Art Law Litigation Updates: Fraud, Fair Use, and Nazi Looting

Katie Wilson-Milne: And Jackie, the silent Jackie. Katie Wilson-Milne: So we're going to do some updates today on cases that we've mentioned before on the podcast, and I think these will be fun. Right. So first on the hit list is a very recent, a couple of days ago, jury decision in the lawsuit that was brought in New York. It was brought by Dmitry Rybolovlev- Katie Wilson-Milne: Good job. -The Russian oligarch against Sotheby's.

And this was the— and I'll get to the decision— one of the outgrowths of a very, very long-standing, 10-year, really, dispute between Dmitry Rybolovlev and Yves Bouvier.

Katie Wilson-Milne: Yeah. And it had to do with the acquisition by Rybolovlev over, I think, a decade of a large number of works from Yves Bouvier, and at the very end of this relationship, Mr. Rybolovlev, first he was finding that it was becoming more difficult to sell his works than it was to buy them at the prices that he bought them for, and that was a little suspicious. And then he was having lunch, coincidentally, in St. Bart's. Katie Wilson-Milne: As one does.

As one does with Steve Cohen's art advisor, and it just turned out that the Modigliani painting that Mr. Rybolovlev purchased was sold by Mr. Cohen, and it turned out for a whole lot less money, millions and millions of dollars, less money than Mr. Rybolovlev purchased it for. And that was the breaking point.

All of a sudden, Mr. Rybolovlev decided that over the years, he had been bilked out of many, many, many, many millions of dollars, and he then commenced a whole series of cases against Yves Bouvier in various jurisdictions. He filed criminal complaints. All of those were... Katie Wilson-Milne: In Europe for the most part, yeah. In Europe, mostly, in Monaco. All of those matters were resolved about a month ago. We're not entirely sure what the settlement was.

Katie Wilson-Milne: And Bouvier was not found criminally liable. He was not found criminally liable. There was a settlement. Nobody admitted to anything. But along the way, Mr. Rybolovlev had sued Sotheby's, the auction house in New York, for in his allegations aiding and abetting Bouvier in his fraud that was committed in terms of the selling of these works. There were four works involved by the time the case got to trial. There was a jury trial in New York.

I know, Katie, you were there one day. Katie Wilson-Milne: Briefly, not for the juicy parts. Yeah, boring parts. But anyway, the jury has returned a verdict against Mr. Rybolovlev in favor of Sotheby's. I'm sure as time goes on, maybe we'll get some more details, maybe try to understand a little bit more what was going on in the jury's head.

I think one of the things that we talked about during the course of this trial was that it was very odd that there was this kind of lingering case against Sotheby's for aiding and abetting something where the actual person who was accused of committing the primary fraud was not in the courtroom. Katie Wilson-Milne: Right. Katie Wilson-Milne: Not in the case. And not in the case.

And so it seemed to me to be a very difficult kind of case, a peculiar kind of case, and the jury in fact ruled in favor of Sotheby's. Katie Wilson-Milne: Yeah, and many people have noted that even though Sotheby's won, it still had to divulge a lot of otherwise confidential information in a very public fashion that could have some impact on the art market.

Katie Wilson-Milne: And I think that's what we'll be interested to maybe talk more about in the future, is just what came out in that trial, what might have been embarrassing for Sotheby's, so that in some way, because money is no object, Rybolovlev got some revenge. Very good. Katie Wilson-Milne: Thank you. Katie Wilson-Milne: I got to hear you say his name numerous times to practice in my head. Katie Wilson-Milne: All right, so next up, we're back to Richard Prince.

Katie Wilson-Milne: You know, one of the most important fair use cases in the fine art world in the US was a case with Richard Prince in the Second Circuit many years ago against a photographer whose name is Patrick Cariou involving photographs that Cariou had taken of Rastafarians in Jamaica that Richard Prince copied, blew up and put blue painted lines on.

Katie Wilson-Milne: Anyway, we won't rehash the whole thing, but he's a very famous appropriation artist and he's pushed the boundaries of this concept of US fair use for many, many years and it is a project of his to do so. Katie Wilson-Milne: So in the perhaps latest iteration of his efforts, there was a case, two cases involving an Instagram series he did.

