Chuck Close and Other Artists Sue Christie's and Sotheby's for Alleged Systematic Royalties Fraud

Chuck Close and Other Artists Sue Christie's and Sotheby's for Alleged Systematic Royalties Fraud

A group of artists including Chuck Close and Laddie John Dill has been joined by the estate of artist Robert Graham in filing two class-action suits against the New York outlets of Christie's and Sotheby's for allegedly violating the 1977 California Resale Royalty Act. The foundation representing the estate of artist Sam Francis was included as a plaintiff in the lawsuit against Christie's as well, though not against Sotheby's, where a major exhibition of Francis's work is now on view.

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Under the California resale royalty law — which is similar to the "droit de suite" laws in the E.U.— any person selling an artwork by an artist who is either alive or has been deceased for fewer than 20 years must give the artist or the artist'sestate 5 percent of the sale's proceeds. The law applies to bothworks of art sold in California and those sold outside the stateby a California resident.

According to the LosAngeles Times, the lawsuits allege that Christie'sNew York and Sotheby's New York routinely violate the law by purposefullyconcealing the identities and residencies of sellers who live inCalifornia, thereby getting around paying the 5percent royalty due as agents for the sellers.

A spokesperson for Christie's revealed thatthe auction house has not yet seen the complaint against it. "AlthoughChristie's has yet to be served with the complaint, it views theCalifornia Resale Royalties Act as subject to serious legal challenges," thespokesperson said in a statement."Christie's looks forward to addressing these issues in court."

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A spokesperson from Sotheby's told ARTINFO, "We believe that we have meaningful defenses to the claims asserted and they will be vigorously defended."

Tim Nye, who represents Dill through his Nyehaus gallery in New York and his just-opened Nye + Brown in Los Angeles, provided ARTINFO with some insight into why the plaintiffs might be going after the major auction houses: that's where the money is. 

"I think the law was really enacted to — and this may apply to artists like Chuck Close — when there is a massive profit from a long period of time and the reseller stands to make a huge profit," he said. Nye, who focuses on primary and secondary sales of California artists from the 1960s, added that when applied to smaller galleries that take a thinner profit margin, the resale law "has the potential to kill deals."

He continued that artists don't always ask for the fee, but sellers should be prepared to give it out. "Everybody in theory is susceptible to the fee," he said. "I haven't always had the artists enforce it, but I always ask them if they expect the fee. Usually, artists whom I work with frequently know that it's not viable to do in certain cases."