Style on Trial: How A Hermès Handbag Became the Center of an Antitrust Lawsuit

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Buy More, Qualify Maybe

Money cannot buy happiness, and, as a recent antitrust lawsuit suggests, it cannot buy a Hermès Birkin handbag either.  Two California residents, Tina Cavalleri and Mark Glinoga, filed a class action lawsuit in March 2024 against Hermès International (“Hermès”) in the U.S. District Court for the Northern District of California.  Cavalleri and Glinoga allege Hermès violated federal and state antitrust laws by requiring customers to establish a lengthy purchase history with the company before becoming eligible to purchase a Birkin handbag.

According to the complaint, Cavalleri spent tens of thousands of dollars at Hermès, purchasing items she would not have otherwise bought, in hopes of qualifying to purchase a Birkin.  When Cavalleri inquired about purchasing a Birkin in 2022, a Hermès sales associate allegedly told Cavalleri that priority for the bags went to clients who consistently support their business, implying Cavalleri needed to buy more Hermès goods to qualify.  Similarly, in 2023, Glinoga made numerous attempts to purchase a Birkin, but was informed by sales associates that he would need to buy other Hermès items first.  Despite their efforts, neither Cavalleri nor Glinoga succeeded in purchasing a Birkin.

Cavalleri and Glinoga subsequently filed a class action lawsuit on behalf of themselves and others who are in a similar situation.  The class represents all United States citizens, and the subclass represents California residents, who, since March 2020, were required or asked to buy additional Hermès products in order to purchase a Birkin.

 From Horses to Handbags

In 1837, Thierry Hermès, originally born in Germany, moved to Paris where he opened a small saddlery along the Rue Basse-du-Rempart in Les Grands Boulevards.  Thierry named his saddlery after his surname, Hermès, which, ironically, is the French name for Hermes—the Greek god of commerce and eloquence.  Initially, Hermès specialized in producing high-quality, handcrafted saddles, harnesses, and bridles.  Hermès emphasized quality and craftsmanship in his work and established an elite clientele amongst European nobles, including Napoleon III, Parisian socialites, and renowned equestrians.

As modern society transitioned from equestrian transportation to automobiles in the early 20th century, Hermès, now led by Thierry’s grandsons Adolphe and Émile-Maurice Hermès, expanded its product line. Hermès began producing handcrafted leather goods, clothing, and small accessories.  As Hermès broadened its collection, its international footprint grew too.  Hermès extended its presence beyond Paris by opening new storefronts in New York City and London.  By the mid-twentieth century, Hermès silk scarves, cashmere sweaters, and handcrafted handbags were wardrobe staples for iconic women like Grace Kelly, Elizabeth Taylor, Audrey Hepburn, and Jackie Kennedy Onassis.

It was not until 1983 when Hermès’ CEO and artistic director Jean-Louis Dumas was aboard a redeye flight from Paris to London that the most iconic handbag in Hermès’ collection was imagined.  Dumas was seated next to British French actress, Jane Birkin.  Birkin’s signature, oversized basket she carried as a purse broke when she was loading it into the overhead compartment.  Birkin joked with Dumas, telling him if Hermès designed a bag large enough for a busy mother, she would buy it.  Dumas and Birkin spent the rest of the flight designing just that, sketching out ideas on air sickness bags.  A year after Dumas and Birkin’s chance encounter, the first Birkin bag was released.  The handbag had a retail value of $2,000, but Dumas graciously gifted Birkin her handbag namesake.

Luxury Without Limits

Today, the cost of a Birkin bag ranges from $10,000 to over $2 million, depending on several factors.  Size plays a role, with both larger Birkins and the rare mini-Birkins fetching premium prices.  The choice of material also impacts cost; exotic leathers like alligator, crocodile, and ostrich are significantly more expensive than standard leather.  Hardware options, from palladium and white gold to diamond-encrusted clasps, can drive bag prices into the millions.  Each Birkin is handcrafted with meticulous skill, featuring Hermès’ signature saddle-stitching; a hand-sewn double stitch that ensures durability against years of wear.  This stitching technique, combined with extensive training in other artisanal skills like dyeing and leatherwork, means that crafting a single Birkin bag requires an experienced artisan with years of training.  Together, these elements solidify the Birkin’s status and price tag in the world of luxury fashion.

The allure of the Birkin is heightened by Hermès’ intentional scarcity, as the brand strategically limits annual production.  This exclusivity has driven Birkin resale values up by 500 percent between 1981 and 2016, with values expected to double in coming years.  Celebrity influence further cements the Birkin’s status as the ultimate luxury item—stars like Victoria Beckham, Cardi B, Kim Kardashian, and Lady Gaga are known to own several.  Despite their exclusivity, Birkins are designed to be practical, offering generous space and secure closures for daily use.  This unique blend of opulence, meticulous craftsmanship, and functionality has made the Birkin a lasting fashion icon.

