Supreme Court ruling goes against Leegin
The Kansas Supreme Court has ruled that Leegin Creative
Leather Products engaged in price-fixing in violation of state law.
The court reversed the Sedgwick County District Court's grant of summary
judgment in favour of Leegin, which makes Brighton handbags, luggage, jewellery
and other accessories.
Plaintiff Sue O'Brien sued Leegin over its retail pricing practices alleging that Leegin's pricing policy violated the Kansas Restraint of Trade Act (KRTA).
Since April 1997, the company has provided its retailers with copies of its suggested pricing and promotional policy.
The policy calls for retailers to sell Brighton products at "keystone," or an amount equal to twice wholesale plus a small amount that varies by product.
Leegin also ships its products to its retailers with tags displaying the manufacturer's suggested retail price (MSRP).
Under the policy, retailers can only discount out-of-season products and products that are not selling well and will not be reordered.
Justice Carol Beier said this arrangement is "designed to" or "tends to" control prices.
"A plaintiff does not have to show that the arrangement actually succeeds in increasing prices," she wrote.
"The language of Brighton's pricing policy certainly is subject to an inference that it was for the purpose of fixing prices and was designed to and tended to control the prices of Brighton's goods.
"While some discounting is allowed under the policy, it is permitted only under terms set by Brighton. Moreover, discounting is intended to be the exception rather than the rule, and discounting approval must be granted in advance by Brighton.
"Ensuring that prices are the same each day and at each store where
Brighton goods are sold is a part of Brighton's business strategy to build
consumer confidence by letting the customers know that they do not need to hunt
for deals."
