Academy's Method of Restricting Oscar Statuette Sales Upheld in Court

If Oscar winners want to sell their trophies, they have to offer them to the Academy for $10. A judge looks at Victorian era land disputes and fruit salad jars to figure out whether this is enforceable.
THR

The Academy of Motion Picture Arts and Sciences has won a ruling that bolsters the enforceability of its particular method for stopping the sale of Oscar statuettes. And the thanks goes to a nearly forgotten half-century old case involving damaged fruit salad jars.

The latest case involves the Oscar won by Joseph Wright in 1943 for color art direction on the film My Gal Sal.

A few years after Wright died in 1985, his My Gal Sal statuette was passed to his nephew, Joseph Tutalo. In 2014, Tutalo consigned the statuette to Briarbrook Auctions. It was then bought by Nate D. Sanders, Inc. for $79,200, possibly for resale. Throughout the years, Sanders has auctioned off over 30 Oscars — the company's website lists some of the sales — but this time, he came into the legal cross-hairs of AMPAS.

Last summer, AMPAS sued Briarbrook. The lawsuit was later amended to target Tutalo, who then settled by agreeing to pay $6,500, and Sanders, which put up a fight.

In the legal war over the My Gal Sal statuette, AMPAS relied upon its bylaws. Since 1951, members have agreed that they cannot sell their awarded trophies without first offering to sell them to AMPAS for just $10. Membership in AMPAS also means the agreement is binding on heirs. So if sometime in the future, the kin of Meryl Streep fall on hard times and want to raise money by selling off her Oscars, they're pretty much out of luck. Or are they? The answer requires a trip to 19th Century England.

In the 1840s, English courts began applying a legal concept known as equitable servitude in land disputes. The basic principle is that parties can agree to restrict land use, and under certain circumstances, a covenant can be enforced against successive owners. Two neighbors, for example, might agree never to plant trees that will block views of the ocean. One neighbor might sell his home, but the new owner might be bound by this deal.

In 1919, the California Supreme Court adopted equitable servitude for the first time. It was later codified by statute by the California legislature in 1968.

But is personal property like an Oscar statuette like a parcel of land?

Yes, said AMPAS, turning the judge's attention to Nadell & Co. v. Grasso, a 1959 case involving a businessman who had purchased Kraft-branded fruit salad. Unfortunately, the property got damaged in transit when the jars were inadvertently frozen, leading to lids expanding over the top of containers. There was nothing wrong with the fruit salad, though. Just the jars. And so, the damaged goods were sold on the condition that the fruit salad would need to be removed and placed in other containers before sale to customers. When the buyer then sold the damaged goods to one of his former employees, who then sold the fruit salad in the damaged Kraft-branded jars, a lawsuit followed. The case went up on appeal, and it was held that similar to equitable servitudes on land, the successive owners were bound by the early restrictions on those jars.

Sanders argued this precedent was old and that hardly anyone cited it.

"Sanders does not cite to any case law binding on this court that specifically disapproves of or overturns Nadell, and neither is this court aware of any cases citing Nadell with approval or disapproval," writes Los Angeles Superior Court judge Gail Ruderman Feuer in an opinion issued last week. "As such, Nadell remains binding precedent on this court. Nadell itself noted that the facts before the court were 'peculiar' and 'perhaps unique.' That it has been over fifty years since similar facts have arisen does not mean that Nadell is no longer good law."

Victorian era land disputes and fruit salad jars only begin the discussion, though, because for equitable servitude to kick in, some conditions have to be satisfied.

First, there must be a written agreement.

Wright won his Oscar in 1943, and the first-right-of-refusal bylaws weren't adopted until 1951. For eight years he could have sold his statuette, but the judge notes he kept his membership in the Academy until his death. According to Feuer, the new bylaws weren't applied retroactively to him. "Rather, Wright's continued membership in the Academy was predicated on his agreement to the new right of first refusal in its bylaws," she writes. "As of 1951, Wright was free to leave the Academy and sell his Oscar on the free market, but instead decided to retain his membership subject to the new bylaws."

Second, there's got to be "adequately described chattel." The Oscar, duh. Moving on...

Third, the restriction has to be reasonable.

Sanders cited a California law stating that "[c]onditions restraining alienation, when repugnant to the interest created are void," and that the $10 bylaw functionally stops Oscars from being sold.

Dawn Hudson, COO of the Academy, gave a declaration that AMPAS "never intended the Oscar statuette to be treated as an article of trade," that a "sale would diminish the value of the Academy's Award of Merit, signified by the Oscar statuette" and that the "award [is] diminished by distribution ... through commercial efforts rather than in recognition of creative effort."

The judge possibly leaves this one open for a jury to address. For now, she writes that AMPAS' "valid business and artistic reasons cannot be said to be be, as a matter of law, insufficient to justify the restraint on the commercial sale of Oscars imposed by the right of first refusal."

Finally, there's got to be notice. There's no dispute that Sanders knew about the Academy's $10 rule.

For these reasons, the judge rejects Sanders' motion for summary judgment over allegedly breaching equitable servitude. She also won't let Sanders escape a claim of tortiously interfering with contracts between AMPAS and its member's heir. Here's the full opinion.

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