The typical answer lawyers give to legal advice requests is prefaced with the same two-word phrase: it depends.
For the most part, it depends is the correct answer for a lot of questions in the trading card industry.
Q - How far does the right of publicity extend? Or is my box break a contest or lottery?
A - It depends on what you're doing, and which state we're talking about.
Q - Do we infringe on this patent?
A - It depends on what you're doing and what happens at the Markman hearing.
Q - Am I infringing a copyright by posting a picture of a card?
A - Technically yes, but it depends.
A recent decision from an appellate court in California, however, actually provides guidance that can eliminate the "it depends" for trading card manufacturers. Not so much for authenticators. And really, the decision is only controlling for California, so yes, it still depends. Just not as much as it used to.
The action is Sterpka v. Upper Deck and Collectors Universe. The lawsuit focused on the authenticity of a Charles Lindbergh signature that Steven Sterpka obtained when he purchased a case of Upper Deck's 2008 SP Legendary Cuts Baseball.
According to the appellate decision, in early 2008, Sterpka read an article that contained portions of an Upper Deck press release about ten rare cards in UD’s Legendary Cuts product. Among these rare cards was a signature of a notable personality along with a strand of that person's hair.
Uh, ew. Hair? Really? It's not like it's hair from a 1980s hair band or Troy Polamalu.
And what's next? Toe nails? Cheek scrapings? Bodily fluids?
After reading the article, Sterpka purchased a case of the SP Legendary Cuts for approximately $1,500. Sterpka hit the jackpot. His case included a redemption for a Charles Lindbergh Hair Cuts Signature card.
And despite how creepy it is to have someone’s hair, Sterpka redeemed the card.
The back of the card had the following printed on it:
Congratulations! You have received a trading card with an historical strand of Charles Lindbergh's hair, that includes an autograph of Charles Lindbergh. The memorabilia was certified to us as belonging to Charles Lindbergh. The cut autograph was independently authenticated by a third party authenticator. We hope you enjoy this piece of history, as we continue to keep you as close as you can get! Enjoy your memorabilia card!
According to Upper Deck, it obtained a letter of authenticity in May, 2008 from PSA/DNA Authentication Services, a division of the other defendant Collectors Universe, authenticating the signature on the card.
After Sterpka received the card, he did what any good collector would want to do with a hair card: sell it. So, he hooked up with Beckett Select Auctions to auction off the card. Sterpka also obtained a letter of authenticity from James Spence Authentication who opined that the signature was genuine. Sterpka then valued the card at $10,000, and Beckett listed it for that price on eBay.
Soon after it was listed, however, an autograph authenticator and consultant to Charles Lindbergh's daughter contacted Sterpka and eBay. This authenticator informed them that the sale of the card would violate intellectual property rights because the signature was a forgery. In view of this, eBay cancelled the listings.
In 2009, Sterpka sent the card to RR Auction to authenticate the signature. In July 2009, RR returned the card to Sterpka with a letter from PSA/DNA disputing the authenticity of the signature.
Wait, didn't PSA/DNA originally authenticate the signature already? And then later through RR Auction, dispute the authenticity?
Don’t worry, the court opinion clears that up. Apparently, PSA/DNA later revoked the opinion in that letter.
Ok, not clearer but apparently not relevant to the court's rulings.
Stuck with a card of questionable authenticity, Sterpka brought claims against Upper Deck and Collectors Universe for, basically, fraud and negligence. The case did not go well for Sterpka. Upper Deck and Collectors Universe won a summary judgment decision.
Legal translation: A party only gets a trial if it can show it has evidence (even just a little bit) for each of the elements of the claims it asserts. If the party lacks evidence, the other side can bring a motion for summary judgment which forces the party to show its evidence. If there is a gap in evidence for any element the case blows up.
The case went up on appeal, and the California court of appeals affirmed the trial court's decision.
Why Upper Deck and Collectors Universe Won on the Fraud Claims
For Sterpka to prevail against Upper Deck on his fraud claims, he needed to show, among other things, intent by Upper Deck to defraud.
Legal translation: Fraud is intentional. If you don’t intend to do something bad, the other side can’t win.
Here, the court found that because Upper Deck had an authentication from Collectors Universe prior to its release of the product, this negated any intent element. Basically, how could Upper Deck intend to sell someone something that was not authentic if it thought the card was authentic?