Katie Wilson-Milne: I think it was called New Portraits where Richard Prince went on Instagram, found posts that he found compelling, copied them, blew them up and then wrote some little comment in the comment field of his own and sold that for, you know, tried to sell it for almost $100,000 at the Gagosian Gallery.

Katie Wilson-Milne: So some of the posters of the Instagram photographs, who presumably were the photographers, noticed this, thought it was outrageous, and eventually brought lawsuits against Richard Prince and Gagosian for copyright infringement. Katie Wilson-Milne: Now it goes through several stages or motions to dismiss filed by the defendants on the basis that this is definitively a fair use. Katie Wilson-Milne: The district court says, no, absolutely not, even under Cariou.

Katie Wilson-Milne: In the intervening time period, the Warhol case gets teed up, the Second Circuit kind of takes a step back, as we've talked about, to limit its fair use analysis, and that case goes up to the Supreme Court. Katie Wilson-Milne: So while this case is being briefed on summary judgment, the Warhol case is also going up to the Supreme Court on this very issue of the scope of fair use under US copyright law, specifically in the context of fine art.

And appropriation art. Katie Wilson-Milne: Famous, famous appropriation artists who are appropriating the work of lesser-known, poorer artists. And photographers. Katie Wilson-Milne: Photographers, right, in both cases. Katie Wilson-Milne: So the defendants lose on summary judgment as well, and the cases involving two photographers, Eric McNatt and Donald Graham, are getting ready for trial. Katie Wilson-Milne: And right before trial, we find out that the cases settle.

Katie Wilson-Milne: And we know the legal terms of the settlement because there are final judgments issued in the case, sort of as if the court had made a decision itself, presumably because the parties sent in proposed judgments for the court to sign. Katie Wilson-Milne: And they award each of the photographers, Graham and McNatt, five times the sale price of each of the prints artworks, you know, at Gugosian that had infringed on the photographer's work.

Katie Wilson-Milne: And we think that in Graham's case, that's about $200,000. Katie Wilson-Milne: In McNatt's case, that's about $450,000. Katie Wilson-Milne: And then the parties agreed on some amount of costs that would be paid to McNatt and Graham as well, probably around a quarter of a million dollars. And that would be for their attorney's fees. In the context of cases that have been pending in court now for almost a decade, that's not an awful lot. Katie Wilson-Milne: No, it's not.

Katie Wilson-Milne: And it's not, you know, some of these copyright infringement cases can bring huge and substantial damages, including attorney's fees. Katie Wilson-Milne: Now, there's a couple of wrinkles in this case. Katie Wilson-Milne: I suspect that these works, these Instagram photographs, had not been registered with the Copyright Office prior to the infringement occurring, which limits some of the damages available, including attorney's fees and heightened statutory damages.

Yeah, I think the thing about these cases, and I remember when the cases were filed, thinking there was even less done to these images than Richard Prince did, even in the Cariou images that were too close to call. Katie Wilson-Milne: There was literally nothing done to the images. It was just a nonsensical comment that was posted below the image. And so they basically took someone else's photograph, blew it up and sold it for, or is asking $90,000 a piece.

And so there's no issue of substantial similarity. I mean, they're the same. You know, the argument pre-Warhol had been, you know, also in the spirit of Cariou, which is that, oh, Richard Prince recontextualized these. Katie Wilson-Milne: Right, new meaning and message. New meaning and message. He took just random photographs off, you know, Instagram. And then because he is Richard Prince and he blew it up and he put it in the gallery, that is the new meaning and message.

And that's exactly what was repudiated in Warhol. Katie Wilson-Milne: Right. Katie Wilson-Milne: And as we've said on the podcast, one of the real problems with that is, if all it takes to have a new meaning and message is that you're famous and people like it because now Richard Prince is behind it, that can't be an out to copyright infringement. Katie Wilson-Milne: That can't be the standard.

Katie Wilson-Milne: And that, I think, under Cariou, I don't think Prince had a ridiculous argument in the Instagram cases. Katie Wilson-Milne: You know, if Cariou was still sort of the only precedent in the Second Circuit, then we're looking at new meaning and message and sort of how the art world and art consumers interpret something. Katie Wilson-Milne: Of course they're going to interpret it differently if it's a famous artist with a $100,000 price tag.

