Chuck Close v. Sotheby's Inc.

In Close v. Sotheby’s, Inc., 894 F.3d 1061 (9th Cir. 2018),

we held that plaintiffs’ claims for resale royalties under the

California Resale Royalties Act (“CRRA”) are expressly

preempted by the 1976 Copyright Act. We thus affirmed the

district court’s dismissal of plaintiffs’ claims that involved

any art sales postdating the Copyright Act’s effective date of

January 1, 1978. We reversed, however, the district court’s

dismissal of plaintiffs’ CRRA claims to the extent they

involved sales occurring before January 1, 1978 (but after the

CRRA’s effective date of January 1, 1977), because those

claims are not preempted by federal copyright law.

Defendants Sotheby’s and eBay have filed applications

for attorneys’ fees pursuant to Ninth Circuit Rule 39-1.6.

They seek fees under the CRRA fee-shifting provision, which

mandates a fee award to the “prevailing party in any action

brought under” the CRRA. Cal. Civ. Code § 986(a)(3).

Plaintiffs argue that fees are not available under the CRRA

because the effect of our decision was to void the CRRA,

including its fee-shifting provision. We disagree. We hold

that Sotheby’s and eBay are entitled to fees under the CRRA

fee-shifting provision and refer the applications to the

Appellate Commissioner to calculate the amount of fees to be

awarded.

I. BACKGROUND

The background of this case is detailed in the panel’s

opinion. In brief, the California Resale Royalties Act of 1976

(“CRRA”) required the seller of a work of fine art or the

seller’s agent to withhold 5% of the sale price and pay it to

the artist. Cal. Civ. Code § 986(a). Artists could bring an

CLOSE V. SOTHEBY’S 5

action to enforce this requirement under the following

provision:

If a seller or the seller’s agent fails to pay an

artist the amount equal to 5 percent of the sale

of a work of fine art by the artist or fails to

transfer such amount to the Arts Council, the

artist may bring an action for damages within

three years after the date of sale or one year

after the discovery of the sale, whichever is

longer. The prevailing party in any action

brought under this paragraph shall be entitled

to reasonable attorney fees, in an amount as

determined by the court.

Id. § 986(a)(3).

Plaintiffs filed this action against Sotheby’s, Christie’s,

and eBay seeking royalties for resales of artwork dating back

to the CRRA’s January 1, 1977 effective date. After claims

involving out-of-state sales were filtered out on dormant

Commerce Clause grounds, see Sam Francis Found. v.

Christies, Inc., 784 F.3d 1320, 1322 (9th Cir. 2015) (en

banc), the parties litigated the claims involving in-state sales.

The district court granted defendants’ motion to dismiss those

claims on two grounds: (1) the CRRA claims were

preempted, and (2) eBay was not a seller subject to the

CRRA.

On appeal, we affirmed in part, reversed in part, and

remanded. Close, 894 F.3d at 1076. We held that all CRRA

claims that involved sales after the effective date of the 1976

Copyright Act—January 1, 1978—were expressly preempted

by the Copyright Act’s preemption provision, 17 U.S.C.

6 CLOSE V. SOTHEBY’S

§ 301(a). Close, 894 F.3d at 1068–72. We thus affirmed the

district court’s dismissal of those claims. Because this

holding disposed of all claims against eBay, we declined to

rule on eBay’s alternative argument that it was not subject to

the CRRA. Id. at 1068 n.6.

We further held that any CRRA claims that involved sales

before the 1976 Act’s effective date, to the extent they exist,

are not expressly preempted, because the operative federal

law at the time of these sales—the 1909 Copyright Act—did

not contain an express preemption provision. Id. at 1072.

Nor are such claims barred by conflict preemption. Id. at

1072–74 (discussing Morseburg v. Balyon, 621 F.2d 972,

977–78 (9th Cir. 1980)). We thus reversed the district court’s

dismissal of any claims involving sales between the CRRA’s

effective date of January 1, 1977 and the 1976 Act’s effective

date of January 1, 1978—i.e., sales that occurred in 1977. Id.

at 1074.

