A pair of class action lawsuits were filed on Tuesday against Christie's and Sotheby's alleging that the auction houses violated the California Resale Royalty Act.
The 1977 California statue grants artists 5% of the proceeds from the resale of their artwork, if the seller lives in California or the sale occurs in California. The law applies to original, one-of-kind artwork and does not cover editioned prints or photographs.
Artist's heirs are included in the resale rights for up to 20 years after the artist's death.
Painter Chuck Close and the foundation for Sam Francis (who died in 1994) are among the plaintiffs.
Eric M. George of Browne George Ross LLP in L.A. filed the complaints in federal court, charging the two auction houses with "failure to comply" with the law by not withholding this royalty for the artists. Artists allege that Christie's and Sotheby's have not readily disclosed the locations of sellers.
George says artists began contacting him after he represented San Francisco-based technology entrepreneur Halsey Minor in a suit against Christie's last year in which Minor was awarded $8.57 million in damages.
According to George, auction houses Bonhams & Butterfields and Phillips de Pury & Company appear to comply with the California law and dealers are "spotty at best."
The outcome of these suits might dramatically alter the resale art business in California, and the location of sales.