Crossover grading

[benjulmag]

IMO it is in the hobby's best interests to have multiple TPGs that are in active competition with each other. There have been multiple threads about alterations going undetected, inconsistent grading, poor customer service, as well as discussion about the entire concept behind "grading" and the information a flip should convey. The more competition among TPGs, the more likely these concerns will be addressed, to the benefit of the hobby.

So it should be of concern to the hobby if a TPG is engaging in unfair practices in order to crush its competition. In my view, the most blatant and effective way to do that is to refuse to cross over a card graded by a competitor regardless if the card is clearly worthy of crossover. I am concerned we are seeing that very thing taking place on a regular basis, and the purpose of this thread is to discuss if others agree and what can be done to prevent it.

A legal obstacle to establishing the existence of such a practice is how does one establish the state of mind of a grader when refusing to cross over? Grading is an opinion, and a TPG in refusing to cross a card over will simply say that in its good faith opinion, the card does not merit being crossed over, either because the card is altered or because its condition does not merit such a grade. Just recently I heard a particularly egregious story. 50 vintage cards graded by company A were sent to company B. None were crossed over, though I am unclear whether the reason was because they were altered or simply not deserving of the same grade. The person who submitted the cards then removed them from their slabs and resubmitted them to company B. All 50 cards came back crossed over at the same or higher grade.

Now this is only a story I heard and I cannot vouch for its accuracy, so I want to be careful not to state that it actually occurred. But whether it did or did not, it would seem to me to give such a company A worried about being crushed out of existence by unfair trading practices a means to fight back. This company A could engage in a pattern of anonymously submitting its slabbed cards to company B, and then if/when the cards come back not crossed over, take evidentiary note of the cards being removed from their slabs and resubmitted. If they come back crossed over, and this pattern is continually repeated, it would seem to me to establish proof that company B is engaging in illegal methods to silence its competition. And if company B is a publicly traded company, the legal consequences could be even more severe.

For me personally, if I was the person running company A and seeing my profitability going down by such actions by company B, I sure would engage counsel and have a serious discussion about what legal methods I could take to protect my company.

[glchen]

Originally Posted by benjulmag

A legal obstacle to establishing the existence of such a practice is how does one establish the state of mind of a grader when refusing to cross over? Grading is an opinion, and a TPG in refusing to cross a card over will simply say that in its good faith opinion, the card does not merit being crossed over, either because the card is altered or because its condition does not merit such a grade. Just recently I heard a particularly egregious story. 50 vintage cards graded by company A were sent to company B. None were crossed over, though I am unclear whether the reason was because they were altered or simply not deserving of the same grade. The person who submitted the cards then removed them from their slabs and resubmitted them to company B. All 50 cards came back crossed over at the same or higher grade.

There's an easy excuse that TPG's can make for the story above, true or untrue. For a crossover in the slab, the TPG obviously cannot crack open the slab, and therefore there may be some parts of the card they cannot observe very easily. (e.g., thickness of the card on whether it is pressed.) Therefore for these reasons, the TPG may refuse to crossover the cards at a high grade due to this reason (or excuse).

[benjulmag]

Originally Posted by glchen

There's an easy excuse that TPG's can make for the story above, true or untrue. For a crossover in the slab, the TPG obviously cannot crack open the slab, and therefore there may be some parts of the card they cannot observe very easily. (e.g., thickness of the card on whether it is pressed.) Therefore for these reasons, the TPG may refuse to crossover the cards at a high grade due to this reason (or excuse).

That's a fair point, but inasmuch as some cards do get crossed over (thereby establishing examples for comparison), I would think that with enough submissions one can establish such an explanation by the TPG to be legally incredulous.

[wondo]

If Company A refuses to cross from Company B is it illegal or is it the charging for the phantom service that is the problem? A bias would be extremely difficult to prove. I am skeptical of the 0/50 then 50/50 story.

[benjulmag]

Originally Posted by wondo

If Company A refuses to cross from Company B is it illegal or is it the charging for the phantom service that is the problem? A bias would be extremely difficult to prove. I am skeptical of the 0/50 then 50/50 story.

I am not an antitrust lawyer but I would think it is an unfair trading practice and violates the Sherman Antirust Act. A refusal to crossover expresses the opinion that company A got it wrong. By constantly doing that company B would be besmirching company A's reputation, causing it to lose substantial business and maybe go into bankruptcy. I would think that is actionable.

[Peter_Spaeth]

Originally Posted by benjulmag

I am not an antitrust lawyer but I would think it is an unfair trading practice and violates the Sherman Antirust Act. A refusal to crossover expresses the opinion that company A got it wrong. By constantly doing that company B would be besmirching company A's reputation, causing it to lose substantial business and maybe go into bankruptcy. I would think that is actionable.

Suppose B just announces a policy that it will not cross over cards in other holders, period. With some narrow exceptions, which I won't bore you with, refusals to deal (which that would be akin to) even by a monopolist are not antitrust violations. A company generally can deal or not deal with whom it pleases at least insofar as the Sherman Act is concerned. Also, as to your hypothetical, I don't buy the premise that refusing to cross over a card is somehow tantamount to libel. And even if it were, there are some pretty onerous requirements before you can convert a business tort into an antitrust violation.

