This article surveys 2023 developments in International Art & Cultural Heritage cases in the U.S.
In March 2023, the Second Circuit Court of Appeals (“Second Circuit”) determined that the District Court for the Southern District of New York (“District Court”) applied the wrong standard of proof when it entered a declaratory judgment of ownership to Michael Steinhardt (“Steinhardt”) of a Kiliya-type Anatolian Marble Female Idol (the “Stargazer” or “Idol”). But the Second Circuit agreed with the District Court that Steinhardt and Christie’s (a nominal defendant) were entitled to judgment based on the equitable defense of laches. The use of laches to defeat a claim of ownership to artwork is not novel. The Second Circuit’s decision did, however, clarify both the reasonable due diligence requirements of parties to an ownership dispute and a plaintiff’s burden of proof in a declaratory judgment motion concerning ownership of property.
The following is a summary of the facts of the Stargazer litigation. In 1961, Alastair and Edith Martin (the “Martins”) purchased the Stargazer from J.J. Klejman Gallery (“Klejman”) in New York City. The Martins kept the Idol in their collection for twenty-two years before they transferred it to the Buttercup Beta Corporation (“Beta”)—an entity owned by members of the Martin family. In 1993, Beta sold the Stargazer to the Merrin Gallery, which, in turn, sold the Idol to Steinhardt in the same year
The Martins and Beta had loaned the Idol to the Metropolitan Museum of Art (the “Met”) from 1966 through 1993, where it was displayed publicly in the Met’s permanent galleries. Steinhardt loaned the Stargazer to the Met from 1999 through 2007. In addition to its history of public display, the Idol was referenced in eleven publications between 1964 and 2017. Notably, some of these publications were written by Turkish journalists who had ties to the Turkish Ministry of Culture. At least one of these reports noted the Anatolian origin of the Idol; thus, Turkey was aware the statue was made in what is modern day Turkey, as well as the fact that it had been on display in New York at the Met. For the years that the Idol was displayed at the Met, Turkey was also aware of its location.
In 2017, Steinhardt sold the Idol at Christie’s for $12,700,000. But the buyer never took possession of the artifact because Turkey claimed ownership of the Idol prior to the auction. The basis of Turkey’s complaint was that it had been unlawfully excavated and smuggled out of Turkey in violation of the country’s patrimony law. That law dates back to a 1906 Ottoman decree that vests all ownership of unexcavated antiquities in the state (the “1906 Decree”). Christie’s and Steinhardt counterclaimed, citing New York’s laws prohibiting tortious interference with contracts, or, in the alternative, tortious interference with prospective economic advantage; they also sought a declaratory judgment that all right, title, and interest in and to the Idol vested in Steinhardt.
On September 30, 2019, the District Court granted Turkey’s motion for summary judgment on the Defendants’ tortious interference with contract and tortious interference with prospective economic advantage claims. The court did not determine either Turkey’s claims of conversion and replevin, or the parties’ respective claims for a declaratory judgment on ownership.
In April 2021, the District Court conducted an eight-day bench trial in which it ruled against Turkey’s replevin and conversion claims. The court entered a declaratory judgment that all rights, title, and interest to the Idol vested in Steinhardt. Specifically, the District Court concluded that Turkey did not meet its burden of proof in establishing ownership of the Idol. The court reasoned that, although the Idol was undoubtedly manufactured in what is now modern-day Turkey, the trial record did not establish that it was excavated from Turkey after 1906, a prerequisite to a finding of ownership under the 1906 Decree. First, the District Court noted that the Idol could have been traded in ancient times, and, therefore, was not necessarily found in Turkey. Second, while Kiliya-type idols originated in Turkey, they have circulated outside of Turkey for at least 120 years. In sum, the exact circumstances surrounding the trajectory of the Idol prior to its arrival in New York in 1961 were unclear. For instance, the Idol’s exact find spot was unknown and there was no other direct evidence establishing even an approximate find spot and date or linking the Idol’s excavation to any place or person. It was also unclear how Klejman came across the Idol, as there was no evidence in the record to establish where Klejman first encountered the statue, how it came to be in his possession, or when and how he brought the Idol to the United States. All that the court could reasonably find is that Klejman sold the Idol to the Martins in 1961.
