Sam Francis Foundation v. Christies, Inc.

concurring in part.

I concur in the majority opinion insofar as it holds the California Resale Royalty Act, Cal. Civ.Code § 986 (“the Act”), unconstitutional as applied to out-of-state art sales conducted by out-of-state agents. As the Act so applied “directly controls commerce occurring wholly outside the boundaries” of California, it violates the dormant Commerce Clause. Healy v. Beer Inst., 491 U.S. 324, 336 , 109 S.Ct. 2491 , 105 L.Ed.2d 275 (1989); see also Valley Bank of Nev. v. Plus Sys., Inc., 914 F.2d 1186, 1189-90 (9th Cir.1990).

But I would stop there. The majority opinion, in my view, unnecessarily decides that the Act is unconstitutional as applied to out-of-state art sales conducted by California residents as well. The partial dissent also reaches this issue, arriving at the opposite conclusion. Yet none of the parties before us are California sellers, nor does the record contain any evidence pertaining to out-of-state sales by California residents. Furthermore, the Act imposes somewhat different obligations on California sellers and sellers’ agents. Compare Cal. Civ.Code § 986(a) with id. § 986(a)(1).

That the Act’s requirement that out-of-state agents “withhold…

*1322 Opinion by Judge GRABER; Partial Concurrence and Partial Dissent by Judge REINHARDT; Concurrence by JUDGE BERZON.

OPINION

California’s Resale Royalty Act requires the seller of fine art to pay the artist a five percent royalty if “the seller resides in California or the sale takes place in California.” Cal. Civ.Code § 986(a). Plaintiffs in these consolidated appeals are artists and the estates of artists. Sitting en banc, we address Plaintiffs’ allegation that Defendants — two auction houses and an online retailer- — violated the Act by failing to pay mandatory royalties on sales of fine art. Reviewing de novo the district court’s order dismissing this action, Zadrozny v. Bank of N.Y. Mellon, 720 F.3d 1163, 1167 (9th Cir.2013), we hold that the Act’s clause regulating sales outside the state of California facially violates the “dormant” Commerce Clause but that the offending provision is severable from the remainder of the Act. We return the case to the three-judge panel for its consideration of the additional issues raised by the parties on appeal.

A. Background

The Act requires that, “[wjhenever a work of fine art is sold and the seller residés in California or the…

concurring in part and dissenting in part.

In 1976, California passed the California Resale Royalty Act (the Act) — a law that, for the last 39 years, has secured invaluable benefits for talented artists. The Act requires that when a fine art sale takes place in California or the seller of the art (sometimes referred to in this opinion as the owner) resides in California, the seller or the seller’s agent must pay a five-percent royalty to the artist. Cal. Civ.Code § 986(a). 1 Under the Act, when a wealthy *1327 collector of modern art purchases for several million dollars a work of art that the prior owner bought for a minimal amount from a then-unknown young artist, the now-well-known artist will for the first time receive a measure of reasonable compensation for the art that he created.

In the case before us, the defendants who challenge the statute are not the seller, the buyer, or even the artist, but two New York auction houses who under the Act are the sellers’ agents. 3 The Act imposes certain duties on them with respect to the disbursement of the royalty payments. The auction houses argue that because the Act imposes those duties in connection with art sales that take…

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SAM FRANCIS FOUNDATION; ESTATE No. 12-56067

OF ROBERT GRAHAM; CHUCK

CLOSE; LADDIE JOHN DILL, D.C. No. Plaintiffs-Appellants, 2:11-cv-08605-

MWF-FFM

v.

CHRISTIES, INC., a New York corporation, Defendant-Appellee.

SAM FRANCIS FOUNDATION; ESTATE No. 12-56068

OF ROBERT GRAHAM; CHUCK

CLOSE; LADDIE JOHN DILL, D.C. No. Plaintiffs-Appellants, 2:11-cv-08622-

MWF-PLA

v.

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

ESTATE OF ROBERT GRAHAM; No. 12-56077

CHUCK CLOSE; LADDIE JOHN DILL,

individually and on behalf of all D.C. No. others similarly situated, 2:11-cv-08604- Plaintiffs-Appellants, MWF-FFM v.

OPINION

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

Appeals from the United States District Court for the Central District of California Michael W. Fitzgerald, District Judge, Presiding

Argued and Submitted En Banc December 16, 2014—Pasadena, California

Filed May 5, 2015

Before: Sidney R. Thomas, Chief Judge, and Harry Pregerson, Stephen…