Bonus Episode: Berkshire Museum Update, Settlement Approved

Katie and Steve update listeners on the Massachusetts Supreme Judicial Court’s decision approving the settlement reached between the Attorney General and the Berkshire Museum, which allows the Museum to sell 40 of its most valuable works of art through Sotheby’s with some (minor) conditions.  Katie and Steve go over the terms of the settlement and discuss their reservations about the form (if not substance) of this resolution.  Since the recording of this bonus episode, it has been reported that the yet to open Lucas Museum in Los Angeles will purchase the painting Shuffleton’s Barbershop, Norman Rockwell’s iconic masterpiece.  The rest of the works will be sold gradually at auction until a total of $55 million in proceeds is reached.

Memorandum of Decision


Bonus Episode Transcription

Katie Wilson-Milne: So, Steve, we’re back to give our listeners an update on the Berkshire Museum saga.  On April 5th, the Supreme Judicial Court of Massachusetts issued a decision in response to the Attorney General and museum’s cy près deviation petition asking for permission from the court for the museum to sell 40 valuable works of its art through Sotheby’s to raise an excess of 50 million dollars for its New Vision Plan.  And so now we know what the court has to say about that.

Steve Schindler: Right and what the court has to say, if you could sum it up, is whatever the Attorney General said.

Katie Wilson-Milne: That’s right.  That’s the theme of this mini episode.

Steve Schindler: And even though this is a decision of the Supreme Judicial Court of the Commonwealth of Massachusetts, it’s worth noting that it’s a decision that was made by a single justice presiding over the court to hear this dispute.

Katie Wilson-Milne: And it wasn’t like there was a full trial or witnesses presented before the court.  There were briefs that were submitted.  There were amici briefs from the plaintiffs in the civil cases, which we talked about on our earlier episode, but really there’s just the cy près deviation petition, a brief from the Attorney General and the museum, and then the court had a hearing where the lawyers could present arguments but that was it.

Steve Schindler:  And after the hearing Judge Lowy issued his decision, which was as I said, to essentially adopt the position of the museum as joined by the Attorney General and just to outline that very quickly: so, the court’s ruling really comes in two parts.  The first is for the sale of Shuffleton’s Barbershop and then the second is for the sale of the remaining 39 works that the museum would like to sell.  And so with Shuffleton’s Barbershop the requirements are that the work go to a 501(c)(3) museum and that that museum has to agree to loan the work for between 18 and 24 months to the Norman Rockwell Museum. There are a couple of other conditions which are a little less —

Katie Wilson-Milne:  Clear.

Steve Schindler:  Or specific.

Katie Wilson-Milne:   Or firm.

Steve Schindler:  Or enforceable. Which basically says that, you know, following the loan to the Norman Rockwell Museum, the buyer of Shuffleton’s Barbershop will explore, are the court’s words, the possibility of loaning the work to other museums in the Commonwealth of Massachusetts and then the last requirement, or at least suggestion, is that the buyer of the work will ultimately display Shuffleton’s Barbershop in what the court says is a place of prominence within its museum, which I suppose is also up to the museum, and that that museum will consider periodically loaning the work to other museums in Berkshire County, So, I think it’s fair to say that Shuffleton’s Barbershop has to be sold to a museum and that museum has to agree to loan it to the Norman Rockwell Museum for 18 to 24 months and then there are some other suggestions.

Katie Wilson-Milne:  And it has to keep it—it has to keep it in public display.

Steve Schindler: Yeah, I think that’s fair to say.

Katie Wilson-Milne:   And all those terms, suggestive or not, have to be in the contract of sale to the museum.

Steve Schindler:  So then with respect to the remaining 39 works, ultimately the museum is entitled to raise approximately 55 million dollars from these sales.  And so the remaining 39 works will be divided into 3 groups that the court refers to as tranches, and that the museum is supposed to start selling each tranche in order to try to hit as close as possible the 55 million dollar mark when you include Shuffleton’s Barbershop.

