Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Suit over wedding dress designer’s minimum retail pricing policies fails a second time, (Dec 5, 2014)

By Linda O’Brien, J.D., LL.M.

House of Brides, Inc., an online and brick-and-mortar retailer of wedding products, failed to state, in its amended complaint, antitrust and price discrimination claims against Alfred Angelo, Inc., a designer/manufacturer of wedding dresses, based on the manufacturer’s minimum retail pricing policies, the federal district court in Chicago has held (House of Brides, Inc. v. Alfred Angelo, Inc., December 4, 2014, Tharp, J.).

For more than 40 years, House of Brides was an authorized dealer of Alfred Angelo wedding products. In 2010, Alfred Angelo implemented marketing policies that included both a Manufacturer’s Suggested Retail Price (MSRP) and a Minimum Pricing Policy (MPP). The MSRP represented the expected retail price for online sales, and the MPP represented the minimum price for products sold at brick-and-mortar stores.

After House of Brides refused to agree to the minimum pricing policies, Alfred Angelo ceased supplying dresses to House of Brides. House of Brides filed suit, alleging violations of Section 1 of the Sherman Act and the Robinson-Patman Act. Specifically, House of Brides alleged that Alfred Angelo’s conduct reduced competition in the market for its wedding products by forcing consumers to pay artificially high prices. Additionally, the retailer contended that it was unable to fill existing customer orders or convert prospective customer inquiries into orders and the MSRP was set substantially higher than the MPP in order to prevent the plaintiff from competing with the designer’s retail stores. In January 2014, the defendant’s motion to dismiss was granted. House of Brides filed an amended complaint, and Alfred Angelo again moved for dismissal.

Price fixing. The court found that House of Brides failed to plausibly plead that the Alfred Angelo brand constituted a cognizable product market. The plaintiff’s assertion that Alfred Angelo products were unique and highly differentiated as to render other brands unsuitable substitutes was rejected as conclusory and unsupported. Moreover, House of Brides’ contention that discovery was needed to flesh out allegations concerning the product market were unpersuasive, given the long term business relationship with Alfred Angelo. Information necessary to state a claim should be readily available to House of Brides, the court noted.

Boycott. The plaintiff’s allegations did not support a claim under a horizontal or vertical boycott. House of Brides alleged that Alfred Angelo agreed with other retailers to boycott House of Brides from purchasing Alfred Angelo products. The only fact asserted to support its claim of a horizontal boycott was that other retailers complained about House of Brides’ failure to follow the pricing policies. According to the court, an allegation of competitor complaints about noncompliance alone was insufficient to show a horizontal conspiracy. Further, House of Bribes failed to allege facts showing that Alfred Angelo had market power to support a claim for an unlawful vertical restraint.

Price discrimination. To state a price discrimination claim under the Robinson-Patman Act, a plaintiff must allege that a seller made at least two relevant sales in interstate commerce, the products sold were of like grade and quality, the seller discriminated in price between the plaintiff and another purchaser, and the effect of the discrimination prevented competition to the advantage of the favored purchaser. The court noted that the plaintiff’s allegation – that Alfred Angelo failed to follow its own minimum pricing policy and discounted the sale of its own products – did not state that House of Brides was charged a different price than other purchasers or that its wholesale pricing to other retailers was discriminatory. Moreover, House of Brides’ allegation that Alfred Angelo instituted different policies to govern the online and retail prices charged by distributors did not state that the designer charged different prices to those distributors.

Since the retailer already had multiple opportunities to replead and remedy the deficiencies identified in its initial complaint, further amendment of the claims would be futile. Thus, the dismissal of the claims was with prejudice, the court concluded.

The case is No. 1:11-cv-07834.

Attorneys: James Kenneth Borcia (Tressler LLP) for House of Brides, Inc., House of Brides World's Largest Online Wedding Store, Inc., HOB Holding Corp., and HOB I Holding Corp. Peter E. Cooper (Lawrence, Kamin, Saunders & Uhlenhop) for Alfred Angelo, Inc.

Companies: House of Brides, Inc.; House of Brides World's Largest Online Wedding Store, Inc.; HOB Holding Corp.; HOB I Holding Corp.; Alfred Angelo, Inc.

Cases: Antitrust IllinoisNews