Tuesday, February 07, 2012

Latest on the California Resale Royalty Class Action

The plaintiffs have filed their response to the auction houses' motion to dismiss.  No online link yet; background about the case here.

The main question in the case, I've been saying, is whether, as applied outside California, the statute violates the Commerce Clause.  In their motion to dismiss, the auction houses argued that "where State A purports to regulate the sale of goods occurring in State B simply because that sale involves a resident of State A, the regulation is invalid."  In attempting to distinguish some authority cited by the auction houses, the plaintiffs here argue that, in those cases, "the only nexus with the state was that the consumer was from the state."  In this case, by contrast, the ("undeniable") nexus is that the sellers "reside in the state" (p. 11).  "[W]hile part of the transaction may occur outside of California, it cannot be said that the transaction occurs wholly outside of California because the seller is necessarily a state resident" (p. 12).  I'm not a constitutional lawyer, but that doesn't sound especially convincing to me.