Latest development in Shanus v. REA

[Peter_Spaeth]

On Monday, REA filed a brief defending the sufficiency of its counterclaim against Corey for, among other things, libel. The libel claim was based on this post by Corey on Net 54 on May 6, 2010.

"Selling 19th century memorabilia at auction, even the really good stuff, can be very risky, unless you put a high reserve to protect yourself. The market for that material is often very thin, and if one or two big players either have the item or are not interested in bidding, the item can bomb. In the recent REA auction, for example, the sheet musics entitled the Live Oak Polka and the Home Run Quick Step did abysmally, selling for a small fraction of what they transacted for in the past. For those who collect that sort of thing, those sheet musics represent the pinnacle of 19th century chromolithography. They are quite rare and the particular pieces offered by REA were in exceptionally good condition for the issue. In the recent Heritage Auction, an N28 poster went for a steal, again much below what such an item has sold for in the past. It did have some condition issues on the borders, but the colors looked good and a good conservator could have made the item look practically brand new (which for posters seems only to enhance their value at auction).

When I look to transact 19th century memorabilia, I typically prefer private transactions, be it sale, trade or a combination of the two. Of course this requires a willingness to wait until the right party comes along, which I recognize may be not possible if there is a quick need for money. But if you have that flexibility, it is something to consider."

For context, this is a link to the complete thread.

http://www.net54baseball.com/showthread.php?t=123436

REA took the position in its counterclaim that this post "unfairly and improperly criticized REA's handling and the result of the sheet music sale" because the "past transaction" Corey referred to by way of comparison was "believed to be" one in which Corey had participated in a shill bidding scheme to inflate the price. (paragraph 14 of counterclaim) According to REA, Corey's post discouraged other potential consignors of 19th century memorabilia from consigning to REA without high protective reserves, and thereby damaged REA. (same cite)

REA has now filed an opposition to Corey's motion to dismiss the counterclaim. Responding to the argument that REA had not sufficiently alleged damages from Corey's post, REA now points to the fact that its sales in 2011 were lower by approximately $500,000 than in 2010. (page 14 of opposition to motion to dismiss counterclaim) REA also claims to have expended time in connection with efforts at "watching the bid process to detect shill bidding by Shanus' cohorts," which "translates to money." (same cite)

I have no knowledge concerning the facts of either the underlying suit or the counterclaim, but in my opinion, should the counterclaim go forward, REA will have a difficult time proving non-speculative damages. I would also say, purely as a matter of my own impression and opinion, that it seems unlikely on its face that Corey's post was intended to hurt REA. Rather, it appears to me to be commentary on the state of the market. It will be interesting to see how this lawsuit plays out.

[Matt]

Originally Posted by Peter_Spaeth

REA has now filed an opposition to Corey's motion to dismiss the counterclaim. Responding to the argument that REA had not sufficiently alleged damages from Corey's post, REA now points to the fact that its sales in 2011 were lower by approximately $500,000 than in 2010.

Leon - this is great fodder for advertisers - REA is claiming a post on the forum decreases their sales by $500k. You should be charging more for ads!

[calvindog]

Wow. All I can say is wow.

[phikappapsi]

It's upsetting this "children friendly hobby" has turned into such a big business amongst adults. Too bad so many adults forget this started with simple, innocent, tobacco ads targeted for children.

Ahh, the good ole days.

[byrone]

Homer Simpson and lawyer Lionel Hutz

Homer: "All you can eat--hah!"
Hutz: "Mr. Simpson, this is the most blatant case of fraudulent advertising since my suit against the film, “The Never-Ending Story.”
Homer: "Do you think I have a case?"
Hutz: "Now, Homer, I don't use the term “hero” very often. But you are the greatest hero in American history."

[iggyman]

REA rocks and is the mostest marvelous auction house in the entire world universe!

There, I just got the $500,000 back...........they should be good to go with this years sales. Leon, you can thank me later.

Lovely day...

[peterose4hof]

I must admit, I have virtually no knowledge of matters such as this, but my Common-Sense-O-Meter is telling me REA could never prove that Corey's comments were meant to be hurtful in any way.

