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Christie’s International cannot claim an arm’s-length relationship with former chief executive Christopher Davidge and must comply with discovery in an ongoing class action alleging the auction house engaged in a price-fixing conspiracy with Sotheby’s Holdings Inc., a federal judge has ruled. On Tuesday Judge Lewis A. Kaplan of the U.S. District Court for the Southern District of New York ordered Christie’s to stop stonewalling and exert its considerable influence over Davidge — whom the auction house is indemnifying in the matter — to answer interrogatories sought by former Sotheby’s chairman A. Alfred Taubman. Kaplan also warned that he may resort to sanctions unless Christie’s provides by Oct. 14 answers to the interrogatories, which deal with a still-pending case brought by people allegedly victimized by the auction houses overseas. The interrogatories, part of In re Auction Houses Antitrust Litigation, 00 Civ. 6322, are unrelated to the $512 million settlement reached two weeks ago between the houses and the American plaintiffs. The judge noted that “although the press has reported that an agreement has been reached to settle these cases, the proposed settlement has not been filed with the court,” and, in any event, the settlement would not resolve two pending cases brought on behalf of a class of plaintiffs allegedly victimized by Christie’s and Sotheby’s operations abroad. In the interrogatories, lawyers for Taubman want answers to a series of questions about handwritten notes from the files of Davidge, who left the auction house last December. Davidge signed two agreements with Christie’s upon his departure. The first, a termination of employment agreement, stipulates a payment of 5 million pounds, at least 2 million of which, Judge Kaplan said, has yet to be paid to Davidge. The second is an “indemnification and joint defense agreement,” in which the auction house promised to indemnify and defend Davidge, not just in civil actions prompted by the alleged conspiracy, but also in connection with a long-running investigation into the auction houses by the Justice Department. In return, according to the agreements, Davidge promised to cooperate with any reasonable requests for information in pending or future litigation. But when lawyers for Taubman wanted answers to questions about the handwritten notes, Christie’s claimed that most of the interrogatories seek information outside of its control. The Davidge documents, which Kaplan said “apparently are important evidence of the alleged conspiracy,” are currently shielded by a protective order that prevents the parties and their attorneys from discussing their contents. For its part, Christie’s said it requested the information sought by Taubman from Davidge, but Davidge declined to provide it. “But Christie’s does not say that it has done anything more than request Davidge to provide the information necessary to enable it to give complete and responsive answers to the interrogatories …,” Kaplan said, adding, ” … [T]his despite the fact that Davidge’s reported refusal arguably breaches those agreements.” Christie’s, he said, has not indicated that it has “threatened to cease payments to him and his counsel or to consider its indemnification obligation as unenforceable in light of Davidge’s position.” “Thus, it certainly has not exhausted the means at its disposal to procure a response from Davidge,” Kaplan wrote. “Indeed, there is reason to suppose that Davidge’s reticence is in Christie’s interest.” Davidge, he said, knowingly subjected himself to the risk that “failure to provide information requested by Christie’s might be a material breach” of the agreements. “He was not coerced to do so, except in the sense that the enormously valuable economic consideration that he stands to receive under the agreements of course might be expected to have had a certain persuasive force,” he said. FIFTH AMENDMENT Christie’s, the judge said, argued that it would be unfair to make them strong-arm Davidge for answers, a response that he said was an example of “Christie’s professed concern for Davidge’s alleged Fifth Amendment rights.” Kaplan said it was “far from self-evident,” that Davidge would be protected by the Fifth Amendment “against an economic inducement from his former employer to provide it with information,” or that his Fifth Amendment rights would be “violated by an economic incentive as opposed to a legal compulsion to testify.” “Further,” he said, “in view of reports that Christie’s has obtained conditional amnesty in the pending grand jury investigation for itself and its personnel, it is not clear that Davidge is at any real risk at all.” William C. Komaroff and Scott W. Muller, of Davis Polk & Wardwell, represent Taubman. Steven Reiss and David Lender, of Weil, Gotshal & Manges, represent Sotheby’s Holdings, Inc. J. Douglas Richards, of Milberg Weiss Bershad Hynes & Lerach, and Karen Morris, of Morris & Morris, represent the overseas plaintiff class. Shepard Goldfein and Clifford Aronson, of Skadden, Arps, Slate, Meagher & Flom, represent Christie’s International.

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