Antitrust Alert: Leegin Plaintiff Seeks Further U.S. Supreme Court Review

The losing retailer in the landmark antitrust case of Leegin Creative Leather Products v. PSKS, in which the U.S. Supreme Court overturned the standard of per se illegality for minimum vertical price agreements, continues to fight on. PSKS has just filed a new petition for certiorari with the Supreme Court seeking review of the Fifth Circuit decision dismissing its complaint on remand.

In a controversial 5-4 decision, the Supreme Court in 2007 ruled that manufacturers' agreements with resellers establishing minimum resale prices would no longer be per se illegal, but instead would be analyzed under the Rule of Reason. The Leegin plaintiff, PSKS d/b/a Kay's Kloset, argued on remand that Leegin's policies establishing minimum prices for its line of Brighton women's accessories should be found unlawful under the Rule of Reason.

Both the district court and the Fifth Circuit rejected these claims, finding that PSKS had not proven that Leegin had sufficient market power to reduce competition or increase prices. PSKS now is seeking Supreme Court review of that decision.

The petition for certiorari is noteworthy for several reasons. First, in the aftermath of Leegin, the lower courts are still in the process of developing standards for reviewing minimum RPM claims under the Rule of Reason, utilizing the broad principles described by the Supreme Court. Second, as its counsel of record for its certiorari petition, PSKS has retained the well-known antitrust scholar and Harvard Law professor Einer Elhauge, who was reported to be under consideration for appointment to a high antitrust enforcement position by the Obama administration. Finally, in framing the arguments for Supreme Court review, Elhauge has highlighted broader issues of antitrust analysis and policy beyond simple RPM issues. The petition urges the Supreme Court to review the Fifth Circuit's decision because it allegedly creates circuit conflicts that "sweep beyond vertical price restraints to disrupt antitrust enforcement on mergers, cartels, monopolization, and all other areas of antitrust." According to the petition, these include conflicts relating to single brand markets, use of direct proof of market power, use of market power screens, and dual distribution restraints. As these issues have exceedingly broad scope and touch upon potential antitrust concerns in just about every sector of the global economy, close attention should be paid to the outcome of the Leegin dispute.

We will follow this petition in future Antitrust Alerts.

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Kathryn M. Fenton

Jones Day prepares summaries of significant antitrust enforcement, litigation, and policy events as a service to clients and interested readers, to provide timely insight on antitrust and competition law developments relevant to business, but not as legal advice on any specific matter. Please visit our Publication Request form to add your name to our distribution list.