Steve and Katie speak with appellate litigator David Barrett about the story animating a recent Supreme Court case between the heirs of Lilly Cassirer, who fled Germany in 1939 after surrendering the painting Rue Saint-Honoré Après-midi, Effet de Pluie (Rue Saint-Honoré in the Afternoon, Effect of Rain) by Camille Pissarro to the Nazis, and the Spanish Museum known as the Thyssen-Bornemisza Collection. They discuss the journey of the painting in and out of the United States over a 60-plus-year period before it found its way into the collection of a Spanish museum, the Cassirer family’s efforts to find and reclaim the painting, and the decades-long litigation in California that led to the recent Supreme Court decision overturning a decision of the 9th Circuit applying the Spanish law of adverse possession in favor of the Spanish Museum.
8.1.2022 Plaintiffs-Appellants’ Response to Kingdom of Spain’s Motion to File Amicus Brief
Steve Schindler: Hi, I’m Steve Schindler.
Katie Wilson-Milne: I’m Katie Wilson-Milne.
Steve Schindler: Welcome to the Art Law Podcast, a monthly podcast exploring the places where art intersects with and interferes with the law.
Katie Wilson-Milne: The Art Law Podcast is sponsored by the law firm of Schindler Cohen & Hochman LLP, a premier litigation and art law boutique in New York City.
Steve Schindler: Hi, Katie.
Katie Wilson-Milne: Hi, Steve.
Steve Schindler: So, how have you been?
Katie Wilson-Milne: Well, I ran the marathon on Sunday.
Steve Schindler: I know that. That’s what I wanted to ask you about. How was it?
Katie Wilson-Milne: It’s good and bad. No, it was a thrilling, exciting day, but really difficult weather conditions, so…
Steve Schindler: Right. Well, Katie’s being modest, because she’s a really good runner and her time, notwithstanding her modesty, was actually very good.
Katie Wilson-Milne: Yeah, it was fun. But today we’re going back in time again, back to World War II, back to Nazi-looted art, and it’s just a topic that is kind of evergreen. It’s still developing in the law all over this country, and we’re going to talk about kind of one of the biggest cases that’s been going on for a couple of decades.
Steve Schindler: Right. So today we’re going to be discussing the case of Cassirer v. Thyssen-Bornemisza Collection Foundation, and this is the case that has been pending since 2005, in which the heirs of Lilly Cassirer have sought to recover a painting by Camille Pissarro called Rue Saint-Honoré in the Afternoon, Effect of Rain, that was taken by the Nazis in a forced sale in 1939 as Lilly Cassirer was fleeing Germany.
And now the work hangs at the storied Thyssen-Bornemisza Museum in Madrid. And we’re thrilled to have with us today as our guest, David Barrett. David is a partner in the law firm of Boies Schiller Flexner in New York City, and has had a career spanning more than 40 years, in which he’s handled cases in virtually every area of complex high-stakes litigation. He is a leader in the firm’s appellate practice with expertise in matters ranging from commercial securities, antitrust, and IP arbitration and mediation and art law. He has argued and briefed dozens of appeals in the US Supreme Court, federal courts of appeal, and the New York State Courts. David received his undergraduate degree in history and literature from Harvard University and attended Columbia Law School.And after that he clerked for then senior Judge Wilfred Feinberg on the US Court of Appeals for the Second Circuit, and for Justice Thurgood Marshall on the US Supreme Court. And I’m also told that David is an avid collector of art. So welcome to the podcast, David.
David Barrett: Thank you very much, Steve. It’s great to be here.
Steve Schindler: So David, we’re going to talk about a case that has turned so far on some pretty technical legal issues, and as I always tell students in my art law class that behind every case is a story about people whose lives have often been profoundly affected by the decisions that we read and discuss. So, before we talk about the legal issues in the case, I want to start with a discussion about Lilly Cassirer, who she was, and how did it come to pass here that the Pissarro was taken from her by the Nazis. Could you just give us a little bit of background, David?
David Barrett: Well, certainly. The painting first came into the hands of the Cassirer family in 1900, the turn of the 20th Century. Two cousins, Paul Cassirer and Bruno Cassirer, ran an art gallery in Berlin and a related publishing house. Indeed, they were among the most prominent art dealers certainly in Germany at that time. And there’s been some recent scholarship, in fact, which credits them with essentially bringing the impressionist movement to Germany. They were the first major art gallery anywhere to champion the works of Vincent Van Gogh. And as a result, of course, Van Gogh has become known as one of the great artists in history. So they had a very well-known art gallery in Berlin. And in 1900 they purchased a number of Pissarro works, including Rue Saint-Honoré directly from Pissarro’s exclusive agent in France, the very famous as well, Paul Durand-Ruel. So the painting was bought essentially directly from the artist, and over the years the Cassirer Gallery in Berlin continued on and eventually closed down.
