Auction House Settlement OKed - Brief Article

Art in America, April, 2001 by Stephanie Cash, David Ebony

In late February, the Federal District Court in Manhattan approved the $512-million settlement of the lawsuit filed against Christie's and Sotheby's [see "Artworld," Dec.'00]. Judge Lewis A. Kaplan ruled that 130,000 auction house customers, who claim to have been cheated as a result of a price-fixing scheme, should be compensated with cash and credit certificates beginning in early March. The judge also ordered that the auction houses cover claims made by customers engaged in foreign transactions, which were not included in the original suit. He additionally demanded that the auction companies publicize the existence of the discount certificates, which buyers and sellers can use for house credit within the next four years, after which time they may be redeemed for cash. They can also be sold on the open market. Kaplan further approved payment of $26.75 million to the law firm, Boles, Schiller & Flexner, which represents the plaintiffs. Twenty percent of this fee will be paid in the form of the certificates.

Unless there are court challenges to the decision, the ruling marks the end of the civil trial involving the four-year auction house probe. The criminal investigation of the companies, however, continues apace. Federal prosecutors are now focused on Sotheby's former chairman A. Alfred Taubman, who denies wrongdoing in the price-fixing conspiracy, although former CEO Diana D. Brooks, who pleaded guilty in the case, indicated in her testimony that she followed his instructions in the collusion scheme.