PS I am only responding to your antitrust point. I would have to think about other possible claims, and who would have standing to bring them.

[barrysloate]

I get the impression that grading company A will not crossover grading company B's cards because they are trying to run their competition out of business. They want customers to believe that only their grades are valid, and the competition is either overgrading or slipping bad cards through.

TPG's are given submissions to grade cards objectively, based solely on the characteristics of the card. If they are playing politics to drive out their competitors that is outrageous.

[Peter_Spaeth]

Originally Posted by barrysloate

I get the impression that grading company A will not crossover grading company B's cards because they are trying to run their competition out of business. They want customers to believe that only their grades are valid, and the competition is either overgrading or slipping bad cards through.

TPG's are given submissions to grade cards objectively, based solely on the characteristics of the card. If they are playing politics to drive out their competitors that is outrageous.

All companies want customers to believe their products are the best, and many aggressively promote that idea. That's competition. The rough and tumble of the world of commerce, as some case I can't recall now puts it. Why do I have to help out my competitor?

[barrysloate]

I don't expect them to help their competition, but collectors spend an awful lot of money to have their cards graded (perhaps you've noticed the dramatic rise in the cost of grading fees). In return for all this money we're sending them, I expect an accurate and unbiased opinion. Sounds to me some of their opinions are extremely biased.

[Peter_Spaeth]

PS there is no chance SGC is going to sue PSA for not crossing SGC cards into PSA holders. Do you think it wants to publicize that people are trying to do that?

[Promethius88]

To think there would be any actual legal basis is a far stretch and almost impossible to prove, in my opinion. To suggest that "Company B" is doing this to crush "Company A" also seems to be a stretch. First off, there has to be a reason that people are trying to cross cards over to "Company B" slabs. Most likely it would be monetary reasons, ie, cards in "Company B" slabs sell for more than "Company A" slabs. This is my logic, and it could be flawed, but to me it would make more sense for "Company B" to go ahead and slab those cards to be in their own holders if they wanted to crush the competition since they would then have more cards holdered than the other company hence taking up a greater market share. But, they could only do that if the cards were accurately graded in the first place. If they aren't, then that blows the whole premise of this discussion.
Personally, if I'm heading up a TPG, I'm not accepting crossovers in the first place. Why take the risk of cracking a card from a holder and having it damaged. I'm sure there's a terrific process in place, but I'm sure it still happens from time to time.

[Peter_Spaeth]

Originally Posted by barrysloate

I don't expect them to help their competition, but collectors spend an awful lot of money to have their cards graded (perhaps you've noticed the dramatic rise in the cost of grading fees). In return for all this money we're sending them, I expect in return an accurate and unbiased opinion. Sounds to me some of their opinions are extremely biased.

Fine, but now we're talking about an issue of whether PSA is treating its customer appropriately or taking its money unfairly, not whether there is some antitrust violation.

[Peter_Spaeth]

Originally Posted by Promethius88

To think there would be any actual legal basis is a far stretch and almost impossible to prove, in my opinion. To suggest that "Company B" is doing this to crush "Company A" also seems to be a stretch. First off, there has to be a reason that people are trying to cross cards over to "Company B" slabs. Most likely it would be monetary reasons, ie, cards in "Company B" slabs sell for more than "Company A" slabs. This is my logic, and it could be flawed, but to me it would make more sense for "Company B" to go ahead and slab those cards to be in their own holders if they wanted to crush the competition since they would then have more cards holdered than the other company hence taking up a greater market share. But, they could only do that if the cards were accurately graded in the first place. If they aren't, then that blows the whole premise of this discussion.
Personally, if I'm heading up a TPG, I'm not accepting crossovers in the first place. Why take the risk of cracking a card from a holder and having it damaged. I'm sure there's a terrific process in place, but I'm sure it still happens from time to time.

Tim I've often wondered the same thing, why PSA wouldn't WANT to take SGC cards off the market. I suppose the counterargument could be that by making cross-over difficult they're discouraging people from buying SGC cards in the first place. But either way I don't see SGC suing them and I think there are some serious obstacles to framing an antitrust violation on these facts.

[benjulmag]

The facts I am positing my question on are :

1. Company B has a stated policy of crossing over slabbed cards from company A that meet company B's criteria. If we are talking about Company A being SGC and Company B being PSA, unless things have changed, PSA will cross over SGC cards if they meet PSA's criteria.

2. It can be proven that the reason the cards will not be crossed over is some unstated rule that PSA wants to put SGC out of business and in furtherance of that end they will not cross over SGC cards.

3. The reason PSA gives in returning the cards not crossed over is that they do not satisfy PSA's criteria.

4. SGC loses a lot of customers and suffers significant damages.

5. In time PSA becomes the only remaining TPG in the hobby.


Under those facts (which let's assume can be proven), Peter, are you saying SGC has no actionable claim against PSA, and also that this has nothing to do with antitrust law?

[boneheadandrube]

Option 1 - Crossover Submission:
If company "B" has a huge backlog of orders to fill and its worker sees a stack of crossovers from company "A" in his ever filling inbox, he can make his day easier by just checking the "will not cross" box on his worksheet for 50% of them without even taking the time to look. Worker and manager know that they will likely be resubmitted raw at some point in future and they will be paid twice.