[WhenItWasAHobby]

According to this link, the statute of limitations for libel in New York and New Jersey is one year:

http://www.statuteoflimitations.net/libel.html

If this is a recently filed counterclaim (beyond May 6, 2011), it would appear it was filed too late.

[slidekellyslide]

That post by Corey was essentially ignored...not a single poster replied to it, and the thread was over about an hour after he posted it...it probably fell off the front page in a day or so.

[bigtrain]

I believe that Corey filed suit in early 2011. I know it was reported in the news by April 2011. The counterclaim was probably filed along with the answer to the suit so it may well have been within the statute of limitations. In any event, the motion to dismiss the counterclaim seems to be the new development, not the counterclaim itself.

[Peter_Spaeth]

April 30, 2012.

The opposition to the motion to dismiss was filed July 16.

[travrosty]

Originally Posted by byrone

Homer Simpson and lawyer Lionel Hutz

Homer: "All you can eat--hah!"
Hutz: "Mr. Simpson, this is the most blatant case of fraudulent advertising since my suit against the film, “The Never-Ending Story.”
Homer: "Do you think I have a case?"
Hutz: "Now, Homer, I don't use the term “hero” very often. But you are the greatest hero in American history."

ha-ha.



mrs. simpson, where did your family go after you left the all you can eat seafood place?



we went fishing.


ladies and gentlemen, does this sound like someone who had all they can eat?

[Deertick]

Seems to me that in order to claim $500K in damages, they would have to show a net decrease in YOY sales of sheet music AND that it was directly attributible to the post cited.
As for ""claims to have expended time in connection with efforts at "watching the bid process to detect shill bidding by Shanus' cohorts," which "translates to money."", isn't that what they should be doing all the time, every time?

[WhenItWasAHobby]

Again, here's the quote that's in question:

In the recent REA auction, for example, the sheet musics entitled the Live Oak Polka and the Home Run Quick Step did abysmally, selling for a small fraction of what they transacted for in the past. For those who collect that sort of thing, those sheet musics represent the pinnacle of 19th century chromolithography. They are quite rare and the particular pieces offered by REA were in exceptionally good condition for the issue.

One could also just as easily argue that Mr. Shanus alerted the public of the undervalued bargains of rare, quality items on REA's auctions, which therefore added interest to REA's future business which would thereby increase their profits.

[oldjudge]

This is a quote from the REA summary of the 2011 auction:

Watchung, New Jersey. The strength of the high-end baseball card and memorabilia market amazed collectors at Robert Edward’s record-setting May 7, 2011 auction. An astounding 179 lots sold for $10,000 or more. Collectors, dealers, and market watchers look to REA’s annual event as the key barometer of the health of the market and the most important auction event of the year. According to REA president Robert Lifson, “The market was extremely strong. If everything went perfect we were expecting the total to be maybe $7 million to $8 million. The results came in at $9.5 million.

Sounds like things went pretty well.

[CW]

Originally Posted by WhenItWasAHobby

Again, here's the quote that's in question:

In the recent REA auction, for example, the sheet musics entitled the Live Oak Polka and the Home Run Quick Step did abysmally, selling for a small fraction of what they transacted for in the past. For those who collect that sort of thing, those sheet musics represent the pinnacle of 19th century chromolithography. They are quite rare and the particular pieces offered by REA were in exceptionally good condition for the issue.

One could also just as easily argue that Mr. Shanus alerted the public of the undervalued bargains of rare, quality items on REA's auctions, which therefore added interest to REA's future business which would increase thereby their profits.

I agree. Also, the bolded part, while it does mention REA, is simply a statement of fact. No real opinion of REA was given, nor was any blame applied to the auction house. Perhaps the term "abysmally" was a bit over the top, but that's hardly worthy of a lawsuit.

There obviously must be more to this (ie. the accused shilling), but just based on the forum post I am amazed this has gotten this far.

I would make a negative comment about lawyers right about now, but I don't want to piss off half the members on this board.


€hû¢k Wölƒƒ

[Bosox Blair]

Originally Posted by CW

...but that's hardly worthy of a lawsuit.