 The Battle for a Birkin

In Cavalleri, et. al v. Hermès International, the plaintiffs assert that Hermès engaged in unlawful business practices that violate federal and state law designed to preserve competition and protect consumers.  Specifically, the plaintiffs allege violations of the Sherman Act, a federal law aimed at preventing monopolistic behavior, and the Cartwright Act, a California law that prohibits practices that restrain trade.  Additionally, the plaintiffs claim Hermès breached California’s Unfair Competition Law by employing coercive sales tactics that force consumers to purchase additional products in order to buy a Birkin.  Through these claims, the plaintiffs seek to hold Hermès accountable for practices that they allege harm consumers and undermine fair competition in the marketplace.

The plaintiffs’ first and second claim alleges Hermès violated the Sherman Act; a federal law designed to maintain competition within markets by preventing companies from using unreasonable tactics like price-fixing, exclusive contracts, or coercive sales practices.  These tactics can force other businesses out, reduce choices, or increase prices for consumers.  The plaintiffs further allege Hermès unlawfully engaged in “anticompetitive, ‘tying’ conduct.”  In support of this claim, the plaintiffs maintain that the availability of a Birkin is dependent on the customer’s purchase history with Hermès.  Additionally, the plaintiffs contend Hermès is unlawfully coercing customers to purchase items they would not normally purchase, simply for the opportunity to buy a Birkin.

The plaintiffs’ second claim is that Hermès violated the Cartwright Act, a California law that prevents companies from unfairly limiting trade and competition.  The Cartwright Act, modeled after the Sherman Act, applies specifically to the subclass of California plaintiffs.  The plaintiffs’ claim under this Act alleges Hermès unlawfully “tied” the purchase of a Birkin to “ancillary products,” such as shoes, scarves, belts, and home décor through its sales associate incentive program.  Hermès sales associates earn a three-percent commission on ancillary products, and one and a half percent on handbags.  However, Hermès sales associates do not earn commission on Birkin bag sales.  The plaintiffs contend this structure incentivizes associates to push ancillary products, building a customer’s purchase history with Hermès.  Associates are then instructed to limit Birkin purchase invitations to customers with the most established purchase histories, allegedly under the direction of Hermès executives.

The plaintiffs’ third claim, their second under the Cartwright Act, alleges that Hermès unlawfully coerces customers into buying unwanted goods by tying Birkin sales to ancillary products.  In their fourth claim, under California’s Unfair Competition Law, the plaintiffs argue Hermès’ practice harmed the plaintiffs and subclass, forcing them to buy items they did not want and could have purchased cheaper elsewhere, resulting in economic loss.

During a case management conference in September, Judge James Donato expressed curiosity about the case but questioned the basis for claiming an antitrust injury.  Judge Donato informed the plaintiffs’ attorneys that in order to have an antitrust injury, the plaintiffs must explain how competition within the luxury market is being adversely affected by Hermès’ practices.  Judge Donato further affirmed Hermès’ right to operate its business as it sees fit, including producing limited quantities of their products and setting high prices.  Judge Donato’s remarks suggest that Hermès’ model actually fosters competition, allowing consumers to choose to buy luxury bags from other retailers, like Louis Vuitton, Christian Dior, or Maison Goyard.  In light of Judge Donato’s concerns, the plaintiffs’ attorneys subsequently filed a motion to amend their complaint.

In their amended complaint filed on October 11, 2024, the plaintiffs added a new claim under the Cartwright Act.  The plaintiffs allege Hermès further violated the Cartwright Act by having their sales associates make false or misleading statements to customers interested in purchasing a Birkin, such as promising an invitation to purchase a Birkin if ancillary products are bought.  The plaintiffs also point to Hermès’ website, which simply states “[t]he Birkin is available,” without disclosing any requirement for customers to purchase ancillary products before becoming eligible to purchase a Birkin bag.

The plaintiffs also added claims for common law fraud and negligent misrepresentation, alleging that Hermès, through its sales associates, falsely assured customers that purchasing ancillary products would allow them to buy a Birkin.  According to the plaintiffs’, Hermès knew these promises were misleading, as many customers who bought these ancillary products still remained ineligible to purchase a Birkin.  In some cases, customers were pressured to buy even more products under the guise of becoming eligible to buy a Birkin.  The plaintiffs and class members relied on Hermès’ assurances, unable to discover their falsity through reasonable diligence, and subsequently made purchases based on this misrepresentation.

In response, Hermès filed a motion to dismiss, arguing that the plaintiffs’ failed to plead the elements of a tying claim under the Sherman Act, and failed to state a claim under the Cartwright Act and California’s Unfair Competition Law.  In the conclusion of its motion, Hermès called the plaintiffs’ complaint “far-fetched and implausible.”  Ultimately, Hermès’ motion to dismiss was denied and the plaintiffs’ motion to amend was granted.

The Verdict Ahead: Possible Implications for Luxury Retail

The outcome of this case could have a significant impact on sales practices within the luxury market, potentially setting new standards for consumer protection and competitive fairness.  Alternatively, the outcome of this case may have limited effect on the luxury market, with Hermès and similar brands continuing to set their own terms for exclusive products and control sales strategies without substantial regulatory change.  As this case unfolds, the luxury industry watches closely, knowing that Hermès’ “style on trial” could redefine the rules of exclusivity in fashion.