Option 2 - Raw Submission:
This worker from company "B" with the overflowing inbox can also check the "N5" box on his worksheet for 15% of raw cards so he can go to lunch earlier, there is no real explanation of N5 to the customer anyway. Worker and manager know that they will likely be resubmitted again at some point in future and they will be paid twice.

[Peter_Spaeth]

Originally Posted by boneheadandrube

Option 1 - Crossover Submission:
If company "B" has a huge backlog of orders to fill and its worker sees a stack of crossovers from company "A" in his ever filling inbox, he can make his day easier by just checking the "will not cross" box on his worksheet for 50% of them without even taking the time to look. Worker and manager know that they will likely be resubmitted raw at some point in future and they will be paid twice.

Option 2 - Raw Submission:
This worker from company "B" with the overflowing inbox can also check the "N5" box on his worksheet for 15% of raw cards so he can go to lunch earlier, there is no real explanation of N5 to the customer anyway. Worker and manager know that they will likely be resubmitted again at some point in future and they will be paid twice.

In that vein people have long suspected PSA of hammering cards in the hope that some will get resubmitted or reviewed, for more fees.

[Peter_Spaeth]

Originally Posted by benjulmag

The facts I am positing my question on are :

1. Company B has a stated policy of crossing over slabbed cards from company A that meet company B's criteria. If we are talking about Company A being SGC and Company B being PSA, unless things have changed, PSA will cross over SGC cards if they meet PSA's criteria.

2. It can be proven that the reason the cards will not be crossed over is some unstated rule that PSA wants to put SGC out of business and in furtherance of that end they will not cross over SGC cards.

3. The reason PSA gives in returning the cards not crossed over is that they do not satisfy PSA's criteria.

4. SGC loses a lot of customers and suffers significant damages.

5. In time PSA becomes the only remaining TPG in the hobby.


Under those facts (which let's assume can be proven), Peter, are you saying SGC has no actionable claim against PSA, and also that this has nothing to do with antitrust law?

There are so many issues with the hypothetical it's hard to accept it, the biggest one being that one company's refusal to take another's cards OFF the market (and thus leave them ON the market) somehow put that company out of business. It sounds absurd. SGC's existence depends on PSA legitimizing its product and putting its own brand on it? I mean come on. I can't even think of an analogy it seems so far-fetched. It would be, maybe, like Ford claiming GM has some obligation to endorse its cars, or that GM dealers are obligated to stock Ford parts and service Ford cars. Be that as it may, I don't think the antitrust laws would impose a duty on PSA to cross over its competitor's cards regardless of its intent. As I said, there are some narrow exceptions to the general principle that a monopolist may refuse to deal (term of art) with a competitor but I don't see one applying here.

PS the antitrust laws exist to protect and promote competition. SGC in your hypothetical should be looking to improve its product, not looking to PSA to legitimize it.

[Promethius88]

Couldn't it also be reasonably argued that because grading is subjective that the alleged "50 cards" may have been borderline when viewed in the SGC holders? I don't care if we are talking Company A, Company B, or Company C to Z.... you submit raw cards 10 different times you may get several different grades.
I just don't see that any of these "facts" are really provable.

[Peter_Spaeth]

Originally Posted by Promethius88

Couldn't it also be reasonably argued that because grading is subjective that the alleged "50 cards" may have been borderline when viewed in the SGC holders? I don't care if we are talking Company A, Company B, or Company C to Z.... you submit raw cards 10 different times you may get several different grades.
I just don't see that any of these "facts" are really provable.

Well, in theory, you could have some former employee claim yeah we had a policy against crossovers. But my opinion, at least insofar as we are talking antitrust as Corey has suggested, is, well so what? Why do I have an obligation to the other grading company to cross over their cards to my holders? And how can that company with a straight face claim they need me to do this for their survival? That just sounds for all the world like they do, in fact, have an inferior product.

Now, whether a PSA customer has some legitimate gripe for his cards not being evaluated properly, that's a different question. But the answer to that in my opinion has nothing to do with the antitrust laws.

[JohnP0621]

I think the person who paid to cross over 50 cards is crazy. Even crazier to crack them open and pay a second time for the same 50 cards . What a joke. The TPG grading co must love these types of customers. Why not just buy the cards that are graded by the TPG that you like. They may have also put a minimum crossover grade on the submission slip that the cards did not match .

John P

[swarmee]

I think this thread was inspired by the thread on the post-war board where Buster posts late in the night.
None of the cards have ever been posted, but the three grading companies all have slightly different definitions of what a NM-MT 8 is. The biggest difference is centering: BGS is stricter than PSA who is likely stricter than SGC. One judges "natural" rough cuts while others may accept "sheet cut" cards cut after the factory production.

PSA has done some dumb things on large submissions before, rejecting approximately 100 cards in an order as ?AUTH (aka likely fake) just because the submitter sent them in toploaders that were taped at the top. That guy has a real axe to grind, because they probably charged for that service, despite not providing the guy any useful service. I know it was posted on the CU/PSA message boards, but I think that thread went poof.

