[CORRECTION: A previous version of this post wrongly attributed the LA Times‘ “insightful, incisive analysis” of the legal issues surrounding the resale royalty issue to Jori Finkel, who had written the LA Times‘ initial report on the artists’ lawsuits against Sotheby’s and Christie’s (claiming resale royalties), as well as this follow-up. But the article discussed (and praised) in the post below was written by the indispensable Mike Boehm.]
In my analysis yesterday of the class-action lawsuit filed against Sotheby’s and Christie’s by artists and deceased artists’ beneficiaries, I noted that the auction houses’ obligations to collect resale royalties for transactions under the 1976 California law seemed clear. Therefore, I predicted, the respondents’ legal strategy will likely be an attempt to attack the validity of the law itself.
Mike Boehm of the LA Times has now moved that ball way down the field. In today’s article, Artists’ Royalty Suit May Hinge on Constitutional Issue, he analyzes in great detail the legal objections likely to be raised against the law itself, if Sotheby’s and/or Christie’s attempt to challenge its constitutionality.
It’s and insightful, incisive analysis, informed by comments that he elicited from legal experts. Mike gets one thing wrong, though. He writes:
If Christie’s and Sotheby’s were to lose the class action, they’d be on
the hook not only for 5% plus interest on each disputed sale, but for
attorneys fees and—the real potential haymaker to their bottom lines—punitive damages.
Not necessarily so. The plaintiffs are asking for all that. Ultimately, though, the question of how much the auction houses owe (or don’t) will be up to the court to decide.
In the meantime, Christie’s and Sotheby’s are finally getting around to (perhaps) challenging a law that’s been on the books for 25 years but which they have long ignored. We’ll have to await their response to the complaint to learn their justification, if any, for that prolonged disregard.