In addition, the District Court found that even if Turkey had established ownership, the trial record showed that Turkey slept on its rights and, thus, was barred from recovery under the doctrine of laches. The District Court determined that Turkey should have known of its interest in the Stargazer “decades before 2017,” when it initiated its recovery attempt, and its delay was inexcusable. The District Court found that, to prevail on a laches defense, a defendant must establish “(1) the plaintiff knew of the defendant’s misconduct; (2) the plaintiff inexcusably delayed in taking action; and (3) the defendant was prejudiced by the delay.” The first of these elements may be established where a plaintiff “should have known” of the injury. The District Court found that academics with connections to the Turkish Ministry of Culture were discussing the Stargazer in the early 1990s, and this awareness “should have put Turkey on notice as to its potential claim—at least enough to inquire further.” By failing to investigate, the District Court concluded, Turkey’s delay became unreasonable. The District Court noted that it, “need not determine the precise date on which Turkey knew of its claim because it concludes that Turkey should have known of its claim decades before 2017, when it finally initiated its attempt to recover the Idol.” Evidence at trial had established that the Idol was widely discussed in the available literature starting in the 1960s, and it was in near-constant display at the Metropolitan Museum of Art for decades. The Court found it especially relevant to the Defendants’ laches defense that as early as the 1980s and early 1990s—before Steinhardt even bought the Idol—the Idol was discussed in Turkish publications by academics with connections to the Ministry of Culture.
Also, the Court noted that “[a]wareness of the existence of the Idol, should have put Turkey on notice as to its potential claim—at least enough to inquire further. Notwithstanding the prominence of the Idol, however, Turkey took no steps to ascertain whether it was entitled to ownership over the object despite being aware of its existence for decades.”
The District Court also concluded that Turkey’s delay was inexcusable, thus determining that Defendants satisfied the second requirement for a laches defense. The Court noted that, inter alia, Turkey failed to take any steps to discover the origins of the Idol, how it made its way to New York, and whether it had any potential claim. Moreover, the Court reasoned that this failure to inquire or investigate was probative of inexcusable delay, even when the precise elements of a potential claim—including the unlawful possessor of the object—were unknown. The District Court found it especially relevant that Turkey was, or should have been, aware that the Idol was on display at the Met, but nevertheless failed to contact the Museum to obtain information about the origins of the Idol—a relatively low bar, all things considered.
The District Court also found that the delay prejudiced the Defendants, as the Martins and Klejman had all died before the time of trial. The Court reasoned that the deaths of the Martins and Klejman deprived Defendants of key witnesses, which was prejudicial to their defense. As a result of the death of these witnesses—which occurred after Turkey should have been aware of its claim but before it initiated this action—Turkey deprived the Defendants of the ability to seek out relevant information or testimony that would support their defenses; prior courts had deemed such prejudice relevant for laches.
In addition, the District Court weighed the reasonableness of the parties’ actions, finding that Steinhardt acted with reasonable diligence before purchasing the Stargazer, whereas Turkey was dilatory in asserting its claim. Turkey rebutted the Defendants’ laches defense by insisting that, even though Steinhardt was a good-faith purchaser, the District Court should conclude he did not conduct due diligence prior to buying the statue. Turkey argued that Steinhardt knew of sufficient red flags as to the Idol’s provenance and, therefore, he had a duty to inquire or investigate prior to completing the purchase. The District Court was unpersuaded by this argument and concluded that the evidence showed that Steinhardt was, in fact, diligent in the lead-up to the 1993 purchase of the Idol.
On appeal, the Second Circuit started its analysis by reiterating that, under New York law, claimants asserting ownership of property are required to make a “threshold showing that they have an arguable claim” before the burden of proof shifts to the possessor. Turkey argued that it exceeded this initial burden by presenting evidence that 1) the Stargazer was crafted in Turkey; 2) the original seller of the Stargazer was a notable antiquities trafficker; 3) looted antiquities typically appear on the market shortly after their theft; and 4) there was no record of the Stargazer’s provenance before its sale to the Martins in New York. Turkey claimed that these facts constituted, at the very least, a “threshold showing” that the Stargazer was found in Turkey after 1906. As such, Turkey argued the burden shifted to Defendants to prove by a preponderance of the evidence that the Stargazer was not stolen.
The Second Circuit noted that it had not, to date, defined a “threshold showing” of an “arguable claim” of ownership. The Court went on to reason that it could not determine whether Turkey’s limited evidence at trial met this standard because the District Court applied the wrong standard of proof, namely, that instead of analyzing whether Turkey made a “threshold showing,” the District Court held Turkey to a preponderance of the evidence standard. Thus, the Second Circuit could not address whether Turkey met its threshold burden. The Court further reasoned that, under New York law, the ultimate burden of proof does not rest on the shoulders of the claimant, “[r]ather, the claimant must only make a ‘threshold showing’ of an ‘arguable claim’ to the pilfered artwork before the possessor must carry the rest.”
