In what could be a landmark judgment for art law, a California judge struck down California's Resale Royalties Act Thursday on Constitutional grounds, according to Thompson Reuters. ARTINFO reported in March that the judge had issued a tentative dismissal of the case, but the auction houses were waiting for a formal ruling.
The law was enacted to guarantee artists a cut of the proceeds of a secondary market sale, but in her decision, judge Jacqueline Nguyen sitting in U.S. District Court in Los Angeles, declared the law a violation of the Commerce Clause of the U.S. Constitution, which gives the power to regulate interstate commerce to the federal government. The judge sided with the legal teams hired by auction houses Christie's and Sotheby's, and against a class of artists including Chuck Close and Laddie John Dill.
In her decision, the judge wrote:
"Under its clear terms, the (Resale Royalties Act) regulates transactions occurring anywhere in the United States, so long as the seller resides in California. Even the artist — the intended beneficiary of the CRRA — does not have to be a citizen of, or reside in, California. For these reasons, the court finds that the (law) has the 'practical effect' of controlling commerce 'occurring wholly outside the boundaries' of California even though it may have some 'effects within the state.' Therefore, the (law) violates the Commerce Clause."
The lawyer for the artists, Eric George of the firm Browne George, said in an email to Thompson Reuters that the decision "marks a departure from established constitutional law." He added that he hopes the 9th Circuit Court of Appeals in San Francisco will take up the question and overturn the ruling. However, that could be a long shot. Though Nguyen was sitting by designation in District Court in L.A., she was confirmed as a 9th Circuit appellate judge in 2009 (note: not the very conservative, Sothern 11th circuit, as reported by Reuters), so her ruling could be an indication of things to come in the California appeals system.
That said, this Commerce Clause decision only says that California cannot regulate resale royalties on sales funneled through New York auction houses. That leaves the door wide open for Congress to pass a federal droit de suite bill, as has been recently discussed.