Hermès seeks dismissal of Birkin fraud lawsuit

Hermès International and its U.S. subsidiary (collectively, “Hermès”) are opposing a lawsuit against them for allegedly tying the availability of the coveted Birkin bag to the sale of “ancillary” Hermès products, which the plaintiffs claim violates U.S. antitrust and competition law. In a recently filed motion to dismiss the case, the French luxury brand seeks to avoid a proposed class action lawsuit filed against it by arguing that the plaintiffs have failed to allege sufficient facts to support their antitrust claims, have failed to define the relevant market, and have failed to demonstrate that they maintain the necessary market power to sustain antitrust claims, among other deficiencies.

The lawsuit—originally filed in the United States District Court for the Northern District of California by Tina Cavalleri and Mark Glinoga (“plaintiffs”), and subsequently amended to add new allegations and an additional plaintiff—accuses Hermès of violating federal and state antitrust laws by conditioning access to its coveted Birkin and Kelly handbags on the purchase of other Hermès products, a move that the plaintiffs allege serves to restrict competition and exploit consumer demand.

While the sensational case seeks to hold Hermès liable for allegedly conducting a scheme to “maintain supracompetitive prices and engage in unlawful restraints of trade,” Hermès argues in its July 2 motion to dismiss that even in its amended complaint, the plaintiffs’ allegations “do nothing to cure the fundamental defects in their claims.” Specifically, Hermès argues that the plaintiffs’ claim for binding under Section 2 of the Sherman Act should be dismissed on four grounds…

> Market or monopoly power: Plaintiffs do not allege that it maintains a monopoly position “in any well-defined market,” Hermès claims. While plaintiffs allege that it “dominates the purported luxury handbag market,” Hermès claims that it has failed to present facts that would establish its share of the luxury handbag market, and in fact the complaint admits that it competes with other elite luxury brands such as Gucci, Prada, and Louis Vuitton, thereby “fatally undermining any inference of market power or monopoly power.”

> Deliberate maintenance or seizure of monopoly power: Hermès argues that the plaintiffs do not allege that they have intentionally acquired or maintained a monopoly in the relevant market. Instead, the luxury goods company claims that they have made “a definitive allegation that (it) is dominant” in the market, not as a result of anti-competitive conduct, but due to “a combination of: (1) the success of the Hermès brand; and (2) the reputation of the Birkin bag as a result of the ‘

The problem, according to Hermès, is that “none of this conduct is in the slightest anti-competitive, and the plaintiffs do not claim otherwise.”

> A vibrant market for bundled products:Hermès also maintains that the plaintiffs do not sufficiently present the existence of a real market for tied products or effects, describing their arguments on this front as “ostensibly untenable.” According to Hermès, the plaintiffs wrongly group their products into a single “complementary products” market that includes “different, disparate items” such as jewelry, shoes, perfumes, and household goods, resulting in an “artificial effort” that “legally fails.”

Alternatively, plaintiffs “appear to argue that each category of ancillary products constitutes its own, separate related market,” Hermès states, arguing that even if plaintiffs “could redefine the related market from ancillary products into multiple separate markets for each different product that Hermès sells, this would create a further problem: Plaintiffs have not alleged significant effects on each of those allegedly related markets.”

> Antitrust position: Finally, according to Hermès, there is simply no antitrust harm here. Plaintiffs do not show that they excluded other sellers of allegedly related products, including jewelry, shoes, perfumes and housewares, Hermès argues, and without allegations of exclusion, there is “no viable claim of affiliation or harm to the competitive process.”

In short“The amended complaint does not address the fundamental deficiencies of the original complaint, including the lack of a properly defined market and the absence of credible allegations of market power or anti-competitive conduct,” Hermès argues.

In addition to the Sherman Act objection, Hermès also argues that the plaintiffs’ claims under the California Cartwright Act and California Unfair Competition Law should be dismissed because they do not allege any harm to consumers or distortion of the competitive process.

As for what the plaintiffs claim, Down disclosed in the amended complaint, according to Hermès, is “the real motive for their lawsuit: Plaintiffs want on-demand access to Birkin and Kelly handbags so that they can immediately resell them at higher prices.” If this “doesn’t sound like the basis for a monopoly claim, that’s because it isn’t,” the Birkin maker argues, stating that “nothing in antitrust or unfair competition law compels such a result.” And echoing the claim in its original motion to dismiss, Hermès maintains that “despite the continued baseless allegations in Plaintiff’s amended complaint, Hermès does not require a customer to purchase any other products before purchasing a Birkin or Kelly handbag… but even if it did, it would not violate the law.”

Based on the foregoing, Hermès argues that plaintiff’s claims are insufficient under Federal Rule of Civil Procedure section 12(b)(6), which permits dismissal of complaints that fail to state a claim because plaintiff has failed to allege (among other things) any antitrust or competition harm, which are essential elements of its core Sherman Act binding claim.

A hearing on Hermès’ motion to dismiss the lawsuit will be held on September 19 before Judge James Donato in San Francisco.

This case is Cavalleri et al. v. Hermès International et al., 3:24-cv-01707 (ND Cal.)