Every auction lawsuit: Perception vs. Reality

By

Mike Brandly
16 March 2017 - 11:27am

This article is published with the permission of the author.

 Instead of winning or losing court cases, stay out of court altogether.

 

We’ve consulted in dozens of auction-related cases (litigation) since 2010. It’s not unusual for my phone to ring three-four times a week asking for my opinion on some auction procedure, practice or strategy.

In almost every case of a lawsuit, or even in regard to a recommendation, I urge my [potential-] clients to consider two things: What legally is allowable, as well as what would appear fair, equitable and/or reasonable.

Further, this contrast of perception vs. reality has been around for centuries, long before our first phone call of this type seven years ago from an attorney in Colorado.

Consider an example:

"An auctioneer has set bid increments in his live/online auction including that bids must be $10,000 or more once the high bid meets or exceeds $1,000,000. In other words, if someone is the high bidder at $1,000,000 the next higher bid must be no less than $1,010,000.

Once the auction is underway, the bid indeed reaches $1,000,000 and then the auctioneer accepts a bid of $1,005,000 (a $5,000 increase.) The $1,000,000 bidder cries foul, citing the terms and conditions that the required increment at this bid is $10,000.

The auctioneer [of course] counters that his job is to maximize the seller’s position, and he has the legal right to modify the terms in order to do so. Here, the auctioneer may be right, but has disenfranchised the $1,000,000 bidder …"

Regarding our title to this story, “reality” likely wins this argument and “perception” likely loses. But what’s the lesson here? As auctioneers, perception is as important — if not more important — than reality. It’s not what’s legally fair, equitable and/or reasonable, but as much what appears to be fair, equitable and/or reasonable.

In other circles, the phrase “he won the battle, but lost the war” comes to mind. As Dr. Maya Angelou is famous for saying “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

We alluded to this argument in a discussion about adhesionary terms and conditions here:

https://mikebrandlyauctioneer.wordpress.com/2016/08/01/an-auction-where-21/

We also wrote about ill-advised discretion disenfranchising bidders here:

https://mikebrandlyauctioneer.wordpress.com/2016/12/12/auctioneer-discretion-and-control-in-registering-bidders/

Carl Carter also recently wrote a very worthy treatise about this topic here titled “Why smoke is more dangerous than fire: Public opinion is the harshest court of all:”

https://newmediarules.com/?p=9080

Sure, there are rules — laws — procedures to follow. However, the best way to apply those rules, laws and procedures is in a uniform, reasonable and disclosed manner. People have a nearly innate perception of “fairness” and often fairness relates to uniformity … equality. As such, inequality and/or inconsistent discretion on the other hand suggests that we as auctioneers can treat people capriciously and arbitrarily which sends the opposite signal.

I would submit that we as auctioneers have an opportunity. As Dr. Wayne Dyer often asked, “Would you like to be remembered as right or kind?” Can you maybe lose a few battles, but still win the war? Set out to be fair, uniform, consistent and your sellers and bidders will sense your thoughtfulness — your goodness.

Lastly, by worrying about perception as much as reality I can assure you it’s more likely you can — instead of winning or losing court cases — stay out of court altogether; that’s a worthy goal for any auctioneer. Keep in mind the feeling of being wronged often lights the desire to sue, where actual wrongdoing is only then possibly discovered.

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 and Faculty at the Certified Auctioneers Institute held at Indiana University.