Chuck Close v. Sotheby's, Inc.
894 F.3d 1061
9th Cir.2018Background
- California enacted the Resale Royalties Act (CRRA) effective Jan 1, 1977, requiring sellers or their agents to withhold 5% of resale proceeds of "fine art" and pay it to the artist (or California Arts Council if artist cannot be found); the right is unwaivable.
- Plaintiffs (artists and estates) sued Sotheby’s, Christie’s, and eBay seeking CRRA royalties dating back to 1977; class claims encompassed sales within the 3-year statute and undisclosed sales back to the CRRA’s effective date.
- District court dismissed, holding the CRRA preempted by federal copyright law (both express and conflict preemption); eBay was also held not liable as a seller/agent.
- Ninth Circuit considered whether CRRA claims are preempted by the 1976 Copyright Act (§301(a)) and whether any residual claims conflict with the 1909 Act.
- Court held CRRA claims for sales on/after Jan 1, 1978 (post-1976 Act) are expressly preempted by §301(a), but CRRA claims for sales during 1977 (between Jan 1, 1977 and Dec 31, 1977) are not preempted under Morseburg and were remanded for further proceedings.
- Court declined to resolve the Takings Clause challenge on the record, leaving takings issues to the district court on remand if any pre-1978 claims remain.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the CRRA is expressly preempted by the 1976 Copyright Act (§301(a)) for post-1978 sales | CRRA is a monetary/royalty right that does not regulate distribution and thus is not equivalent to §106(3) distribution right | CRRA creates a right equivalent to federal distribution/exhaustion (first sale) and therefore falls within §301(a) preemption | Expressly preempted for sales on/after Jan 1, 1978; those claims dismissed |
| Whether CRRA claims for sales in 1977 (between CRRA effective date and 1976 Act effective date) are preempted by the 1909 Copyright Act (conflict preemption) | Morseburg reasoning controls: CRRA coexists harmoniously with 1909 Act; no conflict | Defendants: Morseburg has been implicitly overruled by later cases (Quality King, Kirtsaeng) and en banc Sam Francis | Morseburg remains binding; 1977 claims not preempted and remanded to district court |
| Whether eBay is liable as a seller or seller’s agent under the CRRA | Plaintiffs: online marketplace can be liable for sales it facilitates | eBay: did not exist in relevant pre-1978 period and is not a seller/agent for claimed sales | No claims remain against eBay after express preemption of post-1978 sales; appeal against eBay affirmed |
| Whether the CRRA effects an unconstitutional taking (Fifth Amendment) | Defendants: CRRA takes artists’ property post-sale without just compensation | Plaintiffs: CRRA defines property rights and is a permissible allocation under state law | Court declined to decide; left takings arguments to district court on remand if 1977 claims remain |
Key Cases Cited
- Goldstein v. California, 412 U.S. 546 (state law not preempted by 1909 Act where laws operate harmoniously)
- Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (first sale doctrine limits copyright owner’s control after initial sale)
- Morseburg v. Balyon, 621 F.2d 972 (9th Cir. 1980) (CRRA did not conflict with the 1909 Act; state droit de suite permissible under 1909 Act)
- Quality King Distribs., Inc. v. L’anza Research Int’l, Inc., 523 U.S. 135 (first sale doctrine’s broad application)
- Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (first sale doctrine applies irrespective of where copies were made)
- Sam Francis Found. v. Christie’s, Inc., 784 F.3d 1320 (9th Cir. en banc 2015) (CRRA’s extraterritorial application violates dormant Commerce Clause; severability preserved)
- Maloney v. T3Media, Inc., 853 F.3d 1004 (9th Cir. 2017) (two-prong test for §301(a) express preemption)
- Adobe Sys. Inc. v. Christenson, 809 F.3d 1071 (9th Cir. 2015) (discussion of §109 first sale doctrine)