Also important in the court's decision was that Upper Deck reasonably believed that Collectors Universe did its job, and that Collectors Universe was a reputable authenticator. Now, had Upper Deck thought the signature was dubious, and used Cheap-o's 10-Minutes-Or-Less Authentication Service, these factors could have swung in Sterpka's favor. But, that wasn't what happened here.
The appellate court also found that Collectors Universe couldn’t have acted fraudulently because it also thought the card was authentic. It also helped that there was still an ongoing dispute with other authenticators opining the autograph was authentic, too.
Why Upper Deck and Collectors Universe Won on the Negligence Claims
The opinion then turned to the negligence claims, which do not require intent or an evil motive from the defendants. To win in a negligence action, the plaintiff,basically, must show the other side failed to abide by a reasonable duty of care.
Similar with the fraud claims, the court found for Upper Deck on the negligence claims because Sterpka did not produce evidence demonstrating that Upper Deck's acts were unreasonable. Again, Upper Deck had an authentication that it believed was accurate.
Collectors Universe also prevailed on the negligence claims because the court found Sterpka could not show that Collectors Universe failed to exercise the degree of care and diligence that another company, similarly situated would have exercised. Again, what helped Collectors Universe here was that there was still an ongoing dispute regarding the authenticity of the signature with at least one authentication service other than Collectors Universe opining the signature was genuine.
So, the take home?
If you are a card manufacturer, for your high-prized pulls, use a reputable authenticator prior to the product's release date. If there were no questions about the authenticity of the card, this (at least for California, and likely other states) should afford you a good amount of protection in case the card turns out to be not authentic.
On the other hand, if you are trading card manufacturer and doubts arise as to the card's authenticity before it is released, getting a "second opinion" does not put you in the strongest position. If it comes out in litigation that there was a contrary prior opinion, and that it was withheld from the public, your defense is significantly weakened.
For authenticators, it's a slightly higher bar. Follow good authentication procedures and you are likely good. But, it depends. Because, as the opinion repeatedly pointed out, it was important to the court that another authentication service backed up the original opinion. Had there been three bad opinions to one good opinion, the case might have been closer, and gone to a jury instead of ending at summary judgment.
If you are a collector, what does this mean? It really, really depends and on facts you likely won't be privy to. If you have a card that turns out to be not authentic, the success of your action turns on what the manufacturer knew or did prior to selling the card. Too bad that information is behind the corporate veil, and you'll likely only find out if you file suit and if the suit progresses far enough to get into discovery. And sure, there appears to be hearsay out there that hints some manufacturers might not have met a reasonable duty of care (a la Jersey-gate) for some cards. Take for example the following quote from Brad Wells' sentencing memo:
As Mr. Wells even advised the agents in his interview referenced above, certainly the card companies – who were underpaying for what the value of the items would have been if they indeed were legitimate game used jerseys – either knew or should have known of the foul nature of the items. We are not seeking to cast aspersions on any particular "victim", but counsel thought to indicate that the term "quasi-victim" or "willful blindness" may be more apt, and restitution in the circumstances would not be appropriate either financially or equitably.
Sure, that sounds like a failure to abide by a reasonable duty of care for some unidentified manufacturers of still unidentified cards, but, it's difficult to start a suit when all you have is generalized allegations, rather than the specifics of which cards are allegedly not authentic.
So, to sum up: this case is good for manufacturers that do a good job and an OK case for authenticators that do a good job. And for consumers, it unfortunately all depends on whether or not the manufacturer and/or authenticator did a good job, information you'll likely not have.
The information provided in Paul Lesko's "Law of Cards" column is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered in the sports industry. This information is not intended to create any legal relationship between Paul Lesko, the Simmons Browder Gianaris Angelides & Barnerd LLC or any attorney and the user. Neither the transmission nor receipt of these website materials will create an attorney-client relationship between the author and the readers.
The views expressed in the "Law of Cards" column are solely those of the author and are not affiliated with the Simmons Law Firm. You should not act or rely on any information in the "Law of Cards" column without seeking the advice of an attorney. The determination of whether you need legal services and your choice of a lawyer are very important matters that should not be based on websites or advertisements.
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