Katie Wilson-Milne: So the world of fair use analysis did sort of shift over the course of these cases. Katie Wilson-Milne: The last update will be the longest one. Katie Wilson-Milne: In this case, which we've talked about before, is the Cassirer versus Thyssen-Bornemisza Collection Foundation case that went up and down in the federal court in California, eventually the Supreme Court, back to the Ninth Circuit over almost 20 years.

Katie Wilson-Milne: And the story itself of the underlying people involved is painful, and then the litigation itself is also quite painful. Katie Wilson-Milne: So this was the case, if our listeners may remember, that we spoke about in some length in a prior episode. Katie Wilson-Milne: It involved a painting by Camille Pissarro called Rue Saint-Honore, Effect of Rain. Well done. Katie Wilson-Milne: I've been practicing my pronunciations all day.

Katie Wilson-Milne: And this painting was owned by the Cassirer family in Germany in the early part of the 20th century. Katie Wilson-Milne: I actually believe it was purchased by that family in 1900. Katie Wilson-Milne: By Paul Cassirer. Paul Cassirer, who was an art dealer at the time. Katie Wilson-Milne: He had a storied collection. Katie Wilson-Milne: I mean, very well-respected, wealthy family, as many of the Jewish families we talk about in these Nazi-looted art cases are.

Katie Wilson-Milne: And his daughter, Lilly Cassirer, whose then name changed when she got married to Lilly Neubauer, who inherited this painting from Paul in 1926, I think, when Paul passed away. Katie Wilson-Milne: And Lilly owns this painting. Katie Wilson-Milne: It's a stunning painting in her home in Berlin until 1939. Katie Wilson-Milne: And we know what happens in the late 1930s, especially for wealthy Jews starting in Germany.

Katie Wilson-Milne: She is forced to sell, quote-unquote, this artwork for some very small price to a art dealer who is representing the Nazi government and ordered to do this by the Nazi government. Katie Wilson-Milne: The money that she was paid went into a bank account she could not access, and she fled to save her life. Katie Wilson-Milne: None of that, we should say at the top, was ever in dispute.

Katie Wilson-Milne: There's this case never from the day it was filed in 2005 till last month when the case ended over this shocking period of time, ever had to do with the merits of whether this was stolen from the Cassirer family. Never a dispute.

Unlike some of the other cases that we've talked about on the podcast where there are some gray areas and questions about whether something was sold under duress or not, nobody contests the fact that this work of art by Pissarro was taken forcefully from Lily Cassirer by the Nazis, stolen. Katie Wilson-Milne: So we should start with that important fact.

Katie Wilson-Milne: And just briefly, so after the war, Lily, because she was able to escape, files some actions to try to get compensation for her appropriated property, so in 1948, she files an action against the dealer who had, she had quote-unquote "sold" the work to before the US Court of Restitution that orders that she is the rightful owner.

Katie Wilson-Milne: Then in 1957, Germany, like many other countries in Europe thereafter, puts in place its own proceeding whereby the state of Germany will compensate individuals for property that was taken from them. Katie Wilson-Milne: So they reach a settlement with Lily to compensate her for the loss of this painting. Katie Wilson-Milne: Nobody at the time knows where this painting is, so it's a monetary settlement.

Katie Wilson-Milne: And this painting is, which we'll mention in a moment, is sort of taking its own path through the world. Katie Wilson-Milne: But to finish on the Cassirer's, she settles, has no idea where the painting is, everyone thinks it's lost, she passes away, and her family members don't know anything about where the painting is until around 2000. Right.

And this is something we've talked about before on the show, which I think is always still in our current state of mind with the internet, social media, we're so used to sort of the abundance of facts, where you just look something up. And after the war, people were preoccupied with a lot of things and also had no knowledge. So these very, you know, great paintings that were stolen could make their way through the marketplace without really anybody knowing about them.

Katie Wilson-Milne: Yeah, you'd have to have hired a private investigator in every possible country that a painting could be sold through or purchased in. Katie Wilson-Milne: And even then, you know, that person would have to be at every museum, look at every catalog, at every auction. Katie Wilson-Milne: It's just obviously not reasonable to assume. And there are a lot of stolen works, so it would be very difficult.

