Legal issues in the hobby

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Posted By: Joann

This might be a fun thread. Or maybe not. We'll see.

One of my professors is a huge baseball (Tigers) fan, and I recently brought in my cards to show him. He thought they were great.

He has arranged an invitation for me to speak to the Sports and Entertainment Law Society at school about cards and the legal issues associated with the hobby. I will, of course, cover fraud as the biggest topic. But on this board we have also discussed taxes, contracts and even securities.

So ... I'm looking for some help on topics I may have missed. This is for both the lawyers and the non-lawyers. What are some of the legal issues that affect the hobby? What is your analysis or opinion of the various issues?

A few general questions to get it started:

If you agree via email to buy a card, and the seller tells you he no longer has it or it is not for sale, has there been a breach of contract? What if you see it for sale a month later on the BST, or in the Pick Ups thread because someone else bought it? Can you do anything about it (assume it would be worth it - a higher end card)?

Are the grading companies indemnifiers of either buyers or sellers? I am going to PSA's web site to see what their policy is, but is there ever a chance they could be on the hook for the PSA 8 Wagner (let's assume that it is somehow definitively proven to be trimmed - not debate whether or not it is)?

If someone posts an ebay auction with a stolen scan, is there any cause of action if no one bought it? Who would the injured party be?

Any and all legal issues welcome, and the more detail the better. Can you sue on contract for specific performance if you made an agreement to buy a 1/1 card, and the seller reneges?

I am already mentally putting together my presentation (and hoping it will be scheduled after finals in a few weeks), but want to hear others' ideas.

Thanks in advance for any responses.

J

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Posted By: barrysloate

While many of the issues you brought up are bona fide legal ones, the cost of collecting on most of them would be prohibitive, and they would just die out. For example, if somebody buys a $75 card from you on ebay, and then reneges, how much effort will you put in to collect it? You are likely going to let it slide.

I think a more interesting topic is: despite the numerous laws that govern fair trading, the baseball card hobby seems to be impervious to them. We all know it's the wild west, so I might discuss how laws are constantly broken and in most cases little is ever done.

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Posted By: Josh Adams

Joanne,

Starting where Barry left off, I suggest comparing UCC-2 to the purchase and sale of baseball cards. From what I remember, Section 2 deals with the sale of goods, I believe there's a pretty good law review article in there somewhere!

I'm sure you will get some more ideas from the esteemed attorneys on this board. So far, sounds like a cool presentation. Best of luck!



Go Go White Sox
2005 World Series Champions!

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Posted By: barrysloate

Joann- I am of course not an attorney, but it seems to me that whatever laws do govern the business of this hobby, so few of them are ever enforced.

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Posted By: P Spaeth

The PSA question could be a good law school exam question. Is the act of grading a card an ongoing representation or warranty, such that there would be no statute of limitations issue vis a vis a new buyer even though the Wagner was graded 16 years ago? Does PSA owe a duty of care for purposes of a possible negligence claim to the world or only to the person submitting the card? With all the rumor and innuendo out there, does any buyer assume the risk it is trimmed? Or in the same vein, is any reliance on PSA unreasonable? Suppose PSA has only a limited warranty (they will only pay up to X dollars on an overgraded or shouldn't have been graded at all card). Is the limitation effective?

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Posted By: peter chao

Barry's pretty accurate. Once in a while a case concerning baseball cards or memorabilia will get into Small Claims Court here in the Bay Area. However, if an attorney brought an action in the Superior Court the action would be laughed out of Court by the Judge.

One notable exception in recent memory was the furor over Barry Bond's home run ball. However, at the time people thought the ball might be worth a million. I knew one of the attorneys involved in the litigation and asked him about it. He said the Court took the case seriously only because of the value of the ball and the publicity surrounding it.

Good luck on your presentation.

Peter

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Posted By: Gilbert Maines

Even if PSA was totally vis a vised regarding an ongoing representation of warrantee, I'd like to hear how college law students would prepare a case on a subjective assessment (wadaya mean trimmed? Don't gimme that sheet! It's cut from a sheet.) against the foremost expert grading company.

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Posted By: barrysloate

One question I've always had, and this relates to what Peter S. said, is suppose you bought a professionally graded card ten years ago for $100. Today that card is worth say $1000, but when you go to sell it you discover it was altered and never should have been holdered in the first place. So you now decide to press charges against the grading company.

Assuming you could win the case, would you only get back your $100 cost or would you be entitled to current market value? Or would you get your cost plus some modest interest?

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Posted By: P Spaeth

It contained an interesting discourse on the law of property, abandoned property, etc.