After we denied a petition for rehearing, Sotheby’s and

eBay filed timely applications for attorneys’ fees pursuant to

Ninth Circuit Rule 39-1.6, seeking fees under the CRRA feeshifting

provision, Cal. Civ. Code § 986(a)(3). Plaintiffs

oppose these applications, arguing that the CRRA fee-shifting

provision is preempted by federal law and that Sotheby’s is

not a prevailing party. Because this is a diversity case, state

law governs both “the right to fees” and “the method of

calculating the fees.” Mangold v. Cal. Pub. Utils. Comm’n,

67 F.3d 1470, 1478 (9th Cir. 1995). The preemptive effect of

a federal statute is a question of federal law. See Allis-

Chalmers Corp. v. Lueck, 471 U.S. 202, 214 (1985).

CLOSE V. SOTHEBY’S 7

II. ANALYSIS

The CRRA fee-shifting provision provides: “The

prevailing party in any action brought under this paragraph

shall be entitled to reasonable attorney fees, in an amount as

determined by the court.” Cal. Civ. Code § 986(a)(3). Three

features of this provision are significant. First, by using the

phrase “prevailing party,” this provision grants defendants as

well as plaintiffs the opportunity for a fee award. See Jankey

v. Lee, 290 P.3d 187, 191 (Cal. 2012). Second, by using the

phrase “shall be entitled,” fee-shifting under this provision is

mandatory. See id. at 192; Hsu v. Abbara, 891 P.2d 804, 809

(Cal. 1995) (explaining that “[t]he words ‘shall be entitled’”

mean that the court is “obligated to award attorney fees[]

whenever the statutory conditions have been satisfied”). And

third, the fee-shifting provision was added to the CRRA in

1982, see 1982 Cal. Stat. 6434, and it applies only to claims

involving sales of art that occurred on or after January 1,

1983, see Cal. Civ. Code § 986(f). Thus, the only claims that

remain pending on remand—those involving sales in

1977—do not fall within the fee-shifting provision.

Plaintiffs oppose the fee applications on two grounds,

arguing that the CRRA fee-shifting provision is

unenforceable because it is preempted, and that Sotheby’s is

not a prevailing party. We address each argument in turn.

A. Preemption

Plaintiffs contend that the CRRA fee-shifting provision is

preempted and unenforceable. They raise two arguments:

first, that our opinion in this case rendered the CRRA“null

and void” and thus there is no surviving attorneys’ fees

provision to apply; and second, that the 1976 Copyright Act

8 CLOSE V. SOTHEBY’S

itself preempts the attorneys’ fees provision of the CRRA.

We disagree with both arguments.

1. The CRRA fee-shifting provision is not “null and

void”

According to plaintiffs, our decision in this case means

that, as of January 1, 1978 (the effective date of the 1976

Copyright Act), “the CRRA was null and void and could not

thereafter be enforced” and, accordingly, the 1982

amendments to the CRRA are ineffectual because “a

nonexistent statute cannot be amended.” This argument

misapprehends the effect of our decision.

The Supremacy Clause of the U.S. Constitution provides

that the “Constitution, and the Laws of the United States

which shall be made in Pursuance thereof . . . shall be the

supreme Law of the Land.” U.S. Const. art. VI, cl. 2. As a

consequence, “Judges in every State shall be bound thereby,

any Thing in the Constitution or Laws of any State to the

Contrary notwithstanding.” Id. When we adjudge a state law

preempted under this provision, we do not render the law null

and void in some ultimate sense, such as a presidential veto;

rather, our judgment renders the law unenforceable in the

case before us. We, as judges, cannot enforce the state law

because the “Laws of the United States” are “supreme” and

displace the “Laws of any State to the Contrary.” Id.

The doctrine of preemption therefore provides “a rule of

decision” that “instructs courts what to do when state and

federal law clash.” Armstrong v. Exceptional Child Ctr., Inc.,

135 S. Ct. 1378, 1383 (2015); see also Gilchrist v. Jim

Slemons Imports, Inc., 803 F.2d 1488, 1497 (9th Cir. 1986)

(describing preemption as “a choice-of-law question”). When

CLOSE V. SOTHEBY’S 9

a state law, “in [its] application to [a particular] case, come[s]

into collision with an act of Congress,” the state law “must

yield to the law of Congress.” Gibbons v. Ogden, 22 U.S.

