Giordano v. Saks Inc.

• Decision Date: 31 January 2023
• Docket Number: 20-CV-833 (MKB)
• Court: U.S. District Court — Eastern District of New York
• Parties: SUSAN GIORDANO, ANGELENE HAYES, YING-LIANG WANG, and ANJA BEACHUM, on behalf of themselves and others similarly situated, Plaintiffs, v. SAKS INCOPORATED, SAKS & COMPANY LLC, SAKS FIFTH AVENUE LLC, LOUIS VUITTON USA LLC, LORO PIANA & C. INC., GUCCI AMERICA, INC., PRADA USA CORP., and BRUNELLO CUCCINELLI USA, INC., Defendants.

SUSAN GIORDANO, ANGELENE HAYES, YING-LIANG WANG, and ANJA BEACHUM, on behalf of themselves and others similarly situated, Plaintiffs,
v.
SAKS INCOPORATED, SAKS & COMPANY LLC, SAKS FIFTH AVENUE LLC, LOUIS VUITTON USA LLC, LORO PIANA & C. INC., GUCCI AMERICA, INC., PRADA USA CORP., and BRUNELLO CUCCINELLI USA, INC., Defendants.

No. 20-CV-833 (MKB)

United States District Court, E.D. New York

January 31, 2023

MEMORANDUM & ORDER

MARGO K. BRODIE, United States District Judge:

Plaintiffs Susan Giordano, Angelene Hayes, Ying-Liang Wang, and Anja Beachum commenced the above-captioned putative class action on February 14, 2020 and filed an Amended Complaint on May 1, 2020, against Saks Incorporated, Saks & Company LLC, and Saks Fifth Avenue LLC (collectively, “Saks”), and against Louis Vuitton USA Inc. (“Louis Vuitton”), Loro Piana & C. Inc. (“Loro Piana”), Gucci America, Inc. (“Gucci”), Prada USA Corp. (“Prada”), and Brunello Cucinelli USA, Inc. (“Brunello Cucinelli”) (collectively, the “Brand Defendants”), alleging violations of the Sherman Act, 15 U.S.C. § 1.^[1] (Compl., Docket Entry No. 1; Am. Compl., Docket Entry No. 44.) In the Amended Complaint, Plaintiffs allege that Saks and the Brand Defendants have agreed not to compete for employees in the luxury

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retail industry by not hiring luxury retail employees (“LREs”) who have worked at Saks within six months of such employment unless managers of both companies agree to an exception, resulting in depressed compensation for luxury retail employees and preventing Plaintiffs from changing jobs, advancing their careers, and seeking better compensation in the industry. (Am. Compl. ¶¶ 1-3.)

Defendants move to dismiss the Amended Complaint as time-barred and meritless, and Plaintiffs oppose the motion.^[2] For the reasons set forth below, the Court grants Defendants' motion to dismiss and grants Beachum leave to file a second amended complaint within thirty days from the date of this Memorandum and Order.

I. Background

Plaintiffs worked as skilled luxury retail employees at Saks.^[3] (Am. Compl. ¶¶ 8-11.) They received “extensive training on service, selling, and product-knowledge” and helped to maintain the image of the brand by creating “an atmosphere of exclusivity and opulence.” (Id. ¶¶ 1, 32-34.) Plaintiffs allege that Saks and the Brand Defendants have entered into express agreements to suppress luxury retail employees' compensation, (id. ¶¶ 2, 94), and further contend that these agreements artificially suppress their pay and decrease worker mobility in violation of Section 1 of the Sherman Act, (id. ¶ 3).

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a. Defendants' operations

Luxury brands portray themselves as distinct by “cast[ing] themselves as shaped by cultural and historical heritage, and market[ing] their luxury brands as rooted in longer-term traditions rather than constantly-changing fashions.” (Id. ¶¶ 22-24.) Defendants use “the customer service their sales staff supplies” to help make that impression. (Id. ¶¶ 27-28.) Luxury retail employees have “substantial skill and training” and are essential to maintaining the “aura of authenticity” necessary to luxury brands' identity. (Id. ¶¶ 27-30.) They are “knowledgeable about the particular products each Defendant manufactures and/or sells, as well as current trends,” (id. ¶ 34), and they form personal relationships with repeat customers, (id. ¶ 35). Because luxury retail employees are essential to luxury brands, Defendants make significant efforts to provide them with specialized training. (Id. ¶ 32.) For example, Prada teaches employees about the brand and trains them in salesmanship at its “Prada Academy,” and Saks “has robust employee training and emphasizes customer relationships with its employees.” (Id. ¶¶ 36, 38.)

Defendants compete with each other for luxury retail employees and are “the dominant employers” of such employees. (Id. ¶¶ 39-51.) Saks “is part of a retail conglomerate that employs approximately 40,000 employees worldwide”; LVMH (the parent company of Louis Vuitton and Loro Piana) “has more than 32,000 employees in the United States, including thousands of Luxury Retail Employees who sell luxury retail goods to consumers at Louis Vuitton and Loro Piana”; Gucci “employs more than 14,000 employees worldwide,” including hundreds of luxury retail employees in the United States; Prada employs “more than 13, 000

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employees worldwide,” including hundreds of luxury retail employees;^[4] and Brunello Cucinelli “employs more than 1,800 employees worldwide,” including hundreds of luxury retail employees in the United States. (Id. ¶¶ 42-49.)

