909 F.3d 1204
9th Cir.2018Background
- Plaintiffs (artists) sued Sotheby’s, Christie’s, and eBay under the California Resale Royalties Act (CRRA) seeking 5% royalties on resales dating back to the CRRA’s effective date (Jan. 1, 1977).
- The district court dismissed in-state CRRA claims as preempted by federal copyright law and held eBay not a seller under the CRRA; this court affirmed in part and reversed in part on appeal.
- This Court held CRRA claims based on sales on or after Jan. 1, 1978 (effective date of the 1976 Copyright Act) are expressly preempted, but CRRA claims for sales in 1977 are not preempted.
- After denial of rehearing, Sotheby’s and eBay applied for attorneys’ fees under the CRRA’s fee-shifting provision (Cal. Civ. Code § 986(a)(3)); plaintiffs argued fees were unavailable because the CRRA (and its fee provision) were effectively voided by preemption or conflicted with the Copyright Act.
- The panel concluded the fee-shifting provision remains enforceable and that defendants are prevailing parties for purposes of fee awards for the claims covered by the CRRA fee statute; the matter was referred to the Appellate Commissioner to calculate fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CRRA fee-shifting provision is unenforceable because the panel’s preemption holding rendered the CRRA "null and void" | Close: Panel’s ruling made CRRA unenforceable going forward, so its 1982 fee amendment can’t apply | Sotheby’s/eBay: Preemption is case- and claim-specific; a law on the books can be unenforceable in a case without being nonexistent or unamendable | Held: Preemption makes a statute unenforceable for particular claims but does not erase it; the fee provision survives as a valid state-law basis for fees in this action. |
| Whether the Copyright Act preempts the CRRA fee-shifting provision (express or conflict preemption) | Close: 1976 Copyright Act preempts the CRRA fee provision or otherwise bars its enforcement | Sotheby’s/eBay: The Copyright Act’s express preemption covers state rights equivalent to §106 rights (not fee provisions); conflict preemption does not apply because this suit asserts only state-law claims | Held: No express preemption (fees are distinct from §106 rights) and no conflict preemption here because the suit is purely state-law; CRRA fee provision applies. |
| Whether defendants are "prevailing parties" entitled to fees under §986(a)(3) | Close: Sotheby’s is not a prevailing party because some CRRA claims (1977 sales) remain on remand | Sotheby’s/eBay: California uses a pragmatic test; defendants prevailed on all claims that fall within the fee statute (claims after Jan. 1, 1978 and, per §986(f), fees apply only to sales on/after Jan. 1, 1983) | Held: Sotheby’s and eBay are prevailing parties for purposes of the CRRA fee-shifting provision as to the claims encompassed by that provision; fee award may be made even though some non-fee-shifting claims remain. |
| Procedural: Whether fee award must await final resolution of entire action | Close: Fees improper until the entire case is final | Sotheby’s/eBay: California law allows fee awards before full finality if victory on fee-bearing claims is secure | Held: Fees can be awarded now for the secured victories on fee-bearing claims; referral made to Appellate Commissioner to calculate amount. |
Key Cases Cited
- Close v. Sotheby’s, Inc., 894 F.3d 1061 (9th Cir. 2018) (panel opinion addressing CRRA preemption and fee entitlement)
- Marbury v. Madison, 5 U.S. 137 (1803) (judicial-review principle that courts decide conflicts between laws)
- Gibbons v. Ogden, 22 U.S. 1 (1824) (Supremacy Clause establishes federal law displaces conflicting state law)
- Trollinger v. Tyson Foods, Inc., 370 F.3d 602 (6th Cir. 2004) (preemption viewed as case- and claim-driven)
- Ryan v. Editions Ltd. W., Inc., 786 F.3d 754 (9th Cir. 2015) (fee-shifting statute interpretation in copyright context)
- Jankey v. Lee, 290 P.3d 187 (Cal. 2012) (California law on mandatory fee-shifting and prevailing-party interpretation)
- S.F. Culinary, Bartenders & Serv. Emps. Welfare Fund v. Lucin, 76 F.3d 295 (9th Cir. 1996) (state fee claims cannot be used to circumvent federal fee standards when federal claims overlap)