And when the original owners of the gallery passed away, Lilly was their heir and she inherited the painting in 1926. So it came into her possession at that time. She was living in Berlin and in Munich, and in fact the record in the district court and ultimately in the Supreme Court contains a photograph of the painting in Lilly’s parlor in Germany sometime in the 1920s or 1930s. We thought that this photograph was so important to the story that we made sure to include it in the bound appendix volume that was submitted to the Supreme Court. And I think that turned out to be a good decision, because the court then copied that photograph, that trial exhibit, into its own opinion.
Steve Schindler: Right. It’s very striking to see it. We’ll post it on the notes.
Katie Wilson-Milne: A 14 page opinion and it just ends with this photograph, which is a message, but we will certainly include that in our links.
David Barrett: And, Steve, I think that proves the wisdom of your comment to the students. It certainly suggests that the backstory was very important. I’m not sure it influenced the court’s decision, but very important context for the court’s decision.
Katie Wilson-Milne: Yeah. So David, so what happens? Lilly inherits this painting in the 20s in Germany, and what happens after that?
David Barrett: Well, she and her second husband remained in Germany throughout the 1930s after Kristallnacht. The family was Jewish, and many— in fact, many of the clients of the Cassirer Gallery were Jewish. And in fact, as this recent press indicates, the Jewish collectors were perhaps particularly drawn to some of the newer art movements like Impressionism and post-Impressionism, which were advocated by the Cassirers. Because the traditional Old Master art of the time had a large Christian religious component and the newer artworks did not. Be that as it may, yes, the fact that the Cassirers are Jewish is a very important part of the story. And the persecution of Jews in the 1930s in Germany, of course, was increasing.
Lilly and her husband, Professor Otto Neubauer, determined that they had to flea Germany, and of course, this was a fairly wealthy family, and they did have the means. They were forced, however, by the Nazis to “sell” the painting to an agent of the Third Reich for nominal price, which was 360 US dollars at the time. However it was paid into a blocked bank account that Lilly could not even access.So essentially she never received any money for the painting. The Nazis took it, and I suppose fortunately at one level it was sufficient to get exit visas for Lily and her husband. They fled to England where they survived the war, and Lilly eventually moved to the United States after the war.
Steve Schindler: And then David, what happened to the painting along this timeline? Do we know?
David Barrett: We really don’t know. There is a little bit of evidence in the record. It may have been sold at essentially a Nazi auction at some point during the war. The next time that the painting surfaces, and this was completely unbeknownst to the Cassirers, is at an art gallery in Los Angeles run by a gentleman named Franz or Frank Perls. And the documents show that he bought the painting purportedly from a “Herr Urban” of Munich, Germany, and the painting was shipped to Perls in Los Angeles. So the connection with California, which we’ll talk about later, is very significant, and it begins in 1951 when Frank Perls imported the painting from Germany.
Katie Wilson-Milne: Yeah, and we should note— and we may have discussed this on the podcast before— that the Perls Gallery shows up in a lot of these Nazi art cases. That somehow these paintings get detached from their owners in some fashion during World War II, during the Third Reich, and then the ones that end up in the US, many of them actually surface through Perls. So it’s interesting here that this is in some ways a classic path.
David Barrett: A classic example. Yes, and it’s probably also worth noting that it’s almost impossible to believe that Perls did not know that he was probably importing Nazi paintings. And at the time, doing so without a license was flatly illegal under US laws.
Katie Wilson-Milne: So Perls, I assume, sells the work. Take us through what happens, what its path is up till we get to the case we’re going to talk about.
David Barrett: Sure. Well, he initially sold it to a collector named Sidney Brody in Los Angeles. Apparently, Mr. Brody didn’t like the painting very much, because he returned it to the Perls Gallery and the Perls Gallery then sold it through the Knoedler Gallery in New York City to a collector in St. Louis named Sydney Schoenberg, who held it in his private art collection until his death in 1976.
I might pause here to say that one of the things that’s been troubling in the course of this litigation is that the museum has taken pains at various points in the case to point out that the gallery owners and the owners of the painting in the United States were Jewish. That obviously has absolutely nothing to do with anything about the merits, and I find it’s a very troubling fact that the museum keeps returning to that point, albeit a true point, but a completely irrelevant one.
