Luxury Brands No-Poach Agreements at Saks Stores Antitrust Class Action

Saks is known for its department stores throughout the country. In these stores, certain luxury retailers operate “stores-within-stores” (also known as concessions) in which they sell their goods. The complaint alleges that these luxury retailers have violated antitrust laws by agreeing not to hire each other’s employees.

The class for this action is all individuals in the US and its territories who were employed by one of the defendants in this case, at any time between September 30, 2015 and such time as the anticompetitive effects of their conduct ceases, who (a) work in the defendants’ respective stores or boutiques and (b) sell or manage the sale of luxury goods to consumers.

The defendants in this case include Louis Vuitton USA, Inc., Fendi North America, Inc., Loro Piana & Co., Inc., Gucci America, Inc., Prada USA Corp., and Brunello Cucinelli, USA, Inc. They operate their concessions in the stores of Saks Incorporated, Saks & Company, LLC, and Saks Fifth Avenue, LLC.

The concessions rent space from Saks, the complaint says, and “operate relatively independently: they hire their own staff, make their own inventory determinations, and determine the depth and timing of markdowns and pricing.”

Unfortunately, the complaint alleges that they also conspire among themselves not to hire each other’s employees or Saks luxury retail employees, thus reducing those employees’ mobility and suppressing their compensation “to levels materially lower than they would have been in a competitive market.” According to the complaint, such no-poach agreements violate antitrust laws.

The complaint quotes a writer as saying, about the goods in these stores, “Similar to works of art, they ‘possess an aura of authenticity which surrounds the original—nonmechanically reproducible—work, endowing it with qualities of uniqueness, distance and otherness.’ Thus managing luxury consists in managing the aura of the brand over time…”

The complaint alleges that these companies maintain this “aura” by creating luxury shopping experiences. “Among the keys to this experience are their sales staff’s ability to create and maintain the ‘aura of authenticity’ the brands seek to establish and connect the customer’s experience and purchase to the longer-term traditions of the brand.”

The complaint claims that doing this requires “substantial skill and training” on the part of luxury retail employees, in the areas of service, selling, and product knowledge. They are offered training by the respective companies in their brands’ products, “values,” history, and ways of communicating. These employees then use this to “enhance” the brands.

Luxury retail employees are encouraged to “maintain frequent contact” with regular customers, have their own business cards, and “endeavor to establish a rapport” with the customers in hopes that they will return to the store to make more purchases.

Competition for labor allows employees to gain better pay, benefits, and other terms and conditions. Agreeing not to hire each other’s employees is considered anti-competitive behavior that does not allow a “properly functioning, competitive labor market.”

Article Type: Lawsuit
Topic: Antitrust
Tags: Antitrust, No-Poach Agreements