Times are tough for blue chip auction houses—except in the record-breaking auction prices department. Sotheby's is enmeshed in an ongoing and increasingly embarrassing labor dispute, and now Sotheby's and Christie's are being sued by a group of artists—including Chuck Close—for withholding resale royalties. What are "resale royalties"? Well...
Resale royalties are the sum due to artists according to a little-known 1977 California state law, which "entitles artists to a royalty payment upon the resale of their works of art under certain circumstances." Though unique in the United States, similar laws exist elsewhere in the world, particularly in Europe.
The California law entitles artists (or, within 20 years of their death, their estates) to five percent from the seller of "an original painting, drawing, sculpture or original work of art in glass" that has been sold for more than the price for which it was purchased when the seller is a resident of California, or the sale has taken place in California. So, for instance, any time a Chuck Close painting is re-sold in California, or by a California resident, the artist should received five percent of the sum—assuming it's larger than the sum for which the seller purchased it.
But, the L.A. Times reports, in a pair of lawsuits in which Close, L.A. artist Laddie John Dill and the estate of L.A. sculptor Robert Graham are named as plaintiffs (the estate of late L.A. painter Sam Francis is also named as a plaintiff in the Christie's suit), New York's powerhouse auctioneers are accused of "failure to comply" with the law, and frequently taking deliberate measures "to conceal the fact of a seller's California residency."
This federal lawsuit will not only raise the profile of the obscure law—currently many affected artists aren't even aware it exist, and so don't collect royalties owed them—but depending on its outcome may affect the manner in which resales are (or are not) handled by galleries and auction houses in California. More importantly, it will hopefully make people wonder why such laws don't exist in other states.