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Simon-Whelan v. Andy Warhol Foundation for the Visual Arts

May 26, 2009



Plaintiff Joe Simon-Whelan ("Simon-Whelan" or "Plaintiff") brings this action against the Andy Warhol Foundation for the Visual Arts, Inc. (the "Foundation"), the Estate of Andy Warhol (the "Estate"), Vincent Fremont ("Fremont"), individually and in his capacity as Successor Executor of the Estate, Vincent Fremont Enterprises ("VFE"), the Andy Warhol Authentication Board, Inc. (the "Board"), John Does 1-20, Jane Does 1-10 and Richard Roes 1-10 (collectively, "Defendants"). Plaintiff claims, on behalf of himself and a putative class of art buyers who have allegedly purchased Warhol works at artificially inflated prices, that the defendants have violated the federal Sherman Anti-Trust Act and New York's Donnelly Act by engaging in a conspiracy to restrain and monopolize trade in the market for Warhol works. Plaintiff asserts a further individual and class claim for unjust enrichment (relating to the allegedly artificially high prices of Warhol works), individual claims for false advertising and publicity in violation of the federal Lanham Act (relating to the denial of the authenticity of a work owned by Plaintiff), fraud (based on allegations that certain defendants induced Plaintiff to submit his work to the Board and to sign a general release and convenient not to sue in connection with such submissions (the "Submission Agreement")), and an individual and class claim for a declaratory judgment invalidating the Submission Agreement.

Defendants move to dismiss all of Plaintiff's claims. The Court has reviewed thoroughly all of the parties' submissions and arguments in connection with the claims. For the reasons stated below, Defendants' motion to dismiss is granted in part and denied in part.


The Amended Class Action Complaint (the "Complaint") includes the following relevant allegations.

The Estate is located in New York and was determined to have a fair market value just below four hundred million dollars. (Compl. at ¶¶ 19, 43.) The Estate originally owned close to 100,000 works of art by Andy Warhol. (Id. at ¶ 38.) Originally, the Estate's executor was Frederick Hughes ("Hughes") and Fremont was named as alternate executor. ( ¶¶ 28, 36.) The Foundation is a not-for-profit charitable trust incorporated in the State of New York. (Id. at ¶ 18.) Prior to the creation of the Foundation, Freemont oversaw the sale of Warhol's paintings. (Id. at ¶ 3.) Currently, Fremont is the exclusive sales agent for the Foundation's Warhol paintings. (Id. at ¶ 51.) VFE is a New York corporation, with its principal place of business being in New York. (Id. at ¶ 21.) The Board is a not-for profit New York corporation, with its principal place of business in New York. (Id. at ¶ 22.) The Board is responsible for authenticating the works of Andy Warhol. (See id. at ¶ 68.) John Does 1-20 are past and present officers of the Foundation.

( ¶ 23.) Jane Does 1-10 are past and present members of the Board. ( ¶ 24.) Richard Roes 1-10 are past and present agents of the Foundation and/or Board. (Id. at ¶ 25.)

The Conspiracy

Plaintiff alleges that the Defendants have, for a period of twenty years, conspired to control the market for Andy Warhol artwork. (Compl. at ¶ 1.) The Foundation and the Board are allegedly the central actors in the conspiracy. ( ¶ 9.) According to Plaintiff, Defendants 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. ( ¶ 17.) Defendants employ two methods for authenticating Warhol artwork. (Id. at ¶ 65.) The first is a system of Board ratings of individual works as by Warhol, not by Warhol, or works as to which the Board expresses no opinion at the time. (Id. at ¶ 64-65.) The second is informal authentication by virtue of inclusion in the Warhol Catalogue Raisonné (the "Catalogue"). (Id.) The Catalogue, published by the Foundation, is an allegedly comprehensive listing of all authentic Warhol artwork in existence.*fn1 (Id.)

According to Plaintiff, the Board has denied the authenticity of works that were previously owned by the Estate and stamped with serial numbers from the Estate (id. at ¶ 86), routinely denies the authenticity of a certain percentage of Warhols, particularly when several from the same series are submitted (id. at ¶ 87), has denied authentication as a means of retaliation (id. at ¶¶ 83-85), has approached owners of Warhols to "lure" them into submitting their works for authentication (id. at ¶¶ 119, 185), and changes its authentication policies when the change suits the Board's financial interests (id. at ¶ 89). Plaintiff 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. ( ¶¶ 17, 214.)

