Leegin Creative Leather Products, Inc. v. PSKS, Inc.

Facts

Leegin Creative Leather Products designed, manufactured, and distributed leather goods and accessories, including the “Brighton” brand of women’s fashion accessories. Leegin sold its products primarily through independent boutiques and specialty stores, believing these small retailers provided better customer service than large retailers. In 1997, Leegin instituted the “Brighton Retail Pricing and Promotion Policy,” refusing to sell to retailers that discounted Brighton goods below suggested prices. This policy aimed to give retailers sufficient margins to provide customer service central to Leegin’s distribution strategy and to protect Brighton’s brand image. Leegin also created the “Heart Store Program,” offering incentives to retailers who pledged to sell at Leegin’s suggested prices. PSKS operated Kay’s Kloset, a women’s apparel store that became a significant Brighton retailer. In 2002, Leegin discovered Kay’s Kloset was marking down Brighton’s entire line by 20%. After Kay’s Kloset refused to stop discounting, Leegin terminated their relationship. PSKS then sued Leegin, alleging it had violated antitrust laws by entering into agreements with retailers to fix prices. The case ultimately reached the Supreme Court, which had to decide whether to overturn the century-old per se rule against vertical price restraints established in Dr. Miles.