Hermès sued in San Francisco by shoppers who couldn't access coveted Birkin bag
Riccardo Simonetti seen wearing Alpha Industries black oversized bomber jacket, Carhartt dark green cargo pants and Hermès Birkin 40 black leather bag, on March 19, 2024 in Berlin, Germany. (Photo by Jeremy Moeller/Getty Images)
SAN FRANCISCO - An unusual antitrust lawsuit was filed in federal court in San Francisco on Tuesday against the maker and distributor of luxury Birkin handbags.
The class action alleges that Hermes International, a French company that sells luxury apparel, jewelry and leather goods, and its U.S. subsidiary, have violated the Sherman Antitrust Act by requiring customers interested in its high-end handbags to buy other Hermes products before being allowed to buy a Birkin.
The complaint alleges that Birkin handbags -- it refers to them as "icons of fashion" -- are offered for sale in the U.S. exclusively through Hermes and cost from thousands of dollars to more than one hundred thousand dollars.
Featured
San Jose police arrest pair in connection with 70 retail thefts
San Jose police on Wednesday announced that they have arrested two men in connection with 70 retail thefts totaling $75,000.
"Despite the price and exclusivity," the plaintiffs allege, "the Birkin handbag has become a household name and well known by the general public, both in name and by its distinctive design."
The challenged arrangement allegedly involves a practice called "tying" where a seller with "market power" in a relevant market says a customer cannot buy a desirable product without buying the less attractive, tied product.
According to the plaintiffs, "the unique desirability, incredible demand and low supply of Birkin handbags gives Defendants incredible market power" and allows them to unlawfully influence competition in the market for the tied products.
The plaintiffs are California residents Lisa Cavatelli and Mark Glinoga, who each allegedly unsuccessfully attempted to purchase one of the bags.
Cavatelli says she was "coerced" into spending tens of thousands of dollars on Hermes products in order to get a shot at a Birkin, only to be told "specialty bags are going to 'clients who have been consistent in supporting our business.'"
Glinoga tried on multiple occasions to buy one of the bags but was always told that he had to buy other items and accessories.
The plaintiffs allege that Hermes implemented a "scheme" to exploit the bags unique desirability.
SEE ALSO: San Francisco's Emporium Centre rebrand may not fix troubled mall's problems
The first part was to make the bags hard to buy. They are not available from the website and "unlike most consumer products -- and most other products sold by Defendants -- consumers cannot simply walk into a Hermes retail store, pick out the Birkin handbag they want and purchase it."
In fact, the complaint says that the bags are never publicly displayed in their stores and it is "often the case that there are no Birkin handbags at all at Hermes retail stores" and if they are, "only those consumers who are deemed worthy of purchasing a Birkin handbag will be shown a Birkin handbag (in a private room)."
The Hermes website has a Birkin section but it doesn't show prices or offer an obvious way to add any of the Birkin bags to the customer's cart. Other bags and leather goods on the site, however, are purchase-friendly.
The second crucial part of the alleged scheme involves Hermes sales associates. The complaint alleges that Birkins can only be obtained through a sales associate.
Sales associates allegedly work on an hourly base plus commission arrangement. The complaint claims the sales associates get no commission at all on Birkin bags though they earn up to 3% on other products. This structure allegedly incentivizes them to hold Birkin bags back, all while encouraging the customer to make purchases of other Hermes products.
"These sales associates are directed by Defendants to only offer Birkin handbags to consumers who have established a sufficient 'purchase history' or 'purchase profile' with ... products such as shoes, scarves, belts, jewelry and home goods. Only once a consumer has a sufficient purchase history or purchase profile ... will the consumer be offered the opportunity to purchase a Birkin handbag."
The practice of tying or bundling two products together is not inherently an antitrust problem. The legal constraint arises when the defendant is a monopoly or holds market power in the relevant market. The idea is that when a company holds a dominant position in a market, it is not allowed to take actions -- like tying -- that restrict competition.
For example, a competitor of Hermes scarves would arguably have a harder time selling its scarves to a customer because the competitor would be unable to aid that customer in the achieving the holy grail of acquiring a Birkin. That might mean that Hermes could charge more for its scarves than a competitor with a comparable product.
Antitrust law is complex and determining whether there is market power -- and in what market -- is frequently the subject of intense court battles between dueling economics experts. Here the market definition will be a key question; there are plenty of competitors selling handbags, whether those handbags are comparable to or "substitutable" with the Birkin bag remains to be determined in the court.
Birkin bags have an distinct identity in popular culture, and have often been referenced in music, film, and TV as a status symbols for wealth, materialism, and conspicuous consumption.
The bag's origin story is reported on Hermes' website. A Hermes executive was seated next to the French singer and actress Jane Birkin on a flight. Birkin's regular bag was out of commission and she was using a bag that allowed her things to spill. Supposedly she wondered if Hermes could produce a bag that would better serve her purposes. The executive returned to the office and the company's artisans made it happen.
The bags come in different sizes and have different skins -- calf, lizard, ostrich, crocodile -- and hardware fittings that may be in gold or palladium, perhaps with diamond detailing.
Hermes has carved a niche in luxury products and markets them with an eye to status-conscious consumers.
For example, the Hermes website has a section on bespoke products and claims these items each have their own distinct voice.
The website says "Hermes' bespoke workshop is like a history book, where each object recounts its journey and its secrets."
It seems likely that the new suit will explore what secrets the Birkin bag has to tell.
A request for comment on the suit by Hermes was not immediately returned and the plaintiffs' lawyers did not respond to questions about their market power allegations.