Is Luxury Exclusivity Illegal? Hermès Birkin Bag and the Alleged Tying Arrangement

by Brookelynn Stone, Associate Member, University of Cincinnati Law Review Vol. 94

I. Introduction

Imagine walking into a luxury store with your heart set on purchasing a $15,000 handbag, only to discover that even wealth does not guarantee access. This captures the allure and exclusivity of the Hermès Birkin bag. Hermès has long represented the epitome of elegance and craftsmanship, and it has distinguished itself not only through quality but also through the inaccessibility of its most sought-after product—the Birkin bag.¹ The Birkin bag is not available for ordinary purchase. Instead, customers must first demonstrate loyalty by making substantial prior purchases of other Hermès goods, after which sales associates exercise their discretion to determine whether they will be offered the opportunity to buy one.²

The Hermès sales model is unique, creating an artificial scarcity, encouraging consumers to make repeated purchases in pursuit of status and the opportunity to buy a Birkin.³ Over time, however, this practice has unsettled consumers and has now become the subject of legal scrutiny.⁴ In Cavalleri v. Hermès International, plaintiffs seek to hold Hermès accountable for what they allege are unlawful exclusivity practices, arguing that the company’s model violates federal antitrust law.⁵ As luxury brands increasingly blend artificial market scarcity with high consumer demand, courts may face broader questions about when brand strategy crosses the threshold into anticompetitive behavior under the Sherman Act.

This article explores whether Hermès’ selective sales practices amount to an unlawful tying arrangement and considers how a potential reversal of the case’s dismissal might reshape both luxury branding and antitrust enforcement. Part II provides background on the history of Hermès and the evolution of the Birkin bag, and the claims raised in litigation against Hermès. It also outlines the relevant legal framework under the Sherman Act and the pleading requirements for a plausible tying claim. Part III analyzes the court’s reasoning and discusses the broader implications for antitrust enforcement should the dismissal be overturned. Part IV concludes by situating the Hermès controversy within the evolving intersection of antitrust law and luxury branding, illustrating how non-price exclusivity in contemporary consumer markets challenges conventional notions of consumer choice and competitive fairness.

II. Background

Founded in 1837, Hermès International (“Hermès”) is a French luxury goods manufacturer consistently ranked among the world’s most valuable luxury brands.⁶ Originally established to serve the needs of European noblemen, the company gradually expanded its product offerings.⁷ In 1922, Hermès introduced its first line of leather handbags, which achieved immediate international success and helped solidify the company’s reputation for quality and craftsmanship.⁸ In 1984, the company introduced its most iconic creation—the Birkin Bag—following a chance conversation between then-CEO Jean-Louis Dumas and actress-singer Jane Birkin.⁹ Priced between $10,000 and upwards of $300,000, each Birkin bag is handcrafted and may take over twenty hours to complete.¹⁰

Hermès’ brand philosophy was best captured by Dumas, who remarked, “We don’t have a policy of image, we have a policy of product[,]” underscoring the company’s emphasis on craftsmanship.¹¹ The company has passed through multiple generations of the Hermès family, and it continues to operate according to these principles, maintaining that each item created receives approval from the creative director before it leaves the workshop.¹² This cultivated aura of exclusivity has allowed Hermès to flourish in the luxury goods market, maintaining its identity as an “ultra-premium luxury” brand.¹³

Hermès’ retail structure further reinforces this exclusivity. Product availability varies across locations, online options are limited, and as mentioned, consumers cannot simply walk into their stores and purchase a Birkin bag upon request.¹⁴ Former CEO Patrick Thomas stated, “The luxury industry is built on a paradox: the more desirable the brand becomes, the more it sells[,] but the more it sells, the less desirable it becomes[.]”¹⁵ This paradox encapsulates the essence of Hermès’ strategy—exclusivity and scarcity.