Katie Wilson-Milne: So at the same time, the painting obviously has its own story, you know, gets sold by the Nazis at an auction in Germany in the 40s. Katie Wilson-Milne: It makes its way in the early 50s to a gallery in Beverly Hills in California, where it quickly thereafter is sold to a collector in St. Katie Wilson-Milne: Louis, Missouri, who owns the work until 1976. Katie Wilson-Milne: It's in this family collection.

Katie Wilson-Milne: In 1976, the Baron, we'll call him Baron TThyssen-Bornemisza, whose collection is where this painting ended up, purchases this work from a gallery in New York. Katie Wilson-Milne: The painting goes to Switzerland, where the Baron lives, where his collection is.

Katie Wilson-Milne: It stays there, perhaps lent out occasionally, but it stays mostly in Switzerland until the early 90s, when the Baron, having married a former Miss Spain, arranges with the Spanish government to set up a special museum to house his collection. Katie Wilson-Milne: At first, his collection is loaned to this Spanish museum, which is in his name, and then eventually the Spanish government purchases it.

Katie Wilson-Milne: And that museum is now called the Thyssen-Bornemisza Foundation, and it's located in Madrid. In Madrid. Katie Wilson-Milne: You can verify that, Steve. And I've been there, I've seen it, I've seen the work. It's on the third floor, kind of in the back as you walk in, and it's a beautiful little painting.

Katie Wilson-Milne: Yeah. Katie Wilson-Milne: What's astounding and what this court case really shows is that the Spanish government has had no interest in determining what the right thing to do here is. Katie Wilson-Milne: They have taken a very, very legal approach.

Katie Wilson-Milne: So, in 2000, around 2000, an heir, Lily's sole heir, a man named Claude Cassirer, who had moved to California in 1980, I think to be near his family, is told by a friend, I think, that this painting is in Spain.

Katie Wilson-Milne: He says, wow, I mean, he knew about this painting, this painting had been talked about his whole life, they had a photograph of this painting, and he undertakes some formal process to ask the government of Spain to return the painting to him, and they declined to do so. Katie Wilson-Milne: He spent several years trying to do that in the early 2000s.

Katie Wilson-Milne: And then eventually in 2005, after that's going nowhere, files an action in California against the foundation under the Foreign Sovereign Immunities Act, which is the only way to sue a foreign state actor in the United States Court. Katie Wilson-Milne: And that's where we get started. Right. And so that lawsuit was filed.

And I think before we go through the lawsuit and how it ended up, I think it's also worth just stepping back for a moment, because I think one of the things you mentioned is that here we have the government of Spain, which now is through its collection and through its instrumentality, is now the proud owner of a Nazi-looted work of art.

And the Kingdom of Spain, like many other countries, has signed on to a number of international protocols, the 1998 Washington Principles, and then the Terezin Declaration in June of 2009, when essentially many signatory countries, 47 countries I think, signed on to principles which basically said, when it comes to restitution of Nazi-looted art, that they commit to looking at the issue sort of holistically, recognizing that there are a lot of different legal systems in the world, but to not litigate these questions on technicalities of law, to sort of look at it and try to do what's right and fair.

And Spain signed on to these principles twice. Katie Wilson-Milne: Meaning that if something's stolen, we return it to its rightful owner. Exactly, that's what's right and fair. Katie Wilson-Milne: That's what we focus on, not whether they should have brought the claim sooner. Yeah, or whether the statute of limitations applies.

And so it's in the context of that that we see essentially two decades worth of litigation over questions about essentially at the very end of the day whether the court in California should apply California law and under California property law, as with most states in the United States, we say that a thief can never convey good title. There's no such thing as adverse possession. It doesn't matter if you're a good faith purchaser.

If someone steals a work of art and you purchase it, even if you don't know anything about it, the person who it was stolen from can get it back subject to statute of limitations issues. That's different in most of continental Europe, including Spain, where they have these prescriptive title provisions. And so in Spain, under their property law, if you openly possess a piece of property, a work of art, for three years and you're a good faith purchaser, then you get title.

