attorney, auction, Auction Law, auctioneer, auctioneers, auctions, bid calling, bid rigging, bidders, buyers, client, contract, fictitious bids, genuine intent, illegal, knowledge, lawyer, live auctions, misrepresentation, offer, retract, retraction, Sherman Antitrust Act, The United States Supreme Court
It was only a matter of time I suppose. I had written about this several years ago and just the other day an attorney called who had read: https://mikebrandlyauctioneer.wordpress.com/2010/02/04/unethical-bid-calling-3-he-loves-me-he-loves-me-not/
Amplifying this attorney’s interest, he says, “I just watched an auction on television where the auctioneer had $500 asking $600 and then suddenly he had $200 asking $300 …” My reply was, “Yes, on television is probably where you don’t want to do this …”
This case is a federal case because the attorney has filed in regard to the Sherman Antitrust Act. We wrote about that act here: https://mikebrandlyauctioneer.wordpress.com/2011/07/04/price-fixing-at-auction/ We are likely to be retained, but he has allowed (even encouraged) me to write generally about the case and our conversation.
In fact, we had written about this issue in 2016 here: https://mikebrandlyauctioneer.wordpress.com/2016/12/22/should-the-auctioneer-start-the-bid/ which references other links to similar thoughts.
This case will likely involve looking over contracts, depositions, various claims and counter-claims and even video — where I will be able to watch this so-called bid calling technique. As most know, we regularly provide these types services to attorneys throughout the United States: https://auctionlegalconsulting.com/
In our above “$500-$200” example, I informed this attorney that it could have been a mistake — in essence a miscommunication. For example, the auctioneer thought he had $500 asking $600 and then realized there was no $500 bid …
“No, no, no … it happened over and over and over again,” he replied, “just like on tv — I don’t think it was a mistake.” I informed him I suspected it wasn’t a mistake either.
“It could be another issue …” as I explained that state law (in New York in this case) allows bidders to bid and then retract their bid if done before the completion of the sale. So this $500 bid in our example could have been retracted by the auctioneer or whoever else bid.
“Repeatedly retracted?” he asked, “Over and over?” I told him that with this happening repeatedly, it was likely premeditated. Genuine retraction involves a “change in mind” or “change in thinking,” and constantly or continually retracting probably wasn’t without intention to deceive.
“So retracting your bid because you can’t get a higher bid is not a change of mind?” he asked. I informed him that I felt it wasn’t because that specific retraction is not based upon an initial intent to purchase at that price.
Further this attorney asked if an item eventually sold for $2,000 — are damages to the bidders mitigated when an auctioneer says he has $500 and asks $600 then says he has $200 and asks $300? In other words, if the eventual sale price exceeds the false bids, “What’s the harm?”
“It appears to me there is harm here” I replied. When subsequent bids are made based upon deceptive bidding harm appears intrinsic. We wrote about this in more detail here: https://mikebrandlyauctioneer.wordpress.com/2017/04/01/but-the-bidders-chose-to-bid-again/
“I have more one question,” the attorney pressed. “What if this is a ‘with reserve’ auction? Can’t the auctioneer bid for the seller to get the item up to (or past) the reserve?””Sure, with proper disclosure” I replied.
I continued, “However, when bidding for the seller, why not just let a bid come from the crowd (or simply start the bid for the seller,) and then bid against that or other bidders up to the reserve?” I added. “With this bid, retract, bid, retract … clearly this would make no sense here — what would be the purpose of the repeated retraction?”
“But this ‘bidding for the seller’ is only in a with reserve auction, correct?” the attorney inquired. Of course, outside of forced sales, bidding for the seller is only permitted in with reserve auctions; it appears in this case, these items were selling without reserve — even more remarkable.
I informed this attorney that the UCC 2-328 suggests that all bids following a fictitious or unauthorized bid are void; as such, the burden for a claim would likely fall on the high bidder — “your client.”
I told this attorney that the Sherman Antitrust Act forbids “bid rigging” and the Supreme Court of the United States has stated that auctioneers cannot take “fictitious bids.” He asked I reference both in my report regarding his case. I’ll endeavor to update as this progresses — if it does; my suspicion is it might not make it to court.
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, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and Texas Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.