Waiting for the Other Shoe to Drop: Will State Courts Follow Leeginl

This past June, in a sharply divided five-to-four opin? ion, the U.S. Supreme Court decided the landmark case Leegin Creative Leather Products, Inc. v. PSKS, Inc.1 and held that, henceforth, minimum resale price maintenance would be examined under the more lenient rule of rea? son rather than remaining a per se violation of Section 1 of the Sher? man Act.2 In doing so, the Court overruled a ninety-six year-old precedent, Dr. Miles Medical Co. v. John D. Park & Sons Co.3 Simply defined, resale price maintenance (RPM), which is also known as vertical price-fixing, involves a supplier or franchisor's attempt to control the price at which its distributors, dealers, or franchisees resell the goods sup? plied to them. Under the rule of per se illegality, a defendant was not permitted to offer a defense or jus? tification for the practice. The per se rule was particularly bur? densome to franchisors attempting to create national account pricing programs, whereby the franchisor would negotiate the price and other contract terms under which its franchisees would provide goods or services to large national or regional customers.4 Under the rule of reason, by contrast, in order to prevail on an RPM claim, an antitrust plaintiff must prove sub? stantial harm to competition in the market as a whole (inter brand competition), not just to competition between franchisees of a particular brand. Further, a defendant supplier or franchisor has the right to offer evidence of off-setting pro competitive justifications for the practice, such as the provi? sion of high levels of service or the protection of brand equity.5 The advent of the post-Leegin world has been welcomed by many suppliers with great anticipation. It may be that RPM will prevail but there are several impediments to such an out? come. The Leegin majority itself recognized the anticompeti? tive potential in some RPM schemes, especially those that Richard A. Duncan