The Second Circuit ultimately decided, however, that Steinhardt’s laches defense barred Turkey’s claims. The Court noted that, although the doctrine of laches contains a knowledge requirement, plaintiffs need not be aware of the specific circumstances giving rise to their claim. Here, Turkey was privy to enough information that it should have known of its claim to the Stargazer. The Court noted that, throughout the 1990s, the Ministry of Culture itself published essays and presentations discussing the Stargazer and its Anatolian roots, evidencing that Turkey should have been aware of its potential claim in the 1990s.
The Second Circuit also determined that the District Court did not add an investigation element to the doctrine of laches, but rather simply concluded that, considering the information available to Turkey, its failure to assert or even investigate its claim to the Stargazer for over twenty-five years was unreasonable. This ruling, according to the Second Circuit, was not an abuse of discretion, and Turkey’s failure to bring a claim or start an investigation until 2017 was unreasonable in light of the signals from its own Ministry of Culture that the Stargazer was in New York City.
Turkey contended that Mr. Steinhardt would have purchased the Stargazer even if he had known it was stolen, and the District Court’s dismissal of this argument was an abuse of discretion. The Second Circuit disagreed, reasoning that Rule 404(b) directly prohibits the admission of prior-acts evidence to prove that “on a particular occasion the person acted in accordance” with a character trait—such as buying unprovenanced antiquities.
Regarding the prejudice element of laches, the Second Circuit agreed with the District Court that, because of the passage of time, Defendants could not have produced a witness testifying as to where, when, and how Klejman came into possession of the Stargazer, and that such testimony could have potentially absolved Defendants from liability.
Turkey also objected to the District Court’s findings regarding Steinhardt’s reasonable diligence when he acquired the Idol. Turkey argued that the District Court should have held Steinhardt to the level of diligence typically reserved for art dealers, museums, and other commercial actors under New York’s Uniform Commercial Code, and argued that, by failing to contact the Republic of Turkey, the Martins, or Klejman, Steinhardt exhibited “indifference as to the provenance” of the Stargazer. The Second Circuit responded that Turkey misconstrued the District Court’s reasoning on this issue, and noted that, after concluding that Steinhardt, as an ordinary purchaser of art, was under no duty to investigate the provenance of the Stargazer, the District Court determined that he nevertheless did investigate the Idol’s provenance. The Second Circuit pointed to evidence that Steinhardt had questioned the Merrin Gallery about the Stargazer when he bought it, reviewed a report on the Idol promulgated by a “noted” art expert, met with other experts, and relied upon the “Met’s good reputation.” The Second Circuit noted the District Court’s determination that these efforts were “reasonably diligent.” The Second Circuit further reasoned that, “after contrasting Steinhardt’s investigation into the Stargazer’s provenance with Turkey’s failure to act for over twenty-five years, we do not find that the district court abused its discretion in balancing the parties’ respective diligence.”
The Second Circuit concluded its opinion by noting that “[e]quity favors the vigilant. But in this case, because Turkey has slept on its rights, we affirm the judgment of the district court.”
For nearly two decades, the fate of Camille Pissarro’s Rue St. Honoré, aprèsmidi, effet de pluie (Rue Saint-Honoré in the Afternoon. Effect of Rain) (1897) (the “Painting”) has hung in the balance while courts have considered an action brought by heirs of the original owner, who sued on the grounds that the Painting was Nazi-looted art. The initial decisions in the case addressed whether the court had jurisdiction to hear a claim for the return of a work that was located in Spain, and whether too much time had passed before the case was brought. Since 2015, the Cassirer litigation has chiefly focused on choice of law, namely whether the law of California or the law of Spain should apply. The answer to this question is crucial as, under California law, stolen property remains stolen, even in the hands of possessors who had nothing to do with the theft. Conversely, under Spanish law, title to stolen property may vest in a later owner after the passage of time.
As with much Nazi-looted artwork, the history of the Painting is long and complex. Lilly Cassirer Neubauer inherited the Painting in 1926. As German Jews, Lilly and her husband were subject to the discriminatory racial laws of the Third Reich, including the “Aryanization” of the property of German Jews. Pursuant to these laws, Berlin art dealer Jackob Scheidwimmer (“Scheidwimmer”) was appointed by the Nazi government to appraise the Painting. Scheidwimmer refused to permit Lilly to take the Painting out of Germany and demanded that she “sell” it to him. The payment—about $350 in Reichsmarks—was deposited in a blocked bank account to which Lilly had no access. Lilly and her husband fled Germany in 1939.
