Briefing: February 3, 2023
Saks Fifth Avenue, and the American arms of luxury brands Louis Vuitton, Loro Piana, Gucci, Prada & Brunello Cucinelli have prevailed in the latest round of a proposed class action lawsuit waged against them over an alleged anticompetitive scheme to control the wages and certain job conditions of luxury retail employees.
The case was filed against the defendants in the U.S. District Court for the Eastern District of New York in Feb. 2020 by a trio of luxury retail employees, who claim that the defendants “agreed not to compete for employees … by not hiring luxury retail employees who have worked at Saks within 6 months of such employment unless managers of both companies agree to an exception, resulting in depressed compensation for luxury retail employees and preventing Plaintiffs from changing jobs, advancing their careers & seeking better compensation in the industry.”
Defendants moved to dismiss the plaintiffs’ amended complaint, arguing that they are barred by the Sherman Act’s 4-year statute of limitations.
The Outcome: Tossing out the plaintiffs’ complaint (see the memo & order here), the court found that they “sufficiently alleged the existence of an anticompetitive agreement between Saks & the Brand Defendants,” but didn’t allege “sufficient facts to support a direct adverse effect on competition & have likewise failed to show that the defendants held market power in the relevant market, thus failing to allege indirect ‘adverse effect on competition as a whole in the relevant market.’”
Not a total loss for the plaintiffs, the court states that during the pendency of this motion, there have been “significant developments in the jurisprudence regarding no-poach and no-hire agreements, including in NCAA v. Alston, in which SCOTUS affirmed the appropriateness of the “rule of reason” standard. As such, the court granted the plaintiffs here leave to filed an amended complaint, in which they must allege facts sufficient to permit the court to assess the challenged no-hire agreement’s “actual effect on competition” under the rule of reason standard.
Some additional context: The court’s order comes at the same time as the DOJ’s first criminal no-poach prosecution has resulted in a penalty against an individual. Not a fashion matter, that case involves a scheme between a Regional Manager of a health care staffing company and his competitor agreed not to recruit or hire each other’s nurses or raise the wages of those nurses.
Some of the most notable stories this week came on the MetaBirkins front …
(1) Amid MetaBirkins Trial, Court Reaffirms Summary Judgment Order. Following from a brief order last month, Judge Rakoff set out the reasoning for his denial & shed light on an array of interesting elements from the parties’ discovery, including Rothschild’s alleged plans to make additional meta-titled NFTs, including, “MetaPateks.”
(2) As the MetaBirkins Case Goes to Trial, a Dive into Some of the Key Issues. The case “raises issues of first impression that could set significant legal precedent in the realm of fair use & clarify the balance of free speech and TM protection as applied in the metaverse and beyond.”
(3) In case you missed this one … Hermès v. Mason Rothschild: The MetaBirkins Trial in Brief.
In trademark news … The Office of the U.S. Trade Rep. released its 2022 Review of Notorious Markets for Counterfeiting and Piracy list this week, highlighting “online & physical markets that reportedly engage in or facilitate substantial TM counterfeiting or (c) piracy.” Among the key points: 39 online markets & 33 physical markets reportedly engage in or facilitate substantial trademark counterfeiting or copyright piracy.
This includes “continuing to identify the WeChat e-commerce ecosystem as one of the largest platforms for counterfeit goods in China,” with “other listed markets in China includ[ing] online markets Aliexpress, Baidu Wangpan, DHGate, Pinduoduo & Taobao.”
Co-branding isn’t dead – Tiffany & Nike have launched a collaboration, including Nike silhouette sneakers featuring a Tiffany blue Swoosh that come in Tiffany blue shoe boxes. We previously took a dive into what the assets look like in these sorts of collabs. (You can find that here.) Alexandre Arnault, who spearheads product & communication at Tiffany, says that constant novelty and creativity is crucial to the success of modern luxury brands. “You need to be a part of the cultural conversation.”
And … Lyst released its latest quarterly “Hottest Brands” ranking. Christina Binkley sums up one of the most striking takeaways, which centers on post-PR crisis Balenciaga …
And in a bit of deal-making (and potential deal-making) news this week … LVMH & L’Oreal are among the companies reportedly vying for a stake in Aesop that could value the high-end cosmetics brand at $2 billion or more, per Bloomberg. Japanese beauty group Shiseido Co. is also said to be considering a bid.
– WPF Holdings acquired e-commerce assets of KPOP 1004, a specialty store in Las Vegas that is “dedicated to bringing Korean Pop culture to fans all over the world,” including via K-beauty offerings. E-commerce & digital consultancy company WPF Holdings revealed that it intends to form a subsidiary called K-Shop that will include an online shop, but the terms of the transaction were not disclosed.