15 October 1998: The French crystal maker Baccarat is having a tough time dissolving its marriage with Ross-Simons, a retailer located in Rhode Island (US) that sells most of its goods at discount pri…
15 October 1998: The French crystal maker Baccarat is having a tough time dissolving its marriage with Ross-Simons, a retailer located in Rhode Island (US) that sells most of its goods at discount prices, including Baccarat crystal. According to a recent press report, Baccarat is trying to get out of a 1992 agreement that ended an antitrust suit filed by Ross-Simons in the US District Court in Providence. Ross-Simons says Baccarat does not want to be associated with a discount retailer, and so Ross-Simons has filed a lawsuit to enforce the agreement. Chief Judge Ronald R. Lagueux recently refused to decide the case without a trial. He denied Baccarat“s motion for summary judgement, saying the facts surrounding the agreement are in dispute. He did, however, dismiss some of Ross-Simons“s damage claims. Two years ago, another federal judge ordered the French company to continue doing business with the company after deciding that Ross-Simons was likely to win its case. Darrell Ross, president of Ross-Simons, said the decision is “another victory in a string of victories,” for his company. He noted that Baccarat is working closely with Geary“s of Beverly Hills, California, which Ross and other members of this family acquired last year but is run seperately from Ross-Simons. Once Ross-Simons wins its lawsuit, Ross said, he hopes it and Baccarat can resume an amicable relationship. The lawsuit against the US subsidiary of the Paris-based Baccarat provides a glimpse into the workings of Ross-Simons, a privately held company that employs about 900 people, 500 of them in Rhode Island. The company has seven stores in Rhode Island, North Carolina, Georgia, Massachusetts and New Jersey selling jewelry, tableware, giftware, crystal and similar items, but 85% of its annual sales are from its catalogue and telemarketing operations. It distributes about 55 million catalogues each year. Ross said he expects sales this year to be more than US$ 200 million. Nearly all Ross-Simons“ sales are at less than suggested retail prices. Discounts often are as much as 50%. A key to its sales strategy is a large bridal registry that draws about 15,000 new registrants each year. Each registration is likely to result in sales of many wedding gifts. Prior to 1992, Baccarat refused to sell its crystal to Ross-Simons, “asserting the philosophy that luxury items such as Baccarat crystal are not appropriate for discounting,” Lagueux said. When Baccarat became the exclusive distributor of Haviland Limoges china in 1991, it removed that line from the Rhode Island company. Ross-Simons fought back by filing a lawsuit in 1992 accusing Baccarat of violating federal and state antitrust laws. The two sides settled out of court, signing an agreement in November 1992, under which Ross-Simons would resume selling Limoges china and become an authorized dealer of Baccarat crystal. Baccarat agreed not to drop Ross-Simons as an authorized dealer or otherwise discriminate against the company because of its discount pricing. With the agreement in place, Baccarat sold US$ 1 million worth of crystal a year to Ross-Simons, but the truce was short-lived. In 1994, Jean-Luc Negre became Baccarat president, replacing Francois de Montmorin, who executed the 1992 agreement. Negre met with Ross in October 1994 and said discounting luxury crystal was inapproriate. The next year, Baccarat refused to grant authorized-dealer status to a new Ross-Simons store in Raleigh, North Carolina. Later that year, Negre announced a new authorized-dealer programme. Its centerpiece was an agreement that barred dealers from advertising Baccarat products in catalogues in which more than a quarter of the space was devoted to discount goods. Ross-Simons, whose catalogues are almost entirely filled with discount items, refused to sign the proposed agreement. In January 1996, Baccarat terminated Ross-Simons as an authorized dealer. Ross-Simons went back to court to enforce the 1992 settlement. Judge Francis J. Boyle, then the District Court“s senior judge, issued a preliminary injunction ordering Baccarat to continue selling to Ross-Simons, saying that otherwise, Ross-Simons“ business and reputation would be irreparably harmed. The US First Circuit Court of Appeals upheld Boyle“s preliminary injunction, but Baccarat pressed for a summary judgement dismissing Ross-Simons“ claim. Lagueux took the case when Boyle retired. Baccarat asserted that the 1992 settlement is invalid because it has no time limit and therefore can be terminated at will by either party. Baccarat also contended that the settlement benefitted only Ross-Simons. Lagueux rejected both arguments. “The contract is not so indefinite that it cannot be enforced by this court,” he said.