Izellah Wang
The MetaBirkin NFT was a hot topic in the intellectual property sphere last year, but now the physical Birkin handbags are at the center of litigation. On March 19, two plaintiffs filed a class action suit against Hermès in the Northern District of California claiming the company’s sales practice of tying ancillary products to the Birkin violated federal and state antitrust law.[1] The Birkin is often touted as a symbol of both wealth and status. To secure an opportunity to purchase the coveted handbag from an Hermès retail location involves not only a minimum of $10,000 but also the ever-elusive achievement of being “deemed worthy to buy.”[2] Consumers can become “worthy” of the Birkin by gaining A-list celebrity status or establishing a sufficient sales profile at Hermès through the purchase of shoes, scarves, belts, jewelry, and home goods.[3] The scarcity and desirability of the handbag has given the fashion house tremendous leverage. One of the plaintiffs claimed that she felt “coerced into purchasing [a]ncillary [p]roducts in order to obtain access,” and the resale market reflects shoppers “who were offered a colorway or style of the handbag that they didn’t prefer but felt that decorum dictated they couldn’t turn the offer down.”[4]
Could customers who obtained their dream Birkin by spending time and money curating Hermès branded goods have unintentionally abetted the fashion house in violating antitrust law?
The plaintiff’s argument hinges on the Sherman Act and the California Cartwright Act. Plaintiffs claim that the Birkin handbag purchase process—especially the compensation scheme for sales associates that grants commission only to ancillary products and not the Birkin—is equivalent to a prohibited tie-in arrangement under antitrust law.[5] As the name implies, a tie-in arrangement refers to when a seller with dominant market power in a good requires purchases in other markets in order to gain access to the good, thereby forcing consumers to buy products they might not otherwise desire and/or may have preferred to obtain from a different seller.[6] However, it’s unclear how plaintiffs will prove that Hermès harmed the market for scarves, shoes, belts, and other ancillary products through the tie-in arrangement. More importantly, it’s unclear how Hermès’ market dominance over their own handbag design qualifies as a monopoly in the first place.
Experts have also pointed out the lack of a blanket tie-in policy. Whether a shopper is offered a Birkin depends on many factors, and Hermès does not specify how much one needs to spend to get a shot at the handbag.[7] The inconsistent application of the tie-in arrangement makes it difficult to distinguish the alleged market harm. While the suit aims to challenge the tie-in arrangement practiced by many luxury fashion houses (e.g. Chanel, Louis Vuitton) in addition to Hermès, John Newman, former deputy director of the Federal Trade Commission’s Bureau of Competition, believes that “it could be these plaintiffs partly just want to tell their story to the world. If so, they’ve definitely accomplished that goal already.”[8]
[1] Complaint at 2, Cavalleri v. Hermès Int’l, 3:24-cv-01707-AGT (N.D. Cal. Mar. 19, 2024).
[2] Nathaniel Meyersohn, Birkin Bags Are Too Hard To Buy, Shoppers Allege in Antitrust Lawsuit, CNN (Mar. 21, 2024, 3:55 PM), https://www.cnn.com/2024/03/21/business/hermes-birkin-bags-antitrust/index.html [https://perma.cc/E4FY-SQN3] [https://web.archive.org/web/20240330052412/https://www.cnn.com/2024/03/21/business/hermes-birkin-bags-antitrust/index.html].
[3] Emma Bowman, Hermès Accused of Antitrust Violations by Customers Who Tried To Buy a Birkin Bag, NPR (Mar. 21, 2024, 6:47 PM), https://www.npr.org/2024/03/21/1239940898/hermes-birkin-bag-antitrust-lawsuit [https://perma.cc/9B99-5U4X] [https://web.archive.org/web/20240330052734/https://www.npr.org/2024/03/21/1239940898/hermes-birkin-bag-antitrust-lawsuit].
[4] Complaint at 7, Cavalleri v. Hermès Int’l, 3:24-cv-01707-AGT (N.D. Cal. Mar. 19, 2024); Herb Scribner & Rachel Tashjian, ‘Hermès Has It in the Bag’: Legal Experts Weigh Birkin Lawsuit, Wash. Post (Mar. 21, 2024, 11:42 AM), https://www.washingtonpost.com/style/fashion/2024/03/21/hermes-birkin-bag-lawsuit/ [https://perma.cc/7FJP-T4FX] [https://web.archive.org/web/20240330053636/https://www.washingtonpost.com/style/fashion/2024/03/21/hermes-birkin-bag-lawsuit/].
[5] Complaint at 10, Cavalleri v. Hermès Int’l, 3:24-cv-01707-AGT (N.D. Cal. Mar. 19, 2024)
[6] Tying the Sale of Two Products, Fed. Trade Comm’n, https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/single-firm-conduct/tying-sale-two-products [https://perma.cc/KY66-Z5V4] [https://web.archive.org/web/20240330054126/https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/single-firm-conduct/tying-sale-two-products] (last visited Mar. 29, 2024).
[7] Scribner & Tashjian, supra note 4.
[8] Id.; Meyersohn, supra note 2.