When a group of artists including Chuck Close and Laddie John Dill filed a class action lawsuit against Christie's and Sotheby's for violating the California Resale Royalty Act, they probably knew they'd be in for a lengthy legal battle. But now the auction houses are looking to end the fight early. On Thursday, Christie's and Sotheby's filed a joint resolution to dismiss the artists' suit, which was filed in U.S. District Court in California. The law, they argue, is "unconstitutional, and therefore unenforceable."
The resale act mandates that artists are entitled to five percent of the sale price of any artwork resold in California or by a California resident for over $1,000. As it stands now, California is the only state in the union to have such a law, and the act has been inconsistently enforced since it was passed in 1976 — not only by auction houses but also by galleries who deal on the secondary market. In the original suit, filed in October of last year, Close, Dill, the estate of sculptor Robert Graham, and the Sam Francis Foundation accused the houses of concealing the identities of California sellers so they did not have to pay the resale royalty fee.
The auction houses hinted at their plans to attack the constitutionality of the law back when the suit was first filed. Christie's said in an early statement that "it views the California Resale Royalties Act as subject to serious legal challenges." The motion to dismiss shows just what legal challenges they had in mind. The auction houses argue that the law is unconstitutional because it contradicts the Commerce Clause, which says that no state law should seek to regulate economic activity outside that state. To provide some backup arguments, they also allege that the resale law is preempted by the national Copyright Act, which "entitles a lawful owner of a copyrighted work to resell that work without restriction," the Art Law Blog points out. California's resale royalty law has been challenged in court twice before, according to the book "Art Law: The Guide for Collectors, Investors, Dealers & Artists," and in both cases the law was upheld. Nevertheless, the book's authors Ralph Lerner and Judith Bresler have said that "some question remains as to the constitutionality" of the law.
This relatively obscure legal issue has made headlines several times in recent months. A bill recently proposed in Congress seeks to make a resale royalty into national law, similar to the "droit de suite" laws that currently exist in Europe. California artist Mark Grotjahn is also suing collector Dean Valentine under California's Resale Royalty Act, arguing that he refused to give him the five percent fee to which he was entitled when the collector flipped his work.