essentially: Hermes has enough of a monopoly in the exclusive handbag market (agreed, and they gave some well-cited, interesting analysis). This market power with the Birkin is then exploited in the tying market over which it does not have as much influence: things like RTW, home goods, jewelry, etc. In other words, it leverages the fact that consumers really want a Birkin (which has a monopoly in the luxury handbag market) to get them to buy things (in the ancillary market) they may not necessarily want. They allege that's tying, and it violates antitrust laws. I thought it clever that they cited the amount of pristine H items for sale and noted it was higher than other luxury brands to illustrate that people are buying items they don't necessarily want. So, finally--the markets/monopoly point is clarified. I get it now.

A fault I found was that the complaint still did not flesh out how other brands are harmed by Hermes's competitive advantage arising from its tying. When the judge is basically telling you verbatim, "how is this anti-competitive? I'm seeing Hermes's actions as being pro-competitive"... well, I'd expect to see this addressed. It wasn't. And if it's the job of the plaintiffs to only defend the consumer and not necessarily explain how other businesses are harmed by this tying, then I didn't find the complaint as something that will garner much sympathy based on the wording:

Specifically, Plaintiff Cavalleri purchased, among other items, a Vetiva Tonka fragrance and aHermes polo hat, as well as clothing, housewares, scarves, blankets, hats and shoes totallingthousands of dollars. Plaintiff Yang, purchased, among other items, shoes, clothing, a belt and atie totaling thousands of dollars.57. Plaintiffs have suffered injury as a result of Defendants’ unlawful practice, including but not limited to, being required to expend money to purchase Ancillary Products from Defendants."

It's no secret that I've been vocal in my belief that H business practices are ethically/legally questionable and predatory. But when I read this, I laughed and thought, "Aw, buying that polo hat she didn't really want must've been quite the injury!" I would have re-worded this section (even just dropping the class-laden words, "polo" and "tie" could've helped), especially because the judge has already expressed trepidation over the fact that we're dealing with luxury goods and not something more serious.

More claims for relief were added, alleging false advertising, common law fraud, and misrepresentation. I was hoping this would happen, though it did go in a different direction than what I would've figured.

On these claims, the points are interesting. Consumers want a Birkin. They see the bag advertised on the website and in print. When they go to the store, they're told--either directly or implicitly--that they need to buy other things. They then buy other things. They still don't get a Birkin. How, then, can the bag actually be touted as being for sale or "available?" It'd be nice if something as simple as one sentence on their website about the Birkin's availability can be magnified to show the overarching issue of the H game. I've seen this happen in cases before, where something seemingly trivial becomes the lynchpin. It prob won't happen here, but it's at least one of their better points that I genuinely hope prevails.

I still differ with the Plaintiffs on a key point: they say H tells consumers to buy ancillary items in order to purchase a Birkin. I say the bigger issue is that Hermes merely infers--and not outright says anything--related to the ancillary items required to buy a Birkin. I get that their claims regarding tying, anti-competition, etc, are stronger when they assert that H outright states consumers must buy other items to get a B. But my issue is the ambiguity, as I believe that's when it becomes unlawfully deceptive: for ex (as per someone's YT video that I'm too lazy to find right now) mentioning one might be in line for a special order if they want to take a look at the watch section, buying a watch, and then having to come in several more times to purchase other things for the SA to make good on their innuendo. As the plaintiffs word the situation, an existing, valid defense the company has is, "We don't tell consumers anything as it relates to acquiring a Birkin. We make no promises or assurances that buying something will lead to a Birkin." This, to me, is the indictment; not a defense.

 

[textilegirl]

..... They see the bag advertised on the website and in print. When they go to the store, they're told--either directly or implicitly--that they need to buy other things. They then buy other things. They still don't get a Birkin. How, then, can the bag actually be touted as being for sale or "available?" It'd be nice if something as simple as one sentence on their website about the Birkin's availability can be magnified to show the overarching issue of the H game....

I'm not sure I've seen a Birkin listed on a website since, maybe, ever, or at least not in so many years that I'm not sure it's relevant. I think it's hard to argue the Birkin is 'touted...for sale or available' except on reseller websites. Do you think the plaintiffs' or the judge will think that's a key element of the case?

