Koch v. Christie's Int'l Plc

• Decision Date: 18 March 2011
• Docket Number: No. 10–cv–2804 (BSJ).,10–cv–2804 (BSJ).
• Citation: 785 F.Supp.2d 105
• Parties: William I. KOCH, Plaintiff,v.CHRISTIE'S INTERNATIONAL PLC, Christie's, Manson & Woods, Ltd. and Christie's Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

785 F.Supp.2d 105

William I. KOCH, Plaintiff,

v.CHRISTIE'S INTERNATIONAL PLC, Christie's, Manson & Woods, Ltd. and Christie's Inc., Defendants.

No. 10–cv–2804 (BSJ).

United States District Court, S.D. New York.

March 18, 2011.

Elkan Abramowitz, Edward M. Spiro, Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, P.C., New York, NY, Bruce A. Wessel, Irell & Manella LLP, Los Angeles, CA, Layn R. Phillips, Marshall Alan Camp, Irell & Manella LLP, Newport Beach, CA, for Plaintiff.Jonathan J. Lerner, Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, for Defendants.

Memorandum & Order

BARBARA S. JONES, District Judge.

Plaintiff William Koch (“Plaintiff”) commenced this action against Defendants Christie's International PLC, Christie's, Manson & Woods, Ltd., and Christie's Inc. (collectively “Defendants” or “Christie's”) on March 30, 2010, alleging causes of action for civil RICO pursuant to 18 U.S.C. § 1964, civil conspiracy to defraud, aiding and abetting fraud, and a violation of section 349 of the New York General Business Law. For the reasons set forth below, Defendants' motion to dismiss is GRANTED.

BACKGROUND ¹

The present suit stems from the sale in the late 1980s of rare wine bearing the engraving “Th.J,” supposedly signifying that they once belonged to Thomas Jefferson. For ease of reference, the wine will be referred to as the “Th.J wine” throughout. Christie's, one of the world's largest auction houses, auctioned a number of bottles of Th.J wine in the mid–1980s. In connection with these sales, Plaintiff alleges that Christie's advertised that the collection was authentic in its auction catalogues and generally promoted the Th.J wine. In 1988, Plaintiff William Koch purchased four bottles of Th.J wine from a third party, Hardy Rodenstock, who is not named in this suit. Plaintiff contends that these mid–1980s representations by Christie's induced him to purchase the wine from Rodenstock. He alleges that, despite Christie's knowledge that the wine was likely counterfeit, it marketed the wine as authentic. This was part of Christie's “decades-long scam of promoting, authenticating, and selling supposedly rare wines that it knew to be counterfeit.” (Pl. Br. at 1.)

Specific Allegations in the Complaint

In November and December 1988, Plaintiff purchased four bottles of wine engraved with the initials “Th.J,” supposedly indicating that they were once owned by Thomas Jefferson. (Compl. ¶¶ 59–60.) Plaintiff purchased the Th.J wine from Hardy Rodenstock, a German wine connoisseur who claimed to have discovered the cache of Jefferson's wine in Paris, France in the mid–1980s. (Compl. ¶¶ 28, 30–31.) Plaintiff paid a total of $311,804.40 for the four bottles. (Compl. ¶¶ 59–60.)

Plaintiff does not allege that any Defendant in this action sold him the Th.J wine or was directly involved in the sale. ( Id.) Rather, Plaintiff alleges that Christie's had previously auctioned other Th.J bottles owned by Rodenstock in 1985, 1986, and 1987. (Compl. ¶¶ 39, 42, 54–57.) He claims that the wines were described positively in Christie's auction catalogues, usually with commentary by J. Michael Broadbent, a senior consultant and wine expert employed by Christie's. (Compl. ¶¶ 36–39.) These representations allegedly induced Plaintiff to purchase the Th.J wines from Rodenstock. (Compl. ¶¶ 59–60.)

Plaintiff alleges that Christie's representations and advertisements were made despite the fact that in 1985, Christie's and Broadbent “acquired direct and specific knowledge of facts and circumstances that challenged the authenticity of the Th.J wine.” (Pl. Br. at 5; Compl. ¶ 32.) The counterfeit nature of the Th.J wine was allegedly revealed to Christie's by the experts at the Thomas Jefferson Memorial Foundation at Monticello (“Monticello”) in what has been referred to as the “Monticello Report.” (Compl. ¶ 34.) In April 1986, Monticello's staff informed Broadbent in writing that the Th.J wine had no connection to Thomas Jefferson. (Compl. ¶ 49.) Broadbent disagreed, and he spent years trying to persuade Monticello's experts that the Th.J wine was authentic. (Compl. ¶¶ 52, 63.) In spite of this information, Plaintiff alleges that Christie's continued to offer Th.J wine for sale, “advertising it in a manner intentionally and deceptively suggesting that the wine was clearly connected to Jefferson.” (Pl. Br. at 6; Compl. ¶ 56.)

