Class Action

Class Action Defense Cases–Simon-Whelan v. The Andy Warhol Foundation: New York Federal Court Denies Motion To Dismiss Class Action Alleging Antitrust Violations In Authentication Of Warhol Works Of Art

By Michael J. Hassen

Class Action Complaint Alleging Various Defendants Conspired to Wrongfully Deny Authenticity of Warhol Paintings Survives Defense Motion to Dismiss New York Federal Court Holds

Plaintiff filed a class action against the Andy Warhol Foundation for the Visual Arts (a not-for-profit charitable trust), the Estate of Andy Warhol (which was valued at $400 million and which originally owned 100,000 Warhol works of art), Vincent Fremont (the exclusive sales agent for the Foundation’s Warhol paintings) individually and in his capacity as Successor Executor of the Estate, Vincent Fremont Enterprises and the Andy Warhol Authentication Board (a not-for profit corporation responsible for authenticating the works of Andy Warhol) alleging inter alia violations of state and federal antitrust laws; the class action complaint asserted that defendants conspired to control the market for Warhol works. Simon-Whelan v. The Andy Warhol Foundation for the Visual Arts, Inc., ___ F.Supp.2d ___ (S.D.N.Y. May 26, 2009) [Slip Opn., at 1-2]. According to the allegations underlying the amended class action complaint, The Foundation and the Board (the “central actors in the conspiracy”) have “complete control over the authentication of Warhol artwork by virtue of the Board’s status as sole recognized authentication authority for Warhol works and the Foundation’s publication of an official catalogue of Warhol works,” and “the Board has denied the authenticity of works that were previously owned by the Estate and stamped with serial numbers from the Estate…, routinely denies the authenticity of a certain percentage of Warhols, particularly when several from the same series are submitted…, has denied authentication as a means of retaliation…, has approached owners of Warhols to ‘lure’ them into submitting their works for authentication…, and changes its authentication policies when the change suits the Board’s financial interests….” Id., at 3. In essence, the class action alleges that defendants “use their control over the authentication methods to create a scarcity in the market for Warhol artwork and inflate the value of the Warhol works in the Foundation’s possession.” Id., at 3-4. Defense attorneys moved to dismiss the class action complaint. Id., at 2. The district court granted the motion in part and denied the motion in part.

The class action complaint alleged that in 1989, plaintiff purchased a Warhol painting (later entitled “Double Denied”) for $195,000. Simon-Whelan, at 4. Plaintiff claims Warhol created the work in 1965, and that the Foundation and the Estate previously had authenticated the work. Id., at 4-5. In July 2001, plaintiff offered to sell the painting, id., at 5. Defendants “repeatedly urged” him to submit the painting to the Board, and represented to a prospective buyer that it “would not stand by the prior authentications” unless the painting was first submitted to the Board. Id. Plaintiff submitted the painting to the Board in December 2001; the Board denied that it was authenticate but plaintiff was told he could “resubmit the painting with additional documentation.” Id. “Plaintiff spent more than a year documenting the painting’s origin and history and resubmitted the painting with additional documentation in February 2003.” Id. The painting was again denied, id. Plaintiff alleges that the Board “fraudulently denied the authenticity” of the painting, id., at 5-6. The class action complaint alleged that, because of the denials,” Plaintiff was unable to sell any of the Warhols that he owned without first submitting them to the Board and that he was ultimately forced to sell his Warhols through third-parties at a fraction of the price.” Id., at 6.

Full post as published by Class Action Defense Blog on June 01, 2009 (boomark / email).