In a case that will have the sports card collecting community holding its collective breath, legendary collector Donald E. Spence has sued memorabilia dealer Common Cents Coins, LLC in connection with the sale of the holy grail of all basketball cards: a 1986 Fleer Michael Jordan card graded 10 by Professional Sports Authenticators (“PSA”). The case, which centers on Spence’s purchase of what ultimately proved to be a counterfeit version of what some describe as the “most recognizable basketball card and the most important modern card from any sport in the entire hobby,” may help provide guidance with respect to the age-old question in the collector community: who bears the risk of loss in connection with fraudulent sports cards?
Spence is considered to be one of the most prolific sports cards collectors of all time. His 3000 hit club collection, for example, ranks number one in the world and out-rates mine by fifty spots (https://bit.ly/3oFW5bl). Spence looked to purchase the highest graded version of Jordan’s “rookie” card to complete a full set of the 1986 Fleer collection. Jordan started playing well long before Fleer debuted its basketball cards in 1986. Topps had stopped producing cards years earlier however, and there was a four-year period in the early 80s in which no standardized packs of basketball cards were on the market. As a result, the 1986 Fleer set is considered iconic, containing first-year cards for some of the biggest names in the history of the sport, including Jordan, Charles Barkley, Karl Malone, Hakeem Olajuwon, Patrick Ewing, Clyde Drexler, Isaiah Thomas, Dominique Wilkins, Chris Mullin, and James Worthy. Spence purchased a perfectly scored Jordan “rookie” on eBay from seller Common Cents in May 2017 using the “buy it now” option for $19,999.99.
PSA is an independent certifying company based in Southern California, and is considered the gold standard for authenticating sports cards. According to PSA, only 317 perfectly graded versions of the ’86 Jordan exist. To ensure the provenance of the cards it rates, PSA assigns each card it grades a unique serial number, which is verifiable on its online platform, and places each card in a plastic slab so that authentic cards cannot be swapped with artificial ones.
During the Summer of 2020, Spence decided to sell his complete set of perfectly graded PSA 10s of every version of the 1986 Fleer collection. Spence retained Memory Lane Inc. to handle what would surely be a record-breaking auction. Shortly after news broke about Spence’s plan to sell his set however, he learned through PSA’s Chief of Staff, Jackie Curiel, that the ’86 Jordan he bought more than three years earlier was “not an authentic PSA-graded item” and that “the entire product [wa]s fraudulent.” Curiel further informed Spence that the plastic casing had been tampered with and the label depicting the card’s purported grade was not authentic. Shocked by the news, Spence asked Common Cents Coins to return his money, as well as compensate him for the appreciation he would have enjoyed had his 2017 purchase been authentic. After several attempts were rebuffed, Spence filed a four-count complaint in the Eastern District of Texas, alleging breach of contract, negligent misrepresentation, fraudulent inducement, and violation of the Texas Deceptive Trade Practices-Consumer Protection Act.
One issue Common Cents Coins is likely to raise will be whether the statute of limitations expired as to Spence’s DTPCPA claim, which has a two-year window during which a plaintiff must bring a claim. Spence’s complaint argues that both the discovery rule and the fraudulent concealment exception avoid any limitations bar. After all, according to Spence, he had no idea about the inauthentic nature of the card until receiving Curiel’s letter in August 2020. The complaint is noticeably vague however about one key fact: Spence apparently noticed in June 2017 that someone else claimed to own the exact same card bearing the exact same serial number. It is not clear from the face of the pleading what happened next. Spence’s narrative instead jumps to “early June 2020” when he was finally able to register the card on PSA’s site as his own. The Texas district court’s ultimate ruling on this likely issue will shed light on a card collector’s duty to investigate his or her purchases. While the statute of limitations defense may impact only one of Spence’s claims, an adverse ruling could cause thousands of card collectors to run to their collections and start taking affirmative steps to make sure their prized possessions are genuine.
A separate, but potentially more important, issue in the Spence case is who is responsible for the lost appreciation between the acquisition of a fake card and the discovery of its inauthentic nature. After ESPN moved up the debut of its 10-part Jordan-focused documentary “The Last Dance” to capture a bigger audience during the early stages of the COVID crisis back in April, the collector market’s love affair with Jordan was reinvigorated. As a result, a perfectly graded ’86 Jordan achieved a six-figure market value, which would have represented a 5x return on investment for Spence. While Spence has not specifically articulated lost appreciation in his prayer for relief, his pre-litigation correspondence reflects his desire to recoup that money. The Spence suit may provide additional guidance regarding which entity bears what may be a tremendous risk of loss associated with the sale of fraudulent sports cards. If Spence is only permitted to recover his $19,999.99 purchase price, one may expect institutional collectors to be far more demanding in their diligence before purchasing big ticket cards like the ’86 Jordan. If that risk is assigned however to Common Cents Coins, one may likely expect large memorabilia dealers to spread that cost through increased transaction fees. Regardless how the Spence suit plays out, the sports memorabilia community will be watching.