Scheidwimmer subsequently exchanged the Painting for three German paintings from the collection of Julius Sulzbacher (“Sulzbacher”), a Jewish art collector. This “exchange” was no more consensual than the forced “sale” of the Painting. After the Sulzbacher family fled Germany, the Gestapo seized the Painting.
After the war, both Lilly and Sulzbacher filed claims against Scheidwimmer, for restitution or compensation. In 1954, the U.S. Court of Restitution Appeals confirmed that Lilly was the owner of the Painting. In 1957, Germany established a process for claims related to Nazi-looted property. Lilly dropped her claim against Scheidwimmer and filed a claim with Germany for compensation. At this time, everyone, Lilly included, believed the Painting had been lost or destroyed in the war. Thus, in 1958, Lilly, Sulzbacher, and Germany entered into a settlement agreement with respect to the Painting and two of the three paintings Sulzbacher had “exchanged” for it. In that settlement, Lilly was paid the agreed value of the Painting as of April 1, 1956 (120,000 Deutschmarks).
The Painting, however, had not been destroyed. Instead, it appears to have been sold in a Nazi government auction, and then sold again in 1943 at the Lange Auction in Berlin. The Frank Perls Gallery of Beverly Hills moved the Painting from Germany to California in 1951 and sold it to collector Sidney Brody. The Painting was sold in 1952 to St. Louis art collector Sydney Schoenberg. It was then sold in 1976 to Baron Hans-Heinrich Thyssen-Bornemisza of Lugano, Switzerland (the “Baron”).
In 1988, the Baron and the Kingdom of Spain entered into an agreement for the Baron to loan his collection (the “Collection”) to Spain. Spain subsequently established a non-profit foundation, the Thyssen-Bornemisza Collection Foundation (the “Foundation”) to “maintain, conserve, publicly exhibit, and promote artwork from the Collection.” In 1993, Spain purchased the Collection, and the Foundation continued to manage it. The Painting has been owned by Spain since 1993 and publicly displayed at the Foundation managed Thyssen-Bornemisza National Museum in Madrid since 1992.
Lilly’s heirs discovered the painting at the Foundation in 2000, and petitioned Spain and the Foundation for its return. Spain’s Minister of Education, Culture, and Sports denied that request. Subsequently, five members of the U.S. Congress wrote to the Minister, asking Spain and the Foundation to return the painting to Lilly’s heirs; this request was also refused.
On May 10, 2005, Lilly’s heir, Claude Cassirer, a resident of Los Angeles, filed suit against the Foundation and Spain in the U.S. District Court for the Central District of California.
In 2015, the District Court held that Spanish law concerning stolen property applied to the case and granted summary judgment in favor of the Foundation. On appeal, the U.S. Court of Appeals for the Ninth Circuit reversed the District Court, holding that, if the Foundation had “had actual knowledge the Painting was stolen . . . [it] could not have acquired title to the Painting through acquisitive prescription.” Following a bench trial, the District Court found that the Foundation did not have actual knowledge that the Painting had been stolen, and, therefore, it had acquired title to the Painting under Spanish law. The Cassirers appealed again to the Ninth Circuit, which affirmed the District Court’s decision, holding that “[b]ecause the district court’s finding that [the Foundation] lacked actual knowledge that the Painting was stolen is supported by inferences that may be drawn from facts in the record, it is not clearly erroneous.”
The U.S. Supreme Court granted certiorari, and on April 21, 2022, issued its decision, which rejected the Ninth Circuit’s choice of law analysis. The issue was not which substantive law, California’s or Spain’s, should apply, but whether the courts below had employed the correct choice of law rule for making the determination. The Court determined that both the Ninth Circuit and the District Court had employed a choice of law rule derived from federal common law. The Court framed the issue as “whether a court in an FSIA case raising non-federal claims (relating to property, torts, contracts, and so forth) should apply the forum State’s choice-of-law rule, or instead use a federal one.” The following section briefly considers the Supreme Court’s decision and reasoning before analyzing the Ninth Circuit’s May 22, 2023, decision.
