Antitrust Law Daily Wrap Up, ANTITRUST—Kan. App. Ct.: Decertification of class in leather goods price fixing conspiracy remanded, (Apr 10, 2014)

By Linda O’Brien, J.D., LL.M.

In an action brought by consumers alleging that a leather products manufacturer’s pricing policy for its retailers constituted price fixing, a district court’s decision to decertify most of the class was reversed and remanded by the Kansas Court of Appeals (O’Brien v. Leegin Creative Leather Products, Inc., April 4, 2014, Leben, S.).

Brighton Collectibles, a unit of Leegin Creative Leather Products, is a designer, manufacturer, wholesale supplier and retailer of leather handbags, luggage and other accessories. Brighton provided its authorized retailers with suggested price guidelines. Brighton also required certain luggage retailers through resale price agreements to sell the products at the suggested retail price or risk termination for disregarding the pricing policy.

Consumers filed a class action suit against Brighton, alleging that the company conspired with other retailers to fix prices. The plaintiffs asserted that Brighton’s resale price maintenance policy with its retailers was vertical and horizontal price-fixing, in violation of the Kansas Restraint of Trade Act. The Kansas Supreme Court reversed the grant of summary judgment in Brighton’s favor and remanded the case for consideration of Brighton’s motion to decertify the class. Upon remand, the district court significantly limited the class and effective excluded almost all of the original class. Sue O’Brien, a class representative, appealed.

Class decertification. The appellate court determined that the district court’s analysis was based on erroneous legal propositions. A district court’s decision may be set aside if (1) the discretionary decision was so arbitrary and unreasonable that no reasonable person would agree with it; (2) the decision was based on legal error; or (3) the decision was based on factual error. In this case, the district court decision to modify the class was based on an erroneous legal conclusion that the class must be structured so all the issues presented were resolved with common answers, according to the court. The correct standard required a showing that questions common to the class must predominate over questions individual to each class member - a standard that acknowledges that the existence of individual questions does not automatically preclude class certification.

In rejecting Brighton’s argument that the consumers must prove injury to each class member, the court noted that the consumers presented sufficient evidence that Brighton’s resale price agreements with its retailers were designed to control prices and the consumers were not required to show for class certification purposes that the agreements actually succeeded in increasing prices. Thus, the district court’s denial of class certification to most of the class due to the existence of one or more individual questions was erroneous. Since the district court’s findings were inadequate to meaningfully review its exercise of discretion in decertifying most of the class, the matter was remanded for reconsideration.

Because the state legislature amended the Kansas Restraint of Trade Act, effective April 18, 2013, the case’s precedential value is limited to cases pending before that date, the court noted.

The case is No. 108,988.

Attorneys: Robert W. Coykendall (Morris, Laing, Evans, Brock & Kennedy, Chartered) for Sue O’Brien. James M. Armstrong (Foulston Siefken LLP) and Rohit K. Singla (Munger, Tolles & Olson, LLP) for Leegin Creative Leather Products.

Companies: Leegin Creative Leather Products, Inc.

Cases: Antitrust KansasNews