California “Autographed Memorabilia” Law Revised Following Comment by City Bar’s Art Law Committee and Others

By Megan E. Noh

Earlier this year, the New York City Bar Association’s Art Law Committee (the “ALC”) submitted comments to the California State Assembly on a law that was enacted in September 2016 and went into effect in January 2017: Assembly Bill 1570 (“AB-1570”), “Signed Memorabilia” [Ch. 258, Stat. 2016]. As noted therein, although AB-1570 was intended to effect consumer protections in response to a reportedly increased incidence of forged entertainment memorabilia, the law as drafted was ineffective and harmful to the business of various marketplace actors, including auctioneers and booksellers.

Specifically, the ALC identified the following problems with AB-1570:

• Overbroad in Scope

Rather than simply expanding the scope of an existing regulation on the sale of sports memorabilia (Cal. Civ. § 1739.7, enacted in 1992) to apply to entertainment memorabilia, AB-1570’s language defined the restricted material as including all autographed items being sold for $5 or more. This broad definition inadvertently captured, among other types of property, fine art, decorative objects (e.g. furniture, design, and jewelry), books, and manuscripts.

• Ambiguous Geographic Application

The text of AB-1570 defined regulated sales as those of collectibles “sold or offered for sale in or from” the state of California, but did not address the possibility that this language might capture out-of-state sales. This lack of clarity had the potential to implicate the Constitutional issue addressed by the Ninth Circuit in the context of the California Resale Royalty Act.

• Impractical Requirements, at Odds with Industry Practice

AB-1570 established a requirement that its regulated class of sellers create and issue to consumers “certificates of authenticity” for regulated items, and established numerous substantive requirements for those certificates, including the identification of a witness to the regulated item’s signature. These requirements were impractical (since, for example, the identification of a witness is often impossible where the signatory is long-deceased, as is the case for many antique collectibles), and ignored existing practices in the art industry (which recognizes the authority of specific individuals or organizations—not individual owners or sellers—to authenticate works by specific artists). Certain required disclosures of information about a regulated item’s owner also violated norms of the art industry, in which many sellers operate as agents for confidential principals, and raised privacy concerns.

Following the ALC’s submission of comments to the California State Assembly, several segments of the art and collectibles industry formed alliances to lobby for changes to AB-1570, and one bookseller filed a federal lawsuit challenging the statute. With the sponsorship of Senator Catherine Galgiani and Assemblyman Todd Gloria, the industry alliances introduced two bills (Senate Bill 579 and Assembly Bill 228 [“AB-228”]), each of which proposed modifications to the problematic language discussed above. Aspects of both bills were ultimately merged into AB-228 [Ch. 696, Stat. 2017], which was approved by California Governor Jerry Brown on October 12, 2017, effective in replacing AB-1570 immediately, with certain new requirements for sellers set to take effect on January 1, 2018.

AB-228 preserves AB-1570’s fundamental consumer protection objective by providing that regulated sellers must make an express warranty as to the authenticity of items of regulated memorabilia, but improves upon the prior law’s language by, inter alia:

• narrowing the class of regulated memorabilia specifically to sports and entertainment memorabilia, with explicit exclusions for fine art, decorative objects, books, and manuscripts;
• establishing a higher value threshold for regulated memorabilia ($50, raised from $5);
• narrowing the class of regulated sellers to exclude the consignors on whose behalf auctioneers act as agents;
• eliminating AB-1570’s ambiguous “in or from the state of California” language—the law is now silent as to geographic scope, and although proposals for more explicit language limiting its application to only those sales physically conducted in California were rejected, the removal of the language that could have been interpreted as capturing sales physically conducted outside the state is a significant improvement (and attempts by civil litigants to pursue claims arising from out-of-state sales would be vulnerable to jurisdictional defects as well as to challenges on the basis of the Dormant Commerce Clause issue addressed by the Sam Francis decision);
• replacing AB-1570’s “certificate of authenticity” requirement with an express warranty requirement, and clarifying the required content of such warranty (including to acknowledge that a seller must only identify a witness to an item’s signature if known/applicable);
• replacing certain disclosure provisions with a requirement that regulated seller-agents retain records of their principals’ names and addresses for possible disclosure pursuant to discovery requests in civil disputes; and
• reducing the civil penalties applicable to the provision by regulated sellers—replacing the prior law’s unprecedented ten-times-actual-damages measure with a graduated scale (ranging from $1,000 to the greater of $5,000 or three-to-five-times-actual-damages, plus attorneys’ fees and other costs in certain cases).

The City Bar and the ALC are pleased to have helped inform this successful lobbying initiative.

Megan E. Noh is a member of the City Bar’s Art Law Committee and a Partner at Cahill Cossu Noh & Robinson.