The bottom line was the Judge ruled they should split the proceeds.

http://www.owlnet.rice.edu/~econ438/fall05/popovhayashi121802dec.pdf

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Posted By: P Spaeth

Lemme give you my typical answer: it depends.

It probably does depend to some extent on the terms of any warranty PSA might have, is it based on cost or is it based on value. But in terms of general principles of fairness, you are really only out $100, right? Damages often are assessed as the difference between the actual world and the "but for" world. In the actual world you have a worthless card. "But for" the misgrading you would not have had a $1000 card; you would have the $100 because you wouldn't have bought the card in the first place. So your damages are $100 plus interest.

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Posted By: barrysloate

I didn't think it would be the $1000, but I was curious how it would be determined.

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Posted By: rand

Outstanding points on the grading company's warrantee years after purchase. I would like to hear more about the sickening constant trend on ebay with New members with "0" feedback lifting scans. What's Ebay's responsibility?

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Posted By: DaveW

Joann,

What an interesting topic. I think with regards to your first issue, a sale that was denied, it would be hard to show damage. You haven't paid anything, you just lost a "made" deal. You would have to show that the price was a substantial deal for you, and that you were damaged by that loss of deal. Difficult to prevail, as many have said.

I think another topic that may fringe on the legal arena is insurance. Should a collector insure the collection? In the case of a loss, how do you establish value?

Let us know how this turns out, please.

Dave

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Posted By: P Spaeth

Just a guess, but there is probably something in ebay's terms and conditions of use that limits or excludes their liability for transactions among users.

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Posted By: Misunderestimated

These are some of the more interesting legal issues that occur to me offhand. I would be interested in knowing more about them myself if I weren't rather averse to doing legal research in my spare time:

-- While hardly limited to baseball cards -- auction law is especially significant in the hobby. This is especially true where state laws differ and, of course, on eBay. I haven't actually ever looked at whatever auction law you agree to when buying-selling on eBay but I would think an audience of future lawyers might find that especially interesting.
As I understand it there are a number of higher profile cases where eBay has been sued for one thing or another based on what is sold on eBay (large class actions). e-commerce on the scale of eBay is a relatively recent phenomena and there is minimal specific statutory law so the stakes for applying laws drafted prior to the advent of eBay to eBay and similar "markets" are very high.

As the prior posts suggest one of the biggest issues is determing what if any damages there are in a given case of fraud or breach of contract. Cards and other collectibles can be very difficult to place a clear value on -- and this difficulty along with problems of collecting the damages once they are ascertained are among the major the reasons I beleive that so few claims are ever actually brought.

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Posted By: P Spaeth

Liability
You will not hold eBay responsible for other users' actions or inactions, including things they post. You acknowledge that we are not a traditional auctioneer. Instead, the Sites are a venue to allow anyone to offer, sell, and buy just about anything, at anytime, from anywhere, in a variety of pricing formats and venues, such as stores, fixed price formats and auction-style formats. We are not involved in the actual transaction between buyers and sellers. We have no control over and do not guarantee the quality, safety or legality of items advertised, the truth or accuracy of listings, the ability of sellers to sell items, the ability of buyers to pay for items, or that a buyer or seller will actually complete a transaction.

We do not transfer legal ownership of items from the seller to the buyer, and nothing in this agreement shall modify the governing provisions of California Commercial Code § 2401(2) and Uniform Commercial Code § 2-401(2), under which legal ownership of an item is transferred upon physical delivery of the item to the buyer by the seller. Unless the buyer and the seller agree otherwise, the buyer will become the item's lawful owner upon physical receipt of the item from the seller, in accordance with California Commercial Code § 2401(2) and Uniform Commercial Code § 2-401(2). Further, we cannot guarantee continuous or secure access to our services, and operation of the Sites may be interfered with by numerous factors outside of our control. Accordingly, to the extent legally permitted, we exclude all implied warranties, terms and conditions. We are not liable for any loss of money, goodwill, or reputation, or any special, indirect, or consequential damages arising out of your use of our Sites. Some jurisdictions do not allow the disclaimer of warranties or exclusion of damages, so such disclaimers and exclusions may not apply to you.

Regardless of the previous paragraph, if we are found to be liable, our liability to you or to any third party is limited to the greater of (a) the total fees you paid to us in the 12 months prior to the action giving rise to the liability, and (b) $100.

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Posted By: P Spaeth

Release
If you have a dispute with one or more users, you release us (and our officers, directors, agents, subsidiaries, joint ventures and employees) from claims, demands and damages (actual and consequential) of every kind and nature, known and unknown, arising out of or in any way connected with such disputes. If you are a California resident, you waive California Civil Code §1542, which says: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor."