The title just passes that way. And there's a longer period of time if there's an issue about whether you're a good faith or not. Katie Wilson-Milne: Right, or if you're part of the theft. Or if you're part of the theft. And so ultimately, at the very end of the day, the question for the California courts– and this case went all the way up to the Supreme Court, as we know— and back, was whether California property law should apply to this case or whether Spanish law should apply to this case.

Katie Wilson-Milne: And maybe we should just add that, well, that's the ultimate issue and the decision that just came out in the Ninth Circuit, which, you know, ends this case and we're going to talk about, this case spent almost a decade on other procedural issues.

Katie Wilson-Milne: It wasn't like the Kingdom of Spain, because in some ways, this isn't the merits in terms of whether this was stolen, but this is more of a merits issue, like who has rightful title is a merits-based issue, even if it is not substantive in terms of what the right thing to do is.

Katie Wilson-Milne: But we should just say that the Kingdom of Spain sent, or the foundation, which is an instrumentality of the Kingdom of Spain, spent well over a decade on other procedural issues, trying everything they could to get this knocked out. Katie Wilson-Milne: So they contested whether the Foreign Sovereign Immunities Act applied, which I think it has now settled law that it does under an exception for property taken in violation of international law, the expropriation exception.

Katie Wilson-Milne: Then they argued about whether the California statute of limitations was legal. Katie Wilson-Milne: They tried to go all the way up to the Supreme Court. Katie Wilson-Milne: Again, on those issues, which they didn't at that time, but it goes up and down, District Court, Second Circuit. Katie Wilson-Milne: They finally get to discovery. Katie Wilson-Milne: They do some discovery. Katie Wilson-Milne: They get to summary judgment.

Katie Wilson-Milne: And, you know, only then does this issue about what law to apply come up after many, many years in ungodly expense. Right. Well, then there's even the sort of, I don't know whether this is subsidiary or parallel, but, you know, one of the issues that went all the way up to the Supreme Court was on choice of law. Katie Wilson-Milne: That was the only issue. Right. So, but this is before we get to the property law. The question is, how do we determine which law to apply?

And there's a whole universe of choice of law kind of rules, but ultimately, when the case was first decided by the district court... Katie Wilson-Milne: Right, I guess Cassirer moved to have a declaration that California law should apply, right? Steve Schindler: Right. Katie Wilson-Milne: That's how it started. And... Katie Wilson-Milne: The court said, hold up. Katie Wilson-Milne: We have to decide... We have to decide... Katie Wilson-Milne: How to decide. How to decide, right.

So, in fact, what the district court did was they decided both things, but they basically decided that, well, first they decided that the right choice of law rules were not actually California choice of law rules, but something called federal choice of law rules. Katie Wilson-Milne: Right, federal common law.

Federal common law, which is a question whether or not that exists or not, but the idea was that because it was a lawsuit under the Foreign Sovereign Immunities Act, you should apply this federal common law to decide which, whether Spain's property law or the California's property law applies. And the court said, we apply federal common law.

And they also then decided at the same time that even if you didn't use federal common law, if you used California's property law or California choice of law rules, the answer is the same. Katie Wilson-Milne: That Spanish law applies. That Spanish law applies. But the Cassirers appealed that decision ultimately all the way up to the United States Supreme Court.

And the Supreme Court actually giving the one victory, it seemed, to the Cassirers, ruled in the Cassirers' favor and basically said no, that California should apply its own choice of law rules and not federal common law. Katie Wilson-Milne: In fact, there's no such thing as federal common law choice of law. When it comes to choice of law. So it goes back to the appellate court, to the Ninth Circuit.

Katie Wilson-Milne: Because, as you said, the district court had said, look, federal common law applies to choice of law analysis, so we have to apply Spanish law. Katie Wilson-Milne: But we'll also just look at California choice of law and, hey, it comes out the same way, it also applies Spanish law. Katie Wilson-Milne: But the Ninth Circuit didn't do that.

Katie Wilson-Milne: On appeal from that district court decision, the Ninth Circuit just looked at federal common law, so that's why, when it goes to the Supreme Court, they have to remand because there's no appellate decision on California choice of law, which obviously they could have. That's right. And then it gets a little strange even, which is that, so obviously this is a question of California choice of law rules.

