Clients and customers of auction houses Christie’s and Sotheby’s have recently entered into the final year in which to redeem certificates that were awarded as part of a 2003 class action settlement relating to alleged price-fixing by the firms for non-Internet auction services in the United States. The certificates, which could previously have been used by the holder to obtain reimbursement for certain consignment charges, became redeemable for cash as of May 15, 2007.
Described fully in a “Frequently Asked Questions” document posted at the Auction Houses Litigation Website, www.auctionsettlement.com/faqs.pdf , the certificates can be redeemed for their face value in cash through May 14, 2008 according to their terms. All unused coupons will expire at 5 pm EDT on May 14, 2008.
According to the litigation website, the class action settlement was made to address claims that the auction houses fixed the rate of the buyer’s premium between January 1, 1993 and February 7, 2000, and fixed the rate of the seller’s commission between September 1, 1995 and February 7, 2000. It states, “The auction houses agreed to the class action settlement with plaintiffs’ counsel to resolve the claims of the class members and put to rest the controversy with valued clients and customers.”
Settlement amounts were calculated on the basis of auction transactions at Sotheby’s and/or Christie’s and an arithmetic formula provided by the class action counsel’s economic experts to arrive at each person’s pro rata share of the settlement fund, which contained cash in the amount of $412 million, plus accumulated interest, and certificates with a face value of $125 million.
Clients were sent checks, or a combination of checks and certificates, in May and June of 2003 as part of the settlement of the class members’ claims. The auction houses agreed to compensate class members through a combination of cash payments and certificates with total payment awards of less than $500 receiving a check rather than a certificate.
Class members are advised to contact a tax advisor about their specific settlement payment and the tax implications. The FAQ states, “Generally speaking, the US Internal Revenue Code requires that any money received in excess of the actual monetary damage claims of the class members is considered gross income and is subject to income tax.”
Certificate holders who want to redeem certificates for cash must complete the reimbursement/redemption section on the back of the certificate; obtain a notary public or consular official’s signature and/or seal on the certificate; and send the completed certificate to the certificate administrator.
By mail: Auction Houses Certificates; c/o Computershare; PO Box 8907; Edison NJ 08818-8907. By courier: Auction Houses Certificates; c/o Computershare; Attn: Data Entry Area; 156 Fernwood Avenue; Edison NJ 08837. There is an automated help line at 877-498-8863.