FS: 1948 Leaf Jackie Robinson PSA 4.5

[benjulmag]

Originally Posted by Johnny630

Agree I’ve been saying this for months. PSA has Done ZERO NOTHING CLOSE THAT RISES TO CRIMINAL...IT’s just their opinion, nothing more nothing less.

I'm going to respectfully disagree with this statement as calling something an opinion in and of itself does not absolve the issuer of criminal liability if it can be shown it was issued knowing it was false and people would rely on it to their detriment. Admittedly proving this criminal intent would be difficult, as the issuer can reply that it is no crime to be stupid. So given these challenges I can understand how the FBI might feel its resources are better spent pursuing other matters.

IMO the matter from the civil perspective is materially different. Underlying the PSA guaranty will be a duty for PSA to act in good faith. They wrote the guaranty and inasmuch as it does not contain a phrase such as "in our sole and absolute discretion", a court would likely find the opinion must be reasonably given, which is an objective standard. Hypothetically, if I owned say, a million dollars of PSA 8s and 9s T206s that I bought in good faith believing the cards to be unaltered, and I later learned that Blowout had exposed all those cards to be altered (thereby destroying their market value), I sure as heck would pursue a civil action against PSA if they did not make good on the guaranty. Sure they may say they disagree with Blowout's conclusions and stand by their original assessment. But will a jury believe them after having been instructed to base its verdict on what a reasonable and unbiased person, upon having been presented with the evidence of trimming, would conclude. On top of that I would introduce evidence to establish that PSA's contingent liabilities materially exceed their net worth, which would make a trier of fact more likely to conclude (by the civil standard of preponderance of the evidence) PSA did not act in good faith in not making good on the guaranty.

You will note that in my example I explicitly stated that Blowout's outing of the cards destroyed their market value, thus incentivizing me to take the matter to court. This to me is the key as to whether such a suit will ever take place, given the enormous expense to do so. Right now I suspect there are many people who own altered cards who believe they are altered. But as long as the cards hold their value, these people will see no reason to sue. But should the day come when at least one of these persons (or funds) has reason to believe the cards they are holding are so tainted as to have lost much of their value, then at that point I believe we may see a serious lawsuit. I believe the risk may be particularly high in the case of funds that have invested in such cards. These funds owe a fiduciary duty to their investors, and I can foresee an instance where it might feel it has no choice but to try to invoke the guaranty.

The key consideration to me in this discussion is my simple belief the emperor has no clothes. I believe the overwhelming majority of experienced collectors know there is no way there can be such great numbers of 8s and higher of certain vintage issues in circulation, cards that were produced when cards had no value and no one would have taken the care to preserve them in a way such as to maintain an 8 or higher condition. Consider for example the T206 Wagner, a card if ever one existed that one would surmise a person would have taken more care to preserve due to its perceived scarcity. None (that are untrimmed and were issued in cigarette packs) are believed to exist in better than a generally excellent condition. The few at the top of the totem pole, whose provenance suggest their original owners knew at the time of their importance, none of them would grade higher than a 5, 5.5 tops. To me at least that has to say something as to how cards of that vintage were preserved.

[Johnny630]

Originally Posted by benjulmag

I'm going to respectfully disagree with this statement as calling something an opinion in and of itself does not absolve the issuer of criminal liability if it can be shown it was issued knowing it was false and people would rely on it to their detriment. Admittedly proving this criminal intent would be difficult, as the issuer can reply that it is no crime to be stupid. So given these challenges I can understand how the FBI might feel its resources are better spent pursuing other matters.

IMO the matter from the civil perspective is materially different. Underlying the PSA guaranty will be a duty for PSA to act in good faith. They wrote the guaranty and inasmuch as it does not contain a phrase such as "in our sole and absolute discretion", a court would likely find the opinion must be reasonably given, which is an objective standard. Hypothetically, if I owned say, a million dollars of PSA 8s and 9s T206s that I bought in good faith believing the cards to be unaltered, and I later learned that Blowout had exposed all those cards to be altered (thereby destroying their market value), I sure as heck would pursue a civil action against PSA if they did not make good on the guaranty. Sure they may say they disagree with Blowout's conclusions and stand by their original assessment. But will a jury believe them after having been instructed to base its verdict on what a reasonable and unbiased person, upon having been presented with the evidence of trimming, would conclude. On top of that I would introduce evidence to establish that PSA's contingent liabilities materially exceed their net worth, which would make a trier of fact more likely to conclude (by the civil standard of preponderance of the evidence) PSA did not act in good faith in not making good on the guaranty.

You will note that in my example I explicitly stated that Blowout's outing of the cards destroyed their market value, thus incentivizing me to take the matter to court. This to me is the key as to whether such a suit will ever take place, given the enormous expense to do so. Right now I suspect there are many people who own altered cards who believe they are altered. But as long as the cards hold their value, these people will see no reason to sue. But should the day come when at least one of these persons (or funds) has reason to believe the cards they are holding are so tainted as to have lost much of their value, then at that point I believe we may see a serious lawsuit. I believe the risk may be particularly high in the case of funds that have invested in such cards. These funds owe a fiduciary duty to their investors, and I can foresee an instance where it might feel it has no choice but to try to invoke the guaranty.

The key consideration to me in this discussion is my simple belief the emperor has no clothes. I believe the overwhelming majority of experienced collectors know there is no way there can be such great numbers of 8s and higher of certain vintage issues in circulation, cards that were produced when cards had no value and no one would have taken the care to preserve them in a way such as to maintain an 8 or higher condition. Consider for example the T206 Wagner, a card if ever one existed that one would surmise a person would have taken more care to preserve due to its perceived scarcity. None (that are untrimmed and were issued in cigarette packs) are believed to exist in better than a generally excellent condition. The few at the top of the totem pole, whose provenance suggest their original owners knew at the time of their importance, none of them would grade higher than a 5, 5.5 tops. To me at least that has to say something as to how cards of that vintage were preserved.