And normally speaking, the application of California state law, the highest court to determine that is the Supreme Court of California. Katie Wilson-Milne: Right, the state court. The state court.

This case was in the federal court that encompasses California, the Ninth Circuit, and so they thought it appropriate, and this happens sometimes, to certify a question, to put the question to the highest court in California and ask them whether under California choice of law principles, California property law or Spanish law would apply. And the California Supreme Court declined to answer that question. Katie Wilson-Milne: Said, “No thanks.” Steve Schindler: We don't want to do this.

Katie Wilson-Milne: You've made a mess of this, Ninth Circuit. Don't come to us. We have nothing to do with it. Katie Wilson-Milne: You deal with it. So it was then back on the Ninth Circuit to make a decision. Katie Wilson-Milne: This is understood to be dispositive, right?

Katie Wilson-Milne: There's no dispute really at this, at least in this later half of the litigation, that if California law applies, the claimants, now Paul Cassirer, because Claude Cassirer passed away, so Paul, his son, is going to get the painting. Katie Wilson-Milne: And if Spanish law applies, the foundation keeps the painting. Katie Wilson-Milne: The law is actually, in this case, quite clear, the property law.

Katie Wilson-Milne: We should just say there is a distinction in Spanish law based on whether you're a good faith purchaser or not, as you said, Steve. Katie Wilson-Milne: And if the foundation had not been a good faith purchaser actually under Spanish law, Cassirer still would have gotten the painting back, because the prescriptive period would have been much longer.

Katie Wilson-Milne: The district court had a mini trial on this issue and decided that both the baron and the foundation were good faith purchasers or possessors, and so the shorter period applied, and so Spanish law for sure would have given them title. Katie Wilson-Milne: So the Ninth Circuit goes through this three-step choice of law analysis, which is generally called the governmental interest analysis, and they look at three things.

Katie Wilson-Milne: One, is there a difference between Spanish and California law? They’ve already figured that out. Katie Wilson-Milne: Definitely there is. Katie Wilson-Milne: Is there a true conflict, even though there's a difference? Katie Wilson-Milne: And that means something like, does each state have a real and legitimate interest and stake in having their own law apply, and will they think it's a different outcome? Right. Katie Wilson-Milne: And that for sure is true.

Katie Wilson-Milne: They go through the analysis, but that's not really in dispute. Katie Wilson-Milne: And then the final factor is, because there's a true conflict, how do we decide which law to apply? Katie Wilson-Milne: And then this is called the comparative impairment analysis, which basically just looks at which jurisdiction, California or Spain, is more damaged by the application of the other states' law.

Katie Wilson-Milne: So is Spain more damaged if California law applies, or is California more damaged if Spanish law applies? Katie Wilson-Milne: So obviously this is not a black and white test. Right, this leaves a lot of room for interpretation. And the punch line, of course, is that the court decides under the comparative impairment test that Spanish property law should apply.

Katie Wilson-Milne: Right, which is what the district court had done many years ago, but under federal common law analysis. Right, and you could tell it was just, it was one of these very difficult decisions, I think.

One of the judges, Judge Callahan, noted, and I wrote it down here, that “Spain, having reaffirmed its commitment to the Washington principles on Nazi confiscated art when it signed the Terezin Declaration on Holocaust Era Assets and Related Issues, should have voluntarily relinquished the painting. However, as we previously held, we cannot order compliance with the Washington principles or the terrorism declaration.

Our opinion is compelled by the district court's finding of fact and the applicable law, but I wish that were otherwise." And it's just, I'm not sure it's the right answer. Obviously, the court had a little bit of leeway. They, for some reason, they looked at only the interests of California and having California law applied versus Spain. And of course, there was not a lot of contact with California other than the fact that the plaintiff...

Katie Wilson-Milne: It was there for a year in the 50s or something, and the plaintiff lived there. Lives there. The painting did pass through other jurisdictions in its course. Katie Wilson-Milne: Germany. Steve Schindler: Switzerland, New York. Katie Wilson-Milne: New York, Missouri. But for reasons that, again, it's hard to discern from reading the opinions why nobody argued that those jurisdictions had any interest in this.