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Posted By: Frank Wakefield

I always liked thinking about the various attorneys in the Hall.

I think the next attorney to go into the Hall will be Tony LaRussa. He played, although he'll go in as a manager.

I think I know the rest of them, but won't post the names just yet so folks can respond with them. One is in N172 as a player, a couple in T206, one's Cracker Jack as a player...

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Posted By: rand

My point is/was if ebay is notified throughout an auction that the seller is bogus, shilling, ect.. and they do not remove the listing, then the buyer gets screwed out of $1000's...i would think there should be some accountability even though they protected themselves in their rules. alot of people, including myself have lost $100's and $1000's by getting scammed, especially through paypal.

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Posted By: P Spaeth

Hugh Jennings be one.

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Posted By: P Spaeth

Branch Rickey be another as I recall.

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Posted By: Pennsylvania Ted

Miller Huggins is probably the most known....although most people do not know he was a lawyer.
A smart lawyer at that, since he chose BB as a career, instead of practicing law.

TED Z

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Posted By: Scot Reader

Joann,

I think it is great that you are speaking on this topic. Maybe your talk will inspire one or two members of the audience to become collectors--perhaps even Net54 participants. Are you speaking at Detroit College of the Law by any chance? A good friend of mine was a professor there for a couple of years (now tenured at Loyola Law School in Chicago).

Scot

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Posted By: Steve

The fascinating John Montgomery Ward is the one usually forgotten

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Posted By: Frank Wakefield

Jennings, Rickey, Huggins, and Ward are correct, times 4. Still one more in T206, me thinks.

And I don't consider this a hijack, lawyers to be and lawyers would like knowing about these guys.

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Posted By: Jay

John Ward was a lawyer. John Tener became the governor of PA, was he a lawyer?

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Posted By: Frank Wakefield

Banker, Jay.

http://en.wikipedia.org/wiki/John_K._Tener

But remembering Tener is great! I love thinking about who these guys were, and what they did, so much more than pop report numbers.

Frank.

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Posted By: Cobby33

Joann- I'll send you my last Remedies exam to answer this question of yours

If you agree via email to buy a card, and the seller tells you he no longer has it or it is not for sale, has there been a breach of contract? What if you see it for sale a month later on the BST, or in the Pick Ups thread because someone else bought it? Can you do anything about it (assume it would be worth it - a higher end card)?

How about- can specific performance be ordered if the seller still has the card?

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Posted By: Cobby33

I don't think LaRussa ever took and/or passed the Bar (exam).

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Posted By: Ken McMillan

Albert Pujols said he also failed the all star manager's exam....

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Posted By: Frank Wakefield

Could be correct about Tony and the bar exam...


Specific performance... gotta read that reported case about Nap Lajoie, where the Phillies seek specific performance to get Nap to quit Cleveland and go back to Philly... the court issued a restraining order, but not specific performance. Nap ignored it, and would not ride the train to or through Pennsylvania to avoid contempt. The case is in the old NE Reports. Maybe not, it is at 202 Pa 210, 51 A. 973 (Sup. Ct. 1902).

http://tinyurl.com/2ghtpy

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Posted By: Cobby33

That's good knowledge!

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Posted By: Misunderestimated

Orator Jim O'Rourke was a lawyer too.
He graduate from Yale Law School way back before you even needed to go to law school to become an attorney.
Many attorneys simply served an apprenticeship with a lawyer before they became lawyers (such as Abraham Lincoln).

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Posted By: Adam

I don't remember where I heard this, but wasn't there some case involving someone suing PSA for losing, I think, a T206 Magie that was submitted for grading? Anyone have a copy of that opinion?

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Posted By: barrysloate

That T206 Magie was submitted by one of our board members and occasional posters, but he will have to come on and discuss the details if he chooses. He did win his case.

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Posted By: Joann

Thanks so much for the input and comments so far. I find some of these questions fascinating.

Barry - I think you bring up a really good wrap-up point. After all the legal discussion I can end by talking about how almost none of it is ever brought into play in the real world, and some of the reasons for it. I think people will find that very interesting - there will be so many issues covered, and to think that in a way it's all for naught is a real-life reality. Especially good point to make on students, I think.

I didn't realize that ebay specifically invokes UCC Section 2 provisions to remove themselves from responsibility in the transaction. I suppose it would be a real mess if buyers were somehow allowed to say that, on ebay, ownership passes when they pay the money. Fraud, especially on ebay, will be a big part of the topic, and pointing out this kind of contractual provision will be on point. Anyone remember when one ebay seller listed a lot of T206's with a BIN of $30K, and they didn't own the cards? The website that had them for sale came on this board to let everyone know that the auction was phoney. That will come up too - as I recall ebay didn't take that auction down either.

