Leegin Creative Leather Products, Inc. v. Psks, Inc., Dba Kay's Kloset … Kay's Shoes

551 U.S. 877 (2007)

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Nature of the Case

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Facts

D designs, manufactures, and distributes leather goods and accessories. Its Brighton brand has now expanded into a variety of women's fashion accessories. It is sold across the United States in over 5,000 retail establishments, for the most part independent, small boutiques and specialty stores. PSKS, Inc. (P), operates Kay's Kloset, a women's apparel store. Brighton was the store's most important brand and once accounted for 40 to 50 percent of its profits. In 1997, D instituted the 'Brighton Retail Pricing and Promotion Policy.' D refused to sell to retailers that discounted Brighton goods below suggested prices. The policy contained an exception for products not selling well that the retailer did not plan on reordering. In December 2002, D discovered P had been marking down Brighton's entire line by 20 percent. P contended it placed Brighton products on sale to compete with nearby retailers who also were undercutting D's suggested prices. D requested that P cease discounting. Its request refused, D stopped selling to the store. The loss of the Brighton brand had a considerable negative impact on the store's revenue from sales. P sued D alleging a violation of the antitrust laws. D planned to introduce expert testimony describing the procompetitive effects of its pricing policy. The District Court excluded the testimony, relying on the per se rule. P got the verdict and treble damages ($3,975,000.80). D appealed. The court of appeals affirmed under the per se rule for vertical price-fixing agreements. The Supreme Court granted certiorari.