As previously discussed on this blog, the validity of the California Resale Royalty Act (the “RRA,” Civil Code Section 986), a 1976 law that requires resellers of fine art to pay a royalty of 5 percent to the artists behind the works, was challenged in a dispute between a group of artists and Christie’s Inc., Sotheby’s Inc., and eBay Inc. The group of artists, which includes painter Chuck Close, brought three related proposed class actions in 2011 in the Central District of California, Estate of Robert Graham v. Sotheby’s Inc., 2:11-cv-08604; The Sam Francis Foundation v. Christie’s Inc., 2:11-cv-08605; and The Sam Francis Foundation v. eBay Inc., 2:11-cv-08622. The cases each involve allegations that the auction houses failed to honor their payment obligations under the RRA.

The auction house defendants recently filed a motion in the Central District of California arguing that the RRA is preempted by federal copyright law because it “runs headlong” into the first sale doctrine codified in the Copyright Act at 17 U.S.C. § 109(a). On April 11, 2016, Judge Michael Fitzgerald of the Central District agreed, and granted the motion to dismiss.