I will definitely bring up Peter S points about PSA and negligence theory. The audience (students) may not have had all of the classes related to some of the advanced topics, but I can count on the fact that they have had first term Torts.

I'll also mention the vintage players as lawyers, but I'm not sure they would recognize names. Probably as part of the cards show-n-tell.

And as one more interesting note. This professor told me (I haven't seen it yet) that the case involving the Barry Bonds home run ball is now in the Property casebook we use for our Prop I and Prop II classes.

Keep them coming. Thanks again.

Joann

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Posted By: barrysloate

Good luck Joann with your presentation.

I have this morbid fear of speaking in front of a group of people, even though I was a teacher for three years and taught myself how to deal with it. How many people will you be addressing?

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Posted By: P Spaeth

I suppose another out for PSA on the Wagner or analagous situation (leaving aside what their published policy may be and just talking general legal principles) would be to say that their certification is not a representation or warranty of authenticity but rather an opinion -- in their opinion, a card is authentic and in a certain condition. So to prevail then, one would either have to show the opinion was knowingly false (enter Bill Hughes?) or, if a negligence theory is viable (and I am still not sure PSA really has a duty of care towards the world at large in the context of grading a card for a small fee), that it was rendered without the exercise of due care.

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Posted By: Pennsylvania Ted

I am sorry my dear, all this legal "mumbo-jumbo" would put me to sleep (or at least have me yawning).
I think you would better hold the interest of your audience if you follow Frank Wakefield's suggestion....
talk about famous BB figures who were schooled as lawyers. Or, at least throw this into the "mix".

Starting with Miller Huggins, who in my opinion was the most successful lawyer in the BB scene. He was
a very scrappy ballplayer, who was a very effective lead-off batter. He was an innovative base-stealer
and had a great glove.
More important, though, was his impact on the BB scene when he came to the NY Yankees. He, not only
started out as their Manager; but, also as their chief scout. How many know this......it was Huggins' eye
for talent that brought Babe Ruth to New York in 1919.

And, the rest is BB history.

TED Z

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Posted By: P Spaeth

Wasn't Ruth's talent kinda obvious? Not like he was a sandlot kid in 1919 or anything.

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Posted By: Pennsylvania Ted

Miller Huggins started as a ballplayer in 1904 and became a Manager in 1913 (St Louis). As a manager,
he closely followed Ruth's career from the beginning.

TED Z

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Posted By: leon

With all due respect (and there is a lot of it) the legal mumbo jumbo might put you and I to sleep but it's what lawyers do....and her audience is law students. .....Glad you are going to make our dinner...even if only for afterwards cocktails......

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Posted By: Alan

Ted - Why can't you make the dinner ?

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Posted By: Pennsylvania Ted

I don't want to switch the topic here.....it's not fair to Joann.

I'll address your question in Leon's Dinner thread.

TED Z

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Posted By: Peter Spaeth

The legal mumbo-jumbo puts me to sleep sometimes, even though it's what I do.

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Posted By: Tony Gordon

To find additional legal issues run a search on Westlaw or Lexis with "baseball cards" as your search phrase -- with your law school access to Westlaw and Lexis you should be able to come up with quite a bit of case law along with law review articles.

Great topic! Good luck!!

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Posted By: peter chao

Joann,

Add Judge Kenesaw Mountain Landis who was an early pioneer/executive to your list of baseball people that had a legal background. He was inducted in the HOF in 1944.

Peter

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Posted By: P Spaeth

The case of Fleer v. Topps, discussed a while back, had some interesting discussion of whether Topps had monopoly power over a narrowly-defined baseball card market.

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Posted By: Ted Zanidakis

OK....let's get "lawyer-ese"....here are some classic BB card related topics that I think would go over pretty good.

American Caramel vs ATC over the rights to portray Eddie Plank (based on my theory why the T206 Plank is rare).

Bowman Gum Co. vs Leaf Gum over the rights to portray Satchel Paige in theur 1949 sets.

Sy Berger of Topps vs Bowman Gum Co. over the rights to portray Ted Williams in their 1954 sets.

Sy Berger (Topps) vs Fleer over the rights to do a multi-card BB set story on Ted Williams in 1959.

Just some suggestions....whatever topic(s) you choose ....here's wishing you the best.

TED Z

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Posted By: barrysloate

Ted- that would really put a room full of lawyers asleep.