Chuck Close v. Sotheby's, Inc.

909 F.3d 1204
Court of Appeals for the Ninth Circuit·Decided December 3, 2018·No. 16-56234·Published·Cited by 13 cases

Opinion

FOR PUBLICATION

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

CHUCK CLOSE; LADDIE JOHN DILL, No. 16-56234 individually and on behalf of all others similarly situated, D.C. No.

Plaintiffs-Appellants, 2:11-cv-08604-

MWF-FFM

v.

SOTHEBY’S, INC., a New York corporation, Defendant-Appellee.

THE SAM FRANCIS FOUNDATION; No. 16-56235 CHUCK CLOSE, individually and on behalf of all others similarly D.C. No. situated; LADDIE JOHN DILL, 2:11-cv-08605- individually and on behalf of all MWF-FFM others similarly situated, Plaintiffs-Appellants,

v.

CHRISTIE’S, INC., a New York corporation, Defendant-Appellee.

2 CLOSE V. SOTHEBY’S

THE SAM FRANCIS FOUNDATION; No. 16-56252 CHUCK CLOSE, individually and on behalf of all others similarly D.C. No. situated; LADDIE JOHN DILL, 2:11-cv-08622- individually and on behalf of all MWF-PLA others similarly situated, Plaintiffs-Appellants,

ORDER

v.

EBAY INC., a Delaware corporation, Defendant-Appellee.

Filed December 3, 2018

Before: Danny J. Boggs,* Jay S. Bybee, and Paul J. Watford, Circuit Judges.

Order

*

The Honorable Danny J. Boggs, United States Circuit Judge for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation.

CLOSE V. SOTHEBY’S 3

SUMMARY**

Attorneys’ Fees

The panel granted defendants-appellees’ applications for attorneys’ fees pursuant to Ninth Circuit Rule 39-1.6 and the California Resale Royalties Act, following the panel’s opinion affirming in part and reversing in part the district court’s dismissal of claims for resale royalties.

In Close v. Sotheby’s, Inc., 894 F.3d 1061 (9th Cir. 2018), the panel held that plaintiffs’ claims for resale royalties under the CRRA were expressly preempted by the 1976 Copyright Act, and the panel affirmed the dismissal of claims involving art sales postdating the Copyright Act’s effective date of January 1, 1978. The panel reversed the dismissal of CRRA claims to the extent that they involved sales occurring before January 1, 1978, but after the CRRA’s effective date of January 1, 1977.

Granting the applications for attorneys’ fees, the panel held that defendants were entitled to fees under the CRRA’s fee-shifting provision, which mandates a fee award to the prevailing party in any action under the CRRA. The panel rejected plaintiffs’ argument that fees were not available under the CRRA because the effect of the panel’s decision was to void the CRRA, including its fee-shifting provision. The panel referred the fee applications to the Appellate Commissioner to calculate the amount of fees to be awarded.

**

This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.

4 CLOSE V. SOTHEBY’S

ORDER

In Close v. Sotheby’s, Inc., 894 F.3d 1061 (9th Cir. 2018), we held that plaintiffs’ claims for resale royalties under the California Resale Royalties Act (“CRRA”) are expressly preempted by the 1976 Copyright Act. We thus affirmed the district court’s dismissal of plaintiffs’ claims that involved any art sales postdating the Copyright Act’s effective date of January 1, 1978. We reversed, however, the district court’s dismissal of plaintiffs’ CRRA claims to the extent they involved sales occurring before January 1, 1978 (but after the CRRA’s effective date of January 1, 1977), because those claims are not preempted by federal copyright law.