I'm sure the plaintiffs would love to find such a simple sentence; it's called a 'smoking gun'

I've no doubt the amended complaint is cleaned up somewhat, but I'm still unclear about whether an actual claim has been stated under US anti-trust laws. I even take issue with the fact that Hermes has a monopoly in the luxury handbag market; there are other other bags made at luxury prices, even some that look vaguely like a Birkin, are similarly difficult to source, and are promoted on social media and fashion sites (looking at you The Row's Margaux). I'm certainly not the judge who's trying this case and who will be finding legal facts, but I still think this luxury market monopoly claim has problems.

Still here with popcorn....

 

[MonsoonBirkin]

I'm not sure I've seen a Birkin listed on a website since, maybe, ever, or at least not in so many years that I'm not sure it's relevant. I think it's hard to argue the Birkin is 'touted...for sale or available' except on reseller websites. Do you think the plaintiffs' or the judge will think that's a key element of the case?

I'm sure the plaintiffs would love to find such a simple sentence; it's called a 'smoking gun'

I've no doubt the amended complaint is cleaned up somewhat, but I'm still unclear about whether an actual claim has been stated under US anti-trust laws. I even take issue with the fact that Hermes has a monopoly in the luxury handbag market; there are other other bags made at luxury prices, even some that look vaguely like a Birkin, are similarly difficult to source, and are promoted on social media and fashion sites (looking at you The Row's Margaux). I'm certainly not the judge who's trying this case and who will be finding legal facts, but I still think this luxury market monopoly claim has problems.

Still here with popcorn....

Yeah, the argument's clear but I do recognize that's not the same thing as being a good one. They gave useful stats/metrics at least: for ex, positing the position of Hermes bags as being the vast majority of ones sold above $20k. While I don't think companies should be punished for creating a desirable product, that also hasn't stopped other anti-trust suits with other monopolistic products. I wonder if barrier to entry is a determinant with these decisions? Ie, it's not easy building a compatible operating system or a power company, but anyone can make a handbag? I dunno.

Birkins are certainly never listed for sale but IIRC, I have seen verbage like what was shared in the amended complaint. I'm also pretty sure that in some magazines that include Hermes photoshoots and spreads, there's been a Birkin with its price (along with the name and price of everything else worn/used by the models). I believe it's a very fair argument to make that this is deceptive/false advertising. We all know that the Birkin's price tag is not the true cost because it doesn't include the pre-spend. Even those who adore the brand acknowledge this. Heck, our vocabulary for H actually include phrases that only exist with Hermes like "pre-spend ratio." 🤦‍♀️

I do think the added claims for relief are the better arguments, but I also raise my hand to say they're just the ones I understand a lot more. I'm in the weeds with anti-trust. But it's really unfortunate for the plaintiffs that the judge--who IS an expert on these matters--also can't seem to make heads or tails out of the anti-trust claims here. That's on the plaintiffs.

On the one hand I'm glad for the extra relief claims because they are, to me, the superior arguments. On the other hand, if the judge tosses the case then it makes it very difficult for anyone else to raise these claims later. I don't think the plaintiffs have done justice with their single paragraph add-ons to what I see are very real problems with Hermes's business practices.

 

[CTLover]

The amended complaint has dropped. IMO, it's better in terms of its clarity and argumentation. My stray thoughts:

It clarified what in the world it meant by various markets. Essentially: Hermes has enough of a monopoly in the exclusive handbag market (agreed, and they gave some well-cited, interesting analysis). This market power with the Birkin is then exploited in the tying market over which it does not have as much influence: things like RTW, home goods, jewelry, etc. In other words, it leverages the fact that consumers really want a Birkin (which has a monopoly in the luxury handbag market) to get them to buy things (in the ancillary market) they may not necessarily want. They allege that's tying, and it violates antitrust laws. I thought it clever that they cited the amount of pristine H items for sale and noted it was higher than other luxury brands to illustrate that people are buying items they don't necessarily want. So, finally--the markets/monopoly point is clarified. I get it now.

A fault I found was that the complaint still did not flesh out how other brands are harmed by Hermes's competitive advantage arising from its tying. When the judge is basically telling you verbatim, "how is this anti-competitive? I'm seeing Hermes's actions as being pro-competitive"... well, I'd expect to see this addressed. It wasn't. And if it's the job of the plaintiffs to only defend the consumer and not necessarily explain how other businesses are harmed by this tying, then I didn't find the complaint as something that will garner much sympathy based on the wording:


It's no secret that I've been vocal in my belief that H business practices are ethically/legally questionable and predatory. But when I read this, I laughed and thought, "Aw, buying that polo hat she didn't really want must've been quite the injury!" I would have re-worded this section (even just dropping the class-laden words, "polo" and "tie" could've helped), especially because the judge has already expressed trepidation over the fact that we're dealing with luxury goods and not something more serious.