At some time between 1988 and July 1990, the Estate implemented a policy requiring persons seeking authentication of works to sign a "Submission Agreement." (Id. at ¶ 91.) The Board has continued the Estate's policy of requiring persons submitting works for authentication to sign the Submission Agreement. (Id. at ¶ 97.) The Submission Agreement includes the following clause:

By signing this letter Owner: . . .

(iii) hereby indemnifies the Authentication Board, the Foundation, the Estate of Andy Warhol (the "Estate"), and all members of and officers, directors, agents, representatives, employees and others at any time acting for the Authentication Board, the Foundation or the Estate (collectively, the "Indemnitees"), and agrees to defend and hold each Indemnitee harmless and releases, waives and covenants not to sue any Indemnitee, based upon any claim or liability asserted (a) by Owner or by any person or entity acquiring the Work, or any interest in the Work from Owner (a "Buyer") or any person or entity from whom Owner or any predecessor in interest acquired the Work which is based directly or indirectly on the legend or endorsement, if any, affixed to the Work, or on any letter herein referred to, or any other action by the Authentication Board or any other Indemnitee in connection herewith, including without limitation any claim that the opinion expressed therein is not correct, or (b) by any other person to whom Owner or the Buyer has made any statement or representation respecting the authenticity the Work or any action of the Authentication Board or any other Indemnitee in connection therewith, and hereby agrees to pay or reimburse each Indemnitee for all costs and expenses incurred by the Indemnitee in connection with any such asserted claim or liability, including without limitation the fees and expenses of legal counsel. (Compl. at ¶ 99, Ex. B at 3.)

Double Denied

Plaintiff originally purchased a painting (referred to herein and in the Complaint as Double Denied) for $195,000 in 1989. (Id. at ¶ 19.) According to Plaintiff, the painting is one of several created in August 1965 at Warhol's direction from an acetate personally created and chosen by Warhol. (Id.) Plaintiff alleges that the painting had previously been authenticated by the Foundation and the Estate, including by Hughes and Fremont, and had passed through several major dealers, each of whom had carefully vetted the painting's provenance. (Id.)

Plaintiff offered to sell his painting in or about July 2001. (Id. at ¶ 148.) Plaintiff alleges that, from July through December 2001, Fremont repeatedly urged Plaintiff, by telephone, email and in a face-to-face meeting in Los Angeles, to submit his painting to the Board. (Id. at ¶ 149.) An interested buyer was also informed by the Board that it would not stand by the prior authentications; the painting would have to be submitted to the Board. (Id. at ¶ 151.) Plaintiff submitted Double Denied for authentication on December 20, 2001, and signed a copy of the Submission Agreement dated December 21, 2001, in connection with the submission. (Compl. at ¶ 153, Ex. B.) The Board stamped the painting "Denied." (Id. at ¶¶ 20, 155.) After the Board's initial determination, Plaintiff was informed that he was welcome to resubmit the painting with additional documentation. (Id. at ¶ 158.) Fremont urged him to resubmit the painting with additional documentation. (Id. at ¶ 159.) Plaintiff spent more than a year documenting the painting's origin and history and resubmitted the painting with additional documentation in February 2003. (Id. at ¶¶ 161-62.)

Plaintiff alleges that, on or about February 12, 2003, he was informed by Paul Morissey that Fremont had told Morissey that the painting had been denied again. (Id. at ¶ 163.) By letter dated July 14, 2003, the Board notified plaintiff that it had rejected Double Denied a second time. (Id. at ¶ 165.) The Board subsequently issued a letter, dated May 18, 2004, purporting to explain the basis of the Board's denial. (Id. at ¶¶ 168-72; Compl. Ex. E.) Plaintiff alleges that the Board fraudulently denied the authenticity of Double Denied and that the denials were a foregone conclusion. (Id. at ¶¶ 247, 249.) Plaintiff alleges that, as a result of this second rejection, 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 ¶ 166.) Further, Plaintiff alleges that, by excluding Double Denied from the Catalogue, the Defendants have represented that the painting is a fake, thus depressing its market value. (Id. at ¶ 237.)

Plaintiff brings this action requesting a declaratory judgment that the Submission Agreement is unenforceable, as well as injunctive, declaratory and monetary relief in respect of his claims under Section One and Two of the Sherman Act, the New York Donnelly Act, the Lanham Act, and for fraud and unjust enrichment. Defendants seek dismissal of Plaintiff's claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing that the claims are barred by the release and covenant not to sue provisions of the Submission Agreements, that the allegations of the Complaint are insufficient to plead plausibly Plaintiff's antitrust claims because, inter alia, the claims are time barred and Plaintiff lacks standing to assert them, that the Complaint's Lanham Act and fraud ...

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