Tags

, , , , , , , , , ,

Our Plaintiff: Tim Mayes. Tim owns an auction house.

Tim conducts auctions every other week at his 7,000 square foot auction facility just outside of town.

Years ago, Tim decided to augment his live auctions with online bidding. Tim chose an online bidding platform from a pool of about five available providers.

Tim’s first few auctions went very well, with his online provider adding, in his estimation, a nearly 30% increase in gross proceeds.

Our Defendant: Online auction software provider Conscious Auctioneers (www.consciousauctioneers.com) provides auctioneers the ability to expose property to bidders all over the world.

Their software works to allow bidders to bid remotely during a live auction, or place absentee bids to be executed during the auction.

Conscious Auctioneers provided Tim Mayes an online auction solution for his first few auctions, with according to them, a “healthy” increase in proceeds for Tim’s clients.

The Lawsuit: Tim Mayes sued Conscious Auctioneers asking that they provide him all the email addresses of the registered bidders for all of his auctions.

Tim Mayes had asked repeatedly for an electronic copy of all the email addresses of any bidders registered for his auctions, as he wanted to email them about other auctions … some of which were “live only.”

Conscious Auctioneers had refused to provide Tim Mayes any of the email addresses of bidders (and buyers) claiming that those email addresses were “their property,” and Tim Mayes had no right to access them.

The Trial: Tim Mayes’ attorney argued that as the auctioneer, Tim Mayes, per his sellers consent, owns all the data about the bidders who participate in his auctions. Tim’s attorney gave examples of such data, including name, address, phone number, driver’s license number and email address.

Conscious Auctioneers’ attorney argued that since Conscious Auctioneers was providing the online platform, all data collected by that platform belonged to them, and could only be released to the auctioneer and/or seller with their unilateral consent. Their attorney noted their policy clearly states that, “Conscious Auctioneers has an internal email system which keeps email addresses private.”

The Judge’s Ruling: Judge Darren Carney ruled that since both the property being offered at auction and the fiduciary responsibility concerning were clearly housed in the “seller-auctioneer” relationship, that all data collected in that regard belonged to one or both parties of that relationship.

A portion of Judge Carney’s ruling included his thoughts about those bidders, generally: “These bidders register with the online provider to access the seller’s items, and not specifically to access the software itself. The software is only a conduit, not an end with rights of data housing.”

Further, Judge Carney ruled that Conscious Auctioneers, by providing a service to the auctioneer and seller, could not profit by data collection at the expense of their clients.

Judge Carney noted that it would be more commercially reasonable to view these email addresses, “as belonging to the seller and/or auctioneer, and can be provided to Conscious Auctioneers if the auctioneer/seller so deems.”

Our Commentary: We concur with Judge Carney’s decision.

We have raised this issue before in our analysis regarding, “Whose buyers are they?” That story can be read here:

Our view then, and now, is that auctioneers need to be especially alert to software providers who harvest seller, bidder and/or buyer data for purposes other than the benefit of their client — the auctioneer and associated seller.

And, in particular, any information that the software provider requires bidders to submit should be accessible by the auctioneer; those bidders are customers of the auctioneer and seller — as at an auction, the auctioneer, at minimum, engages those bidders in oral contracts with associated terms and conditions.

In fact, the auctioneer is the client, to which the fiduciary (the online platform) necessarily owes full disclosure.

Even if the online platform denies this agency relationship with the auctioneer, and rather claims they are the proxy for those bidders, or engages those bidders as their clients, then one could argue that the online platform should rightly accept the auctioneer’s terms and conditions, pay for the property purchased, collect all unpaids, settle all disputes … since these are, “their bidders.”

Of course, Conscious Auctioneers doesn’t want to accept those responsibilities in return for their accumulation of bidder information.

It appears rather, that this online platform who requires auctioneers and sellers in order to survive demands considerable self-enrichment without material costs, expenses and other potential liability borne by their clients.

* The above account including company names, events, etc. are purely fictional. This scenario has been created solely for educational purposes.

Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.