(9 Wheat.) 1, 210 (1824); cf. Massachusetts v. Mellon,

262 U.S. 447, 488 (1923) (describing the power “to review

and annul” a statute as “little more than the negative power to

disregard an unconstitutional enactment, which otherwise

would stand in the way of the enforcement of a legal right”);

Marbury v. Madison, 5 U.S. (1 Cranch) 137, 178 (1803)

(explaining that when “both [a state] law and [federal law]

apply to a particular case, . . . the court must determine which

of these conflicting rules governs the case,” enforcing the

“superior” law and “disregarding” the inferior law). The

effect of our judgment is to render the preempted state law

inoperative with respect to the claims before us. See

Trollinger v. Tyson Foods, Inc., 370 F.3d 602, 608 (6th Cir.

2004) (“[T]he [preemption] doctrine generally concerns the

merits of the claim itself—namely, whether it is viable and

which sovereign’s law will govern its resolution.”).

Holding that a state law is preempted by federal law does

not, however, render the entire state law “nonexistent” in the

way that plaintiffs argue. The state law continues to exist

until the legislature that enacted it repeals it. At the same

time, any portion of the law that is preempted is

unenforceable in court until Congress removes the

preemptive federal law or the courts reverse course on the

effect of the federal law. See Jonathan F. Mitchell, The Writof-

Erasure Fallacy, 104 VA. L. REV. 933, 953 (2018)

(“[S]tate statutes that contradict ‘supreme’ federal law

continue to exist as ‘laws,’ even as they go unenforced, and

they would become enforceable if federal law were amended

10 CLOSE V. SOTHEBY’S

or reinterpreted to remove the conflict.”).1 Preemption is

1 We are aware that, as far back as Marbury, there is language

suggesting that an unconstitutional or preempted law is “void” and must

be treated as “though it be not law.” Marbury, 5 U.S. at 177; see also,

e.g., Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 479 (1974)

(considering whether a state law was “void under the Supremacy

Clause”); Chi., Indianapolis, & Louisville Ry. Co. v. Hackett, 228 U.S.

559, 566 (1913) (stating that “an unconstitutional act is not a law” and is

“inoperative as if it had never been passed”); Ex parte Siebold, 100 U.S.

371, 376 (1879) (“An unconstitutional law is void, and is as no law.”);

Duke Energy Trading & Mktg., L.L.C. v. Davis, 267 F.3d 1042, 1058–59

(9th Cir. 2001) (finding state regulations “void under the Supremacy

Clause”). Indeed, one court has gone so far as to declare that preempted

state laws “are void ab initio.” Antilles Cement Corp. v. Fortuno,

670 F.3d 310, 323 (1st Cir. 2012). Such sweeping pronouncements may

overstate the actual effect of judicial review and the Supremacy Clause.

A federal law passed in violation of the Constitution’s procedural

requirements may be void ab initio, see Mester Mfg. Co. v. INS, 879 F.2d

561, 570 (9th Cir. 1989), but state laws that clash with federal law

(including the Constitution) may be amended by the legislature that

enacted them. It is more accurate to state that these laws are “without

effect,” rather than treat them as nonexistent. Cipollone v. Liggett Grp.,

Inc., 505 U.S. 504, 516 (1992) (quoting Maryland v. Louisiana, 451 U.S.

725, 746 (1981)); accord Harris ex rel. Harris v. Ford Motor Co.,

110 F.3d 1410, 1415 (9th Cir. 1997). Preempted laws are constitutionally

unenforceable, but they are not snipped from the statute books.

Here, the CRRA could not have been void ab initio, because its

effective date antedated the effective date of the 1976 Copyright law that

preempted it. There is no reason why the entire CRRA may not remain on

the books in California until California chooses to amend or remove it. It

is true that portions of the CRRA are, in effect, dormant—at least unless

we reverse our judgment about the preemptive effect of the federal

copyright laws, the Supreme Court reverses our judgment for us, or

Congress removes the preemptive provision of the 1976 Copyright Act or

otherwise recognizes the droit de suite. See Close, 894 F.3d at 1065–66

(discussing similar proposals). If, for example, Congress removed the

preemption provision from the Copyright Act, the preempted portions of

CLOSE V. SOTHEBY’S 11

therefore claim-driven: when a party successfully invokes

preemption as a defense to a state-law claim, the court will

apply the federal law and the state law will be disregarded to

the extent the laws conflict.2

Our opinion in this case made this distinction clear. We

addressed the question “whether plaintiffs’ claims are

preempted by federal copyright law.” Close, 894 F.3d at

1064 (emphasis added). Our answer to that question does not

control our answer to the question whether defendants are

entitled to attorneys’ fees; rather, that question is a matter of

state law. And nothing in the text of the CRRA fee-shifting

provision is concerned with how a prevailing party prevailed.

