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Sam Francis Foundation sues nine galleries for artists' royalties

The class-action lawsuits are a major attempt to gain payment under an often-ignored California resale statute.

November 02, 2011|By Jori Finkel and Mike Boehm, Los Angeles Times

For decades, gallery owners in California have wished that the state's Resale Royalty Act of 1976, which provides artists with 5% of the sales price of artworks when they are resold under certain conditions, would just go away. While some dealers follow the law and pay the royalty to artists, others do not.

But it's hard to track what artists may be owed in either case, given the difficulty of getting the galleries to disclose information on their sales.

Now, working to force some disclosures as well as recover money, the foundation of the late abstract painter Sam Francis is the lead plaintiff in class-action lawsuits filed Tuesday against nine galleries in Northern and Southern California. The complaints, alleging that these galleries "failed and refused" to pay the royalty to the foundation, were filed in Los Angeles and San Francisco Superior Courts by Los Angeles attorney Eric George, who last month filed class-action suits against Sotheby's and Christie's in New York and EBay in San Jose citing the same law.

Together, these suits represent the most serious attempt yet to put teeth in a law that experts say is little publicized, rarely enforced and virtually untested in the courts.

It's a law whose very constitutionality is a matter of debate: Some experts think California's law requiring a royalty for visual artists conflicts with the federal Copyright Act of 1976.

The galleries sued this week include some of the state's busiest galleries specializing in what are known as secondary-market sales: Ace, Manny Silverman, Leslie Sacks, Hamilton/Selway, Denis Bloch and Lora Schlesinger galleries in Los Angeles, and Scott Richards, Martin Lawrence and Hackett/Mill in San Francisco.

George expects that other artists or their estates could come forward. "There's a good possibility that we will name additional galleries as defendants," he said.

"There are very few galleries that comply with the resale royalty requirement. For every one instance where I hear about an artist receiving a royalty payment, I hear 10 stories of artists who have not," George said.

The law provides that artists or their heirs receive a 5% royalty on certain resale transactions provided that the sale takes place in California or that the seller resides in California. The law applies only to the sale of fine art, defined as an "original painting, sculpture, or drawing, or an original work of art in glass" that sells for more than $1,000. The 5% is taken from the sale price, not the profit. These rights under the law extend to artists' heirs for up to 20 years after the artist's death.

Debra Burchett-Lere, the head of the Sam Francis Foundation, which was created after the artist's death in 1994, declined to comment on the lawsuits.

Some of the galleries sued also declined to comment, saying that they hadn't consulted their attorneys. But others did respond. Lora Schlesinger said, "I always pay [the royalty] to artists when I sell something for them. I didn't know it applied to artists who are no longer living."

Doug Chrismas of Ace Gallery said, "I don't think I've been involved in the resale of a Sam Francis from the secondary market. All of the works we've sold were purchased directly from Sam or his estate."

Denis Bloch said, "I don't see a reason for me to be sued by the foundation — I sell prints. Never in my life have I sold an 'original' Sam Francis painting."

"This is news to us," said John Obrecht, managing director of Hackett/Mill. "Hackett/Mill has not even sold a Sam Francis. I think we'll be able to move through this fairly easily. I think they threw a big net to see what they would catch."

George said he based his investigation, in the absence of access to gallery receipts or invoices, on "the websites of the galleries, third party websites such as artnet.com, and conversations with artists and artists representatives." The complaints do not provide specific examples of resales, titles of artworks or prices.

California is the only state with a resale royalty for visual artists. Artist Robert Rauschenberg, state Sen. Alan Sieroty and an artists rights group called Artists for Economic Action all lobbied for the bill, which Gov. Jerry Brown signed into law in 1976. The intention was for artists to participate in the financial appreciation of their own artwork, as artists in France do under the "droit de suite." Similar bills in other states have failed to gain support.

Los Angeles art law attorney Christine Steiner calls the California law "an obscure act more honored in the breach than the observance, meaning that more people seem to deal with it by not following it than following it."

She points to several reasons why the law is controversial, from the "burden it places on California trade" to questions about its constitutionality.

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