[oldjudge]

My guess is that crossover submissions represent a minuscule portion of PSA total submissions. It seems that the easiest way to address the issue is to raise the fee for such service to a minimum of $100, with the fee increasing as the value of the card increases.That would effectively put an end to crossover business, ending the arb of people trying to buy lower priced SGC cards and, without cracking them out, get them into comparable PSA holders.

[benjulmag]

One of the things that has guided me well as an attorney is what I call the smell test.

If,

(I) company B is the industry leader and has a publicly stated policy of objectively evaluating all submissions explicitly including submissions of slabbed company A cards;

(II) company B as a matter of internal policy has a policy against crossing over cards in company A's slabs, which policy can be proven;

(III) company B when returning the uncrossed over cards to the submitter states the reason for the refusal to cross over is that the cards are either altered or do not merit the same grade;

(IV) these occurrences occur on a regular basis;

(V) company A's profitability goes down, which decrease can be proven to correlate to company B's internal policy of refusing to objectively evaluate slabbed company A cards in crossover submittals;

Then,

company A has an actionable claim for damages against company B.

And to go further, if company B can be proven to have similar policies with similar results against all the other TPG companies in the market, such that that the end result is company B is left as the only TPG company in the industry,

Then

there are antitrust implications.


Let me worry about whether what I state to be fact can be proven. Assuming they can, I believe the conclusions I have drawn stand a very good chance of being correct if tested.

[Promethius88]

I'm guessing that you are using "Company A" and "Company B" because you don't actually have the proof to substantiate all of these claims and therefore avoiding any claims of libel/slander against you. We know you referring to PSA and SGC so lets get it out there. If there are internal policies at PSA that can be proven and the intent is to malicious or detrimental to SGC, BGS, etc, I'm happy to listen to the discussion. But, as Peter has stated, I doubt that the amount of crossovers sent to PSA is so vast that it is going to make some huge difference in the bottom line at SGC. I think that with the recent issues of the fake T206's being authenticated by SGC and them doing away with their autograph authentication line of business, their bottom line is probably affected more by their own hand than by that of PSA.

[Republicaninmass]

From what I understand it is very difficult for even some reviews and crossovers, if centering meets guidelines, the corners and edges and sometimes even minute wrinkles cant be seen in the slab. I had a 3 card review order take 85 days in a 45 day sub and was told reviews and crossovers take the longest when I asked.

Howd you feel if the cracked it, saw damage and said "nope" under close examination. This is why a lower minimum grade is usually used on crossovers. If you want a chance in hell that is

[Peter_Spaeth]

Originally Posted by benjulmag

One of the things that has guided me well as an attorney is what I call the smell test.

If,

(I) company B is the industry leader and has a publicly stated policy of objectively evaluating all submissions explicitly including submissions of slabbed company A cards;

(II) company B as a matter of internal policy has a policy against crossing over cards in company A's slabs, which policy can be proven;

(III) company B when returning the uncrossed over cards to the submitter states the reason for the refusal to cross over is that the cards are either altered or do not merit the same grade;

(IV) these occurrences occur on a regular basis;

(V) company B's profitability goes down, which decrease can be proven to correlate to company B's internal policy of refusing to objectively evaluate slabbed company A cards in crossover submittals;

Then,

company A has an actionable claim for damages against company B.

And to go further, if company B can be proven to have similar policies with similar results against all the other TPG companies in the market, such that that the end result is company B is left as the only TPG company in the industry,

Then

there are antitrust implications.


Let me worry about whether what I state to be fact can be proven. Assuming they can, I believe the conclusions I have drawn stand a very good chance of being correct if tested.

All I can go on is all the years of practice I have had including many antitrust cases some pretty high profile. I would personally value that more than your smell test -- antitrust law can be very technical -- but whatever. If you think you know more about antitrust law than I do, cool. PS in your (V) you have the wrong company's profitability going down (I think anyhow). You might want to fix that. If you truly meant to say B, then you haven't articulated any theory of harm to A, have you? Not that any of that matters really to the question.

Kinder, gentler version of above -- just because big company A does something to hurt small company B, even badly hurt it, it doesn't necessarily implicate the antitrust laws. It might, but there are lots of reasons it might not. It's a very complex subject that even the Supreme Court struggles with at times.

[benjulmag]

Originally Posted by Peter_Spaeth

All I can go on is all the years of practice I have had including many antitrust cases some pretty high profile. I would personally value that more than your smell test -- antitrust law can be very technical -- but whatever. If you think you know more about antitrust law than I do, cool. PS in your (V) you have the wrong company's profitability going down you might want to fix that.

Kinder, gentler version of above -- just because big company A does something to hurt small company B, even badly hurt it, it doesn't necessarily implicate the antitrust laws. It might, but there are lots of reasons it might not. It's a very complex subject that even the Supreme Court struggles with at times.

In the example I give, company B has a stated policy of crossing over a card from company A if the card meets company B's criteria. So what point are you making by saying that they did not have to have that policy? I am not talking about that fact pattern. I initiated this thread to discuss what if any legal implications there might be to company B if it can be proven that the real reason it did not do the crossover is not because its specified criteria is not met but only because the card came from company A, and this practice is repeated over and over.

