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Friday, May 24, 2024 | Back issues
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Artists Say Sotheby’s, Christie’s|and eBay Cheat on Royalties

LOS ANGELES (CN) - In three federal class actions, Chuck Close and other artists accuse New York-based Sotheby's and Christie's, and Internet auctioneer eBay, of "willful and systematic violation" of their obligation to pay royalties on artworks sold in California or at auction by California residents. The artists say the auctioneers "affirmatively engaged in a pattern of conduct intended to conceal" the sales, and the money due to the artists.

Close, of New York, L.A. artist Laddie John Dill and the estate of L.A. sculptor Robert Graham claim the auction houses and eBay violated the California Resale Royalties Act of 1977, which entitles visual artists or their estates to 5 percent of the proceeds from resale of their artwork in California or out of state by a California resident.

The law, which defines fine art as "an original painting, sculpture, or drawing, or an original work of art in glass," applies to works by artists who are alive or who have been dead for less than 20 years.

The foundation of California painter Sam Francis, who died in 1994, is a plaintiff in the lawsuits against Christie's and eBay.

The artists say the defendants sold their artwork at California auctions and on behalf of California sellers, but failed to withhold royalties due.

The virtually identical complaints state: "Under California's Resale Royalties Act (section 986 of California's Civil Code) (the 'act'), Sotheby's was required to withhold at the time of the auction or sale, and then pay to the artist (or agent or estate thereof) within 90 days, five percent of the amount of such sales (herein, the 'royalty'). More specifically, the act obligated Sotheby's to remit the royalty when it sold the fine art 'at an auction' and/or when otherwise serving as the 'seller's agent.'

"Sotheby's failed and refused to pay the royalty owed to the plaintiffs and class members, and also failed and refused to apprise plaintiffs and class members when a fine art sale occurred that would entitle class members to the royalty due. (Nor did Sotheby's, as required by the act - where 'unable to locate and pay the artist within 90 days' - transfer the amount of the royalty to California's Art Council, for deposit 'in an account in the Special Deposit Fund in the State Treasury.')" (Parentheses in complaints.)

The artists say Christie's and eBay engaged in similar practices to conceal auctions and sales that entitled them to royalties.

"Worse still, Sotheby's [/Christie's] affirmatively engaged in a pattern of conduct intended to conceal from plaintiffs and class members those circumstances in which a fine art sale - because it involved a California resident seller, or because the sale took place in California - entitled plaintiffs and class members to a royalty," according to the complaints against the auction houses. "Sotheby's [/Christie's] custom and practice is to conceal the fact of a seller's California residency, or the fact that a sale took place in California, from communications with the public concerning auctions and sales of fine art. By way of several examples Sotheby's [/Christie's] auction catalogs generally conceal from the reader the state of residency of a seller of fine arts, and Sotheby's [/Christie's] will refuse - upon inquiry - to reveal said information. None of these practices is necessary to maintain the anonymity of a seller of fine art, since Sotheby's [/Christie's] could - but refuse to - identify the state of residency (and not the identity) of a fine art seller, or could otherwise denote by the inclusion of a symbol in their catalog materials ... that the lot is one for which the artist will be entitled to the royalty due under California law. Similarly, Sotheby's [/Christie's] conceal information from the public that would enable a reader to learn whether a non-auction sale of fine art took place in California." (Parentheses, but not brackets in complaints. The complaints are identical here except for the name of the defendant.)

Close and his co-plaintiffs claim to represent hundreds of artists and artists' estates whose work was sold by California residents or at auctions organized by the defendants in California, and who have not received royalties.

They seek class certification, royalties, compensatory and punitive damages for violations of California's Resale Royalties Act and California's Unfair Competition Law, and they want the defendants to pay royalties on all future California artwork sales.

They are represented by Eric George with Browne George Ross.

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