Thursday, April 22, 2010

Park West Gallery Fiasco - Just the Beginning

A monumental legal dispute has been churning very quietly for the past several years in the Upper Midwest pitting Phoenix based Global Fine Art Registry against Southfield Michigan art gallery Park West. Park West Galleries, Inc. has hosted auctions on board cruise ships since the early 1990's and provided documentation from their appraisers as to authentication and value. Bottom line Fine Art Registry accused Park West of fraud. Park West sued Fine Art Registry for $46 million for defamation. Park West lost and Fine Art Registry was awarded $500,000 for trademark law violation. This now opens the door for all those buyers to come back at Park West for their own claims. This could potentially start an avalanche of claims against appraisers, Park West, and maybe the cruise lines as well.

Park West Galleries Inc. was not defamed by an Arizona art registry service, and will even have to pay $500,000 for infringing a federal trademark law while defending its reputation, a federal court jury found today.

Jurors took about a day and a half to reach a unanimous verdict against the Southfield art dealer and in favor of Phoenix-based Global Fine Art Registry L.L.C. Park West had sought $46 million in damages against the registry, its CEO Teresa Franks, owner Bruce Hochman of California-based The Salvador Dali Art Gallery, and a contract writer for the registry.

After a six-week trial before U.S. District Judge Lawrence Zatkoff, the jury on Wednesday awarded no damages in Park West's claims for defamation, tortuous interference and civil conspiracy.

It also awarded no damages in Fine Art Registry's and Franks' counterclaims of defamation and tortuous interference; but it did award $500,000 to Fine Art Registry for violations of the federal Lanham Act that governs several aspects of trademark law.

“I'm overwhelmed,” Franks said of the outcome Wednesday. “We went through three years of hell with this company (Park West), and I was honored by the witnesses and experts who came and helped us from around the country and all over the world. This was a company with three law firms and we were in a classic David and Goliath case, and I feel like we kicked rear-end today.”

The federal lawsuit stems from a series of online reports the Registry posted in 2007-08 about Park West, mainly involving buyers who claim fraud and violations of consumer protection laws in several states in art auctions that Park West hosts aboard cruise ships.

Many of those buyers are plaintiffs in eight other state and federal lawsuits seeking more than $22 million in damages; most of those cases were consolidated a few months ago into a multi-district federal lawsuit that heads to trial next year in Seattle.

Park West has hosted auctions aboard cruise lines since 1993, and the company has claimed they account for more than 80 percent of annual revenue, which peaked at nearly $300 million in 2006 and early 2007.

Celebration, Fla.-based Disney Cruise Line has ended its concession agreement to host Park West auctions last year and entered a new agreement with competitor West End Gallery Inc. of Fort Lauderdale, Fla. But Park West maintains its agreements with several other cruise lines.

Rodger Young, founding partner at Southfield-based Young & Susser P.C. and lead attorney for Park West, said he was shocked by the result and expects to file a motion next week for judgment as a matter of law, to supplant the verdict with a ruling by Judge Lawrence Zatkoff.

If that request fails, he said, the art dealer will take the matter to the Sixth U.S. Circuit Court of Appeals.

"We are extraordinarily disappointed by the verdict," he said. "Absolutely anyone else in the courtroom must have heard a different case than the one the jury considered, and we intend to very vigorously appeal."

Robin Danek, director of marketing communications for Park West, could not be immediately reached. In a voicemail recording she deferred comment to Young.

Jonathan Schwartz, associate at Farmington Hills-based Kaufman, Payton & Chapa P.C., said the Lanham Act violation involved Park West's use of a Fine Art Registry trademark in sponsored links on search engines, to drive Internet user queries to a Park West reputation management page online.

He also hailed Wednesday's outcome as a win and a possible indicator of the strength of the buyer lawsuits. Kaufman Payton is also representing 10 art buyers in a civil lawsuit at Oakland County Circuit Court, and defended Franks and the Registry in the federal lawsuit in Port Huron.

“We mounted a defense of truth in the defamation case, and were able to bring witnesses and experts to support the claims that were made (online),” he said. “The (parties) are going to take a look at the buyer claims on a case by case basis, but if Park West wants to present this same case as a defense to those allegations, the outcome today might say something about the strength of presenting that defense.”
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Unknown said...

"Park West won and was awarded $500,000 for trademark law violation." That statement in your blog is wrong. Park West LOST. FAR was awarded $500,000.

Unknown said...

Typo - Thanks for the heads up.. JB

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