Supreme Court Decision Legalizes Price Fixing — Texas Entrepreneur Sues Ladies’ Apparel Maker, Case Forges New Ground In Anti-Trust Law

FLOWER MOUND, Texas Highland Village, Texas entrepreneur Phil Smith has seen better days.

In 2001, he and his wife were riding a wave of success. Their company, PSKS, Inc., which operated three “Kay’s Kloset” locations around the metro-area, enjoyed a high tide of sales. Things were looking rosy.

Today, the outlook is grim. The company has closed two of its stores, and downsized the third, located in Flower Mound’s popular Parker Square shopping center. After a prolonged court battle with one of their most popular distributors, the Supreme Court ruled against him, despite two prior rulings in his favor by a jury and an appeals court. With their financial leeway shrinking and the loss of a line of big-ticket items, Smith is not as confident as he once was.

One of the most popular lines of leather products carried in their shops women’s handbags, clothing and accessories sold under the name “Brighton” is produced by the company Leegin, based in Industry, Calif. In 2002, Kay’s Kloset discounted a number of Brighton products, along with a wide swatch of their stock, for a seasonal sale.

“I was trying to compete with some of the other area businesses that also had Brighton products on sale,” said Phil Smith during a telephone interview. “It is perfectly normal that we’d be discounting some of our stock. Stores like ours have sales from time to time.”

When Brighton found out about it, however, the company reacted sharply.

“They stopped shipping their products to me,” said Smith. “Then they amassed a database on my customers through warranty cards, though special offers for registering their purchases