To understand the Court’s analysis and holding, it is necessary first to consider how a U.S. court came to have jurisdiction to hear a case against a museum such as the Foundation, which is an instrumentality (or agency) of a foreign government. As the Court explained:
Under the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. §§ 1602 et seq., a foreign state or instrumentality is amenable in specified circumstances to suit in an American court . . . . [The FSIA] provides the sovereign actor with immunity unless the claim against it falls within a specified exception . . . . The complaint here asserted that the statute’s expropriation exception applied. That exception removes immunity for cases involving ‘rights in property taken in violation of international law”. . . . At a prior stage of this litigation, the courts below held that the Nazi confiscation of Rue Saint-Honoré brought [Cassirer’s] suit against the Foundation within the expropriation exception.
Since, under the FSIA, any claim for relief not entitled to immunity is liable in the same manner and to the same extent as a “private individual under the circumstance,” the Court reasoned there could be no deviation from the choice of law rule that would apply in a case against a private individual. The rationale, the Court noted, is simple:“[c]onsider two suits seeking recovery of a painting – one suit against a foreign-statecontrolled museum (as here), the other against a private museum. If the choice-of-law rules in the two suits differed, so might the substantive law in fact chosen. And if the substantive law differed, so might the suits’ outcomes.”
The Court remanded the case back to the Ninth Circuit for further consideration.
The Ninth Circuit issued its decision on May 22, 2023, applying the “governmental interest test,” which is California’s choice-of-law rule. This test involves three steps: (1) “a court must determine ‘whether the relevant law of each of the potentially affected jurisdictions with regard to the particular issue in question is the same or different,’” (2) “if the law is different, ‘the court examines each jurisdiction’s interest in the application of its own law under the circumstances of the particular case to determine whether a true conflict exists,’” and (3) “if there is a true conflict, the court ‘carefully evaluates and compares the nature and strength of the interest of each jurisdiction in the application of its own law to determine which state’s interest would be more impaired if its policy were subordinated to the policy of the other state.’”
The Ninth Circuit analyzed each of the test’s three steps. With respect to the first step, it concluded that
[b]ecause Spanish law expressly recognizes ‘that title to chattels may pass through qualified, extended possession,’. . . while no California judicial decision or statute has ever authorized such a practice, and California law has made clear that ‘[s]tolen property remains stolen property, no matter how many years have transpired from the date of the theft,’. . . the relevant laws of these jurisdictions are different ‘with regard to the particular issue in question.’
In considering the test’s second step, the court concluded that a true conflict existed, since both jurisdictions had a legitimate interest in the application of its own laws. The court noted that:
Spain has an interest in regulating conduct that occurs within its borders, including applying its long-standing rule governing acquisitive prescription of personal property, which assures Spanish residents that their title to personal property is protected after they have possessed the property in good faith for a set period of time.
Likewise, the court observed that California “has shown it has an interest in enabling residents to recover stolen personal property, even when it is in the hands of good faith purchasers, and a particular interest when that stolen property is Holocaust-era art.”
The application of the third element of the test–comparing the degree of impairment of the two jurisdictions if their law were subordinated to the law of the other jurisdiction–created a problem for the court. The court noted a distinction between the ways that courts analyze choice of law questions in cases arising in torts and in cases addressing questions of property, reasoning that “[w]hile federal common law provided guidance on how its choice-of-law rules should be applied to property cases . . . California’s choice-of-law rules do not.” Without overt guidance, the court looked to those decisions that applied California’s choice-of-law rules, which were limited to “tort actions where a California resident, who has suffered a physical injury due to the negligent conduct of a defendant in a different jurisdiction, being an action to impose liability on that defendant.” While the courts applying California’s choice-of-law rules in tort actions had considered a number of factors, the most important factor by far was the “situs where the tortious conduct and physical injury occurred.” This factor was, the court found, unhelpful in the context of a stolen property action.
Seeking guidance on how this prong of the test should be applied to stolen property, the Ninth Circuit certified the question to the California Supreme Court. On August 9, 2023, the California Supreme Court declined the Ninth Circuit’s request for clarification, leaving the court to its own analysis. The court has accepted supplemental briefing from the parties on the question of choice of law as it relates to stolen property.
For the Painting, the long and tortuous road continues. The Ninth Circuit must complete its choice-of-law analysis. The outcome of that analysis is far from clear. Observers of the case should consider the following advice, which Pissarro himself once gave to a young art student: “[t]he eye should not be fixed on a particular point but should take in everything, while simultaneously observing the reflections that the colors produce on their surroundings.