Well Said!!
To Me This Has Not Decreased the value of said outed cards, they continue to go up in value....I know it's weird but who is damaged here?????

[TedWill1939]

Just thinking out loud... Since grading is opinion based arent we putting putting faith into the equation, not absolute? The same thing has happened in the art world. "Experts" claim a piece is authentic and they are fooled. No nefarious conspiracies by the expert, just the wrong opinion. Seems to that unless a TPG is active and knowingly engaging in deceit, its a matter of having an "opinion" that may or may not be wrong.

With the amount of cards that are submitted, I always wondered how they could ever be expected to fully go over a card, they would have to hire an army. Seems like a leap of faith to me.

[Peter_Spaeth]

Corey -- consider this. In AJ's case, if he sued, could PSA argue he has a duty to mitigate damages by selling the card for what likely would be a big profit even if he fully disclosed? If so, no damages, no lawsuit. If not, tell me why not.

[steve B]

But that mitigating sale would be based on peoples belief that PSA was right.

A sale for a profit even with the card being claimed as trimmed despite PSAs faulty opinion damages all of "us" in many ways. Admittedly those ways are often intangible, for example, the falsely inflated prices of cards erroneously (to be generous) graded 8-10 also falsely inflates the prices of lesser unaltered cards which at some point financially locks many out of the hobby.
This is different from a simple supply and demand price increase, because it's based on a foundation of lies.

as the prices become higher and nearly everyone relies on those faulty opinions the perceived value of ungraded cards is reduced. The old "if it isn't graded by now it must be fake" attitude promoted by the same people charging for that false opinion. That means that anyone not wanting so support incompetence at best or malfeasance at worst must also accept a reduced value.
For an example, I have a couple 86 Fleer basketball packs. I know they are not opened. I was the original purchaser.
If they grade a typical grade- 8- they would probably sell for 5-6000 each based on recent Ebay sales. Ungraded, they might make 1000. So that as I see it is 10K in damages if I sell them. I could grade them, but don't want to support PSA.
But realistically I have no choice. And that forced lack of any realistic choice would cost between 200-1000 more depending on what service level if any they will accept right now.
So my choice is between taking what for me is a serious hit on value, supporting a company I believe more and more is not merely hopelessly incompetent, but crooked, or waiting.

If I were to die or have a sudden need to sell my collection, the waiting choice is removed. More "damages"

The loss to the greater "us" is more still, as fewer unaltered examples will exist all the time.

[steve B]

PSA should honor their guarantee, buy the card at current market value, reslab as "A" and then sell to mitigate their losses caused by their mistake.

[Peter_Spaeth]

Originally Posted by steve B

PSA should honor their guarantee, buy the card at current market value, reslab as "A" and then sell to mitigate their losses caused by their mistake.

Of course they should. And they will, on the 12th of Never. Until then, the graders stand behind the grade and AJ gets nothing.

Roger Daltrey running through my mind again.

[benjulmag]

Originally Posted by Peter_Spaeth

Corey -- consider this. In AJ's case, if he sued, could PSA argue he has a duty to mitigate damages by selling the card for what likely would be a big profit even if he fully disclosed? If so, no damages, no lawsuit. If not, tell me why not.

Peter,

This is how the guaranty reads in regard to what PSA is obligated to do under the guaranty:

Buy the card from the submitter at the current market value if the card can no longer receive a numerical grade under PSA's standards or,
Refund the difference in value between the original PSA grade and the current PSA grade if the grade is lowered. In this case, the card will also be returned to the customer along with the refund for the difference in value.

The first part implies the card has no value (e.g., is a counterfeit), in which case AJ would be entitled to receive the current value of the card. If the card is trimmed and therefore is graded A (the case at issue), the guaranty says AJ is entitled to receive the current value as A is not a numerical grade, and the duty to mitigate (implied in the second part where PSA has the option to refund only the reduction in value caused by the downgrade) would by the terms of the guaranty be inapplicable.

I will add as a practical matter I'm not sure why a duty to mitigate would impact AJ's outcome from an economic perspective. Let's call the current value of the card to be X. And let's call its disclosed value to be Y. If AJ had a duty to mitigate, his damages from PSA would be X - Y. And since he would receive Y from the purchaser, he ends up netting X. This is the same amount he would end up with if he had no duty to mitigate and instead received X from PSA and handed them the card.

BTW, AJ would still suffer damages under the terms of the guaranty even if the card as valued as an A in 2021 is more than he bought the card for. Damages here are measured based on the appreciation AJ would have realized had the card been accurately graded. IMO this is a proper result since such damages are measurable and were incurred by AJ via opportunity cost. Had he known the card was altered, he would have spent his money on an unaltered card, and by not doing so lost the opportunity to realize the appreciation of the substitute card.

[Peter_Spaeth]

Thoughtful analysis. Not sure it flies in the real world though with a state court judge. Mr. Johnson, you could have sold and still could sell this card for a $20,000 profit after PSA affirmed the grade despite what an internet poster said about it, but instead you're here in my court suing PSA why exactly?

[benjulmag]

Originally Posted by Peter_Spaeth

Thoughtful analysis. Not sure it flies in the real world though with a state court judge. Mr. Johnson, you could have sold and still could sell this card for a $20,000 profit after PSA affirmed the grade despite what an internet poster said about it, but instead you're here in my court suing PSA why exactly?

Fair. Maybe the most troubling part of the guaranty from the submitter's perspective is agreeing to jurisdiction in Orange County.