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RR Auction Sues Michael Johnson for Defamation, 14 Other Counts

RR Auction sued rrauctionlawsuit.com owner Michael Johnson on June 2. The complaint alleges 15 counts, including business defamation, abusive litigation practices, false light invasion of privacy, interference with contractual relationships, misappropriation of RR Auction’s marks and trade name, breach of implied covenant of good faith and fair dealing, and cybersquatting.

Johnson, a former RR Auction client, has an ongoing lawsuit against RR Auction that he tried to get certified as a class-action. That failed, because no one else wanted to join the class, so Johnson is continuing the lawsuit on his own.

You can read about RR Auction's lawsuit in a June 5 report on AutographMagazine.com.

 

Tags: cybersquatting, defamation, michael johnson, rr auction, rrauctionlawsuit.com

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So are items that are already pre certified PSA not eligible to be returned should you later feel that a particular item is not genuine? 

Only items sold with full third party LOAs are ineligible.

This can be confusing

There are items for which a TPA letter is included, there are items which are "pre-certified" (could be PSA, REAL, Zarelli, depending on the item)

The difference is simply whether the buyer pays the extra amount of $$$ for the certificate which, in the latter case is NOT included with the bid/BP/final price. If item came in with a TPA cert, AH I off the hook since they auctioned an already certified TPA, and they will pass the LoA with the item.

So arguably, all items listed (except perhaps lots of photos or signed covers in bulk which do not have pre certs) (too much $$ to get 20 LOA's or stickers I suppose) can be considered de facto TPA certified at the start of the auction, as RR has stated so on the auction, (the difference being the issuance of a new certificate to the new owner with a$$ociated co$t$).  If we accept this premise, these items are NOT  returnable period. (The only possible "loophole" being a PSA  pre cert, declined by the buyer, and then later the buyer sends to PSA, and PSA rejects item, so it brings into question the original authenticity premise. This could happen with REAL, Zarelli, etc, but it would have to be "self contained" ( ie Epperson rejects a REAL pre-crt, Steve does the same, as long as the rejection comes from the SAME pre-cert source) but this is very low probability, since these are individuals, not a large "for profit" sticker mill with multiple graders, and thus there is a much smaller chance that the original individuals have changed thir minds or would contradict themselves.) What this may do, however, as I relate it to the lawsuits, it takes the AH (RR in this case) out of the loop on crossovers (ie  Epperson v PSA)  type argument (item sold with REAL pre certification, buyer declined  REAL COA, but sent to PSA which subsequently rejected) which is a possibility (How many of the Press pass "stickers" on eBay would Epperson go along with?....).   Back to the point, and following the wording, item had a TPA when purchased, and buyer's decision to not buy LoA concurrently does not change the TPA original opinion on the item.

I know I've said quite a lot, and was very verbose, SORRY,  but this is how I see the "pre certification" activities. they protect the AH on better than 95% of the items, it gives buyer a higher sense of security (no value judgment on whether is real or not) as it puts forth that most every item has been screened for authenticity, thus AH has done "above and beyond" diligence, at their cost, and,=, if buyer wants LoA, buyer should pay for it, if he/she does not pay for LoA, then enter the "buyer beware" with AH being off the hook.

Am I being too cynical?

Honestly I don't think pre-certified means jack in their case, it's something they throw on every listing.  I know we have called out pretty obvious music forgeries they have listed from time to time that stated they were pre-certified by Epperson, but there's no way that Epperson OK'd them, he would never in 1000 years OK some of those forgeries.  They always remove them after we post them here so they never get sold.

Even if PSA really did pre-certify every listing they have, they are not examining the items in person, so what are they really doing?  Is "pre-certified" really just a quick opinion of a scan of the item?  If that's the case, don't get me started on how worthless quick opinions are.

For the record, I review every single item that bears my pre-certification. I would not allow my name to be used for an item I did not review.

Sorry Steve, I didn't mean to loop you into that statement, for the record I have never seen a space forgery reach the auction and you do a great job policing them for RR.

Do they always send items for you to review in person if you request them or is it always by scan only?

Gentlemen

I appreciate the inquiry. However, given there is an ongoing case (which does not involve me or items I reviewed), I think I should limit my commentary.

To answer Mike T's question: Yes, RR always sends me items to review in hand if I request them, and I review items in hand often. I have a number of images on my web site of me reviewing items that appeared in various RR Auctions.

In terms of standard industry practice, the following applies to PSA, JSA, Heritage and a host of others: Experienced people on site review items to ensure they are live ink, not laser copies, etc., and they typically weed out obvious fakes. Items that pass the initial review onsite are sent via high resolution scan to the consultants for their input. As far as I know, RR is one of the only auction houses that is willing to ship items to consultants.

As far as how in-depth "pre-screen" goes, I can only speak for myself. I review each and every item carefully like I was going to buy it myself. I do NOT quickly breeze through items and I do not take "pre-screen" lightly.

