Hermès Beats Antitrust Case Over Alleged Birkin Bag Allocation Scheme

A California federal judge has dismissed a closely watched antitrust lawsuit accusing Hermès of illegally conditioning the sale of its coveted Birkin handbags on consumers’ willingness to purchase a significant lineup of other, “ancillary” Hermès products first. The dismissal – which comes with prejudice – closes the door on claims that Hermès engaged in an unlawful “tying” arrangement in violation of the Sherman Act and California law.

The Background in Brief: The proposed class action lawsuit, which was filed by Tina Cavalleri, Mark Glinoga, and Mengyao Yang (the “plaintiffs”) in March 2024, alleges that Hermès has engaged in an unlawful tying scheme, coercing customers to buy other Hermès products (such as scarves, jewelry, or home goods) as a condition for purchasing Birkin (or Kelly) bags. The plaintiffs further argued that Hermès has misled consumers about the availability of its iconic bags and assert claims under both federal antitrust laws and various California state laws.

After previous versions of the plaintiffs’ complaint were dismissed for failure to “plausibly allege relevant product markets, [Hermès’] market power within those markets, or an injury that the antitrust laws were intended to prevent,” the plaintiffs attempted on more than one occasion to bulk of their allegations. They lodged an amended complaint in May 2024 and a second amended complaint in October 2024, attempting to redefine the relevant markets, introduce new claims of false advertising and fraud, and address previous deficiencies related to antitrust injury by highlighting how the company’s practices “artificially inflate the true prices of their handbags.”

Specifically, they maintained that “the nominal retail price of a Birkin bag” – which routinely costs upwards of $10,000 – is “a facade, masking a hidden lottery system that forces consumers to purchase substantial amounts of Hermès ancillary products.” This “predatory practice” not only “drives up the true price of the Birkin bag, which includes the cost of these coerced ancillary product purchases, but also generates additional revenue for [Hermès] from consumers who never ‘qualify’ and are left with Hermès ancillary products that they never would have purchased but for their desire to acquire a Birkin bag,” the plaintiffs argued.

Hermès responded with yet another a motion to dismiss last fall, arguing that the plaintiffs’ shifting and “artificial” market definitions exaggerate its dominance, their allegations show no cognizable antitrust injury beyond personal frustration over Birkin scarcity, their false advertising and fraud claims mischaracterize innocuous statements and lack specificity, and their state law claims merely duplicate failed federal theories.

The Court’s Analysis

In an order on September 17, N.D. Cal. Judge James Donato revealed that he was unpersuaded by the plaintiffs’ case. In dismissing the amended complaint (“SAC”), the court held that Cavalleri and co. failed to adequately allege three essential elements of a tying claim …

> A Plausible Market Definition: The plaintiffs relied on dated academic articles and general luxury consumption reports to define the relevant market as “elitist luxury handbags in the United States.” The court said these materials did not come close to establishing a legally cognizable product market.

> Market Power in the Tying Product: While the SAC asserted that Birkin bags account for 60-75 percent of the supposed market, Judge Donato stressed that market share is not synonymous with market power. Without factual allegations showing Hermès could exclude competitors or control prices, plaintiffs could not plausibly allege market power.

> Anticompetitive Harm in the Tied Market: The complaint grouped together an “almost kaleidoscopic” array of tied goods – scarves, footwear, fragrances, homewares, and more. But the plaintiffs offered no facts indicating that competition in these markets was restrained, or even that they could be lumped into a single tied market, according to the court.

Even under the more plaintiff-friendly “per se” approach to tying arrangements, the SAC still fell short. As Judge Donato put it: “It may be, as the plaintiffs suggest, that Hermès reserves the Birkin bag for its highest-paying customers, but that in itself is not an antitrust violation.”

This was the plaintiffs’ third attempt to state a Sherman Act claim, with court previously warning them of deficiencies in their allegations and granted leave to amend. Finding that the SAC failed to cure those flaws, Judge Donato dismissed the federal antitrust claims with prejudice. With no viable federal claims remaining, the court declined to exercise supplemental jurisdiction over the state law claims, leaving state court as their only path forward.

THE BIGGER PICTURE: The ruling underscores how difficult it is to fit luxury retail practices into the rigid framework of U.S. antitrust law. Hermès’ alleged practice of making customers “prove themselves” through prior purchases before being offered a Birkin may raise questions of fairness, but absent evidence of harm to competition, it does not amount to an antitrust violation.

For Hermès, the decision is a significant win. For the plaintiffs (and for other consumers frustrated by opaque access rules around luxury goods), it is a reminder that the courts will not police exclusivity unless it crosses the line into actual market foreclosure.

The case is Cavalleri, et al. v. Hermès International, et al., 3:24-cv-01707 (N.D. Cal.)