Posted By:
P SpaethI tend to agree with you on the first point from a strictly legal point of view ("materiality" is defined as something a reasonable buyer would consider important to the total mix of information and the fact that a major grading service had rejected a card would seem to pass that definition) but I can't see it ever happening, can you? A catalog description stating FYI this PSA 8 was rejected by SGC, or vice versa? No chance.
As to your second point, take it to its logical extreme. Why impose such a duty of independent verification only on an auction house? Why not every seller, or at least every seller who you could prove is reasonably knowledgeable about graded cards? It isn't crazy, to be sure, but I think unless and until the whole concept of third party grading is completely discredited, I can't see a tribunal imposing that duty of independent inspection -- otherwise it would mean a seller has essentially no right to rely on the industry standard third-party verification. So I think, just my opinion of course, that unless the visible evidence in the case of a particular card was such that the seller knew it was altered, or set off red flags such that it was reckless not to look into it further, you would not see liability imposed in the case of a subsequent finding by another grading service that a mistake had been made. Now whether in those circumstances the grading service itself could be liable of course leads back to the Wagner hypothetical discussed earlier. EDITED TO CORRECT TYPOS