As far as antitrust law is concerned, I am not stating that it is not complicated, nor that I profess to have more expertise or experience in it then you do. Nor am I stating that this is a cut and dry legal matter. My intent is to initiate discussion about a practice that I have heard takes place, and if it does, it reeks to the bone. If company B wants to have a policy of not crossing over company A's cards, great, then say so. But unless they explicitly state that is their policy, I believe they have a duty to objectively evaluate crossover submissions.

While I agree that antitrust law may be complicated, the economic principles on which I understand it to be based I believe are pretty basic. I am familiar with many of the Supreme Court cases on this subject and the struggles the Court has had. So to the extent you are insinuating that if our hobby ends up with company B having a near 100% market share, coupled it being proven the company did not objectively evaluate submissions in accordance with its stated policies, it is very unlikely that company A has any legal recourse or that there are not antitrust implications, I respectfully disagree.

PS. Thank you for pointing out I had the wrong company's profitability going down. I have corrected that.

[Peter_Spaeth]

How is antitrust law the source of that duty? There are all sorts of things that might rise to the level of a business tort but aren't an antitrust violation.

From an economic perspective, what's the difference if they make it an explicit policy or not? It seems to me if you concede they could refuse to cross SGC cards without violating the antitrust laws, then by the same token they could say they would cross them but then not do it. Sure. maybe one seems more underhanded or distasteful or sleazy, but so what, the economic effect is the same so the antitrust analysis which concerns itself with economic effect should be the same. Either way, the bottom line is that they don't cross SGC cards. It's not an antitrust issue IMO. Maybe the submitters get screwed because they pay on false pretenses, but that has nothing to do with SGC's potential claim.

One other thing I alluded to earlier. SGC would be insane to want to publicize that PSA wouldn't cross its cards. It makes SGC look bad on multiple levels.

[wondo]

I currently have 36 cards from BGS submitted to PSA for crossover inspection. I put my minimum grade at .5 lower than the current BGS grade. I'll post results when I receive them. BTW, its all the same modern card.

[Peter_Spaeth]

Originally Posted by wondo

I currently have 36 cards from BGS submitted to PSA for crossover inspection. I put my minimum grade at .5 lower than the current BGS grade. I'll post results when I receive them. BTW, its all the same modern card.

If you have 36 SP Jeters mazel tov.

[Peter_Spaeth]

Corey consider this example. A small pharma company with one drug loses much of its market share when Merck develops a blockbuster drug for the same indication. Small co. goes to Merck and says, I need to license your drug and become an authorized seller to stay in business. Merck says no. Lawful refusal to deal.

Change the facts. Merck says yes, but then breaches the bargain and never delivers the product. Small co. might have a breach of contract claim now, but it still doesn't have an antitrust claim; the economic effect is the same whether the refusal is straightforward or sleazy. Put another way, every wrongful act by a monopolist does not thereby become an antitrust violation.

[benjulmag]

Originally Posted by Peter_Spaeth

From an economic perspective, what's the difference if they make it an explicit policy or not?

The signal they are giving the hobby by its refusal to cross over.

If company B explicitly states that they objectively evaluate all crossovers, then its refusal to do a crossover is an expressed opinion the card is either altered or not worthy of the same numerical grade. It this in fact occurs over and over and it creates an impression in the hobby that company A offers an inferior grading service, that can cause company A to lose customers, in the same manner a false advertising campaign can.

If though the impression the hobby gets is the reason company A's cards are never crossed over by company B is because company B as a matter of policy does not consider crossovers, the hobby would not get the same impression that company A offers an inferior grading service, and as a result company A would not lose those customers.

[benjulmag]

Originally Posted by Peter_Spaeth

Corey consider this example. A small pharma company with one drug loses much of its market share when Merck develops a blockbuster drug for the same indication. Small co. goes to Merck and says, I need to license your drug and become an authorized seller to stay in business. Merck says no. Lawful refusal to deal.

Change the facts. Merck says yes, but then breaches the bargain and never delivers the product. Small co. might have a breach of contract claim now, but it still doesn't have an antitrust claim; the economic effect is the same whether the refusal is straightforward or sleazy. Put another way, every wrongful act by a monopolist does not thereby become an antitrust violation.

Two responses.

1. One of the points I was making is that company A could very well have a legal claim for damages from company B that is not predicated on antitrust violation.

2. In my fact pattern company B's practices results it having a (near) 100% market share. So let's change your example a bit. Let's say that Merck has a business model in which it always breaches its license agreements with small companies. Merck as a result gains a 100% market share, the result being there are no companies spending R&D dollars to develop new drugs out of a belief they will be eventually put out of business by Merck. Are you saying that does not have antitrust implications?

[oldjudge]

The market has judged via its’ valuations that PSA has a superior product. If PSA refused to cross SGC’s cards (and there is no blanket policy, some cards do cross)they would not be diminishing their value, the marketplace has already done that. For all the cards that PSA refuses to cross to an equivalent grade they are doing nothing to the card’s value. For the cards they do cross they are increasing their value and indirectly the value of the SGC brand.
However, there is no reason for PSA to worry about SGC. Look at the lines in front of each company’s booths at the National and judge for yourself whether this battle isn’t already over.

[Peter_Spaeth]

Originally Posted by benjulmag

The signal they are giving the hobby by its refusal to cross over.