Rather, it applies if the “action [was] brought under” the

CRRA, Cal. Civ. Code § 986(a)(3), which this action

indisputably was. The reason for our dismissal of plaintiffs’

claims is thus irrelevant, as it does “not affect the character or

type of action that has been brought.” Tract 19051

Homeowners Ass’n v. Kemp, 343 P.3d 883, 888 (Cal. 2015).

Courts have awarded fees under provisions like this one even

when the substantive law that houses the fee-shifting

provision is inapplicable to the underlying claims. See, e.g.,

Love v. Associated Newspapers, Ltd., 611 F.3d 601, 614 (9th

Cir. 2010); Tract 19051, 343 P.3d at 889–94 (collecting

cases).

the CRRA would automatically revive; the CRRA would not have to be

reenacted to become effective.

2 Indeed, preemption must be claim-driven, because “[p]reemption

ordinarily is an affirmative defense forfeitable by the party entitled to its

benefit.” Sickle v. Torres Advanced Enter. Sols., LLC, 884 F.3d 338, 345

(D.C. Cir. 2018); see Brannan v. United Student Aid Funds, Inc., 94 F.3d

1260, 1266 (9th Cir. 1996); Johnson v. Armored Transp. of Cal., Inc.,

813 F.2d 1041, 1043–44 (9th Cir. 1987).

12 CLOSE V. SOTHEBY’S

Moreover, plaintiffs’ proposed understanding of

preemption would end up favoring certain defenses over

others by conditioning fees based on how the defendant

prevailed. We can easily envision cases in which defendants

would forgo a meritorious preemption argument in order to

preserve the possibility of recovering attorneys’ fees. In this

case, the rule advanced by plaintiffs would be particularly

unfair to eBay, as we specifically declined to “address eBay’s

argument that it is not subject to the CRRA” given our

preemption holding. Close, 894 F.3d at 1068 n.6. It would

be strange to allow eBay to recover attorneys’ fees if we held

that the CRRA is inapplicable to eBay, but not if we held that

the CRRA is unenforceable because it is preempted.

In sum, we conclude that our preemption holding in this

case did not render the CRRA fee-shifting provision “null and

void.”

2. The CRRA fee-shifting provision is not preempted

Plaintiffs also argue that the CRRA fee-shifting provision

is preempted by the 1976 Copyright Act itself. As we

explained in our opinion, two forms of preemption are

available with respect to the 1976 Copyright Act—express

preemption and conflict preemption. Id. at 1068. Neither

applies here.

First, the 1976 Copyright Act does not expressly preempt

the CRRA fee-shifting provision. The 1976 Act expressly

preempts state laws governing “legal or equitable rights that

are equivalent to any of the exclusive rights within the

general scope of copyright as specified by section 106.”

17 U.S.C. § 301(a) (emphasis added). In other words, “the

rights asserted under state law [must be] equivalent to the

CLOSE V. SOTHEBY’S 13

rights contained in 17 U.S.C. § 106” for the Act’s preemption

provision to apply. Maloney v. T3Media, Inc., 853 F.3d

1004, 1010 (9th Cir. 2017) (citation omitted). The rights

contained in § 106 are the rights of reproduction, preparation

of derivative works, distribution, display, and performance.

17 U.S.C. § 106(1)–(6). Notably missing is any mention of

attorneys’ fees, which are in fact governed by a different

section—17 U.S.C. § 505. The CRRA fee-shifting provision

“does not fall within the scope of § 301(a) and therefore is not

preempted by the express terms of the Copyright Act.” Ryan

v. Editions Ltd. W., Inc., 786 F.3d 754, 761 (9th Cir. 2015).

