In 2000, bids are taken on Claude Monet's 'Nympheas' at… (Louis Lanzano / For The Times )
New York painter Chuck Close, L.A. artist Laddie John Dill and the estate of L.A. sculptor Robert Graham are plaintiffs in a pair of class-action lawsuits filed on Tuesday against the New York operations of Sotheby's and Christie's, alleging that the auction houses violated the California Resale Royalty Act.
The 1977 California statute, a rare attempt in the U.S. to provide visual artists with a financial cut of appreciating artworks they made but no longer own, grants artists 5% of the proceeds from the resale of their artwork under certain conditions. One is that the seller lives in California or the sale occurs in California. The law applies only to one-of-a-kind examples of fine art — defined as "an original painting, sculpture, or drawing, or an original work of art in glass." Editioned photographs and prints are not included. The rights provided by the law extend to the artist's heirs for up to 20 years after the artist's death.
Eric M. George of Browne George Ross LLP in L.A. filed the complaints in federal court, charging the auction houses with "failure to comply" with the law by not withholding this royalty for the artists and by routinely going out of their way "to conceal the fact of a seller's California residency."
George said the suits had their genesis in an $8.57-million jury verdict he won while representing collector Halsey Minor against Christie's last year.
After that, he began hearing from others who had assorted gripes against auction houses.
"I spoke to a good number of artists," George said, and he learned about frustrations over their inability to find out when an auction seller was from California and therefore owed the 5% royalty under state law. The law went into effect in 1977.
"It's a wholesale systematic denial by Sotheby's and Christie's of artists' rights," George said. "How they've gotten away with it for this long is a mystery."
He said that there does not appear to be a problem with two other auction houses, Phillips de Pury & Company and Bonhams & Butterfields. "It's my understanding they follow the law," George said. With art dealers, he said, it appears that compliance is "spotty at best."
Close, Dill and Graham's estate are plaintiffs named on both suits. The foundation of L.A. painter Sam Francis, who died in 1994, also appears as a plaintiff in the suit against Christie's.
The law was inspired by European visual arts royalties like the French "droit de suite" as well as the entertainment-industry model of residuals. The California Arts Council, which is in charge of distributing royalties when auction houses or galleries cannot locate artists, maintains information about the law on its website, and a list of artists whom it is seeking for payment.
The Wall Street Journal quoted a spokeswoman for Sotheby's as calling the claim meritless. A spokeswoman for Christie's told the paper that the auction house looks forward to debating the validity of the law itself in court.
If successful, these suits could be more than a slap against Christie's and Sotheby's: They could affect how galleries with resale practices throughout California run their business — or shift business elsewhere.
Times staff writer Mike Boehm contributed to this report.