More claims for relief were added, alleging false advertising, common law fraud, and misrepresentation. I was hoping this would happen, though it did go in a different direction than what I would've figured.

On these claims, the points are interesting. Consumers want a Birkin. They see the bag advertised on the website and in print. When they go to the store, they're told--either directly or implicitly--that they need to buy other things. They then buy other things. They still don't get a Birkin. How, then, can the bag actually be touted as being for sale or "available?" It'd be nice if something as simple as one sentence on their website about the Birkin's availability can be magnified to show the overarching issue of the H game. I've seen this happen in cases before, where something seemingly trivial becomes the lynchpin. It prob won't happen here, but it's at least one of their better points that I genuinely hope prevails.

I still differ with the Plaintiffs on a key point: they say H tells consumers to buy ancillary items in order to purchase a Birkin. I say the bigger issue is that Hermes merely infers--and not outright says anything--related to the ancillary items required to buy a Birkin. I get that their claims regarding tying, anti-competition, etc, are stronger when they assert that H outright states consumers must buy other items to get a B. But my issue is the ambiguity, as I believe that's when it becomes unlawfully deceptive: for ex (as per someone's YT video that I'm too lazy to find right now) mentioning one might be in line for a special order if they want to take a look at the watch section, buying a watch, and then having to come in several more times to purchase other things for the SA to make good on their innuendo. As the plaintiffs word the situation, an existing, valid defense the company has is, "We don't tell consumers anything as it relates to acquiring a Birkin. We make no promises or assurances that buying something will lead to a Birkin." This, to me, is the indictment; not a defense.

My two cents. It's precisely that she was only buying this stuff to get a bag that led to her not getting the bag. I've bought plenty of items in Hermès, but I've wanted every single item and use every single item. Hermès is keeping these bags for the true lovers of the brand.

 

[DoggieBags]

My two cents. It's precisely that she was only buying this stuff to get a bag that led to her not getting the bag. I've bought plenty of items in Hermès, but I've wanted every single item and use every single item. Hermès is keeping these bags for the true lovers of the brand.

That’s not exactly true either or there wouldn’t be so many brand new in box Hermes bags advertised by resellers.

 

[textilegirl]

That’s not exactly true either or there wouldn’t be so many brand new in box Hermes bags advertised by resellers.

Exactly. I think Hermes is perfectly happy to take the money but they're attempting to balance 'greed' with longevity so the 'rules' are both opaque and fluid. Because they sorted out the family issues years ago, they've been able to chart a course unfettered by pesky demands from investors/shareholders and enjoy the luxury to do pretty much what they wish. The course they've charted isn't palatable to these plaintiffs but I think it's hard to muster up a lot of moral outrage over $10K + handbags, and even harder, IMO, to articulate a legal wrong.

 

[CTLover]

That’s not exactly true either or there wouldn’t be so many brand new in box Hermes bags advertised by resellers.

Interesting, I just read "Bringing Home the Birkin." Very interesting account of someone who essentially travelled the world buying Birkins to sell to resellers. He cultivated people around the world to get Birkins for him, and it was quite interesting how he did it. However, I think when you're dealing with a local boutique, many SAs do know how to tell the true lovers from the ones just out to get a birkin who will disappear afterwards. I know plenty of people, like myself, who truly love the brand and manage to score BKCs without spending tens of thousands of dollars to get them. That said, I also think it depends on the store.

 

[papertiger]

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.

1. Other brands' bags are available.

2.B, K, and Cs are readily available to buy through resellers. Depending on the popularity of combo (size/leather/colour) it's possible to get a bag in excellent condition for less than new.

3. Very few clients that are lucky enough to be offered a Q bag get one in exactly the combo they are dreaming of. Should they sue too?

4. Other bags are available at the store and also through resellers.

 

[CTLover]

1. Other brands' bags are available.

2.B, K, and Cs are readily available to buy through resellers. Depending on the popularity of combo (size/leather/colour) it's possible to get a bag in excellent condition for less than new.

3. Very few clients that are lucky enough to be offered a Q bag get one in exactly the combo they are dreaming of. Should they sue too?

4. Other bags are available at the store and also through resellers.

I always felt, if all you want is a BKC and really don't want anything else, then you should just go to a reseller and get what you want. Yeah, it's more expensive, particularly for new bags, but you're paying the premium to get exactly what you want (which many of us who buy from the boutiques still have trouble getting) and you "save" the cost of buying other stuff.

