Leegin Creative Leather Products, Inc. v. PSKS, Inc. Case Brief Summary | Law Case Explained

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Leegin Creative Leather Products, Inc. v. PSKS, Inc. | 551 U.S. 877 (2007)

In a retail supply chain, manufacturers often sell their products to retailers, who then sell the products to consumers. Generally, retailers are free to set the prices that they charge their customers. But in Leegin Creative Leather Products versus PSKS, Incorporated, we explore whether it violates antitrust law for a manufacturer to impose minimum resale prices.

Leegin Creative Leather Products manufactured woman’s fashion accessories under the brand name Brighton. Leegin sought to promote Brighton as a high-end brand. To that end, Leegin adopted a pricing policy whereby Leegin refused to sell Brighton products to any retailers that would resell the products below certain minimum prices. Leegin theorized that retailers making higher margins would have more capital to invest in providing a high-end customer experience.

Leegin subsequently became aware that one of its retailers, Kay’s Kloset, was selling Brighton products at discounted rates below Leegin’s minimum prices. When Kay’s Kloset refused to discontinue the discounting, Leegin refused to sell the retailer any additional Brighton products.

The owner of Kay’s Kloset, PSKS, Incorporated, filed a federal antitrust action against Leegin. PSKS alleged that under United States Supreme Court precedent in Doctor Miles Medical Company versus John D. Park and Sons Company, vertical minimum-price restraints, such as those between Leegin and its retailers, were per se violations of antitrust law. In response, Leegin argued that such restraints shouldn’t be per se antitrust violations because they sometimes have procompetitive effects.

The district court, acknowledging that it was bound by Doctor Miles, ruled in favor of PSKS. The Firth Circuit affirmed, and the United States Supreme Court granted cert.

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