Jacobs v. Halper

WENDY BEETLESTONE, District Judge.

[ 472] Alex J. Murland, Michael Yanoff, Robert H. Nemeroff, Ronald L. Woodman, Friedman Schuman Applebaum Nemeroff & McCaffery, P.C., Jenkintown, PA, for Plaintiff.

Monica Watson, PIB LLC, Jonathan S. Ziss, Michael P. Luongo, Seth L. Laver, Goldberg Segalla LLP, Samuel E. Cohen, Marshall Dennehey Warner Coleman & Goggin, Philadelphia, PA, for Defendants.

OPINION

WENDY BEETLESTONE, District Judge.

I. INTRODUCTION

This dispute concerns Plaintiff Michael Jacob's purchase in December 1999 at a Sotheby's auction of a 1951 Willie Mays New York Giants signed rookie road jersey (the “Mays Jersey”) and a 1950's Willie Mays New York Giants travel bag (the “Mays Travel Bag”) (together, the “Mays memorabilia”), which he subsequently learned were inauthentic. Plaintiff alleges that the Defendants knew the items had not been authenticated at the time he bought them despite making written representations in the auction catalogue that they had. Plaintiff brings this lawsuit against three separate groups of Defendants: (1) Sharon Halper and Barry Halper, Inc. (collectively, “Halper”), who were alleged to be engaged in the business of buying and selling sports memorabilia, and who were the previous owner(s) of the Mays Jersey and Mays Travel Bag; (2) Sotheby's, Inc., Sotheby Parke Bernet, Inc., Sotheby Holdings, and Sotheby's (collectively, “Sotheby's”), all of which allegedly served as the auction house for the sale of the Mays Jersey and Mays Travel Bag; and, (3) Grey Flannel Auctions, Inc. (“GF Auctions”) and Grey Flannel Collectibles, Inc. (“GF Collectibles”) (collectively, “Grey Flannel”), which allegedly specialize in authenticating, appraising, and auctioning sports memorabilia, and who were represented by Sotheby's to have authenticated the Mays Jersey prior to the Sotheby's auction.

[ 473] Each of Defendants has filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). The Grey Flannel Defendants have also moved the Court for dismissal pursuant to Rule 12(b)(2) for lack of personal jurisdiction. The Court held oral argument on the motions.

II. BACKGROUND

A. Sotheby's Advertises the Halper Collection

In or about early 1999, Sotheby's advertised an auction sale of Barry Halper's collection of baseball memorabilia, which was described as “the world's largest and most significant private collection on baseball.” Am. Compl. ¶ 23. With the help of Grey Flannel, Sotheby's and Halper published a three-part auction catalogue entitled “The Barry Halper Collection of Baseball Memorabilia” (the “Halper Catalogue”). Id. ¶ 22. The Halper Catalogue stated that the auction would “establish new standards for the hobby in the areas of condition, authenticity, provenance, and historical significance.” Id. ¶ 24. Further, the Halper Catalogue represented that Grey Flannel had authenticated all the uniforms and jerseys in the auction. Id. ¶ 25. Specifically, page 37 of the Halper Catalogue states, “Grey Flannel has authenticated all uniforms and apparel (excluding most baseball hats).” Id., Ex. A.

B. Plaintiff's Purchase of the Mays Jersey and Travel Bag

Plaintiff obtained a copy of the Halper Catalogue in or about the summer of 1999. Id. ¶ 26. The catalogue described the Mays Jersey as “one of the most important pieces of memorabilia relating to [Willie Mays'] glorious career.” Id., Ex. B. On around September 29, 1999, Plaintiff bid by telephone on the Mays Travel Bag and the Mays Jersey. Id. ¶ 28. Plaintiff was the successful bidder on both items and paid $8,625.00 for the bag and $63,000 for the jersey, id. ¶ 30, by wiring the money plus the applicable sales tax to Sotheby's. Id. ¶ 31.

The Halper Catalogue included a copy of Sotheby's Conditions of Sale and Terms of Guarantee (“Conditions & Guarantee”). Sotheby's Opp'n, Ex. B. The Terms of Guarantee set forth the following provisions:

Authenticity.... If within five years from the date of sale of a purchased lot, the original purchaser of record tenders to us a purchased lot in the same condition as when sold and it is established that the catalogue description of the lot as it relates to its authenticity (as defined above ...) is not substantially correct based upon a fair reading of the catalogue as a whole, ... the sale of such lot will be rescinded and the original purchase price refunded.

Sole Remedy. It is further specifically understood that the remedy set forth herein, namely the rescission of the sale and refund of the original purchase price paid for the lot, is exclusive and in lieu of any other remedy which might otherwise be available as a matter of law.

Id. In addition, the Conditions of Sale included a New York state choice of law clause, which provides:

[ 474] These Conditions of Sale and Terms of Guarantee, as well as the purchaser's and our respective rights and obligations hereunder, shall be governed by and construed and enforced in accordance with the laws of the State of New York. By bidding at an auction, whether present in person or by agent, order bid, telephone or other means, the purchaser shall be deemed to have consented to the jurisdiction of the state courts of, and the federal courts sitting in, the State of New York.

Id.

C. Plaintiff Retains Leland Collectibles to Appraise the Value of the Mays Jersey

In or around July 2012, Plaintiff retained Leland's Collectibles of Bohemia, New York (“Leland's”) to appraise the Mays Jersey for insurance purposes. Id. ¶ 33. At that time, Leland's appraised the Mays Jersey at $400,000. Id. ¶ 34.

