Koch vs Acker case 'should not affect auctions'

  • Tuesday 29 June 2010

Auction houses and wine lawyers are looking closely at the recent Koch vs Acker case to see if a dangerous precedent has been set.

Earlier this year the New York Appellate Division reversed a lower court ruling which had allowed Bill Koch to pursue the claims against Acker Merrall and Condit.

The billionaire Florida collector charged the Manhattan auction house and retailer with misrepresentation in April 2008.

The claim related to fine and rare wines Koch bought at auction for a total of $77,925 (£39,242), at least five of which are counterfeit, and others suspect, he said.

The court said in May: 'a reasonable consumer, alerted by...disclaimers contained in Acker's auction catalogue, including that "prospective bidders must satisfy themselves by inspection”...would not have relied [on], and thus would not have been misled [by]... Acker's catalogue descriptions.'

Although lawyers see a possibility that the decision could harm internet wine auction sales, they do not seem too concerned.

Wine industry attorney Brian Pedigo in Irvine California said if a precedent is set that all prospective bidders must satisfy themselves by inspection, ‘it would be horrible for consumer trust in the online auction environment; it could possibly destroy this niche market sector’.

But he added, ‘I don’t think it will. If this case were to be appealed all the way to the US Supreme Court, I believe it would be overturned. A regular Joe consumer is not going to fly overseas [or across the country] to inspect wine. A reasonable consumer will rely on the representation of the seller, and will not read or understand the fine print disclaimers.’

New York-based attorney Vincent O'Brien of Nixon Peabody LLP said auction houses ‘shift the risk of authenticity to the purchaser’.

‘The auction house sets the terms and conditions of the auction, and also identifies the role that it is playing in the auction. Here, the auction house expressly disclaimed any representations as to the authenticity of the wine being auctioned. This is a matter of risk allocation, and is reflected in the express terms under which the auction took place.’

Like other auction houses, Christie’s would ‘not comment on the particulars of this case,’ said Charles Curtis MW, head of North American Wine Sales at Christie’s. He did say however that ‘Christie’s remains confident in the continued growth of its online sales across all categories, including wine.’

Brad Goldstein, director of corporate affairs for William Koch's Oxbow Group, told decanter.com last month they would challenge a decision they found ‘reprehensible’.

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