Heritage Sues Christie's for Poaching Handbag Specialist

Bloomberg is reporting that Heritage Auctions is suing Christie's for $60 million including $40 million in business value and $20 million in damages. The suite is due to Christie's who recently hired a handbag specialist away from Heritage. Heritage is claiming trade secretes in the form of customer and dealers lists, customer requirements and compilations of information.

It goes to show how important the luxury handbag market has become to the large auction houses. Heritage is claiming its handbag division is valued at $40 million.

Bloomberg reports on the suit.

When it was reported that Heritage Auctions was suing Christie's for poaching their "pre- owned" handbag specialist Matthew Rubinger last week, much was made of his expertise. "No one...knows more about the buying and selling of pre-owned bags," stated one article. Another mentioned Heritage's claim that the 26 year-old Rubinger would be sharing "trade secrets" with his new employer.

It's a compelling narrative -- a high-stakes battle over a million-dollar wunderkind with an intricate knowledge of the luxury goods industry. In this story line, Rubinger is positioned as an expert with an "Antiques Roadshow"-style ability to uncover treasure: "You say your grandmother only paid $25,000 for this Birkin bag back in 1992? Well: it's your lucky day, ma'am, if only your grandma knew what it was really worth."

But that's not how it works, and that's not what the suit is about.

The language of the court filing (INDEX NO. 651806/2014, Supreme Court of New York, New York County) spells it out. The "trade secrets" Heritage is suing over include "customer and dealer lists," "customer requirements," and "compilations of information." The suit continues: When Rubinger was "fresh from his graduation from college, even though he had no prior contacts," it alleges, Heritage gave him access to its database of buyers and sellers.

That database – now in the hands of a larger, better-funded competitor -- is worth $60 million, the lawsuit argues. $40 million for what Heritage says they could have sold the business for, and $20 million in damages.

It sounds like a crazy number, but it might not be far off the mark.

Let's say someone wants to sell a bag worth $50,000 at your auction house. If you don't have a list of people to notify about the sale, trying to sell a luxury good that niche (and let’s be clear: a $50,000 purse is as niche as it gets) is the equivalent to putting a note in a bottle: fervently hoping it reaches its intended audience won’t be enough. So it's up to specialists, armed with a client list like the one Heritage is suing over, to make sure bidders show up to the sale -- and to match particular people with particular bundles of leather and crocodile.

Take Heritage's upcoming September auction -- the lawsuit reveals that Heritage spent some $3.6 million compiling inventory (aka purses). With that many items to sell, the lawsuit alleges that Rubinger received "special training and introduction to sources" in Asia, the fastest growing auction market in the world for art and luxury goods.

It’s no wonder that Christie's or any other auction house for that matter would covet such a valuable database. In effect, Rubinger himself is merely a particularly well-made carrier for the real goods. Not unlike a vintage handmade bag.

Source: Bloomberg