Steve Schindler: Right, and so eventually this work gets acquired by a Baron, right? A Baron with a long name.
Katie Wilson-Milne: We leave the US again, right? How do we get back to Europe?
David Barrett: After Schoenberg died in 1976, a gallery called the Stephen Hahn Gallery in New York, undertook to sell the painting on consignment, and in October of that year it was purchased by Baron Hans-Heinrich von Thyssen-Bornemisza.
Steve Schindler: That was very good. Very well done.
Katie Wilson-Milne: Yeah, I’m not going to say his name.
Steve Schindler: I get tripped up on that name all the time.
David Barrett: I’ve been doing it for a few years now. And the Baron is one of the scions of the Thyssen steel dynasty in Germany. You’ve probably seen Thyssen elevators around the country. You’ve also heard of the Thyssenkrupp steelworks, which was a very important part of the Nazi war machine.
The Baron always claimed that he was anti-Nazi, but I think there’s a good deal of reporting that suggests that the family, in fact, was quite supportive of the Nazis. He was a great art collector. He purchased paintings all over the world, amassed a collection of paintings. Much of it was maintained in his home mansion in Switzerland, which is where he was living at the time. And sometime after that, in, I think in the 1980s, he married his fourth or fifth wife, who was a former Miss Spain. And as a result he seems to have become enamored of Spain.
And in the early 1990s, he began negotiating with the Kingdom of Spain to purchase most of his enormous and extremely high quality art collection including the Cassirer painting. Ultimately, those negotiations resulted in the creation of a foundation and a museum, which is, in legal terms, an agency or instrumentality of the Spanish government. The museum is called the Thyssen-Bornemisza Collection. Spain bought the entire collection in the early 1990s for over $300 million including, again, the Cassirer painting. And Spain also donated to the foundation a beautiful palace in Madrid to serve as the location of the museum. And so the painting along with hundreds of others from the Baron’s collection has since the early 1990s and continues to reside in this former Spanish royal palace in the Thyssen-Bornemisza Collection.
Steve Schindler: Putting the litigation aside and the issues that we’re talking about, it’s an exquisite museum, right?
Katie Wilson-Milne: Steve went to check on the painting recently.
Steve Schindler: I went to check on it recently, and the painting is there on the second floor and I had forgotten perhaps how amazing the collection of art in that museum really is. I have a question, just going back one step, David, do we know how much the Baron paid for the Pissarro?
David Barrett: The Baron paid $275,000 for the painting in 1976, plus a $25,000 commission. So essentially $300,000, which at that time was a huge price for a work of art, and I think further evidence of the significance of the painting.
Steve Schindler: Do you have any sense now of what the painting is worth?
David Barrett: Well, that’s a good question. There’s evidence in the record that places the value in the $30 to $35 million range based on auction sales of a comparable painting around 8 or 10 years ago. In my view, the painting today is worth far more than that. Clearly, the art market has exploded in the last decade or so. I guess we’ll see what the works in the Paul Allen collection and some of the others that are up for auction this month.
Steve Schindler: Actually tonight as we talk is the first evening auction of that amazing collection.
Katie Wilson-Milne: Well, give us a range, David. What do you think—
David Barrett: Well, I don know that I can give it range, but it’s certainly in the upper half of eight figures. Given the quality of the painting, it’s recognition over the years— aside from that decade or so of when it was in Nazi hands— absolutely pristine provenance from the artist to the Cassirers to Mr. Schoenberg, was certainly a major collector in the United States, to Baron Thyssen. So it’s got an incredible pedigree. I understand that sometimes the fact that works were stolen in the Holocaust and have that as part of their story as well sometimes enhances the value as well. So I would say it’s a very high number, far more than the $30 million that was estimated a decade or so ago.
Katie Wilson-Milne: Yeah. Well, so not to spoil the plot here for our listeners, but David represents the Cassirer family in the litigation that we’re going to talk about. So how did the Cassirers stay connected to this painting, and how do we get to a place where they’re suing this museum in Spain in 2005 in California?
David Barrett: That’s a great question. Although the painting was stolen, expropriated from Lilly in 1939, she never lost hope of finding it. Eventually after the war the United States created what was called the Court of Restitution Appeals to look into what had happened to all kinds of artworks that were stolen by the Nazis, and she made a claim in that court. The court investigated, found that she was the rightful owner, but neither she nor the court nor anyone else had any information about the existence of the painting. Even though it was residing in St. Louis at that time. No one knew that, and the court declared that she was the rightful owner.
