Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007)

In Leegin Creative Leather Products, Inc. v. PSKS, Inc., the underlying dispute arose from Leegin's implementation of a "Brighton Retail Pricing and Promotion Policy" in 1997, which mandated that retailers, including PSKS, Inc. (operating as Kay’s Kloset), adhere to suggested retail prices for Brighton products. PSKS had been selling Brighton goods since 1995 and had established itself as a significant retailer for the brand, generating substantial profits from its sales. However, when PSKS began discounting Brighton products below the suggested prices, Leegin refused to supply them, leading to a conflict between the two parties. The procedural history of the case began when PSKS filed a lawsuit against Leegin in the United States District Court for the Northern District of Texas, claiming that Leegin's refusal to sell to them constituted a violation of antitrust laws under the Sherman Act. The district court ruled in favor of PSKS, applying the per se rule established in Dr. Miles Medical Co. v. John D. Park & Sons Co., which deemed minimum resale price maintenance agreements illegal. Leegin appealed the decision, and the case eventually reached the United States Court of Appeals for the Fifth Circuit, which affirmed the lower court's ruling. Leegin then sought review from the Supreme Court, which granted certiorari to address the broader implications of the case regarding antitrust law and resale price maintenance. The relevant background context includes the historical precedent set by the Dr. Miles case, which established a per se rule against minimum resale price maintenance agreements. This case marked a significant moment in antitrust law, as the Supreme Court was asked to reconsider whether such agreements should be evaluated under a more flexible rule of reason standard, which considers the competitive effects of the pricing policies rather than deeming them illegal outright. Leegin argued that its policy aimed to enhance consumer experience through specialized retailers, contrasting with larger retailers that often provided less personalized service. The case ultimately questioned the balance between promoting competition and allowing manufacturers to set pricing policies to maintain brand integrity.

Whether the Supreme Court should overrule the per se rule established in Dr. Miles Medical Co. v. John D. Park & Sons Co. and allow resale price maintenance agreements to be judged by the rule of reason under §1 of the Sherman Act.

The judgment is reversed.