In or around June 2013, Plaintiff entered into a written sales agreement with Leland's in which Leland's agreed to purchase the Mays Jersey from Plaintiff for $675,000, subject to the approval of the third-party to whom Leland's had agreed to sell the jersey. Id. ¶ 35. Leland's and/or its prospective buyer thereafter retained MEARS to authenticate the Mays Jersey. Id. ¶ 36. MEARS examined the Mays Jersey and concluded that it was inauthentic. Id. ¶ 37. As a result, Leland's rescinded its sales agreement with Plaintiff. Id. ¶ 39. At the same time, Leland's advised Plaintiff that the Mays Travel Bag was also inauthentic. Id. ¶ 40.

D. Plaintiff Seeks Explanations from Sotheby's and Grey Flannel

On September 20, 2013, Plaintiff advised Sotheby's by letter that he believed the Mays Jersey was counterfeit and intended to pursue recovery of his damages. Id. ¶ 42, Ex. C. On October 7, 2013, Sotheby's sent a response letter noting the expiration of its five (5) year Guarantee of authenticity and denying Plaintiff's claim in its entirety. Id. ¶ 43, Ex. D.

On March 19, 2014, Plaintiff sent a letter to Grey Flannel advising them he had determined that the sports memorabilia he had purchased from the Halper auction was inauthentic. Id. ¶ 51. In June 2014, Plaintiff's counsel spoke with counsel for Grey Flannel by phone and requested information as to whether Grey Flannel had, in fact, authenticated the Mays Jersey. Id. ¶ 54. Grey Flannel did not respond. Id. ¶¶ 55–61.

E. Plaintiff Obtains Documents Regarding Halper Collection

During the course of discovery in this matter, Sotheby's produced documents showing the business relationship between Sotheby's and Grey Flannel in connection with the Halper Catalogue. Id. ¶ 63. These documents include written terms of agreement between Sotheby's and GF Collectibles for “cataloguing and condition reports” of up to 1,000 unspecified uniforms from the Halper collection for a flat fee of $50,000. Id. ¶ 64, Ex. M. The contract between the parties does not specifically provide that Grey Flannel would “authenticate” the collection. Id. ¶¶ 65–66. Similarly, the contract does not suggest that another party was hired to “authenticate” any items. Id. ¶ 67. Nevertheless, the produced documents include a March 22, 1999, letter from Grey Flannel to Sotheby's with proposed language for “inclu[sion] in the [Halper] catalogue.” Id., Ex. M. Grey Flannel wrote:

We at Grey Flannel Collectibles would sincerely like to thank Sothebys [sic], Rob Lifson and Barry Halper, for selecting us to authenticate, catalog and evaluate the greatest uniform collection extant. It was well worth the many early [ 475] mornings and late nights of work[ ] needed to complete this labor of love. A Directors [sic] love is the play, an Artist [sic] his painting, ours is game-used Jerseys. Our deepest gratitude is extended to James Gates at the Baseball Hall of Fame Library and Marc Okkomen[;] their help was invaluable.

Id. (emphasis added).

III. DISCUSSION

Plaintiff asserts a number of claims against each of the Defendants: misrepresentation and fraud (Count I); negligent misrepresentation (Count II); violation of New York General Business Law (“GBL”) § 349 (Count III); Violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 Pa.Stat. § 201–1 et seq. (Count IV); and unjust enrichment (Count V). The Grey Flannel Defendants argue that they should be dismissed for lack of jurisdiction. They also argue that GF Auctions should be dismissed because it has no relationship with Sotheby's in connection with the Halper Catalogue. All Defendants assert a number of arguments that would require dismissal of all, or most, of these claims, including arguments that: (1) the statute of limitations has run on all of Plaintiff's claims; (2) the Conditions of Sale & Terms of Guarantee in Plaintiff's contract with Sotheby's bars Plaintiff's claims because it provides the exclusive remedy for his grievance; and (3) the economic loss doctrine bars claims for economic loss resulting from a contract. In addition, the Defendants argue that Plaintiff has failed to state a claim with respect to each Count. The Court addresses each argument in turn.

A. Jurisdiction over Grey Flannel Defendants

The jurisdictional issue boils down to whether a federal court in Pennsylvania has jurisdiction over New York corporations with their principal place of business in New York whose only contacts with Pennsylvania are: (1) participating in the drafting of a catalogue that, Plaintiff contends, they “should have known” would be distributed to potential customers outside New York state, including potential customers in Pennsylvania; and (2) maintaining websites that could be accessed by users in Pennsylvania.

1. Participation in Drafting Halper Catalogue

In its motion to dismiss, Grey Flannel argues that the Court does not have specific jurisdiction over the Grey Flannel Defendants because Grey Flannel lacks “minimal contacts” with Pennsylvania, and the Plaintiff's alleged injury did not “aris[e] out of or relate[ ] to” any such contacts. Grey Flannel Mot. at 11. Noting that Plaintiff's Complaint bases its specific jurisdiction on the fact that Grey Flannel participated in drafting the Halper Catalogue, which was eventually sent to Plaintiff in Pennsylvania, Grey Flannel argues that it “never sent the [Halper Catalogue] to anyone in Pennsylvania,” “never directed any solicitations to anyone in Pennsylvania, including Plaintiff,” and indeed was “not aware that the [Halper Catalogue] would reach Pennsylvania.” Id. at 11–12. Grey Flannel attached an affidavit by the President of Grey Flannel Auctions in support of these contentions. See Grey Flannel Mot., Ex. B.