The ruling by a judge in a district court of Manhattan last week resolved a dispute that threatened to upset the $537m settlement between Sotheby’s, Christie’s and 130,000 buyers and sellers who claimed they had been cheated in a commission-fixing cartel operated by the auctioneers since 1993.
The controversy erupted over a small clause in the initial settlement proposal that required plaintiffs to waive their right to pursue the auctioneers in the US courts on the issue of foreign sales. In order to mollify this faction, the auctioneers had agreed to give them $7m of discount vouchers towards future vendors’ commission charges from the $125m pool allotted to the 130,000 class-action members as part of the settlement.
But this did not address the denial of foreign claims in the US courts.
The resolution allowed Judge Lewis Kaplan to give his final approval to the settlement which, barring last-minute appeals, should see compensation being paid out by June. Such appeals are unlikely, with the issue of foreign claims resolved and the compensation package worth almost twice as much money as an economist estimated that the plaintiffs had been overcharged by the auctioneers. There is also the fact that many clients have grown tired of waiting for their windfall after more than 14 months of legal proceedings. Like the other plaintiffs, their payback will be five per cent of the hammer price paid on any item worth up to $50,000. On items purchased above that level, whether at $51,000 or $5.1m, the compensation is a flat rate $2500. Vendors are expected to receive one per cent of the hammer price on each sale.
The civil case is drawing to a close, but the criminal side of investigations is drawing to a climax, with the sentencing of Diana Brooks, disgraced former CEO of Sotheby’s, who admitted that she had fixed prices with Christie’s, due on May 23. Alfred Taubman, former chairman of Sotheby’s, who stepped down from his position at the same time as Brooks last year, continues to be the focus of the government investigation.
Judge sanctions US class action proposal
Some payouts expected by June. Buyers and sellers at Sotheby’s and Christie’s will now be able to sue the auctioneers through the United States courts over transactions that took place in London and elsewhere outside the US.
