What pulled the trigger?
It all started with a small, independent retailer, Kay’s Kloset of Lewisville, Texas, not unlike many of the mom-and-pop CE dealers. Kay’s (known as PSKS in court documents) was a retailer of the Brighton brand of leather women’s accessories—belts, shoes, handbags, etc.—offered by Leegin Creative Leather Products.
According to court transcripts, Leegin had a history of working with independents. Founded in 1991, Leegin expanded to around 5,000 retail establishments, mostly independent, and they made a point of not selling to larger retailers like Wal-Mart and Sam’s Club because it believed such retailers did not offer the kind of service their products demanded.
Kay’s Kloset began selling the Brighton brand in 1995 and, eventually, those products accounted for 40 to 50 percent of the stores profits. In 1997, Leegin instituted the “Brighton Retail Pricing and Promotion Policy”, under which Leegin would not sell to retailers that discounted Brighton products below list—although there was an exception for products that were not selling well and for those that the retailer did not plan on reordering. Furthermore, Leegin adopted a policy to give retailers a sufficient margin on products, so they could provide better service. They additionally created a “Heart Store Program” that offered retailers incentives in exchange for adherence to the pricing policy.