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Image: Christie's

In May, Christie’s brought in $5.5 million in sales by way of an action in Hong Kong. Unlike its usual offerings of impressionist paintings or “exceptional jewels,” this one was different. All but a very small number of the nearly 220 lots that went up for sale were Hermés bags – mostly Birkins and Kellys, with bidding for more than a few of the bags topping $100,000. A Géranium Porosus Crocodile Diamond Birkin 35 with 18k gold accents sold for $120,074, a rare Matte Black Niloticus Crocodile So Black Birkin 30 for $176,108.

The auction did not make headlines for breaking records as the Christie’s auction last month in London did, thanks to a particularly rare Diamond-encrusted Himalaya Birkin, which sold for $287,145, making it the most expensive bag ever sold at auction in Europe. The Hong Kong event was noteworthy for a different reason: It was one of the latest offerings from the world-famous auction house’s budding handbags and accessories division, which was launched in 2014 under the direction of Matthew Rubinger.

Mr. Rubinger, who is only barely 30 years old, has gained quite a bit of notoriety, himself, in recent years. He is, after all, one of the key figures in the $60 million lawsuit that Heritage filed against Christie’s in a New York federal court in June 2014.

According to Heritage’s lengthy complaint, in 2014, Christie’s – which is known far more for its $180 million Picassos and a world-record breaking $450+ million Salvator Mundi painting than its handbag offerings – poached Matthew Rubinger, who was just 26 years old at the time and was Heritage’s foremost Hermès expert.

Not only did Rubinger, allegedly armed with $40 million in propriety – and highly confidential –  information that belonged to Heritage, leave the Dallas, Texas-based auction house to join Christie’s, he also took two other Heritage employees, then also in their 20’s, with him. They each gave Heritage owner Gregory Rohan less than a few days’ notice of their departure and their intent to join the world’s largest fine arts auction house.

Rubinger, Rachel Koffsky and Caitlin Donovan – who had previously made up Heritage’s entire luxury accessories team, specializing in the authentication of some of the world’s most expensive handbags – had been lured away by none other than Christie’s Chairman Johnathan Rendell, Heritage claims in its suit. Their task: To build and launch Christie’s very own Luxury Accessories division.

According to Heritage, the move saw the three twenty-somethings “breach their respective employment contracts and engage in unfair business practices,” and in particular, amounted to a blatant violation of Rubinger’s non-compete agreement with Heritage, as well as a contract clause in which Rubinger agreed not to lure any Heritage employees away from the company should he leave.

As for the significance of the Hong Kong-specific handbags auction: Heritage claims that Christie’s very strategically sent Rubinger to work in its Hong Kong office from the outset. While Christie’s is headquartered primarily between London and New York, the auction house shipped Rubinger off to Hong Kong in an attempt, Heritage argues, to avoid breaching his non-compete agreement with Heritage, which limited his ability to work for competitors in North America.

Rubinger was, however, still in breach, Heritage claims, as instead of working to launch a Far East-specific division, as he was said to be doing, he and Christie’s were actually developing the Christie’s U.S.-based Luxury Accessories branch.

Almost exactly four years after Heritage filed suit against its rival, Christie’s hosted its $5.5 million Hong Kong Hermès auction, just kicked off a similarly Hermès-centric online-only Handbag & Accessories auction, and is preparing for a handbag auction in London. These come on the heels of bi-annual auctions handbag actions in the Far East, Paris, London, and the U.S., which list Matthew Rubinger as the “International Head of Handbags & Accessories” and routinely see Christie’s bringing in millions of dollars.

Meanwhile, the auction houses are locked in a bitter legal war, centering on claims of breach of contract and trade secret misappropriation, and in connection with which Heritage cites more than $60 million in damages.

As recently as this February, Judge Andrea Masley of the New York State Supreme Court served Heritage with a partial loss in holding that Rubinger’s cohorts and fellow defendants Koffsky and Donovan did not breach their respective fiduciary duties and duties of loyalty to Heritage when they jumped ship from Heritage to Christie’s. She also tossed out Heritage’s claim that Rubinger violated his non-solicitation clause when he convinced Koffsky and Donovan to join Christie’s with him since they all resigned on the same day in May 2014 and Rubinger’s clause only prevented him from recruiting Heritage employees after his departure.

The February decision was not a total loss for Heritage, though. A number of its claims against Christie’s, Rubinger, Koffsky and Donovan are still on the table to be decided at trial. For instance, Judge Masley held that it will be decided at trial whether Rubinger violated the non-compete clause in his contract with Heritage when he left to join to Christie’s.

Also to be determined: Whether Christie’s – which is owned by Groupe Artémis, the holding company of Gucci and Saint Laurent owner Kering’s chairman François-Henri Pinault – “tortiously interfered” with Rubinger’s contract with Heritage by allegedly recruiting him. And still … whether Christie’s engaged in unfair competition with Heritage, as a result of Christie’s “wrongfully obtaining Heritage’s confidential information via Rubinger, Koffsky and Donovan,” including years of extensive training, important introductions to sources in Asia, as well as other insider information about the auction house’s expansion and branding plans.

The parties’ trial is slated to begin in early September. In the meantime, Christie’s has been offering up no small number of exotic skinned Birkin and Kelly bags in its online auctions, along with a very limited Tom Sachs Kelly bag emblazoned with a NASA logo, which joined the lots in its June Handbags & Accessories auction in London.

UPDATED (Sept. 11, 2018): Following a several-day break after the first day of trial, the parties notified the court that they have reached an out of court settlement. The terms of the settlement have not yet been released, and are almost certainly confidential.

* The case is Heritage Auctions v. Christie’s, 0651806/2014 (N.Y. Sup).