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Tad Lipsky, Jul 16, 2007
On June 28, the U.S. Supreme Court issued its opinion in Leegin Creative Leather Products, Inc. v. PSKS, Inc. The Court in Leegin overruled a 96-year-old precedent, and held that minimum resale price agreements should now be judged based on their reasonableness, rather than being deemed per se unlawful. The Court’s opinion changes the legal landscape under federal law for evaluating the legality of minimum resale price agreements. The degree to which state antitrust laws follow suit, however, remains to be seen.
Summary of Leegin
On its facts, Leegin is a common resale price maintenance case in a terminated dealer context. Plaintiff PSKS operates a women’s apparel store in Texas. Defendant Leegin manufactures and distributes leather goods and accessories sold under the brand name “Brighton.” To promote better customer service, Leegin established a minimum resale price policy pursuant to which Leegin refused to sell to retailers that sold Brighton products below Leegin’s suggested prices. When Leegin discovered that PSKS’s store was discounting its Brighton products below its suggested prices, Leegin stopped selling to the store.
PSKS filed a federal lawsuit, alleging that Leegin’s agreements with retailers to charge prices at or above levels set by Leegin violated federal antitrust law. The trial court found Leegin’s minimum resale price policies per se illegal under the rule established by the Supreme Court decision in Dr. Miles Medical Co. v. John D. Park & Sons Co. The Fifth Circuit agreed.
In an opinion authored by Justice Kennedy, the Supreme Court overruled Dr. Miles and reversed the decision below by a 5-4 vote. The Court warned that per se rules are to be reserved for restraints that have -manifestly anticompetitive- effects, and lack any redeeming virtue, and held that minimum resale price agreements are not so clearly anticompetitive that they should be deemed per se illegal.