If company B explicitly states that they objectively evaluate all crossovers, then its refusal to do a crossover is an expressed opinion the card is either altered or not worthy of the same numerical grade. It this in fact occurs over and over and it creates an impression in the hobby that company A offers an inferior grading service, that can cause company A to lose customers, in the same manner a false advertising campaign can.

If though the impression the hobby gets is the reason company A's cards are never crossed over by company B is because company B as a matter of policy does not consider crossovers, the hobby would not get the same impression that company A offers an inferior grading service, and as a result company A would not lose those customers.

If company A does not have an inferior grading service, why are people seeking to cross its cards into company B's holders in droves, such that company B's refusal to do so is capable of badly hurting company A?

[benjulmag]

Originally Posted by Peter_Spaeth

If company A does not have an inferior grading service, why are people seeking to cross its cards into company B's holders in droves, such that company B's refusal to do so is capable of badly hurting company A?

And so therefore company B has a free rein to say anything it wants or through its deceptive trade practices give false impressions about company A's product?

[Peter_Spaeth]

Originally Posted by benjulmag

And so therefore company B has a free rein to say anything it wants or through its deceptive trade practices give false impressions about company A's product?

Nonresponsive. I never said there could not be a business tort here though I'm skeptical without some overt defamation. But you said there was an economic/antitrust difference between just refusing to cross and saying you would but not doing it, and you articulated that difference as the latter suggested A had an inferior product, so I am responding to that. If A is claiming it's hurt because B won't rebrand its product as B's product, what does that tell you about A's assessment of its own product, or the market's?

A should be critically examining itself and asking why people are trying switch its cards to B's holders, not making it painfully obvious that it has an inferior product by suing B.

I think B would welcome such a suit actually -- what great publicity to have high profile dealers/collectors explain why they wanted to get their cards out of A's holders and into B's.

[benjulmag]

Originally Posted by Peter_Spaeth

Nonresponsive. I never said there could not be a business tort here though I'm skeptical without some overt defamation. But you said there was an economic/antitrust difference between just refusing to cross and saying you would but not doing it, and you articulated that difference as the latter suggested A had an inferior product, so I am responding to that. If A is claiming it's hurt because B won't rebrand its product as B's product, what does that tell you about A's assessment of its own product, or the market's?

A should be critically examining itself and asking why people are trying switch its cards to B's holders, not making it painfully obvious that it has an inferior product by suing B.

I think B would welcome such a suit actually -- what great publicity to have high profile dealers/collectors explain why they wanted to get their cards out of A's holders and into B's.

Again, we are going to have to agree to disagree. If such a suit were brought and it should come out that B has an unstated company policy that it does not crossover from A, but that the explanation it is to give to the submitter is that the card possess defects B knows it does not possess, I'm not sure I share your view that such a suit would be beneficial to B. Such a suit could give A a forum to submit voluminous forensic evidence of grading errors by B, which could be an eye opener for a number of potential dealers/collectors. In the world we are in high-grade vintage cards routinely sell for five and six figures. Some potentially seven figures. And I suspect that a number of the purchasers would find it material if they were to learn that the cardboard within the slab is in fact not what the flip represents, and that if revealed would be worth a small fraction of what it sold for.

Edited to add that the antitrust implications I am trying to draw out pertain to a situation where B essentially has 100% market share. Are you saying that such a market concentration does not have antitrust implications?

[Peter_Spaeth]

Originally Posted by benjulmag

Again, we are going to have to agree to disagree. If such a suit were brought and it should come out that B has an unstated company policy that it does not crossover from A, but that the explanation it is to give to the submitter is that the card possess defects B knows it does not possess, I'm not sure I share your view that such a suit would be beneficial to B. Such a suit could give A a forum to submit voluminous forensic evidence of grading errors by B, which could be an eye opener for a number of potential dealers/collectors. In the world we are in high-grade vintage cards routinely sell for five and six figures. Some potentially seven figures. And I suspect that a number of the purchasers would find it material if they were to learn that the cardboard within the slab is in fact not what the flip represents, and that if revealed would be worth a small fraction of what it sold for.

But Corey, why would A want to publicize in a complaint then trial that so many people were trying to switch so many cards out of its holders? That just strikes me as incredibly counterproductive, even in the fantasy world that there is some viable legal claim here.

[wondo]

Originally Posted by Peter_Spaeth

If you have 36 SP Jeters mazel tov.

Peter,
Very funny - all the same serial number, too!!!

Actually just some Tiger Woods rookies. My experience with crossing from both BGS and SGC has been more than reasonable. From a marketing standpoint, I like a version of the car analogy. Think of a Lincoln driver going into a GM dealership and driving out in a Malibu. The driver has paid and downgraded, but is now in a GM product. The dealership is happy; never thought of not accepting the crossover. Maybe it isn’t a perfect comp, but I like it!

[benjulmag]

Originally Posted by Peter_Spaeth

But Corey, why would A want to publicize in a complaint then trial that so many people were trying to switch so many cards out of its holders? That just strikes me as incredibly counterproductive, even in the fantasy world that there is some viable legal claim here.

