They appear to be left with two choices:
• stay with the class action, accept the compensation set by the US courts that relates only to transactions in the United States, and sign away any rights to pursue further claims in the US over transactions made elsewhere in the world; or
• opt out of the class action suit and retain the freedom to pursue a case in any court.
The compensation proposal, which awaits final Federal Court approval in Manhattan on February 2, gives buyers five per cent of the hammer price of each purchase under $50,000 plus an additional $2500 per item for pieces sold above that amount. It proposes that vendors should receive one per cent of the hammer price on each item consigned.
For dealers who have bought and sold more at Sotheby’s and Christie’s in the US than elsewhere, it would appear their best option is to sit tight in the class and if necessary challenge the amount of compensation from within the class; although a separate case brought under English law against the auction houses would still be possible, it would be severely compromised by the agreed terms of the US settlement (see below).
For dealers who have bought or sold nothing in the United States, it is possible to apply to be a part of a new class action lawsuit filed in the US courts seeking compensation for auctions conducted by Sotheby’s and Christie’s outside the US. The reason for doing this is that it is thought that pursuing cases through the US courts would have a better prospect of success because burdens of proof are less stringent than in UK courts and claimants should have better access to key witnesses. The law firms involved are Milberg, Weiss, Bershad, Hynes and Lorach, based in New York, and Cohen, Milstein, Hausfeld and Toll, based in Washington. However, as Neil Smith of the Society of London Art Dealers pointed out: “The auction houses may not have the ability to pay enough money at the end of the day to make this venture worthwhile.”
For dealers who have bought and sold more at both auction houses outside the US, but are still in line for a large amount of money from the settlement over US auctions, a considerable dilemma remains. For, as the settlement contract states: “Any class member who believes he or she may have a claim arising out of auctions held outside the United States should consider whether or not to forego the benefits of the proposed settlement... and exclude themselves from the class... taking into consideration the likelihood of recovering such foreign auction claims.” It would appear that in the American courts at least, one can either claim compensation for US auctions, or attempt to claim for non-US auctions, but not both. Class members, it goes on, “release all claims under federal, state and foreign laws that you may have against the defendants and certain affiliated persons based upon any alleged collusive activity between them”.
Associations won’t sue
The reference to “foreign laws”, moreover, would seem to imply that it is impossible to sue on the same course of action in England. This is how dealer association LAPADA, after consultation with lawyers, have interpreted this statement, saying in a letter to their members: “If you wish to retain your legal right to action outside America, then you will need to request exclusion from this settlement.” Another lawyer was more sceptical, wondering whether “the terms of the American contract would be respected by other jurisdictions”. Indeed, the document appears to indicate that the proposed settlement “...does not affect whether or not... foreign law claims based on auctions conducted outside the United States brought in a non-United States court or tribunal may be asserted by Class Members”. In other words, other countries may choose to ignore any agreement made in the US. Even so it would be difficult, say lawyers, to claim in the US and win a related case in England when the defendants produce a contract stating you had agreed not to pursue them in the matter again.
Neither SLAD, LAPADA or BADA (the British Antique Dealers’ Association) are considering legal action against Christie’s or Sotheby’s in the UK. “We would not encourage our members to take action in this country,” said Mr Smith. He also advised those of his members in line for compensation in America to stay in their class. Over a quarter of BADA members are liable for compensation over United States auctions, and Mark Dodgson said his organisation was still in discussion with their lawyers “about whether members should accept settlement or continue to pursue the auction houses through the courts”.
The directors of LAPADA “feel that the financial risks (of court action in the UK) outweigh any potential gain”, said chief executive Malcolm Hord. He cited the difficulty of issuing subpoenas to foreign nationals, the large burden of proof on the prosecution – more rigorous in the UK than the US – and the fact that the case would be heard by a judge rather than a jury, as key problems in mounting a case under English law. “This does not preclude, of course, any member or group of members initiating action,” he added.
Compensation dilemma for claimants in collusion case
Auction houses want disclaimer clause included before payment. Buyers and sellers given a January 5 compensation claim deadline as part of the class action in the Sotheby’s/Christie’s collusion case face a dilemma.
They appear to be left with two choices: