Friday 27 January 2012

Motion to dismiss filed by Sotheby's in California resale royalty claim

In October 2011, a lawsuit against Sotheby's and Christie's commenced in Los Angeles (reported in Art and Artifice here). The claimants - a class of artists including Chuck Close, Laddie John Dill and the estate of Robert Graham (and, in Christie's case, the Sam Francis Foundation) - are arguing that the auction houses unlawfully failed to collect the 5% artist's resale royalty that California law demands. The state's Resale Royalty Act (CRRA) says that:

'When a work of fine art is sold at an auction or by a gallery, dealer, broker, museum, or other person acting as the agent for the seller, the agent shall withhold 5 percent of the amount of the sale, locate the artist and pay the artist'.

At the time the suit was filed Christie's stated that 'it views the California Resale Royalties Act as subject to serious legal challenges'. Now co-defendant Sotheby's has duly filed a motion to dismiss the artists' suit. Its main arguments are:

  1. that the CRRA 'violates the Commerce Clause of the US Constitution in that it constitutes an impermissible direct regulation of interstate commerce and serves no legitimate local interest' (that is, it violates the constitutional principle that no state may control commerce in any other state); 
  2. that the CRRA 'effects a per se taking of private property in violation of the US and California constitutions', i.e. that the resale percentage is an unlawful taking of the auction houses' own property in a sort of legalised theft; and
  3. that 'the Copyright Act of 1976 both expressly and impliedly preempts the CRRA'.  

The motion is due to be heard on or after 12 March.

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