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Neither the Sherman Antitrust Act nor international law can be the basis for a civil action brought by people injured abroad by the price-fixing conspiracy of Christie’s International and Sotheby’s Inc., a judge with the U.S. District Court for the Southern District of New York has ruled. U.S. District Judge Lewis A. Kaplan dismissed three consolidated class actions filed last summer by eight persons or entities who bought or sold items at auctions, mostly in London, while Christie’s and Sotheby’s had an agreement to fix buyer premiums and seller commissions. Kaplan said the question posed by the defendant’s motion to dismiss was whether “a transnational price fixing conspiracy that affects commerce both in the United States and in other countries inevitably gives persons abroad in transactions otherwise unconnected with the United States a remedy under our antitrust laws.” “Unless the court is to impute to Congress an intention to establish an antitrust regime to cover the world, the answer must be ‘no,’ ” he said. The ruling in Kruman v. Christie’s International PLC, 00 Civ. 6322, comes as the two sides in the consolidated class actions brought by plaintiffs injured in the United States are preparing for a fairness hearing on a proposed $512 million settlement. With the foreign-based class actions out of the way, Kaplan on Friday will hear any objections to the settlement in In re Auction Houses Antitrust Litigation, 00 Civ. 0648. One issue expected to be raised at that hearing is that the proposed settlement calls for $100 million of the total to be paid in coupons rather than cash. Under the proposal, the coupons could be used against sellers’ commissions. Coupon holders would have up to five years to use the coupons, and would have the right to transfer them to a certificate administrator, thus creating a secondary market in the coupons. At a hearing in December, Kaplan said he was concerned that people who try to sell the coupons might not receive full value. He also said that coupon holders would be in jeopardy if either Christie’s or Sotheby’s goes out of business. He told the lawyers: “If you are going to provide $100 million in fair market value, you might as well pay money.” “I’ve said it privately,” Kaplan said. “Now I’m saying it publicly. I’m very skeptical about the value of these certificates.” Kaplan, who has appointed two experts to analyze the coupon proposal, said he had received letters from individual plaintiffs complaining about the real value of the coupons. ATTORNEY COMPENSATION At the December hearing, Judge Kaplan also tweaked David Boies and Richard Drubel, of Boies, Schiller & Flexner, the attorneys who prevailed in an auction established last year by Kaplan to determine lead plaintiffs’ counsel. The winning bid submitted by the lawyers calls for them to receive 25 percent of any amount recovered for the class above $405 million, which would be $27 million based on the full $512 million settlement. Discussing the coupon issue, Kaplan said, “Class counsel may wind up holding most of these.” Following the hearing, Boies told the media he would be willing to accept 80 percent of his fees in cash and 20 percent in coupons, a split that mirrors that the ratio of cash to coupons in the settlement. Two weeks ago, Sotheby’s and Christies improved their offer on the coupons, promising that at the end of five years, the coupons could be redeemed for cash. The two auction houses also may improve on that offer by Friday. In his ruling on the foreign-based class actions, Kaplan said that Congress passed the Foreign Trade Antitrust Improvement Act in 1982, in part to exempt conduct that falls short of having a certain level of impact in the United States, even where that conduct began in the United States or involves American companies operating abroad. “The power of the United States to prescribe a rule of conduct for extraterritorial transactions, its prescriptive jurisdiction, depends, so far as is relevant here, on those transactions having a substantial effect within U.S. territory,” he said. “To grant a remedy under U.S. law where, as here, the transactions for which that remedy is sought had no such effect would be an unwarranted assertion of American power.” Kaplan said the complaints must also fail under the Alien Tort Claims Act. “Plaintiffs’ position, which only recently was rejected in the Microsoft case, borders on the frivolous,” Kaplan said. “There is no substantial support for the proposition that there is an international consensus proscribing price fixing that fairly might be characterized as customary international law, much less an international consensus that price fixing gives rise to tort claims on behalf of victims.” Kaplan issued another ruling Tuesday in the still-open criminal case against Sotheby’s. Sotheby’s attempted to plead guilty to price-fixing on Oct. 5, but Kaplan refused to accept the plea until he had more information about how it could affect the civil settlement. He also wanted more time to determine the propriety of the $45 million fine that the company is obligated to pay under its plea agreement with the Justice Department. Because the fine is less than that called for under the Federal Sentencing Guidelines, Kaplan has raised the possibility that the auction house would be required to pay more. INFORMATION SOUGHT Tuesday, Kaplan said the information that he had received from the government and Sotheby’s was “quite limited,” and he ordered the two sides to submit more by Thursday. Kaplan will also conduct a hearing on the pending guilty plea on Friday. Sotheby’s former chief executive, Diana Brooks, pleaded guilty Oct. 5 to a single count of conspiring to violate the antitrust laws. Both Brooks and her former employer are believed to be cooperating with the government’s ongoing investigation of Sotheby’s chairman, A. Alfred Taubman. In her plea allocution in October, Brooks said she agreed to fix prices in meetings with representatives of Christie’s — meetings she had “at the direction of a superior at Sotheby’s Holdings.” Representing the plaintiffs in the Kruman case were the law firms Milberg Weiss Bershad Hynes & Lerach; Cohen, Milstein, Hausfeld & Toll; Meredith, Cohen, Greenfogel & Skirnick; Morris & Morris; Spector, Roseman & Kodroff; and The Furth Firm. Representing Christie’s Inc. and Christie’s International was Skadden, Arps, Slate, Meagher & Flom. Representing Sotheby’s Inc. and Sotheby’s Holdings Inc. was Weil, Gotshal & Manges.

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