 

[haute okole]

The plaintiffs attorney failed to cure the problem in their still deficient Federal Complaint. Although they seek jurisdiction in Federal court primarily by citing Hermes’ violation of US Federal Anti-trust laws, plaintiffs have not spelled “out how competition is being affected adversely… No client says I had an Hermes belt shoved down my throat, but I really wanted a Prada belt.” Quotes are by presiding Judge Donato to Plaintiffs counsel. Thank you, your Honor.

The only competition being stifled is the people who want a Birkin now, right now, because they want one right now, just because they have a credit card to pay for it. Never mind that there is 2500 other people who also want it right now, and by comparison, are a little late in the line.

For those who are confused about how anti-trust fits in this scenario, look to the legislative history of what the original drafters of the Anti-trust laws intended. Anti-trust laws are to protect the process of commerce and prevent restraint on trade and prevent monopolies. I don’t blame anyone for being confused about how anti-trust laws apply, because THEY DO NOT APPLY in this case and the Judge stated the same.

Judge Donato specifically stated that Hermes can run its business any way it wants, including producing 5 Birkins and charging millions of dollars for them. He suggested that Hermes business model is pro-competition because anyone who did not want to play along can purchase luxury handbags elsewhere. No monopoly if you can buy luxury handbags, including Birkins, elsewhere, that is not Hermes.

 

[880]

@haute okole , @textilegirl , or anyone, I don’t really remember civ pro, but why wasn’t this case dismissed under failure to state a claim upon which relief can be granted 12(B) 6. . . Would that not apply here. . .

 

[haute okole]

@haute okole , @textilegirl , or anyone, I don’t really remember civ pro, but why wasn’t this case dismissed under failure to state a claim upon which relief can be granted 12(B) 6. . . Would that not apply here. . .

Great question! Hermes filed a Motion to Dismiss pursuant to 12(b)6, which I have attached for your perusal. I assume a Motion to Dismiss the Second Amended Complaint would be successful because Plaintiffs counsel failed to take heed of any of the Judge’s criticism of the initial Complaint’s failures. I can only opine that the Judge proceeded with caution in denying the first Motion to Dismiss when he warned Plaintiffs that the Complaint was factually and legally defective. Judge Donato gave Plaintiffs leave to fix or Amend their Complaint. However, Plaintiffs continue to allege the SAME defective underlying facts and circumstances that the judge stated were not supportive of triggering the Federal Anti-Trust law protections.

https://fingfx.thomsonreuters.com/gfx/legaldocs/movalxbbwpa/Cavalleri-v-Hermes%20Motion%20Dismiss%2020240509.pdf

 

[880]

Great question! Hermes filed a Motion to Dismiss pursuant to 12(b)6, which I have attached for your perusal. I assume a Motion to Dismiss the Second Amended Complaint would be successful because Plaintiffs counsel failed to take heed of any of the Judge’s criticism of the initial Complaint’s failures. I can only opine that the Judge proceeded with caution in denying the first Motion to Dismiss but warned Plaintiffs that the Complaint was factually and legally defective. Judge Donato gave Plaintiffs leave to fix or Amend their Complaint. However, Plaintiffs continue to allege the SAME defective underlying facts and circumstances that the judge stated were not supportive of triggering the Federal Anti-Trust law protections.

https://fingfx.thomsonreuters.com/gfx/legaldocs/movalxbbwpa/Cavalleri-v-Hermes%20Motion%20Dismiss%2020240509.pdf

Thank you. I appreciate this.

 

[textilegirl]

Thank you. I appreciate this.

@haute okole, I concur counsel

I’m guessing because it’s a somewhat novel claim the judge gave them some leeway to amend, but that’s plaintiff’s opportunity to get the legal arguments nailed down. The plaintiffs don’t have to do more than allege facts, those will be challenged/proven at trial. But they do have to articulate a sound legal claim, even if it’s a new one.

I don’t know which law school has what clinical specialties at this point in my very lapsed career, but there are likely a few doing some sort of anti-trust or consumer fraud work. That’s where I would have gone for free help if I were serious about the legal case, especially if my clients weren’t prepared to fund a legal campaign against a well prepared and deep pocketed defendant.

Just because it’s a novel legal theory doesn’t mean it doesn’t have value, but you have to actually make the legal arguments, not simply assert something is unfair and that the law should step in and fix it.