Monday, November 3, 2014
Court Grants En Banc Review of Constitutional Challenge To California Law Giving Artists Resale Royalties
From Staff and Wire Service Reports
A ruling striking down a state law that broadly allows California artists to collect resale royalties will be reviewed en banc by the Ninth U.S. Circuit Court of Appeals.
Judge Sidney Thomas, the court’s en banc coordinator, said in a brief order Thursday that a majority of the court’s unrecused active judges had voted to hear Sam Francis Foundation v. Christie’s, Inc., 12-56067, consolidated with actions by the same plaintiffs against Ebay and Sotheby’s.
Judges Jacqueline Nguyen, who heard the case prior to her elevation from the U.S. District Court for the Central District of California, and Kim M. Wardlaw recused themselves.
The plaintiffs—who include painter and photographer Chuck Close, 73, known for his massive-scale photorealist portraits; artist Laddie John Dill; heirs of California sculptor Robert Graham; and the foundation for painter and printmaker Sam Francis—brought suit in 2011, but the actions were dismissed by Nguyen the following year. The judge ruled that the state act infringed upon the Constitution’s Commerce Clause.
Because the Resale Royalties Act effectively controlled commerce outside California, affecting businesses incorporated in New York, Nguyen said the law could not survive its “offending provisions,” even if other parts of the statute were lawful.
“Were the court to merely to sever the extraterritorial provisions of the statute, it would create a law that the legislature clearly never intended to create,” Nguyen wrote.
She cited the example of a California resident placing a painting by a New York artist for sale with Sotheby’s in New York, where at the subsequent auction the painting is bought by a New York resident. In this instance, the judge said, the California law requires the New York company to withhold the amount of the royalty from the sale price, and either locate and pay the artist in New York or remit payment to the California Arts Council should the artist not be located.
The act would also permit the New York artist to sue New York-based Sotheby’s under California law should the auction house fail to collect and remit the applicable royalty to the artist, the judge noted.
A three-judge panel considered the plaintiffs’ appeal of that ruling this past April but surprised the parties in August with a call for more briefing instead of the expected opinion.
The August order directed the parties to brief the court on whether the case should be heard en banc, and mentioned the possibility of a conflict in case law on the dormant Commerce Clause.
The panel from the April hearing seemed inclined to rule against California’s law.
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