A. Hermès Birkin Phenomena

In 2001, an episode of Sex and the City aired featuring the now-iconic line: “It’s not a bag. It’s a Birkin.”¹⁶ This moment solidified the Birkin bag’s status as the quintessential “it bag,” and for decades to come, the bag evolved from a luxury accessory into a global status symbol. As celebrities demand increased, so too did its price and inaccessibility, solidifying its reputation as one of the most exclusive consumer goods in the world.¹⁷

The process of acquiring a Birkin remains intentionally vague. Although Hermès has never published formal criteria, consumers have shared their stories on how they secured one. Essentially, prospective buyers must cultivate relationships with Hermès sales associates and establish a purchase history by buying other Hermès products.¹⁸ Consumers then express interest through a “wish list,” as there is no traditional waiting list.¹⁹ If a sales associate determines that a customer qualifies, the individual will receive a notification, inviting them to purchase a Birkin when one becomes available.²⁰ Importantly, there is no guarantee that a consumer will ever be afforded the opportunity to purchase a Birkin, as the decision rests entirely within the discretion of the sales associate.

While this approach has preserved Hermès’ reputation for exclusivity, it has also generated increasing consumer criticism. Most notably, two California customers filed suit against Hermès in Cavalleri v. Hermès International, alleging the company’s sales practices unlawfully “tie” the sale of the Birkin bag to the purchase of other Hermès products in violation of the Sherman Act.²¹ Understanding whether Hermès’ selective sales strategy constitutes an unlawful tying arrangement requires an examination of the antitrust principles that govern tying arrangements under federal law.

B. Antitrust Tying Law

A tying arrangement arises when a seller conditions the sale of one product or service (the tying product) on the buyer’s purchase of a different (or tied) product from the seller.²² Such arrangements may be challenged under Sections 1 and 2 of the Sherman Act, which prohibit “contracts in restraint of trade” and “monopoliz[ing] any part of the trade or commerce among the several states, or with foreign nations.”²³ Historically, tying arrangements were treated as per se unlawful, meaning that courts presumed illegality without inquiring into actual market effects. Over time, however, courts recognized that certain tying arrangements may also produce efficiencies in the market or serve legitimate business purposes. As a result, courts have gradually strayed from per se liability, instead applying a rule of reason test to evaluate whether a tying arrangement has actual anti-competitive effects.²⁴

To establish per se liability, a plaintiff must prove: (1) the defendant tied together the sale of two distinct products or services; (2) the defendant possesses enough economic power in the tying market to coerce its customers into purchasing the tied product; and (3) the tying arrangement affected a “not insubstantial” volume of commerce in the tied market.²⁵ In determining whether two products are distinct, courts examine whether there is a separate consumer demand for each item.²⁶ If customers typically do not seek to purchase the products independently, then there is little risk that a tie arrangement would foreclose competition or restrain trade.²⁷

The Supreme Court articulated the central principle governing tying arrangements in Jefferson Parish Hosp. Dist. No. 2 v. Hyde, explaining that “the essential characteristic of an invalid tying arrangement lies in the seller’s exploitation of its control over the tying product to force the buyer into the purchase of a tied product that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms. When such “forcing” is present, competition on the merits in the market for the tied item is restrained, and the Sherman Act is violated.”²⁸

Following Jefferson Parish and its modified per se framework, lower courts have increasingly applied the more flexible rule of reason to assess the competitive effects of tied sales.²⁹ As the Federal Trade Commission (“FTC”) has noted, liability often turns on the specific facts of each case. Generally, if a tying arrangement restricts competition without providing consumers a benefit, then it raises antitrust concerns.³⁰ With this legal foundation established, the following section turns to the plaintiffs’ initial complaint in Cavalleri v. Hermès International, examining the factual allegations and their attempt to characterize Hermès’ selective sales practices as an unlawful tying arrangement under the Sherman Act.