There obviously must be more to this (ie. the accused shilling), but just based on the forum post I am amazed this has gotten this far.


€hû¢k Wölƒƒ

Chuck,

This is not the lawsuit...this is the Counterclaim. Shanus sued REA. REA defended and filed a Counterclaim. Standard stuff.

[WhenItWasAHobby]

Originally Posted by oldjudge

This is a quote from the REA summary of the 2011 auction:

Watchung, New Jersey. The strength of the high-end baseball card and memorabilia market amazed collectors at Robert Edward’s record-setting May 7, 2011 auction. An astounding 179 lots sold for $10,000 or more. Collectors, dealers, and market watchers look to REA’s annual event as the key barometer of the health of the market and the most important auction event of the year. According to REA president Robert Lifson, “The market was extremely strong. If everything went perfect we were expecting the total to be maybe $7 million to $8 million. The results came in at $9.5 million.

Sounds like things went pretty well.

Thanks for posting that oldjudge.

I'd love to hear how REA explains their damages after claiming better than "perfect" results. If this auction was on a card grading scale it would have gotten a PSA 12 or an SGC 120 (Super Ultra Pristine).

[Peter_Spaeth]

What REA would say is that while the items consigned to it went higher than expected, it was hurt because it should have received additional consignments. That said, as stated previously, my opinion is that on its face the post is not libelous, and that even if it were, REA would have a difficult time proving a connection between the statement and any loss of consignments to its auction a year later. EDIT TO ADD If the counterclaim survives Corey's motion to dismiss, these matters will be probed during discovery.

[CW]

Originally Posted by Bosox Blair

Chuck,

This is not the lawsuit...this is the Counterclaim. Shanus sued REA. REA defended and filed a Counterclaim. Standard stuff.

Ah, I see. Every time I see x vs. y, I think lawsuit. Thanks for clearing that up.

[Peter_Spaeth]

A counterclaim is a lawsuit.

[Il Padrino]

Wo there!.

[joeadcock]

Seems like there has to be more to this than that post

[Bosox Blair]

Originally Posted by Peter_Spaeth

A counterclaim is a lawsuit.

As lawyers we understand this - but for the non-lawyers, some people are clearly wondering: why is REA making a claim against Corey? Well the answer is that Corey sued first. A Counterclaim is a common part of an aggressive defence. I doubt REA would have filed this claim if Corey had not sued first.

Cheers,
Blair

[Peter_Spaeth]

Originally Posted by Bosox Blair

I doubt REA would have filed this claim if Corey had not sued first.

Cheers,
Blair

I agree. I am surprised REA filed it even as a counterclaim, frankly.

[Kenny Cole]

Originally Posted by Peter_Spaeth

I agree. I am surprised REA filed it even as a counterclaim, frankly.

Me too. Ultimately, I think that decision may end up being counterproductive.

[Runscott]

Perhaps I'm being lazy, but I really enjoy just sitting around flipping through all the great auction catalogs, browsing the auction house websites, getting drunk off my ass and spending way too much money. It's so much fun and I never get sued.

But I do realize that there are a lot of collectors who, behind the scenes, are spending a lot of energy keeping this 'Babes in Toyland' world relatively safe for innocent idiots like myself.

There are a lot of different types of players in our hobby - someone should create a board game.

[tbob]

IMHO, if REA can truly prove that it did indeed lose money because of this quote on the Net 54 Board, one would have to think it could have a chilling effect on poster commentary. I don't have a dog in this fight but the outcome is going to be very interesting.

[SetBuilder]

What's this case all about? Why did Corey sue REA in the first place?

[Leon]

Originally Posted by tbob

IMHO, if REA can truly prove that it did indeed lose money because of this quote on the Net 54 Board, one would have to think it could have a chilling effect on poster commentary. I don't have a dog in this fight but the outcome is going to be very interesting.

Hey Bob
I am no lawyer, obviously, but is this board any different than any other very popular (for a hobby) public venue? If someone told a news reporter something it would be no different. I always say to be careful of what you say on our board. Everyone is liable for what they say AND with virtually no anonymity everyone is accountable. I am sure you would agree that is the best way to operate a message board? So, I am not sure this venue is different than other public ones from a liability standpoint?

