In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, takes a look at the D&O liability risks that can emerge when a company bundles products or services, as well as the costs that can be involved in defending companies from allegations of anticompetitive conduct. I would like to thank Sarah for allowing me to publish her article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article.
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A recently dismissed class action complaint targeting Hermès’ purported anticompetitive sales practices raises interesting antitrust considerations for D&O underwriters: when a company bundles products or services, does D&O risk increase?
While the antitrust and pled causes of action in the case against Hermès will be discussed in more detail, the allegations include that the French luxury brand unlawfully ties access to its coveted Birkin handbags to the purchase of other products. Specifically, the plaintiffs claimed that Hermès leverages the demand and scarcity of its Birkin handbags to coerce customers into buying ancillary goods such as scarves, shoes, and jewelry. The antitrust complaint also claims that Hermès incentivizes the sales of ancillary goods through a commission structure, while no commission is tied to a Birkin sale.
The mention of Birkin handbags in a lawsuit was enough to get my attention; however, the legal theory surrounding Hermès’ alleged tying is similar to prior and pending antitrust litigation targeting companies that allegedly force consumers to bundle goods and services. While this specific type of antitrust lawsuit may, like the one against Hermès, be dismissed, defending a company against alleged anticompetitive behavior may be costly for D&O insurers.
In an effort to gauge whether the risk of alleged antitrust exposure to D&O underwriters may increase when companies tie goods and services, I review the causes of action pled against Hermès, the order dismissing the antitrust complaint, and discuss similar antitrust lawsuits involving tying.
The putative class action complaint brought on behalf of national and California consumers against Hermès asserted, in part, that the company violated the Sherman Act, California’s Cartwright Act, and California’s Unfair Competition Law. In particular, the plaintiffs alleged that Hermès’ illegal tying arrangement conditioned access to purchase its highly coveted Birkin handbags on customers first purchasing other luxury products (shoes, scarves, jewelry, home goods).
The U.S. Supreme Court has historically condemned tying of patented goods to services, finding such activity to be per se illegal. And while the Hermès Birkin bag is not patented, it is protected by trademarks and trade dress rights.
And, according to the plaintiffs, Hermès sales associates were instructed to only offer Birkin bags to consumers with a “sufficient purchase history,” and that Hermès sales commission structures incentivized associates to sell ancillary products, because there are no commissions earned on Birkin sales. The complaint against Hermès further alleged that, due to extreme demand and scarcity, the company wielded monopoly power over Birkin bags and that Hermès exploited this power to boost sales of other goods, coercing consumers to purchase tied goods.
Notably, the individual named plaintiffs pled that their experiences included spending tens of thousands on Hermès products but being told to further “support the business” to qualify for another Birkin purchase. Another plaintiff allegedly attempted multiple purchases of a Birkin handbag but was consistently told he needed to buy other items first to qualify for a Birkin purchase.
Importantly for D&O underwriters, class complaints may be re-pled as amended complaints after an initial motion to dismiss is filed, briefed, and decided on by a court. Legal expenses incurred during motion practice, including additional party fact discovery to support underlying allegations, may be covered if an antitrust exclusion has been carved back from a D&O policy or affirmatively endorsed as a sublimit.
The Northern District of California dismissed the plaintiffs’ second amended complaint against Hermès with prejudice in September 2025. The Court held that the plaintiffs, despite their alleged individual experiences, failed to plausibly plead the core antitrust elements of market definition, market power, and harm to competition.
Specifically, the Court found no facts to support the plaintiffs’ allegations that Hermès possessed market power or restrained competition in the wide array of tied products, from scarves to home goods. Hermès agreed to assume a per se framework for tying claims; however, the Court found that not all tying is automatically illegal, particularly in luxury markets where exclusivity strategies may promote competition rather than harm it.
The dismissal of the lawsuit against may be helpful for D&O underwriters considering providing antitrust coverage. Particularly that the Court, in deciding Hermès did not violate antitrust laws by tying products, differentiated between brand-driven exclusivity and true competition-restricting conduct.
Discussion
The Hermès antitrust complaint may resemble other tying antitrust cases where plaintiffs have alleged that access to a highly desired product was conditioned on unwanted purchases.
For example, in Brantley v. NBCUniversal, consumers alleged that cable programmers tied popular channels (ESPN, TNT) to bundles of less desirable channels, effectively coercing purchases. Similarly to the Hermès case, the Ninth Circuit in the NBCUniversal dismissed the putative antitrust class action complaint, holding that merely being forced to buy something extra (additional channels) is not enough; plaintiffs must plead actual harm to competition, not just consumer inconvenience.
Also in the Hermès antitrust litigation, the District Court found plaintiffs had not plausibly defined a relevant market or shown competitive injury, rejecting the claim that reserving Birkins for “worthy” customers through ancillary purchases alone constituted an antitrust violation.
In contrast to the courts’ dismissals of the antitrust complaints brought against Hermès and NBCUniversal, the antitrust case against Live Nation and Ticketmaster brought by the DOJ (and various states) survived dismissal. In the pending Southern District of New York (SDNY) case, the DOJ and states alleges that Ticketmaster leverages dominance in concert promotion and venue control to force exclusivity in ticketing, raising barriers to rival platforms and inflating fees.
In March, the SDNY Court found that the plaintiffs sufficiently alleged a Section 1 of the Sherman Act claim by asserting thatlarge amphitheaters are the tying product and concert promotion services are the tied product. Also, the DOJ and states have alleged that artists are forced to use Live Nation’s promotion services if they want to perform in its amphitheaters. Unlike the consumer-framed Birkin and NBCUniversal suits, Live Nation and Ticketmaster’s alleged conduct is portrayed as a market-structuring exclusion that harms the competition systemwide.
This may make it a stronger candidate for enforcement. Taken together, the three cases highlight a key distinction: antitrust liability may not arise from exclusivity or high consumer demand alone. Thus, for D&O underwriters, it may be helpful to understand a company’s marketplace and market share when deciding whether allegations of competitive harm may be brought by consumers or the federal government (DOJ).
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