Peter, if within the hobby it is generally believed that B's cards sell for more than comparably graded A cards, and the reason has nothing to do with grading quality but instead B's set registry, A could rationally take the view that there is no improvement it could make to its product that could increase its market share. And therefore the most prudent business strategy would be to expose the great percentage of high-grade B vintage cards that in fact are altered, along with the blatant misrepresentations B is making by telling submitters how accurate its grading is and the ethical standards under which it operates. Maybe in the end such a suit would bring no benefit to A. But the upside of bringing it to me seems to outweigh the downside.

[Peter_Spaeth]

Originally Posted by benjulmag

Peter, if within the hobby it is generally believed that B's cards sell for more than comparably graded A cards, and the reason has nothing to do with grading quality but instead B's set registry, A could rationally take the view that there is no improvement it could make to its product that could increase its market share. And therefore the most prudent business strategy would be to expose the great percentage of high-grade B vintage cards that in fact are altered, along with the blatant misrepresentations B is making by telling submitters how accurate its grading is and the ethical standards under which it operates. Maybe in the end such a suit would bring no benefit to A. But the upside of bringing it to me seems to outweigh the downside.

How would altered cards be relevant to the suit you are proposing? Your suit concerns already-graded A cards and B's treatment of them, not B's grading practices in general. By the way even if somehow relevant, what admissible evidence is A going to provide to show that B slabs a high percentage of altered cards?

[benjulmag]

Originally Posted by Peter_Spaeth

How would altered cards be relevant to the suit you are proposing? Your suit concerns already-graded A cards and B's treatment of them, not B's grading practices in general. By the way even if somehow relevant, what admissible evidence is A going to provide to show that B slabs a high percentage of altered cards?

The suit would focus on A cards that B did not cross over and show those cards to possess the attributes of B cards that do have the desired crossover grade. The purpose would be to persuade the trier of fact that the real reason they did not cross over was not because of some objective assessment by B that they did not meet B's criteria, but instead due to an unstated policy of not crossing over. It would seem to me that by showing voluminous numbers of altered B cards that did have the desired crossover grade, B grading practices would come into view.

[Peter_Spaeth]

Originally Posted by benjulmag

The suit would focus on A cards that B did not cross over and show those cards to possess the attributes of B cards that do have the desired crossover grade. The purpose would be to persuade the trier of fact that the real reason they did not cross over was not because of some objective assessment by B that they did not meet B's criteria, but instead due to an unstated policy of not crossing over. It would seem to me that by showing voluminous numbers of altered B cards that did have the desired crossover grade, B grading practices would come into view.

How would you propose to show those and prove they were altered, consistent with the rules of evidence, Daubert, etc. It might be quite difficult as a practical matter to establish an adequate foundation for expert testimony.

[Dpeck100]

I have played the cross over game both in the holder and out of the holder. I do tend to think you have a better shot out of the holder but that is where all of the risk is. Whether it is position bias or not being able to see the card it is impossible to know. There is absolutely no case here that can be brought against grading companies and I am quite surprised it is even being discussed in a serious matter as if one would ever have a legit chance of moving forward with any level of success.

Under no circumstances can anyone prove the motives of a grading company when it comes to analyzing cards in other companies holders. PSA has such a dominate position that they couldn't care less what SGC does. They have no need to beat them further into submission. The market has.

This notion that all grades are equal in third party holders is laughable. I have seen numerous examples where cards can go up or down from company to company. I have had BGS 9's turn into PSA 10's and BGS 9's turn into PSA 7's. Even worse BGS 9'5's turn into PSA 8's.

Years ago I tried crossing over several BGS 8.5's and a BGS 9 1982 Wrestling All Stars Series A Andre The Giant. No luck. Cracked them out along with several others and had a BGS 8 go to a PSA 6, two 8.5's go to 8's, a BGS 9 that went to a PSA 7 the first time and then an 8, and another BGS 9 go to a PSA 8. This example is why a PSA 9 will out sell a BGS 9.5 for this card.

The registry is not the only driving force that differentiates prices. Those with large SGC and BGS positions tell themselves this to make themselves feel better but the collective market is smarter than this and has created quite the divide in prices. No grading company is perfect but in my view on the margin PSA is definitely the toughest. I have submitted to all three by the way.

The only SGC 98 1982 Wrestling All Stars Series A Hulk Hogan was a PSA 9 that had been subbed time and time again raw and for review at PSA with no luck of landing the first PSA 10. It was cracked and sent to SGC to get the Gem Mint grade. When it sold it went for just over $100 more than the PSA 9. Why? Because it is a PSA 9 sitting in an SGC 98 case. Examples like this destroy your case.

There are numerous comments over the years about SGC being more lenient on centering than PSA. BGS having the four sub graded scoring system where a 9 corner subgrade with three 9.5's has no chance to cross over in or out of the holder to PSA. Once again there is wayyyy too many examples that show that third party grading isn't perfect and that one companies grade may be different than another.

One of the primary reasons that many cards sell for a big spread is dealers in so many cases will pay a one grade discount on SGC graded cards. Why? Because the market has built the expectation that they are over graded vs. PSA. Is this true? In some cases yes and in other cases no but enough times that the risk reward analysis points to not paying an equal value.

If cards were graded by computers and we could prove that there was virtually no variance in grading and then they didn't cross over perhaps you might be on to something but with all of these scenarios I have laid out there is absolutely without question no case here.