Katie Wilson-Milne:  So after they sell Shuffleton’s Barbershop, whatever the delta between that sale and 55 million.  They can sell one tranche of work, try to get to 55 million, and then if they don’t get there, they can sell another.

Steve Schindler:   Another tranche.  And then if they still don’t get there, they can sell the third tranche.  They’re supposed to – you can’t stop within a tranche, but from tranche to tranche, once they hit 55 million they’re supposed to stop.  And then there are some restrictions on the amount that the museum received in excess of 50 million dollars.  The first 5 million between 50 and 55 is supposed to be put in a separate fund for the benefit of the museum’s collection.  And as the court says, to be used for acquisitions and to support the museum’s collection, including in connection with the so-called New Vision, so I think it’s fair to say that even though the 5 million dollars has be put into a separate fund, the museum has a pretty broad discretion on what to use it for, because it includes the New Vision.

Katie Wilson-Milne:  So the first 50 million is totally unrestricted?

Steve Schindler:   Right, the first 50 million, they can do what they want with it and presumably —

Katie Wilson-Milne:  As long as it’s for their charitable purpose.

Steve Schindler:  Right, and presumably that’s to realize their New Vision Plan.

Katie Wilson-Milne:  So what happens if they sell a tranche, and in that tranche they make more than 55 million?

Steve Schindler:  So if they make more than 55 million then that — the excess — is supposed to go into another segregated fund, or restricted fund, that’s supposed to be held for the benefit of the museum’s art collection and to be used for acquisitions and to support the museum’s art collection, including in connection with the New Vision.  Now support, as the court then defines it, seems to include virtually anything that you could possibly spend money on.  It includes capital and operating expenditures for curation, exhibition, collection storage, and facilities and then related salaries and conservation efforts.  I think it’s fair to say that the museum has pretty broad discretion on how to spend the excess of the money, as long as it’s in some way can be seen to be connected to the —

Katie Wilson-Milne:  The museum.

Steve Schindler:  The museum’s – well I wouldn’t even say the museum’s art collection, with respect to the excess over 55.  At least that’s what the order says.

Katie Wilson-Milne:  So the court, even in the restricted buckets, the 50 to 55, and above 55 permits use of that funds that directly contradict the guidance of the AAMD and the organizations we talked about in our full-length episode.

Steve Schindler:  Oh absolutely, I mean the –there’s no question that these funds can be used for operating expenses in a very broad sense.

Katie Wilson-Milne:  So you could renovate an art gallery or pay for a new curator.

Steve Schindler:  Absolutely.

Katie Wilson-Milne: Okay.  So, Steve, what do we make of the court’s decision?  I guess we should say first it’s pretty short and it doesn’t contain any of its own reasoning so to speak.

Steve Schindler:  Right, it—it leans entirely on whatever work the Attorney General did and it—it seems to me –It seems very thin, you know, for a decision that rests very heavily on, or what should rest on analysis of facts during an investigation that the Attorney General conducted over a number of months, there’s no reference in the opinion really to any of those facts and to the basis for the conclusion that the museum really had no choice in order to survive except to sell these 50 works.

Katie Wilson-Milne:   Yeah, so let’s back up for a second.  So the opinion is 6 pages, double-spaced and it basically–

Steve Schindler:  Courier font.

Katie Wilson-Milne:  Courier font, probably size 12, and it says, you know, the AG has done this investigation over 7 months.  It’s the statutory job of the Attorney General to investigate and oversee nonprofit institutions or charitable institutions in the state of Massachusetts.  The AG represents the public. So, therefore if they’ve done this investigation and they say that the museum really needs to sell this work or it’s going to shut down and close, then who are we to question them, because they represent the people of Massachusetts.  Now, a complicating fact is that we just know that there are a lot of people in Massachusetts who disagree with this stridently, including the plaintiffs in the two civil lawsuits and a devoted large protest movement that has sprung up around this – this case but the Attorney General, you know, says only that no other individuals have standing, which is perhaps legally true, to challenge the Attorney General at the museum and so he basically has no choice but to just adopt the attorney general’s recommendation.