Second, fee shifting in this case does not conflict with the

1976 Copyright Act. Under the CRRA, fee shifting applies

to “any action brought under this paragraph.” Cal. Civ. Code

§ 986(a)(3). Under the Copyright Act, fee-shifting applies to

“any civil action under this title.” 17 U.S.C. § 505. The

applicability of the two provisions depends on whether the

“action” was brought “under” state or federal law. And here,

plaintiffs brought this action under the CRRA. The CRRA

fee-shifting provision thus applies, and the Copyright Act feeshifting

provision does not.

That this action involves only state-law claims

distinguishes it from actions brought under both federal law

and state law. We have held that a prevailing party in such a

case cannot “resort to a state statutory procedure to reach

around [federal-law] attorneys’ fees provisions for fees on [a

federal-law] claim.” S.F. Culinary, Bartenders & Serv.

Emps. Welfare Fund v. Lucin, 76 F.3d 295, 298 (9th Cir.

1996) (emphasis added); cf. Ryan, 786 F.3d at 762 (noting

that conflict preemption “might” apply in a case involving “a

[state] fee-shifting statute . . . that permitted a fee award

where the Copyright Act did not” (emphasis omitted)). The

14 CLOSE V. SOTHEBY’S

reason is straightforward—when claims under state law and

federal law overlap, it is generally “impossible to distinguish

the fees necessary to defend against the [state-law] claim

from those expended in defense against the [federal-law]

claim.” Hubbard v. SoBreck, LLC, 554 F.3d 742, 745 (9th

Cir. 2009). A fee award in this circumstance would

encompass fees for litigating the federal claim. And granting

that award under a more generous state-law fee-shifting

provision could allow the prevailing party to evade the

stricter federal-law fee-shifting provision that would

ordinarily apply to the federal claim.

Lucin is instructive. There, we held that a request for fees

under a state fee-shifting statute for work performed in an

underlying ERISA suit was “preempted” by ERISA’s feeshifting

provision. 76 F.3d at 298. We did not, however,

“declare the state statute itself preempted but only any

implementation of it that fails to use the applicable ERISA

standards to determine the propriety of an award of attorneys’

fees for work done in the underlying ERISA action.” Id. We

thus made clear that “to the extent that state law provides for

attorneys’ fees with respect to a state law action, ERISA is

not implicated.” Id. And because “ERISA attorney’s fees

provisions do not apply to non-ERISA actions generally,

those provisions likewise do not preempt them generally.”

Id.

That same principle applies here. The 1976 Copyright

Act’s fee-shifting provision governs only “action[s] under”

the Copyright Act. 17 U.S.C. § 505. Plaintiffs brought their

claims exclusively under the CRRA. The Copyright Act’s

CLOSE V. SOTHEBY’S 15

fee-shifting provision does not apply to—and has no

preemptive effect in—this non-Copyright Act lawsuit.3

B. Prevailing Party Status

The CRRA fee-shifting provision awards fees to a

“prevailing party.” Cal. Civ. Code § 986(a)(3). Plaintiffs do

not dispute that eBay is a prevailing party, as we disposed of

all of the claims against eBay in eBay’s favor. See Close,

894 F.3d at 1076. Plaintiffs argue that Sotheby’s is not a

prevailing party because the 1977 claims remain pending on

remand. Indeed, plaintiffs make an abrupt about-face from

their contention that defendants “succeeded in gutting the

entire CRRA,” now arguing that they are the prevailing

parties because they succeeded in obtaining reversal of some

of the previously dismissed claims.

California courts take a “pragmatic approach [to]

determining prevailing party status,” generally looking to

“the extent to which each party has realized its litigation

objectives, whether by judgment, settlement or otherwise.”

Graciano v. Robinson Ford Sales, Inc., 50 Cal. Rptr. 3d 273,

281–82 (Cal. Ct. App. 2006) (citations omitted). And here,

Sotheby’s has obtained a judgment in its favor for all claims

involving sales that occurred after January 1, 1978. See

Close, 894 F.3d at 1076. All that remains on remand is the

“sliver of claims” involving sales that occurred in 1977. Id.

at 1072. Sotheby’s is, in any practical sense, a prevailing

party.