C. Cavalleri v. Hermès International

In the United States District Court for the Northern District of California, plaintiffs filed a class action lawsuit against Hermès International, a French corporation, and Hermès of Paris, a New York corporation.³¹ The complaint alleged violations of the Sherman Act and state law claims for unfair business practices.³²

Plaintiffs’ argument centers on an alleged unlawful tying arrangement involving the sale of its Birkin handbags.³³ Specifically, they assert that defendants implemented a scheme to exploit their market power by conditioning consumers’ ability to purchase a Birkin on the prior purchase of other Hermès products.³⁴ Furthermore, plaintiffs allege that defendants are utilizing their sales associates to implement this tying scheme. Because sales associates do not profit from the sale of Birkin bags, yet they receive a three percent commission on the sale of other ancillary products, they may be incentivized to push those products.³⁵

Lead plaintiff Tina Cavalleri asserts that she was coerced into purchasing tens of thousands of dollars’ worth of ancillary products to improve her chances of obtaining a Birkin.³⁶ At one point, she contacted Hermès to inquire about the availability of the Birkin bag, and was told that specialty bags were reserved for “clients who have been consistent in supporting our business,” a statement plaintiffs cite as evidence of Hermès’ coercive tactics.³⁷

In their First Amended Complaint (“FAC”), plaintiffs failed to plausibly allege a relevant product market, Hermès’ market power within that market, and an injury that the antitrust laws were designed to protect against.³⁸ The following section examines the plaintiffs’ Second Amended Complaint (“SAC”), its shortcomings, and the district court’s reasoning in ultimately rejecting plaintiffs’ antitrust theory.

D. The District Court’s Reasoning

The district court emphasized that the SAC failed to introduce any new factual allegations that might cure the deficiencies in the FAC or otherwise strengthen the plaintiffs’ antitrust theories.³⁹ Instead, the plaintiffs largely relied on the argument that all tying arrangements are per se violations of the Sherman Act and, therefore, required minimal factual support.⁴⁰ The court rejected this approach, noting that the Supreme Court has repeatedly cautioned against automatically condemning tying arrangements as per se unlawful.⁴¹ Furthermore, the court reasoned that “experience with the luxury handbag industry is not such that a presumption of per se liability is obvious, as plaintiffs would have it.”⁴²

Applying the elements of per se liability, the district court found that the plaintiffs failed to plausibly allege that the defendant possessed sufficient market power in the tying product market.⁴³

The plaintiffs defined the relevant product market as “elitist luxury handbags in the United States,” yet relied primarily on outdated articles to support their assertions.⁴⁴ Moreover, plaintiffs’ conclusory assertions that Hermès Birkin bags constitute between 60% and 75% of the “Elitist Luxury Handbag Market” were insufficient to establish the market power necessary to carry out such a predatory scheme.⁴⁵ The court reiterated that market share alone does not equate to market power and that the plaintiffs’ reliance on such figures was misplaced.⁴⁶

The court also held that the plaintiffs failed to plead facts demonstrating harm to competition in the alleged tied market. The “tied market” here is the market for other ancillary goods, such as scarves, belts, leather goods, jewelry, etc. The court correctly points out that without any more facts indicating that Hermès has illegally restrained competition for these goods, it fails the third element as well.⁴⁷ Having failed to adequately plead the requisite elements necessary for a per se violation, the district court dismissed the plaintiffs’ antitrust claims with prejudice.⁴⁸ The plaintiffs filed a notice of appeal to the Ninth U.S. Circuit Court of Appeals, hoping to revive their proposed class action.⁴⁹

III. Discussion

As luxury brands continue to blur the line between exclusivity and accessibility, the Cavalleri case highlights the uncertainties about how antitrust law should apply. This section considers what is beyond the district court’s dismissal and what is at stake if courts begin extending antitrust scrutiny to luxury markets. It also explores how the outcome might have differed if the plaintiffs were to raise their pleadings above a purely speculative level, and what the plaintiffs could have done to further support their antitrust theories.