[Peter_Spaeth]

Originally Posted by tbob

IMHO, if REA can truly prove that it did indeed lose money because of this quote on the Net 54 Board, one would have to think it could have a chilling effect on poster commentary. I don't have a dog in this fight but the outcome is going to be very interesting.

REA has to establish both liability and damages. In my personal opinion, just based on the language of the post, it will be very difficult to establish that a comment about the potential pitfalls of consigning 19th century memorabilia to auction houses was libelous.

[WhenItWasAHobby]

Originally Posted by tbob

IMHO, if REA can truly prove that it did indeed lose money because of this quote on the Net 54 Board, one would have to think it could have a chilling effect on poster commentary. I don't have a dog in this fight but the outcome is going to be very interesting.

Mr. Shanus' quote, in my opinion, did not attribute the later price drop in 19th century sheet music to anything that would be considered wrongdoing by REA, but rather attributed that significant price drop due to the very limited demand of deep-pocketed investors for that type of collectible.

To take that type of thinking to its logical conclusion, this could mean that a price guide like VCP, could also be found liable for documenting that one item by a consignment seller on Ebay sold that item for X and then also documenting a year later an identical item by the same consignment seller sold on Ebay for 0.4X would mean VCP would be libeling both the consignment seller and Ebay since both could claim that information would discourage future consigments of that item and therefore reduce profits, etc. In my opinion a lawsuit like that would be manifestly absurd.

Peter brings up a good point too. REA has a steep mountain to climb proving damages due to Mr Shanus' posting such as finding 19th century sheet music consignees who read that post and decided not to submit items to REA based on that comment alone. Even if they do produce witnesses who will claim that they were discouraged from consigning items to REA based on that post, it still comes down to Mr. Shanus rendering a factual observation that was not a poor reflection upon REA's actions.

Finally, I've since learned by reading REA's counterclaim that this was not just libel, but business libel. That does carry a 2 year statute of limitations, but with it REA also has to prove malice, which should be extremely difficult unless they uncover some evidence that Mr. Shanus knew he intentionally made a false statement. Assuming the statement was substantially true to begin with, and the counterclaim appears to acknowledge the price drop, I don't see this counterclaim going anywhere at all.

[birdman42]

Originally Posted by SetBuilder

What's this case all about? Why did Corey sue REA in the first place?

Manny,

Here's a link to a thread from last year. The link in the first post is dead, so here's a good link to the original article in the *New York Daily News*.

The thread: http://www.net54baseball.com/showthread.php?t=135307
The DN article: http://www.nydailynews.com/sports/i-...ticle-1.108694

Bill

[nolemmings]

Dan, I believe the premise of the trade libel claim is 1) Corey knew that the reason the price had fallen on the sheetmusic was not because of any market forces or because of limited demand, but because the prior REA auction price was artificially high, made artificial by Corey's alleged shill bidding and 2) knowing the "real" reason the price had dropped substantially was because of his own (alleged) wrongdoing, Corey nonetheless intentionally suggested that the low price was attributed to REA's failure to set an adequate reserve. That is how I read it.

Although I too wonder about the damages elements of the claim and both the surrounding circumstances and litigation strategy, I find the other count of the counterclaim, which alleges that Corey engaged in shilling, to be interesting, shall we say.

[tbob]

Originally Posted by Peter_Spaeth

REA has to establish both liability and damages. In my personal opinion, just based on the language of the post, it will be very difficult to establish that a comment about the potential pitfalls of consigning 19th century memorabilia to auction houses was libelous.

Peter- I agree absolutely. My comment was that IF REA were able to prevail on its counterclaim, that posters would really be gun-shy about what they posted on the board. I did not mean to imply that I felt they WOULD prevail, only that IF they did it would have a chiiling effect on comments in the future. There are may different reasons to file a counterclaim in ANY case, not only the honest belief that the party being sued is actually the aggrieved party but also occasionally an attempt to derail the opposition's claim or try and muddy the water by obfuscation.
As mentioned previously the issue of an exact determination of damages appears to me to be very speculative, IF the counterclaimant managed to get over the hurdle of liability in the first place.
Leon- I agree with you also and it has long been your policy to patiently but firmly caution posters to realize the possible ramifications of what they might post on this board.