I mean, the court in the footnote basically said that the parties didn't argue that. And so, you know, we're left with the ultimate decision by the court that it was more important, in a way, because the property resided in Spain for so many years that the interest in sort of finality and sort of settling of affairs was more important to Spain than California's interest in protecting owners from stolen property.

Katie Wilson-Milne: Yeah, I mean, the court, I guess, the court's evaluating the two different benefits. Katie Wilson-Milne: So for California, there's this interest in not passing title to a stolen item, protecting victims in terms of helping them recover stolen property and deterring theft.

Katie Wilson-Milne: So California is clearly structured with those interests in mind, whereas Spain, like many civil law countries, most if not all, have this concept of prescriptive title where they have put great value on expectations, finality, being able to settle title at some point in time. Katie Wilson-Milne: And those are worthy legal goals.

Katie Wilson-Milne: They're analogous to why we have statute of limitations or repose, that at some point, you know, we need to close a chapter on possible wrongdoing. Katie Wilson-Milne: People can't worry they're going to be sued forever and ever and ever. Katie Wilson-Milne: So those are two legitimate interests, and the court has to figure out how to contrast them and figure out which one is greater. Katie Wilson-Milne: And so it looks to case law as we do in the common law system.

Katie Wilson-Milne: And many cases dealing with this question, this comparative impairment analysis, look at where the conduct at issue occurred. Steve Schindler: Right. Katie Wilson-Milne: And it would be very, you could not say that the conduct at issue in this case occurred in California. Katie Wilson-Milne: The case is being brought in California because Claude Cassirer happened to move there in 1980, completely unrelated to this painting or anywhere else.

Katie Wilson-Milne: But he could have moved to another state. Katie Wilson-Milne: And so the court's saying, look, we can't base a choice of law analysis, a choice of what substantive law to apply based on where a plaintiff may end up moving that has absolutely nothing to do with the case. Katie Wilson-Milne: That's just not, that can't be how we draw people into whole different legal systems.

Katie Wilson-Milne: On the other hand, if we look at where the conduct generally occurs, then the actors are there at the relevant time. Katie Wilson-Milne: If the possessor is there, they have some expectation that where they transact, they can rely on the law to determine the effect of that transaction. Katie Wilson-Milne: And so those are the main factors the court is looking at. Katie Wilson-Milne: And it says, look, Spain is the possessor of this painting.

Katie Wilson-Milne: It purchased it in 1992. Katie Wilson-Milne: The foundation has a right to rely on Spanish law when it's trying to understand its own title. Katie Wilson-Milne: In fact, when the foundation purchased the collection from the baron, there was a provision in the contract kind of based on prescriptive title, where the baron basically gave an indemnity for three years to the foundation.

Katie Wilson-Milne: Which was just an example the court gave, that people do try to order their affairs around the law they understand applies. Katie Wilson-Milne: So that's the analysis the court goes through. Katie Wilson-Milne: As the concurring opinion says, just because this is the right legal answer doesn't mean it's the right answer.

Katie Wilson-Milne: And it's so striking in this case that at least three different times the courts go out of their way to make an ethical comment on this, which you really never see. Steve Schindler: Right, right. Katie Wilson-Milne: I mean, we feel it's improper. Katie Wilson-Milne: We don't want our jurists to be making political or ethical comments on the law. Steve Schindler: We try.

Katie Wilson-Milne: But in this case, it's really striking that the trial court level, the district court has an extended discussion about how Spain is not acting ethically and how it should have returned this painting. Katie Wilson-Milne: The Supreme Court, which is deciding, as we said, a pretty narrow issue of what choice of law applies, not what law applies, attaches at the end of its decision a picture of this painting in the Cassirer family home to say, like, there's a real story here.

Katie Wilson-Milne: This isn't about this narrow legal issue. Katie Wilson-Milne: And then in the final decision in the Ninth Circuit, one of the judges in the Ninth Circuit says, I am compelled to this decision, but it is not correct. Katie Wilson-Milne: It is legally correct, but it is not morally correct. I think the thing that I find so strange about all of this, again, is that it's the government of Spain. They have lots of art. It's a big museum.