Plaintiff alleges that in 2005, he “learned for the first time that there were credible and serious questions about the authenticity of the Th.J wine.” (Compl. ¶ 65.) In that year, a Boston museum contacted Plaintiff and asked if he would lend the Th.J bottles for exhibition. In preparation for the exhibit, Plaintiff contacted Monticello to obtain information regarding the authenticity of his wine. ( Id.) From this conversation and subsequent investigation, Plaintiff obtained a copy of the Monticello Report for the first time. Plaintiff alleges that prior to 2005 “he had not known of the report.” ( Id.) Plaintiff undertook an investigation to determine the authenticity of his Th.J bottles. His efforts allegedly revealed that the bottles had no connection to Jefferson and were counterfeited by Rodenstock in the 1980s. (Compl. ¶¶ 66–76.)

Plaintiff filed suit against Rodenstock in August 2006. In connection with that suit, he interviewed Broadbent regarding Christie's role in the fraud. As a result of this investigation, he “began to suspect that Christie's sale of the Th.J wine was not an isolated event.” (Pl. Br. at 8.) A wine expert confirmed that “numerous bottles in Koch's collection that Koch had purchased from Christie's are counterfeit or likely counterfeit.” (Pl. Br. at 8; Compl. ¶¶ 139, 141–76.)

Plaintiff alleges that former Christie's employees have confirmed that Christie's knew that it often offered counterfeit wine for sale, including frequent sales from Rodenstock. (Compl. ¶¶ 110–30.)

In December 2008, Plaintiff purchased a bottle of 1870 Lafite for $4,200 at a Christie's auction. (Compl. ¶ 103.) Plaintiff admits that he thought the bottle was counterfeit prior to the auction. After the purchase, Plaintiff's experts allegedly confirmed their suspicions through testing. (Compl. ¶¶ 103–06.) Plaintiff relies on this purchase and on interviews of Christie's employees to allege that Christie's knowingly engages in sales of counterfeit wines because it “absolve[s] itself of responsibility for sales of counterfeits by including elaborate small print disclaimers in its auction catalogues” stating that the wine is sold “as is.” (Pl. Br. at 9–10.)

Plaintiff filed the present action on March 30, 2010, alleging claims for civil RICO pursuant to 18 U.S.C. § 1964, civil conspiracy to defraud, aiding and abetting fraud, and a violation of section 349 of the New York General Business Law.

LEGAL STANDARD

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for dismissal of a complaint that fails to state a claim upon which relief may be granted. “In ruling on a motion to dismiss for failure to state a claim upon which relief may be granted, the court is required to accept the material facts alleged in the complaint as true.” Frasier v. Gen. Elec. Co., 930 F.2d 1004, 1007 (2d Cir.1991) (citation omitted). The Court is also required to read a complaint generously, drawing all reasonable inferences from its allegations in favor of the plaintiff. See Harris v. Mills, 572 F.3d 66, 71 (2d Cir.2009) (explaining that in deciding a motion to dismiss, a court “consider[s] the legal sufficiency of the complaint, taking its factual allegations to be true and drawing all reasonable inference in the plaintiff's favor”) (citation omitted).

“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations and internal quotation marks omitted). A plaintiff must assert “enough facts to state a claim to relief that is plausible on its face.” Id. at 570, 127 S.Ct. 1955. “A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1940, 173 L.Ed.2d 868 (2009) (citation omitted).

DISCUSSION

Plaintiff's RICO, aiding and abetting fraud, and civil conspiracy to defraud claims are based on his 1988 purchase of four bottles of the Th.J wine. Plaintiff's Section 349 claim is based upon the purchase of an allegedly counterfeit bottle of wine from Christie's in 2008.²

Defendant's primary argument in its Motion to Dismiss is that Plaintiff's claims are time-barred, and therefore fail as a matter of law.

I. RICO Statute of Limitations

Defendants move to dismiss Plaintiff's RICO claim as time-barred. They argue that Plaintiff was on inquiry notice of his injury as early as 1993. Plaintiff filed suit against Christie's on March 30, 2010. Christie's argues that the statute of limitations expired, at the latest, in 2004.³

As an initial matter, the Court decides this motion on the basis of Plaintiff's complaint and attached exhibits, as well as four additional categories of documents: (1) news articles relating to the Th.J wine; (2) documents describing other suits regarding the Th.J wine; (3) the results of a test of the Th.J wine; and (4) Plaintiff's 2009 deposition testimony and court documents from a related action commenced by Plaintiff in an Illinois court in 2008.

A district court may take judicial notice of “the fact that press coverage, prior lawsuits, or regulatory filings contained certain information, without regard to the truth of their contents, in deciding whether so-called ‘storm warnings' were adequate to trigger...