Plaintiffs are increasing the number of claims in a case involving the sale of Hermès Birkin handbags

Two people who are suing Hermès for allegedly tying the availability of its coveted Birkin handbags to sales of “additional” Hermès products – and allegedly violating US antitrust and competition laws in doing so – want to increase their claims against the French luxury goods brand. Following Hermès’s headline-grabbing motion to dismiss the case earlier this month, plaintiffs Tina Cavalleri and Mark Glinoga are doubling down on their claims in a newly filed amended complaint, arguing that Hermès has sufficient power in the luxury goods market that ” systematically used… to employ a deceptive and manipulative pricing scheme.”

In an amended complaint filed May 30 in the U.S. District Court for the Northern District of California, as first reported by TFL, Cavalleri and Glinoga (“plaintiffs”) seek to reject Hermès’s arguments that their original complaint does not properly define the market for related products, and does not allege that the famous fashion brand has market power in this properly defined market for related products, that it has excluded other sellers of allegedly related products, and that it has intentionally acquired or maintained monopoly power.

In this context, Cavalleri and Glinoga argue in their amended complaint that the relevant market at issue is the “market or submarket for luxury handbags in the United States” and that Hermès “exercises significant power” in that market because of the existence of the “iconic bag Birkin, limited production and high demand.” In particular, they claim that “Hermès’ dominant position in this market, characterized by high barriers to entry and brand recognition, enables (it) to control prices and engage in the anti-competitive conduct alleged herein to the detriment of consumers.”

Regarding Hermès’ share of the luxury handbag market, the plaintiffs claim that exact figures are not publicly available. The available information “strongly suggests” that Hermès has a “significant presence and dominance in the luxury handbag market” and that it will maintain “a significant share of the luxury handbag market in 2023.”

The plaintiffs point to a number of “statements and testimony by (Hermès) relating to the relevant market and its market power,” including a 2023 universal registration document in which Hermès said it “has a unique position in the luxury market” and a letter to shareholder report in March 2024, in which Hermès stated that it “continues to strengthen its position as one of the best performing companies in the luxury and cosmetics sector in the MSCI ESG, Moody’s ESG and Sustainalytics rankings.” (Note: It is not immediately clear (at least to me) what the significant connection is between Hermès’ alleged dominance in the luxury handbag market and its performance on various ESG indices.)

Intended to further distinguish the luxury handbag market from the “general handbag market,” the plaintiffs allege that luxury handbags, such as the Birkin bag, “are characterized by handmade or artisanal construction, exceptionally high prices often exceeding tens of thousands of dollars, and unique manufacturing processes that emphasis on high-quality materials and craftsmanship.

While the plaintiffs argue that Hermès maintains a dominant position in a potentially quite broad “luxury handbag market,” they also appear to confirm their earlier argument that Hermès operates in an entirely separate market. For example, Cavalleri and Glinoga say that the “exclusivity, limited availability and iconic status of the Birkin bag make it difficult to find a perfect replacement” for the Birkin bag. There may be some “potential substitutes for cross-flexibility purposes,” but these alternatives, which “consist primarily of high-end products from elite designers and luxury brands such as Gucci, Prada and Louis Vuitton, nevertheless lack unique brand identity and exclusivity , which define Birkin bags, making them imperfect substitutes,” they argue.

This “limited substitutability enhances the market power of Birkin bags and enables (Hermès) to engage in anti-competitive practices,” Cavalleri and Glinoga claim.

As for Hermès’ allegedly illegal activities, the plaintiffs allege that the company “took advantage of the unique characteristics of the luxury handbag market, including its relative inflexibility and affluent consumer base, to adopt a pattern of anticompetitive behavior.” Specifically, they claim that “by leveraging the unique brand identity, craftsmanship and exclusivity of the Birkin bag that cannot be easily replicated by other high-end brands, (Hermès) has created a market with a limited number of direct substitutes, enabling them to maintain supra-competitive prices and engage in unlawful restraints of trade, including alleged illegal tying arrangements.

“Not only does this predatory practice increase the true price of the Birkin bag – which includes the cost of these forced purchases of additional products – but it also generates additional revenue for (Hermès) from consumers who never “qualify” and are left with additional Hermès products that they would never have otherwise considered.” they bought it if it weren’t for the desire to get a Birkin bag,” the defendants argue. “This scheme constitutes a gross abuse of market power and intentionally defrauds consumers, causing significant financial harm to the class (of potential plaintiffs).”

The case concerns Cavalleri et al. v. Hermès International et al., 3:24-cv-01707 (N.D. Cal.)