I've consulted with RR for almost four years now, and to my knowledge, not one item I reviewed has been returned for authenticity reasons. That's probably over 6,000 signatures. No authenticator is perfect and it is a constant learning process, but I am proud of my track record and the fact that RR's Space Auctions are the most prestigious in the world.

Steve Zarelli
www.SpaceLOA.com

So everything sent is in scam form unless you ask to see an item physically?

Is that an in-hand review or a review of scans that are sent to you?

I also apologize in advance for the length of this post, but people want to know what things mean, so here we go.

There are actually two separate and distinct sections of the online Terms and Conditions dealing with LOA/COAs, paragraphs 14. and 62.  The bold-face language below is by me.

NOTE:  In paragraph 62, in the online terms and conditions http://www.rrauction.com/terms.cfm the text of paragraph 62 is almost entirely duplicated within that section.  For simplicity, I have deleted the rest of the duplicate language.  The only significant difference is the bolded language regarding a Bidder's right to consign the item again with RR, as long as it came with an RR COA.

Paragraph 14 says:

14. If the description of any lot in the catalogue is incorrect (e.g. gross cataloging error), the lot is returnable if returned within five (5) calendar days of receipt, and received by RR Auction no later than twenty-one (21) calendar days after the sale date. NO RETURN OR REFUND OF ANY AUCTION LOT WILL BE CONSIDERED EXCEPT BY REASON OF LACK OF AUTHENTICITY, UNLESS OTHERWISE PROVIDED IN THESE TERMS AND CONDITIONS OF SALE. 

Paragraph 62, which deals with "authenticity" and really covers the right of return, is as follows:

62. All Lots sold by RR Auction are accompanied by an Auction Certificate. On any lot presented with a Auction Certificate (“AC”) issued by RR Auction, that warranty insures only to the original Bidder (as shown in Auctioneer’s records) “Bidder”. Bidder may not transfer the rights afforded under the AC and it is null and void when Bidder transfers or attempts to transfer the lot. The AC warranty is valid from date of the auction in which Bidder was awarded the lot to five (5) years after its purchase. The AC warranty is valid as to its attribution to the person or entity described or to the lot’s usage. When the lot is accompanied by a Letter of Authenticity (or its equivalent) from a third-party authentication provider, buyer has no right of return. On lots not accompanied by third-party authentication or under extremely limited circumstances not including authenticity (e.g. gross cataloging error), a Bidder who did not bid from the floor may request Auctioneer to evaluate voiding a sale; such request must be made in writing detailing the alleged gross error, and submission of the lot to Auctioneer must be pre-approved by Auctioneer. A Bidder must notify the appropriate department head in writing of the Bidder’s request within three (3) days of the non-floor bidder’s receipt of the lot. Any lot that is to be evaluated for return must be received at the office of RR Auction within 35 days after Auction. AFTER THAT 35 DAY PERIOD, NO LOT MAY BE RETURNED FOR ANY REASONS. Lots returned must be in the same condition as when sold and must include any Letter of Authenticity. If a bidder wishes to challenge the Letter of Authenticity within the five (5) year warranty period, Bidder must present with the claim, authoritative written evidence that the lot is not authentic as determined by a known expert in the field. If Auctioneer concurs that the lot is not as represented, Bidder shall be refunded their purchase price. If the Auctioneer denies the claim, the Bidder may file the dispute with the American Arbitration Association with locale in Boston Massachusetts, Suffolk County, before a single selected Arbitrator selected by the American Arbitration Association. The American Arbitration Association arbitration shall be conducted under the provisions of the Federal Arbitration Act and the Bidder consents to jurisdiction in The Commonwealth of Massachusetts. The challenge to Authenticity must be brought within one (1) year if the Auctioneer denies the claim. After one (1) year, the Bidder hereby releases and discharges RR Auction from any and all legal, equitable, administrative and/or other claims, counterclaims, demands, set-offs, defenses, accounts, suits, debts, dues, actions, causes of action, proceedings, arbitrations, damages, executions, judgments, findings, controversies and disputes, whether known or unknown or suspected or unsuspected, whether in law or equity, that the Bidder have or may have had against RR Auction arising from or relating to any claim whatsoever. Specifically, the AC provided by RR Auction, does not provide for incidental or consequential damages or other indirect damages. Any lot sold with a certificate of authenticity or other warranty from an entity other than Auctioneer is subject to such issuing entity’s rules and such conditions are the sole remedy afforded to Bidder. For information as to third party authentication warranties the bidder is directed to contact RR Auction.

This is the language, referred to above, which was not duplicated within paragraph 62.

The Bidder as well as their heirs, successors and assigns is also given an unconditional lifetime guaranteed that allows the present owner of any lot purchased through RR Auction the right to consign with RR Auction.