Defendants Sotheby’s and eBay have filed applications for attorneys’ fees pursuant to Ninth Circuit Rule 39-1.6. They seek fees under the CRRA fee-shifting provision, which mandates a fee award to the “prevailing party in any action brought under” the CRRA. Cal. Civ. Code § 986(a)(3). Plaintiffs argue that fees are not available under the CRRA because the effect of our decision was to void the CRRA, including its fee-shifting provision. We disagree. We hold that Sotheby’s and eBay are entitled to fees under the CRRA fee-shifting provision and refer the applications to the Appellate Commissioner to calculate the amount of fees to be awarded.

I. BACKGROUND

The background of this case is detailed in the panel’s opinion. In brief, the California Resale Royalties Act of 1976 (“CRRA”) required the seller of a work of fine art or the seller’s agent to withhold 5% of the sale price and pay it to the artist. Cal. Civ. Code § 986(a). Artists could bring an

CLOSE V. SOTHEBY’S 5

action to enforce this requirement under the following provision:

If a seller or the seller’s agent fails to pay an artist the amount equal to 5 percent of the sale of a work of fine art by the artist or fails to transfer such amount to the Arts Council, the artist may bring an action for damages within three years after the date of sale or one year after the discovery of the sale, whichever is longer. The prevailing party in any action brought under this paragraph shall be entitled to reasonable attorney fees, in an amount as determined by the court.

Id. § 986(a)(3).

Plaintiffs filed this action against Sotheby’s, Christie’s, and eBay seeking royalties for resales of artwork dating back to the CRRA’s January 1, 1977 effective date. After claims involving out-of-state sales were filtered out on dormant Commerce Clause grounds, see Sam Francis Found. v. Christies, Inc., 784 F.3d 1320, 1322 (9th Cir. 2015) (en banc), the parties litigated the claims involving in-state sales. The district court granted defendants’ motion to dismiss those claims on two grounds: (1) the CRRA claims were preempted, and (2) eBay was not a seller subject to the CRRA.

On appeal, we affirmed in part, reversed in part, and remanded. Close, 894 F.3d at 1076. We held that all CRRA claims that involved sales after the effective date of the 1976 Copyright Act—January 1, 1978—were expressly preempted by the Copyright Act’s preemption provision, 17 U.S.C.

6 CLOSE V. SOTHEBY’S

§ 301(a). Close, 894 F.3d at 1068–72. We thus affirmed the district court’s dismissal of those claims. Because this holding disposed of all claims against eBay, we declined to rule on eBay’s alternative argument that it was not subject to the CRRA. Id. at 1068 n.6.

We further held that any CRRA claims that involved sales before the 1976 Act’s effective date, to the extent they exist, are not expressly preempted, because the operative federal law at the time of these sales—the 1909 Copyright Act—did not contain an express preemption provision. Id. at 1072. Nor are such claims barred by conflict preemption. Id. at 1072–74 (discussing Morseburg v. Balyon, 621 F.2d 972, 977–78 (9th Cir. 1980)). We thus reversed the district court’s dismissal of any claims involving sales between the CRRA’s effective date of January 1, 1977 and the 1976 Act’s effective date of January 1, 1978—i.e., sales that occurred in 1977. Id. at 1074.

After we denied a petition for rehearing, Sotheby’s and eBay filed timely applications for attorneys’ fees pursuant to Ninth Circuit Rule 39-1.6, seeking fees under the CRRA fee- shifting provision, Cal. Civ. Code § 986(a)(3). Plaintiffs oppose these applications, arguing that the CRRA fee-shifting provision is preempted by federal law and that Sotheby’s is not a prevailing party. Because this is a diversity case, state law governs both “the right to fees” and “the method of calculating the fees.” Mangold v. Cal. Pub. Utils. Comm’n, 67 F.3d 1470, 1478 (9th Cir. 1995). The preemptive effect of a federal statute is a question of federal law. See Allis- Chalmers Corp. v. Lueck, 471 U.S. 202, 214 (1985).

CLOSE V. SOTHEBY’S 7

II. ANALYSIS

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Chuck Close v. Sotheby's, Inc., 909 F.3d 1204 (9th Cir. 2018).

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