3 We reject plaintiffs’ judicial estoppel argument, as defendants have

not taken “inconsistent positions regarding [their] entitlement to fees” so

as to be judicially estopped from requesting them. Ryan, 786 F.3d at 763.

16 CLOSE V. SOTHEBY’S

Plaintiffs argue that Sotheby’s “cannot be deemed to be

the prevailing party” because of the remanded claims. The

CRRA fee-shifting provision, however, applies only to claims

involving sales that occurred after January 1, 1983. See Cal.

Civ. Code § 986(f). Sotheby’s is thus the prevailing party for

all of the claims that fall within the fee-shifting provision.

And under California law, a party who prevails on a feeshifting

claim remains a prevailing party “even when such a

claim is made with other claims on which attorney fees are

not recoverable.” Sharif v. Mehusa, Inc., 193 Cal. Rptr. 3d

644, 650 (Cal. Ct. App. 2015); see Jankey, 290 P.3d at 198

(“The general rule is that where a non-fee-shifting claim

overlaps with a fee-shifting claim, it does not limit fee awards

under the fee-shifting claim.”).4 The non-fee-shifting claims

might affect the “amount of” the fee award, but they do not

negate a party’s “entitlement to” a fee award. Graciano,

50 Cal. Rptr. 3d at 283.

Plaintiffs also contend that “there may be no fee award

while, as here, a case is still pending.” But California courts,

like federal courts, “allow attorney fee awards even where

there has been no decision on the merits.” Winick Corp. v.

Safeco Ins. Co., 232 Cal. Rptr. 479, 481 (Cal. Ct. App. 1986);

accord Animal Lovers Volunteer Ass’n, Inc. v. Carlucci,

867 F.2d 1224, 1225 (9th Cir. 1989) (“The fact [that] the

dispute between the parties may continue does not preclude

a fee award.”). The “case need not be completely final” for

4 This rule disposes of plaintiffs’ argument that a fee award is proper

only when the prevailing party prevails in the entire “action.” California

courts have expressly considered and rejected this argument, holding that

the phrase “any action” in a fee-shifting statute “refers to any ‘cause of

action,’” not the entire lawsuit. Aleman v. AirTouch Cellular, 146 Cal.

Rptr. 3d 849, 868–69 (Cal. Ct. App. 2012); see, e.g., Ramos v. Garcia,

204 Cal. Rptr. 3d 214, 222 (Cal. Ct. App. 2016).

CLOSE V. SOTHEBY’S 17

fees to be awarded as long as the victory obtained on the feeshifting

claims is “secure.” Urbaniak v. Newton, 24 Cal.

Rptr. 2d 333, 336 (Cal. Ct. App. 1993) (citation omitted).

And here, Sotheby’s has obtained a secure victory on all of

the claims for which fees may be awarded.

The cases cited by plaintiffs involve fee requests by a

party who won a procedural victory on appeal that merely

continued the litigation. See Hanrahan v. Hampton, 446 U.S.

754, 758 (1980) (reversing fee award where the applicants

had “not prevailed on the merits of any of their claims” on

appeal but instead only obtained a new trial); Presley of

S. Cal. v. Whelan, 196 Cal. Rptr. 1, 2 (Cal. Ct. App. 1983)

(declining to award fees for achieving a reversal of summary

judgment). But as we have explained, these cases addressing

purely procedural victories are “irrelevant” if the prevailing

party has “won a determination on the merits.” Animal

Lovers, 867 F.2d at 1225. Sotheby’s is the “prevailing party”

with respect to all of the fee-shifting claims and is entitled to

a fee award for the work performed on them.



* * *



5 Plaintiffs’ motion to strike defendants’ replies in support of their fee

applications (Case No. 17-56234, Dkt. No. 82) is DENIED.

Sotheby’s and eBay are entitled to a fee award under the

CRRA fee-shifting provision. Their applications for

attorneys’ fees (Case No. 16-56234, Dkt. Nos. 72 and 74) are

accordingly GRANTED.5 We refer the matter to the

Appellate Commissioner to determine the appropriate amount

of fees to be awarded, subject to reconsideration by this

panel. See Ninth Circuit Rule 39-1.9.