Hermès, the French luxury house, faces escalating legal challenges as American shoppers broaden their class action lawsuit accusing the company of antitrust violations. The iconic brand, famed for its Birkin bags, is under fire for allegedly coercing customers into purchasing additional Hermès products before obtaining the coveted handbags.
Originally filed on March 19, 2024, by plaintiffs Tina Cavalleri and Mark Glinoga, the lawsuit alleges that Hermès breaches federal antitrust and state unfair competition laws by enforcing a "sufficient purchase history" prerequisite. This means buyers need to have substantial past purchases of ancillary Hermès products such as shoes, scarves, and jewelry to access a Birkin bag, a practice the plaintiffs denounce as tying—a potentially anti-competitive tactic.
The controversy centers on the exclusivity and scarcity tactics used by Hermès, which have caused significant uproar among luxury shoppers. Reports indicate that barriers extend beyond price, making Birkin bags accessible only to those willing to spend exorbitantly on other items. Critics argue that such a practice unfairly disadvantages certain consumers and curtails equitable access to these high-end products. Others say if someone wants to buy a Hermès Birkin bag, they can purchase one from a pre-loved or reseller site such as SACLÀB, The RealReal, Rebag, or Fashionphile.
Hermès’ alleged practices have incited a backlash among shoppers and drawn skepticism from legal experts. In response to growing public interest, we contacted legal professionals for their insights on this high-profile litigation's potential outcomes and implications.
1. What's your take on the Hermès class action lawsuit, any predictions on who will win the case?
"I think Hermes has a great chance of prevailing on this lawsuit. First, any "policy or practice" Hermes has with respect to Birkin bags is ambiguous as it never tells customers what they need to buy or how much they need to spend in order to be offered the chance to purchase a Birkin. Moreover, there are enough stories and instances of first or second time customers or low purchase history customers being offered a bag, that it would refute claims of a systematic policy," said Golnoush Goharazad, a personal injury attorney.
"Further, the point of an anti-trust lawsuit with tying allegations is that the tying policy must stifle competition. Hermes is not selling the same product as other luxury brands. Hermes has its own style, quality and vibe. Whatever Birkin policy it has is not forcing customers to buy an identical product from Hermes that they could get from Dior or Louis Vuitton, just to qualify for a Birkin."
"For example, the Federal Trade Commission once challenged a drug maker that required patients to purchase its blood-monitoring device along with its medicine to treat schizophrenia. They were the only ones making the drug, but many companies were making the monitoring device. Tying the ability to get the drug while preventing consumers from buying the device from other companies stifled competition and was an illegal tying scheme."
"This Hermes case is not that as you cannot buy same items Hermes makes from let's say Dior. You can buy clothes, bags accessories, etc., but they are so drastically different in style that it would not be a tying scheme."
"In short, Hermes is creating a monopoly over its own products, not the industry, and that is not illegal."
"Other companies have less well-known practices, which are, at their heart, also based on a consumer's relationship with the sales advisor. For example, a sales advisor may call their best customers to offer a rare bag that has come into the store at Chanel. Similarly, Hermes sales advisors have significant control over who they offer Birkin bags to."
"If this case settles, it is because Hermes may not want testimony out there about its Birkin practices as this air of mystery helps sales. It won't be because this suit has any merit." - Golnoush Goharazad
2. Does the class action hold any weight against Hermès, and what exactly are the allegations?
"The lawsuit alleges that Hermes committed unlawful "tying" under Section 2 of the federal Sherman Act and California's Cartwright Act. Tying is a practice where the seller of a product requires purchasers to buy another product as a condition for being able to purchase the product they want. In this case, the plaintiffs claim that Hermes forces customers to purchase other Hermes products, such as jewelry, scarves, and other accessories, as a precondition to allowing customers to purchase the famous Birkin," says Elizabeth Milian, a Trademark & IP Attorney at Milian Legal Group.
She added, "Generally, to win, the Plaintiff must prove the following: 1) there are two separate products, a "tying" product, and a "tied" product; 2) those products are, in fact, "tied" together—that is, the buyer was required purchase the tied product as a precondition to being able to purchase the tying product; 3) the seller has enough market power in the tying product to force the buyer also to purchase the tied product, and; 4) the tied product is sold in interstate commerce.
In some instances, the Plaintiffs must show that the conduct harmed competition in the market for the tied product, not merely that the Plaintiffs themselves were harmed." - Elizabeth Milian
Leah Wise added, "I think this case is interesting and somewhat entertaining to follow. People have been talking about it for years, playing the Hermes game and how do you play the game and how do you get an offer because they think it's impossible to get an offer unless you become really good friends as a sales associate or if you buy a lot of stuff. There's three major bags, it's the Birkin bag, the Kelly bag and the Constance bag that are only offered to certain clientele."
"There's this theory that you have to spend a lot of money at Hermes to get offered this bag. I went to the Hermes in Austin and met my current sales associate and she offered me a bag almost immediately. I didn't have to purchase a lot of stuff before I got my first bag offer." - Leah Wise, founder and owner of Leah Wise Law Firm, PLLC.
"My experience might be a little unique because that sales associate was brand new, so she hadn't really met a ton of her clientele. We connected and became friends and she started offering me bags right away. I do not believe Hermes is violating antitrust laws with their current business practices."
Leah explains in her TikTok, in a short video, that the plaintiffs are alleging that they're violating antitrust laws by selling time goods.
@crashgal Hermes class action lawsuit comments. Are rhey violating anti-trust laws? 🤔 #hermes #hermeslawsuit #birkin ♬ original sound - Leah Wise
Any predictions on the possible outcome of the case?
Wise commented, "My prediction is that Hermes will end up up paying a certain amount of money to settle the case. Then they're not admitting that they're violating any laws, but they'd rather just pay this to make it go away, rather than spend hundreds of 1000s of dollars in attorneys fees and drag it out."
"Plus, once once it's all done and settled there, they can't get sued for it again, because they now have immunity. So it's like, okay, let's just pay to close this out. And now we're free and good. And we can continue our practices because now we have immunity. We can't get sued for the same thing again."
"If the case wins the penalty for Hermes will be paying out some sort of settlement to the plaintiffs and attorneys fees. That's if I'm correct, I could be totally wrong, and maybe the court will find that they actually are violating antitrust laws. And then I'd expect there to be a class action lawsuit where everybody who's shopped at Hermes can opt in," said Wise.
Milian added, "The Plaintiffs are asking the court to award them monetary damages. The goal of monetary damages is to compensate the Plaintiffs for the economic harm they sustained due to the allegedly illegal tying arrangement. The total amount is usually the difference between the price actually paid for the tied product against the price of the product on the open market free of any tying arrangement."
"The other approach is the "package" approach, which looks at both products together and allows for recovery only if the combined price paid for both products is more than the combined price on the open market. Both approaches require a detailed analysis of the products' markets and pricing structures."
"There is an additional kicker to damages in an antitrust case: If the Plaintiffs prevail and prove the existence of an illegal tying arrangement, they can recover an award of triple their actual damages, along with costs and attorney fees."
"A true win for the Plaintiffs would also mean Hermes must pay triple the damages to the entire class of consumers."
"Even if Hermes believes it can demonstrate that it has done nothing illegal, the inherent uncertainties of litigation present significant risks. The specter of facing triple damages, calculated based on the harm allegedly suffered by a nationwide class of potentially thousands of consumers, warrants serious consideration by Hermes," said Milian.