A. Broader Implications if Ninth Circuit Reverses Dismissal

Although a reversal by the Ninth Circuit appears unlikely, such an outcome could have significant ripple effects. It bears noting that the district court analyzed the case under the per se framework because Hermès agreed to that standard for purposes of the SAC.⁵⁰ And yet, even under this more plaintiff-friendly standard, the court found the allegation insufficient to support a plausible tying claim.⁵¹ Their inability to do so underscores the speculative nature of their alleged harm.⁵² Accordingly, a reversal would signal that conclusory or speculative allegations of tying arrangements could survive dismissal, thereby lowering the threshold for future antitrust plaintiffs.

In modern times, many brand strategies, particularly in the luxury goods sector, focus on exclusivity and artificial scarcity to drive consumer demand and maintain brand prestige. If courts began treating exclusivity-based marketing practices as inherently suspect under antitrust laws, this could have far-reaching effects on legitimate brand strategies. As District Judge Donato alluded to, Hermès is permitted to set its own sales policies, even if consumers are disappointed by them. He stated, “It may be, as plaintiffs suggest, that Hermès reserves the Birkin bag for its highest-paying customers, but that in itself is not an antitrust violation[.]”⁵³

While such strategies may appear inequitable or manipulative, and consumers are understandably frustrated, they are not necessarily illegal. Under existing antitrust doctrine, brands remain free to implement selective or exclusive sales practices, despite consumer disappointment, so long as those policies do not restrict competition in the market for the tied products or foreclose consumer choice.

B. What If Plaintiffs Alleged More?

To survive dismissal, the plaintiffs could have strengthened their case by grounding their market definition in economic evidence. First, they could have supported their conclusory allegation that Hermès operates in the market for “elitist luxury handbags in the United States” with recent scholarly articles demonstrating that Hermès and other luxury brands compete in a tier above the typical handbag market, as they compete in a market characterized by exclusivity and brand prestige, with limited cross-elasticity of demand relative to brands such as Michael Kors or Kate Spade. Once a relevant market is clearly defined, plaintiffs must demonstrate that Hermès’ market share translates into market power.⁵⁴ Data demonstrating market foreclosure, barriers to entry, or evidence suggesting that Hermès’ practices deterred consumers from purchasing handbags from competing luxury brands could be enough for the court to find a plausible allegation of market power.

As for the tied market, the “kaleidoscope” of ancillary products should instead be narrowed to include only specific categories of ancillary goods that consumers commonly purchase to build their reputation with Hermès.⁵⁵ Plaintiffs could focus on high-value goods, such as fine jewelry or watches, or on products that are most likely to have displaced rival sales. If plaintiffs had been able to find sales data on this, they could have provided the factual foundation needed for the court to assess whether there is a plausible allegation that competition in the tied market was unlawfully restrained.

Ultimately, the plaintiffs’ failure to move beyond speculative and conclusory allegations proved fatal to their case. Without adequately pleading the necessary requisites for Sherman Act claims, plaintiffs cannot transform a luxury marketing strategy into an antitrust violation.

IV. Conclusion

The Cavalleri case underscores the growing tension between antitrust law and modern-day luxury branding strategies.⁵⁶ For companies that thrive on exclusivity and artificial scarcity, a reversal by the Ninth Circuit would signal a significant shift, suggesting that per se condemnation under the Sherman Act extends to certain forms of selective sales practices. More plausibly, however, the Ninth Circuit will affirm the district court’s dismissal, reinforcing that the Sherman Act does not apply merely because consumers are dissatisfied with the company’s sales policies. Rather, the Sherman Act applies only where competition in the market for the tied product is actually restrained. As courts continue to confront cases involving luxury branding and non-price restraints, the Cavalleri decision highlights the delicate balance between protecting competitive markets and preserving a brand’s right to define its own identity.

Cover Photo by Ar Kay on Pexels

Brookelynn Stone

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