Leegin Case Summary

In 1991, Leegin Creative Leather Products, Inc. (Leegin) (defendant), started selling belts and other women’s accessories under the Brighton brand (). The Brighton label was a success, and Leegin utilizes a “dual distribution system” for its Brighton products. It distributes Brighton goods at the wholesale level to independent retailers through periodic trade shows. It also owns and controls over one hundred Brighton retail stores. The company thus is both manufacturer and retailer (). PSKS, Inc. (PSKS) (plaintiff), operated Kay’s Kloset (Kay’s), a women’s apparel store that began selling Brighton products in 1995. Over the next few years, Brighton products accounted for 40 to 50 percent of the profits earned by Kay’s. In 1997, Leegin began

In 2002, Leegin learned that Kay’s had been selling the entire line of Brighton products at discount prices. Kay’s refused to stop selling below the prices suggested by Leegin, and Leegin subsequently refused to sell any more Brighton products to Kay’s. PSKS then brought a suit, alleging that Leegin’s resale-price policy violated antitrust law. The jury awarded $3,975,000 to PSKS, and this court affirmed pursuant to Dr. Miles. PSKS, Inc. v. Leegin Creative Leather Prods., Inc., 171 F. App'x 464 (5th Cir.2006). Leegin’s appealed, but the court of appeals affirmed. Leegin’s appealed again on the issue of whether the practice was a per se antitrust violation. Finally, in a 5-4 decision, the U.S. Supreme Court overruled Dr. Miles Medical, a 96-year-old antitrust precedent that prohibited manufacturers from maintaining retail prices for their products (). The main issue of the case was if Leegin was violating antitrust laws with their price policy or

These are laws that apply to virtually all industries and to every level of business (). They prohibit a variety of practices that restrain trade. Examples of illegal practices are price-fixing conspiracies, corporate mergers likely to reduce the competitive vigor of particular markets, and predatory acts designed to achieve or maintain monopoly power. Congress passed the first antitrust law, the Sherman Act, in 1890 as a "comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade." In 1914, Congress passed two additional antitrust laws: The Federal Trade Commission Act, which created the FTC, and the Clayton Act. With some revisions, these are the three core federal antitrust laws still in effect today ().
The impact of the lawsuit brought by PSKS, Inc was not good at all for Leegin Creative Leather Products, Inc. To begin with, the initial amount awarded to the plaintiff surely cut deep into the defendant’s profits. Added to that come the costs involved with any legal process, which kept making damage to the already sore profits. Also, all the bad press that accompany high visibility cases like this tend to deter the image of the company, making the price of their stock take a hit. This is just the surface of the plethora of damages that any lawsuit can bring to a business.