New Hampshire Board of Auctioneers Can Discipline Licensed Auctioneers for Collusive Bidding

The Supreme Court of New Hampshire in Appeal of French, 162 N.H. 223 held that Auctioneer’s Board can bring disciplinary actions against licensed auctioneer for collusive bidding because it was a form of “unprofessional” or “ dishonorable” conduct .

In Appeal of French, the New Hampshire Board of Auctioneers (“Board”) sanctioned French (“Appellant”), a licensed auctioneer in New Hampshire for submitting a fictitious bid. The Appellant attended an auction run by another auctioneer, Stephen Bennett (“Bennett”) and registered as bidder under his own name. An auction sale was conducted to sell painting owned by William Noonan. Bennett and Noonan had entered into a contract regarding the auctioning of the painting and set a reserve price of $10,000. Promotional materials for the auction did not disclose that the painting had a reserve and Bennett’s website advertised the auction as without reserve.

Before auction began Bennett and Appellant French discussed about the painting and Bennett told French that it was an with reserve auction. Benett asked Appellant to bid if the reserve price was not met during the normal course of bidding.  The Appellant agreed and when bidding price for painting reached $9,000 French bid $9,500. Noonan believed that his painting had been sold because he thought he waived the reserve by gesturing Bennett following French’s bid.

Subsequently Noonan requested payment from Bennett, Bennett told that painting did not sell as the reserve price was not met. Later Noonan filed a complaint before Board charging both Bennett and French with misconduct. The Board concluded that French willingly submitted fictitious bid and otherwise engaged in collusive bidding in violation of RSA 358-G:2.  Consequently, the Board issued letter of reprimand to Appellant. Then the Appellant filed motion for reconsideration, which the Board denied. This appeal followed.

Appellant contended that it was not proper for the Board to rely upon RSA 358-G:2 because his conduct did not constitute collusive bidding.  He also argued that RSA 311-B:11(2005) does not specifically authorize the Board to take disciplinary action against auctioneer for a violation of RSA 352-G:2 and Board exceeded the authority. Appeal of French  162 N.H.225.

The Supreme Court observed that legislature has provided the board with authority to discipline a licensed auctioneer for “unprofessional” or “dishonorable” conduct pursuant toRSA 358-G:2. Id.  However, the legislature did not further define these terms.  Id. The court observed that RSA 358-G:2 prohibits the practice of collusive bidding, which is defined as: a practice whereby the auctioneer, the seller, or anyone acting on behalf of the auctioneer or seller, causes, employs any person to engage in, or knowingly allows, fictitious bidding during an auction for the purpose of bidding up the price of any goods in competition with bona fide bidders to purchase, or for the purpose of encouraging or enticing bona fide bidders to purchase, or for the purpose of stimulating competitive bidding to purchase. Collusive bidding shall include any use of false bidders, cappers, shills, or by-bidders. RSA 358-G:1, II. Id.

The Appellant further argued that even if it was permissible for the board to rely upon RSA 358-G:2, his conduct did not constitute collusive bidding. Id. The Board specifically found that the Appellant “with knowledge of the reserve, submitted a bid on the painting which he knew was fictitious.” Id. The Appellant also asserted that the auction being one with reserve, the painting could not be purchased by any bidder until the reserve was met, and, accordingly, his bid below the reserve price did not actually cause or entice anyone to bid. Id. at 225-26. The court stated that the nowhere in the statute is there a requirement that another auction participant actually bid based upon a fictitious bid. The court found that the purpose of Appellant’s bid was to entice another bidder to bid above the reserve, which is exactly the conduct prohibited by the statute.

 The Supreme Court found that the Board was right in its conclusions. The Board concluded that French willingly submitted a fictitious bid in violation of RSA 358-G:2 because he had no intention of purchasing the painting. Id. Further, the Board then correctly decided that because a New Hampshire statute prohibits collusive bidding, it is also a form of “unprofessional” or “dishonorable” conduct pursuant to RSA 311-B:11, II(c). Id. Accordingly, Supreme Court found that the Board did not exceed its authority by disciplining Appellant for collusive bidding. Id. The Supreme Court  affirmed the Board’s decision.