Last May, Sotheby’s and Christie’s rejoiced when a federal judge declared the California Resale Royalty Act unconstitutional. The ruling put an end to the 33-year-old law, which mandated that auction houses and galleries give California artists five percent of the price of a work of art when it is resold under specific circumstances. The fight, however, is not over. The artists and estates who brought the class action suit are ready for a rematch.
On February 28, lawyers for artists Chuck Close, Laddie John Dill, and the estates of Robert Graham and Sam Francis filed their opening brief with the Ninth Circuit Court of Appeals in an effort to overturn federal judge Jacqueline Nguyen’s ruling. (The class’s legal team first filed a motion to appeal the day after the law was declared unconstitutional, but it has not been reported until now.)
“I think the district court went too far,” said Ira Bibbero of Browne George Ross LLP, a lawyer for Close and the rest of the plaintiffs. In her ruling, Judge Nguyen concluded that because Resale Royalty Act applied to artwork sold both in California and by a California resident outside the state, it violated the U.S. Constitution’s Commerce Clause. (That clause gives the power to regulate interstate commerce to the federal government, not individual states.) “I don’t think that this is something that should have been thrown out at this stage in the case,” noted Bibbero.
In early March, two artists’ advocacy groups — California Lawyers for the Arts and the New York-based Artists Rights Society — submitted amicus briefs in support of the plaintiff’s appeal. “Artists are the only members of the creative community who do not receive a residual or royalty for the later resale of their work — composers do, actors do,” Theodore Feder, president of the Artists Rights Society, told ARTINFO of his motivation to support the appeal.
Laws like California’s Resale Royalty Act exist throughout Europe (where they are known as “droit de suite”) as well as in Australia and several South American countries. But such royalties have proved elusive for artists in the United States. Until the class action suit was filed last fall, few even knew the California law existed — and if they did, “getting auction houses to pay was almost always futile,” said Feder.
A bill introduced to Congress last year would make resale royalty rights for artists into federal law. It is currently in need of a new co-sponsor following the retirement of senator Herb Kohl of Wisconsin.
In the meantime, the best hope California artists have of pocketing residuals from their artwork rests with the Ninth Circuit. In the opening brief, the class’s lawyers rely in part on a concept that will be familiar to those who follow art law: the rule of agency. Although judge Nguyen stated in her ruling that the California law “explicitly regulates applicable sales of fine art occurring wholly outside California,” the plaintiffs claim there is no legal difference between a Californian selling a work of art at auction in New York and a Californian selling a work of art in his home state.
The auction house, they argue, is simply acting as an agent for the collector, regardless of its physical location. “The acts of an agent are conducted on behalf of the principal and, thus, are deemed to be the equivalent of acts by the principal himself — it is as though the California seller were himself or herself conducting the sale,” they write.
The auction houses will file their reply briefs next month. In a statement, a representative from Christie’s said the auction house “looks forward to defending the lower court’s decision.” A Sotheby’s representative said, “We believe that the district court’s decision dismissing the complaint was correct, and we believe that it will be affirmed on appeal.”