Saks Fifth Avenue is facing allegations by three former sales associates claiming that it conspired with brands operating shops-in-shop to keep staff from jumping ship.
In their lawsuit filed in New York federal court on Friday – which also named Gucci America Inc., Brunello Cucinelli USA Inc., Louis Vuitton and other luxury labels, the former employees claimed they missed out on job opportunities at other brands because of alleged “no-hire” agreements between Saks and those brands.
One of the plaintiffs, Angelene Hayes, a former sales consultant at a Saks location in Beachwood, Ohio, alleged that she heard about such hiring restrictions from both a human resources director at Saks, and from a Louis Vuitton store manager there. She claims that when she e-mailed the Louis Vuitton store manager in 2015 about potential opportunities at the brand, the manager demurred and mentioned the alleged agreement in her e-mailed reply to Hayes.
The Louis Vuitton store manager at the time, Hope Frate, wrote, “Unfortunately we have an agreement with Saks that we cannot take their employees and have to wait six months before hiring. We have strict guidelines we have to follow. Sorry,” according to a copy of the e-mail dated July 2015 and attached to the complaint.
A representative for Louis Vuitton declined to comment.
And a source familiar with the matter said Saks does not have such no-hire agreements.
The suit seeks to represent a proposed class of luxury retail employees employed by the defendants named in the suit, which also include Gucci America Inc. and Brunello Cucinelli USA Inc.
Brunello Cucinelli denied such agreements existed, with its president of North America, Massimo Caronna, saying in a statement Wednesday: “We don’t have any agreement of this type. It would go against the important values of human relations we believe in.”
Representatives for Gucci could not be reached for comment.
It’s fairly common for retail employees to move between brands. Before she worked at Saks, where she earned $17 an hour, Hayes had held sales and service positions at Gucci and Louis Vuitton, according to the complaint.
But the specifics of whether any anticompetitive practice took place may depend on the dynamics at play.
U.S. antitrust laws generally take a dim view of such agreements between competitors, which are seen as “restraints of trade” and raise concerns about their potential to freeze wages and lessen mobility in the labor market, antitrust and labor experts said. In this case, the court would likely examine whether such agreements existed, what the competition dynamics between Saks and these other brands were like, and whether it affected hiring practices.
The complaint, for instance, describes Louis Vuitton and the other luxury brands as “leased entities,” a reference to these brands having stores within Saks department stores. The court would also likely consider that dynamic between Saks and the brands setting up shops at its locations, antitrust attorneys said.
“It depends on a lot of the facts,” said A. Christopher Young, a partner at Pepper Hamilton LLP who advises clients on antitrust issues and is not involved in the case. “What’s important is to understand the context in which [any] agreement is made.”
If the suit progresses toward discovery, the phase where each side asks the other for evidence and information, the plaintiffs would likely try to unearth any formal no-hire agreements, or, if there isn’t one in writing, try to show if there was a pattern of restrictive hiring practices.
“We are eager to vindicate the rights of all employees who have been affected by these anticompetitive practices and look forward to preparing the case for trial,” said Innessa Huot, a partner at litigation firm Faruqi & Faruqi, who represents the plaintiffs. The plaintiffs are also being represented by the Joseph Saveri Law Firm Inc.