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.