And we're talking about one work of art by one artist, which is clearly stolen, and it's not the case. We've talked about this. We're not talking about the British Museum now and the Parthenon marbles. Katie Wilson-Milne: Not just about all cultural property. That all of a sudden, the museum, the floodgates will be open and everything will be heading out the door. This is one work of art, which we know was stolen.

And for the museum, you know, they might as well put a, you know, a sign up below. It said, here, enjoy watching this, enjoy looking at this work of art that was stolen by the Nazis. Katie Wilson-Milne: It's really weird. Steve Schindler: It’s strange. Katie Wilson-Milne: I was trying to think, what is this Spanish motivation? I don't know.

And the other thing that also has struck me all along, which I know we had one of the lawyers for the Cassirers on at one point, is what would happen if the Cassirers won? Let's just say that the Ninth Circuit ruled in their favor. They said, California law applies and judgment for the Cassirers. It's never been clear to me how they would ever enforce that judgment. Katie Wilson-Milne: Good question. And maybe smarter minds can figure it out.

But basically, this painting is in the possession of the Spanish government in Spain. It's not in a private collection. Now, this may have some impact in whether the work can travel. It would have, perhaps, but as long as that work sits in the Spanish government's museum in Madrid, it doesn't really matter what the Ninth Circuit says. They wouldn't be able to get it. Katie Wilson-Milne: That's a good point.

Katie Wilson-Milne: And so we're spending almost 20 years of litigation on this painting where no matter what happened, that was going to be the case. And maybe, maybe, if there was a judgment, maybe the thought was that the Spanish government would, you know, somehow comply with that. Katie Wilson-Milne: They comply with California law? It certainly doesn't look that way. It doesn't look that way. Otherwise, they might have resolved this a long time ago.

So it's a really, you know, unsatisfying end to a very long period of litigation, precisely the kind of litigation that the Washington Principles and the Terezin Declaration were supposed to obviate and avoid. Katie Wilson-Milne: I think legally reasonable minds can differ about the legal analysis of the Ninth Circuit. Katie Wilson-Milne: Avoid, yeah. I do think it's a solid legal analysis.

Katie Wilson-Milne: It would set a precedent that anyone in the world could move to California and then sue a foreign government to get their work back under California law, which would be way more favorable than any civil law jurisdiction. Katie Wilson-Milne: So there's some reason that legally that outcome would have a large impact or could, or set a precedent that's unsustainable. Katie Wilson-Milne: But ethically, it's very hard to see.

Katie Wilson-Milne: It's not like there's going to be every work in this collection or every work owned by the Kingdom of Spain is subject to a claim from an heir, an heir of someone who was dispossessed by the Nazis. Katie Wilson-Milne: Like, it's not the case. Katie Wilson-Milne: I mean, no one's suggesting that the baron's entire collection was Nazi-looted art, and if it is, that's a way bigger problem.

Katie Wilson-Milne: So there's no, yeah, there's no slippery slope analysis where I think as we've talked about with cultural property, you know, there are real concerns about what it means to be stolen. Katie Wilson-Milne: What is it, what is an imbalance of power? Katie Wilson-Milne: Where is art properly consumed and cared for? Katie Wilson-Milne: Like, there are bigger questions that have an impact on the world's encyclopedic museum, universal museums, but this isn't one of them.

No. Well, I wish I could give our legal system higher marks on this, but unfortunately we can't. Katie Wilson-Milne: Yeah, or it's really the kingdom of Spain we can't give higher marks. Well, that's true. Katie Wilson-Milne: The legal system— That's true too, I guess. Yeah. And that's it for today's podcast. Please subscribe to us wherever you get your podcasts. And send us feedback at [email protected]. And if you like what you hear, give us a five star rating.

We are also featuring the original music of Chris Thompson. And finally, we want to thank our fabulous producer, Jackie Santos, for making us sound so good. Katie Wilson-Milne: Until next time, I'm Katie Wilson-Milne. And I'm Steve Schindler bringing you The Art Law Podcast, a podcast exploring the places where art intersects with and interferes with the law. Katie Wilson-Milne: The information provided in this podcast is not intended to be a source of legal advice.

Katie Wilson-Milne: You should not consider the information provided to be an invitation for an attorney-client relationship, should not rely on the information as legal advice for any purpose, and should always seek the legal advice of competent counsel in the relevant jurisdiction.