[benjulmag]

Originally Posted by Dpeck100

There is absolutely no case here that can be brought against grading companies and I am quite surprised it is even being discussed in a serious matter as if one would ever have a legit chance of moving forward with any level of success.

Under no circumstances can anyone prove the motives of a grading company when it comes to analyzing cards in other companies holders.

I respectfully disagree with this view. To be clear, I am not saying that if A were to go after B in this instance, A could satisfy its burden of proof. But I can think of a way A could go about trying to do so that if successful could shift the burden of proof to B to establish that it did not have improper motives in its refusal to cross over.

Suppose A were to take 10,000 good candidates of A-slabbed cards for crossover, and only 8 cross over. A then takes the 9,992 that did not cross over out of the slab and submit them raw. 8,895 come back crossed over, and 4,583 of those at higher grades. I believe that if A was to submit such evidence, B would then have the burden to come up with a explanation to explain this. A far-fetched fact pattern, perhaps. But the story I recounted about the 50 out of 50 non-crossed cards being crossed over when resubmitted raw was told to me by a source I regard as credible. And I have heard other stories, though not as egregious. So while perhaps A has an uphill climb, for me at least I do not regard it as insurmountable.

My ire at this situation arises because B says that it objectively evaluates all crossover submissions, and that submitting it raw will make no difference. And when they refuse the crossover, they might tell you something untrue about your card. If B wants to have a blanket policy of refusing to cross over A's cards, then go ahead and announce it. That would be perfectly lawful and I would have no cause to complain. But don't go about saying you are doing one thing, when in reality you are doing something else.

[Dpeck100]

Originally Posted by benjulmag

I respectfully disagree with this view. To be clear, I am not saying that if A were to go after B in this instance, A could satisfy its burden of proof. But I can think of a way A could go about trying to do so that if successful could shift the burden of proof to B to establish that it did not have improper motives in its refusal to cross over.

Suppose A were to take 10,000 good candidates of A-slabbed cards for crossover, and only 8 cross over. A then takes the 9,992 that did not cross over out of the slab and submit them raw. 8,895 come back crossed over, and 4,583 of those at higher grades. I believe that if A was to submit such evidence, B would then have the burden to come up with a explanation to explain this. A far-fetched fact pattern, perhaps. But the story I recounted about the 50 out of 50 non-crossed cards being crossed over when resubmitted raw was told to me by a source I regard as credible. And I have heard other stories, though not as egregious. So while perhaps A has an uphill climb, for me at least I do not regard it as insurmountable.

My ire at this situation arises because B says that it objectively evaluates all crossover submissions, and that submitting it raw will make no difference. And when they refuse the crossover, they might tell you something untrue about your card. If B wants to have a blanket policy of refusing to cross over A's cards, then go ahead and announce it. That would be perfectly lawful and I would have no cause to complain. But don't go about saying you are doing one thing, when in reality you are doing something else.

I just gave you numerous examples of cards going down in grade from BGS to PSA out of the holder.

In your argument they should have crossed over but because they were in another third party grading companies holder they didn't. Instead they were over graded by BGS.

One of the main arguments against grading is consistency. This is a an argument within firms and so if at times the same company isn't consistent how on earth can you prove a standard? You can't.

If you are considering trying this case give your money to a good charity or something because otherwise all you are doing is lighting it on fire.

[glchen]

Here is a crossover submission that I did recently. For this crossover, I put the minimum grade as ANY. That is, as long as PSA deemed the card Authentic, I wanted it holdered in a PSA holder. (This was for the new PSA Jumbo holders.) None of the cards were cracked out, and all went to PSA in their holders.

(1) 1921 Pathe Freres Phonograph Co. Babe Ruth

Went from SGC Authentic to PSA Authentic

(2) 1935 Wheaties-Series 1 Hand Cut Lou Gehrig

Went from SGC 35/2.5 to PSA 2

(3) 1936 R311 New York Yankees Glossy

Went from SGC 40/3 to PSA 3

(4) 1936 R311 American League All-Stars Glossy

Went from SGC 40/3 to PSA 3


(5) 1920 W529-8 i.f.s. panel


Went from BGS (Beckett) Authentic to PSA Authentic

(6) 1927 Sporting News Supplements M101-7 Babe Ruth Ad Back-Red

Went from BGS (Beckett) Authentic to PSA Authentic

(7) 1927 Sporting News Supplements M101-7 Babe Ruth

Went from BGS (Beckett) 4 to PSA 2.5

(8) 1934 R310 Butterfinger Babe Ruth

Went from BGS (Beckett) 5 to PSA 1.5

(9) 1934 R310 Butterfinger Lou Gehrig

Went from BGS (Beckett) 5 to PSA 3


(10) 1934 Goudey Premiums R309-1 American League All-Stars

Went from BGS (Beckett) 5 to PSA 5

(11) 1928 W565 Uncut Sheet / Gehrig

Went for BGS (Beckett) 3 to PSA 2

So sure, I wanted some cards to have gotten better grades in their PSA holders. However, I could still understand why they got the grades they got, so I'm fine with that.

[swarmee]

Was #8 due to a pinhole that Beckett missed?

[glchen]

Originally Posted by swarmee

Was #8 due to a pinhole that Beckett missed?

Small tear on the edge. It's a pretty fragile paper stock.