Christie's, Sotheby's Accused of Not Paying Artist Royalties

By Edvard Pettersson – Oct 18, 2011 9:27 PM ET

Christie’s Inc. and Sotheby’s (BID) were sued by artists who claim the auction houses failed to pay them royalties for works either sold in California or at auction by California sellers.

The Sam Francis Foundation, the estate of Robert Graham, and artists Chuck Close and Laddie John Dill said in complaints filed today in federal court in Los Angeles that the auctioneers violated California’s Resale Royalties Act by failing to pay them 5 percent of the sales price for their works.

The two auction houses don’t disclose whether a seller resides in California or whether a non-auction sale took place in California, which would entitle the artist or the artist’s estate to the royalty, according to the complaints. The plaintiffs seek to represent other artists in class-action cases and they seek unspecified damages.

“Although Christie’s has yet to be served with the complaint, it views the California Resale Royalties Act as subject to serious legal challenges,” Sara Fox, a spokeswoman for Christie’s in New York, said in an e-mailed statement. “Christie’s looks forward to addressing these issues in court.”

Diane Phillips, a spokeswoman for New York-based Sotheby’s, said in an e-mailed statement, “We believe the claim is meritless and it will be vigorously defended.”

In a separate complaint, the artists also accuse EBay Inc. (EBAY), the world’s biggest online marketplace, of failing to pay the royalties they say they are due under the California law. Representatives of San Jose, California-based EBay didn’t immediately respond to an e-mail seeking comment on the lawsuit after regular business hours.

The cases are Estate of Robert Graham v. Sotheby’s, 11-08604, and Sam Francis Foundation v. Christie’s, 11-08605, U.S. District Court, Central District of California (Los Angeles).

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.