Steve Schindler:  Well, what I find still a little bit hard to understand is, if you go back to the very beginning, we had a situation where the museum had more or less secretly consigned the lots of works to Sotheby’s.  Word got out of the impending auction and private parties came in to bring the lawsuit to try to enjoin the sale, and even though the Attorney General had apparently been looking at the museum’s situation for a number of months, the Attorney General did nothing initially until it was sort of dragged into the lawsuit and once it was dragged into the lawsuit, it filed a fairly, you know, substantial set of papers arguing for—for the injunction of the sale, and that seemed to be a pretty strong or quick about face.  And then for reasons, again that we have no insight into, the Attorney General more or less abandoned that position, adopted almost the entire proposal of the museum and presented to the court as a fait accompli.

Katie Wilson-Milne:  And didn’t even mention that about face.  The court’s fully aware that the Attorney General has submitted dozens of pages of briefing trying to stop these sales earlier in the year, and then all of a sudden without explanation, just says actually we agree with the museum completely they need the money, there’s nothing else they can do.  And it’s not like the original Attorney General briefs trying to stop the sale didn’t have reasoning in them or didn’t list the reasons they thought they had a legal basis to stop the sale.  It did!  It alleged that there were contractual limitations preventing the sale, that there were statutory limitations because of the museum’s history and origin at the end of the 19th century, so the AG really dived deep in that earlier proceeding for the injunction and then in this, you know, much more important proceeding for the Supreme Judicial Court they said nothing.

Steve Schindler:   So that’s the question that I would have.  If I were the judge presiding over this case, I would have asked the Attorney General what made you change your mind, what is it that happened between the time that you filed in support of an injunction to the time that you proposed a settlement to make you change your mind?  And – and I think from even from a just a transparency point of view and a fairness to the public and everyone who cares about that, I think the court should have explored that.

Katie Wilson-Milne:  Especially because so much of the anxiety around this sale was caused by the museum’s complete lack of transparency from the very beginning about planning to change the museum’s mission, to selling off all basically all of its most valuable famous pieces of art without the public knowledge until it was announced months later, after all the contracts with Sotheby’s had been sold.  It was not public how the museum had come to this decision.  So the court should have known that, you know, one of the major issues in this entire saga was the museum’s lack of transparency and then the court just accepts that same lack of transparency from the Attorney General.  So maybe it doesn’t change the legal basis for the ruling, but it certainly changes how it’s perceived.

Steve Schindler:  Well now that we’re talking about how it’s perceived, let’s talk about the auction. And it’s nice timing, because we’re about to do an episode on the May auctions and we know that some of these works will appear in some of the Sotheby’s auctions in May.

Katie Wilson-Milne:  13 of the works right?

Steve Schindler:  Right, and what we know also was that auctions and auction buyers tend to not like controversy.  There is a question that has been raised by some about whether or not the way in which these works are being sold and the fact that they’re being deaccessioned by a museum, whether or not that is going to dissuade some buyers from purchasing the pieces.

Katie Wilson-Milne:  Is that because, Steve, they will feel ashamed to be buying works out of this controversial sale or that museums doing something untoward?

Steve Schindler:  Yeah, I think so.  I think, you know, for example I mean, not that museums don’t normally bid at auction, but anyone who is anticipating displaying these works publicly and who has any sense of the ethical issues involved in this kind of deaccessioning might not be so willing to purchase the works but we don’t know and we’ll –we’ll see.

Katie Wilson-Milne:  Well you know, on the other hand, we know that these works, including the two Norman Rockwell works which were the most controversial in the deaccessioning, they weren’t even on display at the Berkshire Museum.  They hadn’t been on display for years.  It wasn’t like people could go see them. So, maybe the auction actually presents an opportunity for a buyer to come in and sort of save the day by buying a work and then displaying it for the public in a way that it wasn’t before.

Steve Schindler:  I mean, that would certainly be another scenario, but I guess we won’t know until May.

Katie Wilson-Milne:  We won’t know until May.

Produced by Jackie Santos.