As I read it, this is what the foregoing language means:

1.  You get an RR "Auction Certificate" for each item you buy.

2.  That AC only covers the original Bidder.  It is non-transferable, so in any subsequent re-sale, no future purchaser can rely on the RR AC. [I am sure that this will lead to future legal problems.]

3.  The AC is only valid for five years from the Auction Date.

4.  When there is a third-party LOA/COA, "or its equivalent" the Bidder has NO right of return at all.  This does not clarify whether items that are PSA or otherwise "pre-certified" meet the "or its equivalent" definition.  I am sure that RR will take the position that it does.

5.  If it is an RR AC, then the buyer has five years within which to file a claim with RR, including a written opinion by a known expert in the field.

6.  If RR denies the claim, the Bidder has one year to initiate an arbitration proceeding to contest the issue, after which all further rights are gone.

7.  If it is a third-party COA, then the Bidder's sole rights are subject to such issuing entity’s rules and such conditions are the sole remedy afforded to Bidder.

8.  Under no circumstances are any consequential damages covered by the guarantee.

Obviously, some of this conflicts with the terms that I posted above, quoted directly from the print RR Auction catalog on-line.  I think that as the auction house, RR is going to have to deal with the discrepancies, and they will be determined to be in favor of the Bidder, as the confusion is cause by RR, who drafted and is posting the contradictory language.

But, basically, the "new improved" RR COA [actually they don't even refer to it as a COA anymore, just an "Auction Certificate"] is worthless, as it only protects the initial purchaser, and then only if there was no third-party LOA, or its equivalent, in which case it is just a meaningless scrap of paper.  But, in any case, since the AC is only good as to the Bidder, and then only for a period of five years, it has no future value in the marketplace, as no one else can rely on it.  Hope this helps.  Govern yourselves accordingly.

Thanks for doing this GP,

Two things:

1) Pre-certified is not a COA or LOA equivalent. I can't imagine R&R considering it one. How R&R would handle things if someone paid the additional fee after purchase to get a full COA or LOA, I don't know. That's something worth finding out.

2) I'm not aware of any auction houses or dealers that issue transferable COAs or LOAs. I have only seen them covering the original purchaser only.

I struggled with that correlation. It basically states that the authority in question, for a $um of $$ will issue an LoA.  How would that not be equivalent (in court) to a LoA?

To be more specific, the degree of protection an AH has to seek is to do a reasonable effort to avoid selling forgeries.  "self insuring" with AH employees as Subject matter Experts (SMEs) is not good for the AH, exposes them to liability. Having the "pre cert" arrangement can be seen as a "win-win", the AH performs due diligence and the TPA is paid for services, in a way, encouraging business.

Going back to the basis of the thread, a lawsuit for "non genuine autographs", it would be beneficial to the community to understand the depth of a pre-cert, and Mr Zarelli's input is helpful.

I do not disagree wit MikeT, in fact I totally agree with him, as I have read in postings here and other similar sites (Net54)  In most cases, a day's visit to the AH floor (be it RR or one in Dallas, Tx) by a grader is about all it takes fo a "mass pre-cert", which some folks refer to is as the "no look treatment", sometimes, for smaller lots the pre cert is done by e-mailing scans, which is not all that bad either.

The stated wording of the auction basically tells me, as a buyer: "You win it, you pay for LoA, you get LoA", so how would that not be equivalent to an LoA in a Court (in terms of "true/false" signature...? 

We now enter a thought experiment I often  challenge my colleagues:  20 sets of Babe Ruth autos,  all genuine, 10 individuals send one to a TPA (let's use PSA) and an AH has the other 10. Does one really believe there will be 20 LoAs? Does one really believe the AH will get less tan 10 "certs"? The certs which are likely to be rejected are the individual submissions.

Back to the AH, my cynicism derives from how the wording has changed and what I consider AH lessons learned from the current lawsuit. Note that this conclusion does not make the AH more or less trustworthy, the lots are what they are, after all, but, I truly believe that if the AH discloses a pre-cert, and  the pre cert is not accepted (paid extra $ for LoA)  by buyer and, within the warranty period is followed by a subsequent buyer acquired TPA letter of rejection, the AH might have a reason to push back. In this case, and unless explicitly stated otherwise, why would a reasonable person conclude that a pre-certification is not equivalent to a certification?

As I interpret it (big caveat) if Steve, Roger, PSA, or any other SME pre-certs an item, and then buyer gets another SME to reject, AH is "off the hook" whether the pre-cert LoA is acquired or not.  (Not just for items which already carried a prior LoA) My basis for that, from a legal perspective is that the opinion on the pre-cert has ALREADY been provided (established as a basis for the authenticity of the item) , the documentation is on the auction material. The LoA is a more aesthetically pleasing, transferable document, so I would conclude that Pre-cert=LoA for Original buyer

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