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Exclusivity Isn’t Enough: Northern District Of California Dismisses Luxury Retail Tying Claims
09/23/2025On September 17, 2025, Judge James Donato of the Northern District of California granted a motion to dismiss a putative antitrust class action, holding that plaintiffs failed to state a plausible Sherman Act claim, dismissing all federal antitrust claims with prejudice, and declining to exercise supplemental jurisdiction over plaintiffs’ state law claims in the absence of any remaining basis for federal jurisdiction. Cavalleri v. Hermès International, No. 24-cv-01707-JD (N.D. Cal. Sept. 17, 2025). Plaintiffs alleged that defendants, a luxury goods manufacturer and retailer, perpetuated an unlawful tying arrangement by conditioning access to a particular designer handbag on customers making other purchases from the brand. Defendants moved to dismiss the Second Amended Complaint (“SAC”) after the Court had previously dismissed a First Amended Complaint with leave to amend because plaintiffs did not plausibly allege relevant product markets, market power within such markets, or sufficient antitrust injury.
Plaintiffs asserted putative national and California consumer classes alleging defendant luxury brand restricted sales of a highly coveted handbag to customers defendant deemed “worthy” based on prior purchases of other branded retail goods. Plaintiffs alleged defendants’ perceived restrictions on which customers could purchase the handbags constituted a per se unlawful tying arrangement under Sherman Act Sections 1 and 2, along with various claims under California law. To support the per se allegations, plaintiffs alleged the tying product to be the luxury handbag, defining the relevant product market as one for “elitist luxury handbags in the United States.” According to plaintiffs, the particular handbag at the center of plaintiffs’ tying claims allegedly held a 60–75% share of the “elitist luxury handbag” market. Plaintiffs identified a tied market of branded luxury retail goods spanning apparel, accessories, fragrances, and home goods. Plaintiffs cited an investor report, an academic article, and public statements by the company to support market definition and perceived exclusivity.
Defendants argued the SAC, like the prior complaint, failed to plausibly define relevant product markets, allege market power, or show injury to competition. For purposes of their motion to dismiss, defendants assumed the per se standard but maintained the SAC fell short.
The Court adopted the parties per se framing in its decision, but explained that the courts’ “[e]xperience with the luxury handbag industry is not such that a presumption of per se liability is obvious,” as “considerable experience with certain business relationships” is required before applying per se condemnation.
To plead a tying claim—even under a per se theory—plaintiffs must plausibly allege (1) two distinct products; (2) defendant’s market power in the properly defined tying product market; and (3) that the tie affects a not insubstantial volume of commerce in the tied product market.
The Court held that the SAC did not adequately plead a cognizable tying market, market power, or competitive harm. It noted plaintiffs’ conclusory market-share allegations and overbroad, non-substitutable aggregation of tied products, finding many of plaintiffs’ purported facts were “little more than random soundbites assembled from disparate sources.” The Court held the SAC “did not provide any new facts” to lift the antitrust theories above speculation and that nothing placed the alleged conduct within the narrow band of per se violations.
The Court found that the “elitist luxury handbags” market was inadequately supported by plaintiffs’ reliance on decade-old general luxury-consumption materials and “random soundbites.” The Court found that the alleged tied market—a “kaleidoscope” of diverse, non-substitutable goods—was not plausibly defined, and that there were no facts showing restraint of competition. Reserving a product for high-spending customers, standing alone, is not an antitrust violation: “Businesses may choose the manner in which they do business absent an injury to competition.” The Court dismissed plaintiffs’ Sherman Act claims with prejudice and declined supplemental jurisdiction over the state claims.
The decision underscores the need for careful pleading even of alleged per se violations. To successfully plead illegal tying, plaintiffs must offer rigorously supported market definitions, non-conclusory allegations of market power, and facts showing injury to competition in a properly defined tied market. The case also illustrates that exclusivity and selective sales, without competitive harm, are not sufficient to carry an antitrust claim.