In a properly functioning market, Defendants would compete for luxury retail employees. (Id. ¶ 53.) Defendants “would save on training costs and receive the immediate benefit of a well-trained, motivated salesperson who knows how to cultivate relationships with customers and enhance the Defendant's brand.” (Id.) Luxury retail employees would also benefit from the ability to move to luxury retailers with a more attractive compensation package. (Id. ¶¶ 52-64.) In addition, Defendants would be motivated to improve Plaintiffs' compensation and benefits if employees could freely leave for desirable positions. (Id. ¶¶ 65-76.) Because Defendants “carefully monitor and manage their respective internal compensation levels” to “[m]aintain[] approximate compensation parity” among employees with the same job titles and to maintain fixed compensation relationships between job titles, (id. ¶ 77-79), Defendants would hire skilled employees from their competitors with the effect of increasing overall compensation. (Id. ¶ 80.)

b. Allegations of no-hire agreements

The Brand Defendants maintain “no-hire” agreements with Saks, in which they agree not to cold-call Saks employees and offer to hire them. (Id. ¶¶ 80-85.) Plaintiffs contend that these no-hire agreements, which “have been in place since at least 2014,” are “an unreasonable restraint of trade,” and benefit Defendants at the expense of luxury retail employees. (Id. ¶¶ 8691.) These agreements only permit a Brand Defendant to hire a current or former Saks employee

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if (1) managers from both companies agree, or (2) the employee left Saks at least six months prior. (Id. ¶¶ 89-92.)

c. Plaintiffs' employment and attempts to work for the Brand Defendants

Giordano worked for Saks from November of 2012 until March of 2019, Hayes from August of 2013 until July 27, 2016, Wang from October of 2014 until April of 2016, and Beachum from February of 2016 until September of 2016 and from the summer of 2018 until December of 2019. (Id. ¶¶ 8-11.)

i. Giordano

In 2012, Saks hired Giordano as a sales associate in one of its New York stores. (Id. ¶ 155.) Giordano spent the first eighteen months of her employment working at the Loro Piana boutique within that store, and then sought employment at the standalone Loro Piana boutique on Madison Avenue, which paid “considerably higher wages.” (Id. ¶¶ 156-158.) The manager at the Loro Piana boutique “noted that [Giordano] would surely be an asset” to the store because of her knowledge of the brand but told Giordano that she could not hire her “because she was a current employee of Saks.” (Id. ¶ 160.) The manager added that “Loro Piana is never going to take you, and Saks is never going to let you go.” (Id. ¶ 161.)

Giordano continued to work at Saks, Saks promoted her, and she gained experience with additional luxury brands such as Brunello Cucinelli but remained unhappy with her compensation. (Id. ¶¶ 162-164.) She applied online for an open sales position at the Brunello Cucinelli boutique “in or around 2016,” and when she did not receive a response, met with a store manager “who agreed that [she] was indeed qualified” and accepted her resume. (Id. ¶¶ 165-169.) Giordano “never heard back from the manager or from Brunello Cuccinelli.” (Id. ¶ 170.) Between 2014 and 2017, Giordano “sent dozens of resumes and job applications to the

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other Brand Defendants and numerous other unnamed co-conspirators,” but was unable “to secure even an interview with the Brand Defendants.” (Id. ¶¶ 170-171.) Giordano sought the help of two recruitment agencies that specialized in the luxury retail industry, and they explained that she was qualified but “they would be unable to place her with any brand carried by Saks” unless she resigned her position at Saks and then waited several months. (Id. ¶¶ 173-183.) Giordano eventually obtained a position at a smaller luxury retailer not carried by Saks, but her compensation and her opportunities for upward mobility were affected by her inability to obtain employment at the Brand Defendants. (Id. ¶¶ 184-186.)

ii. Hayes

On August 3, 2013, Saks hired Hayes to work at its Beachwood, Ohio store, where she earned seventeen dollars an hour. (Id. ¶¶ 106, 109.) She had previously held positions at Gucci and Louis Vuitton and knew that she was qualified to earn a higher salary as well as commission. (Id. ¶¶ 108-110). Hayes also believed that she was qualified for a promotion to management at either of those companies. (Id. ¶¶ 111-112.) “Shortly after” Hayes was hired by Saks, she applied to work at Gucci. (Id. ¶ 113.) A store manager at Gucci told her that the company was “not allowed to hire Saks employees.” (Id. ¶ 115.) In December of 2014, Hayes asked the director of human resources at Saks whether she was free to seek a position with Louis Vuitton or other Brand Defendants. (Id. ¶¶ 116-117.) The director told Hayes she could not and explained that under no-hire agreements between Saks and the Brand Defendants, Hayes “must first resign from Saks and wait six months before the Brand Defendants would be allowed to hire [her],” unless Saks and a Brand Defendant mutually agreed to allow her to be hired earlier. (Id. ¶¶ 118-120.)

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On June 24, 2015, Hayes applied by email to work at Louis Vuitton, and a store manager told her via email that “we have an agreement...