[Peter_Spaeth]

Originally Posted by nolemmings

Dan, I believe the premise of the trade libel claim is 1) Corey knew that the reason the price had fallen on the sheetmusic was not because of any market forces or because of limited demand, but because the prior REA auction price was artificially high, made artificial by Corey's alleged shill bidding and 2) knowing the "real" reason the price had dropped substantially was because of his own (alleged) wrongdoing, Corey nonetheless intentionally suggested that the low price was attributed to REA's failure to set an adequate reserve. That is how I read it.

Although I too wonder about the damages elements of the claim and both the surrounding circumstances and litigation strategy, I find the other count of the counterclaim, which alleges that Corey engaged in shilling, to be interesting, shall we say.

Take a look at the prior REA auction that was allegedly artificially high as a result of Corey's shill bidding.

http://www.robertedwardauctions.com/auction/2004/1.html

In that 2004 auction, REA refers to a prior sale of the item for $25k. "We are aware of fewer than five known examples of The Live Oak Polka. This example was once one of the signature nineteenth-century pieces of the Halper Collection. It appeared in the famous 1999 Halper auction as Lot #3. It sold at that time for $25,300, and has been consigned to this sale directly from the purchaser at that landmark sale."

So Corey's observation that the 2010 sale price was low relative to past sales appears to me to be true even without reference to the 2004 price allegedly inflated by his own shill bidding, on the basis of statements made by REA itself.

[nolemmings]

Peter, I don't disagree. I was just trying to explain the gravamen (how long has it been since you used that word?) of the trade libel count as I understood it. As I said, I find the other count more interesting, although it has its own challenges IMO.

[Peter_Spaeth]

Todd, you have accurately characterized the libel claim according to my reading of the counterclaim, but my additional point is that in light of this information which is not mentioned in the counterclaim, Corey's view that the 2010 price was low in comparison to past sales appears to be true even without a comparison to the allegedly shilled auction.

[WhenItWasAHobby]

Todd,

I too agree with your analysis. I was and still am hesitant to discuss REA's allegations about Corey's bidding activities since there are possible scenarios regarding agency and legitimate private sales that would make Corey an innocent party in all of this.

On a totally different aspect of this case, I've never sued someone for libel, but I'm well aware of someone who attempted to sue for libel and business disparagement. That person found out the hardest way imaginable that his life and his business suddenly went under the microscope and any "questionable" business activity, any incriminating written statements, business records, and any objectionable personal behavior suddenly became fair game for the court. Not only did this person not prevail, but fought furiously not let his case get to trial once a myriad of things were brought to light. Even with the case dismissed there is now a lot of very embarrassing and incriminating admissions and evidence are now a matter of public record. It could be very interesting how this all plays out. The old adage, "be careful what you ask for", may have never rang truer.

[nolemmings]

Dan you are right about the consequences of suing for libel/slander (i.e. defamation), and much of that applies to other legal theories where damages are alleged to be a decrease in business revenue. This is why I have said in other threads where defamation is threatened that it likely will never proceed--in Arizona at least it would be one of the hardest, most expensive, most potentially embarrassing actions to pursue. Also remember that at least in personal defamation cases truth is an absolute defense, and discovery will lead to a defendant pretty much looking under every rock--talking to all your associates, friends etc to show that what they are alleged to have said or written is in fact true. Add to that certain privileges or immunities that may apply in some scenarios, and you can see that bringing such an action is no walk in the park. Having said all that, I make no comment on New York and New Jersey trade libel or the specifics of what is in issue between Corey and REA.

[Peter_Spaeth]

Originally Posted by WhenItWasAHobby

Even with the case dismissed there is now a lot of very embarrassing and incriminating admissions and evidence are now a matter of public record.

He couldn't just take a scissors to the record?