E-Photo
Issue #27  3/11/2001
 
Judge Approves Massive Settlement of Class Action Lawsuits Against Sotheby's and Christie's

By Alex Novak

U.S. District Judge Lewis Kaplan approved a settlement possibly worth over a half billion dollars in a consolidated class-action lawsuit brought on behalf of buyers and sellers at Christie's and Sotheby's U.S. auctions from 1992. The class action alleged these customers were overcharged because the auctioneers colluded on commission fees.

Meanwhile a different federal judge approved a $70 million settlement of a shareholder class-action lawsuit against Sotheby's related to the same scheme.

The settlement of the suit on behalf of auction buyers and sellers, which the auction houses agreed to pay last fall, includes $412 million in cash and the balance in certificates that can be used to receive discounts on future commission fees at either auction house. These discount certificates have a face value of $125 million, although a market value of only $100 million.

The settlement does not apply to buyers and sellers who participated in auctions overseas and opted out of the class action suit. Last month the judge dismissed lawsuits brought by participants in overseas auctions, principally in London, on grounds that U.S. antitrust law would not apply. Buyers and sellers in foreign auctions can still sue in foreign courts under foreign law, according to the settlement terms, but foreign jurisdictions may not permit the class action lawsuits allowed for under U.S. law.

Former Sotheby's Holdings President and Chief Executive Diana Brooks has pleaded guilty to criminal charges related to the scheme and is cooperating with the government. Sotheby's itself also pleaded guilty to criminal charges and will pay a $45 million fine. Christie's cooperated early with a government investigation into the scheme and was not named in criminal charges.

Former Sotheby's Chairman Alfred Taubman had agreed this past September to pay more than $156 million of Sotheby's half of the settlement of the customer class action case. Taubman has also agreed to contribute $30 million toward the shareholder's class action settlement.

Taubman has not yet been charged criminally, but Kaplan's ruling noted published reports that Taubman is the target of a grand jury investigation.

Sotheby's, apparently in a move to help pay for all of this (although denied by the auction house), has announced that it will cut its worldwide staff back by about 8%.

Novak has over 47 years experience in the photography-collecting arena. He is a long-time member and formally board member of the Daguerreian Society, and, when it was still functioning, he was a member of the American Photographic Historical Society (APHS). He organized the 2016 19th-century Photography Show and Conference for the Daguerreian Society. He is also a long-time member of the Association of International Photography Art Dealers, or AIPAD. Novak has been a member of the board of the nonprofit Photo Review, which publishes both the Photo Review and the Photograph Collector, and is currently on the Photo Review's advisory board. He was a founding member of the Getty Museum Photography Council. He is author of French 19th-Century Master Photographers: Life into Art.

Novak has had photography articles and columns published in several newspapers, the American Photographic Historical Society newsletter, the Photograph Collector and the Daguerreian Society newsletter. He writes and publishes the E-Photo Newsletter, the largest circulation newsletter in the field. Novak is also president and owner of Contemporary Works/Vintage Works, a private photography dealer, which sells by appointment and has sold at exhibit shows, such as AIPAD New York and Miami, Art Chicago, Classic Photography LA, Photo LA, Paris Photo, The 19th-century Photography Show, Art Miami, etc.