Subsequent to that, Lilly made a claim against Germany through a restitution process that existed in Germany in the 1950s and was successful in that process as well, received payment ultimately for the painting because again everyone assumed that it had been lost or destroyed in the war, received a payment from Germany. The museum has argued vociferously that as a result she has no right or her heirs have no right to claim the painting, because she was compensated for it by Germany.
Katie Wilson-Milne: And so somehow gave up her claims when she received that money, yeah.
David Barrett: Exactly, exactly.
Steve Schindler: What’s the response to that?
David Barrett: Well, that assertion ignores the fact that the agreement with Germany, as confirmed by the German courts in the course of other litigation, essentially provides that if she ever is able to reacquire the painting she will repay the money to Germany, that she will make restitution of the money that Germany paid her, because she will, at that point, have found the painting and therefore wouldn’t be, in that sense, entitled to any payment from Germany.
Steve Schindler: Which was relatively small in today’s—
David Barrett: Well, I don’t know. I think it was $50,000 or $100,000. It was not trivial by any means.
Katie Wilson-Milne: At the time it was like— yeah. I mean, in our experience that’s how this administrative German restitution process worked. I mean that’s how all these agreements were typically written.
David Barrett: Right. Yeah, and the German courts have, and I believe actually in this case the German government specifically acknowledges that if she gets the painting they will take money back from her and that’s the end of it as far as they’re concerned.
Katie Wilson-Milne: So Lily gets paid and then presumably goes about her life. She forgets about this painting, she passes away. I mean, somehow this painting and her family come back into contact.
David Barrett: Right. Well, I don’t think she forgets about the painting. I think it’s actually very, very different. Her son, Claude, grew up hearing stories about this painting. I believe he actually played in her home as a child and saw the painting in her parlor. This was a very important family heirloom that I think the family never gave up on.
Claude worked for many years as a professional photographer in New York City and then in Cleveland. He retired in 1980 and moved to San Diego where one of his children was living, working during that time but always in the back of his mind the painting was very significant. And going back to the photograph that we discussed earlier that appears in the Supreme Court opinion, he actually had a copy of that picture which he carried around with him. And he told people this story and he showed them the picture of the painting and essentially was asking if you ever hear about this, let me know.
So that was really part of Claude’s life and that strong love of the painting was conveyed to his children, including the lead plaintiff in our case, his son David Cassirer. In December, 1999, one of Claude’s friends and clients came to him and said, “I’ve seen a picture of your painting. It’s in a catalog of the works in the Thyssen-Bornemisza Collection, this museum in Madrid.” So the family had been looking for the painting ever since it was stolen in the war, and ultimately in 1999 they fortuitously learned that it still existed and indeed was in this major museum in Madrid.
Katie Wilson-Milne: And it had been on display in the museum publicly for a few years at least, right? Because the Baron loaned or sold his collection in the early 90s.
David Barrett: Yes, that’s correct. And in fact, I believe the museum has said that it had even been displayed publicly by the Baron. Over the years he lent his collection out for art exhibits and the painting may have been shown in those.
Katie Wilson-Milne: But David Cassirer wasn’t aware of that obviously.
David Barrett: David, Claude his father— until he died, was not—they were not aware of it. That claim, that’s another, I think, spurious claim or certainly rejected claim that the museum has made. They claim that the fact that the painting had been publicly displayed, that there was no real effort to hide the fact, certainly after it got to the museum, there was no effort to hide the fact that they had the painting.
That as a result of that the Cassirers were somehow negligent or culpable in not discovering the location and the whereabouts of the painting. In fact, there was an article in the 1950s in, I believe it was Antiques Magazine in an earlier iteration about Mr. Schoenberg’s collection, and it included the painting. Now, that was a publication that no one except art aficionados would’ve read at that time, and there was no way that the Cassirers would’ve seen it. But the museum’s argument that the Cassirers should have found it, that somehow is a legal doctrine, as you know, called laches, which is like a statute of limitations except it’s not a specific number of years attached to it. But if you’re not diligent in pursuing your rights, the court can find they were cut off by laches.
Katie Wilson-Milne: Well, David, let’s get to the lawsuit, and we’ll talk about your arguments and the museum’s responses.
David Barrett: Right.
Steve Schindler: Actually, let me just add one thing on that, because I think it’s important that we sit here in 2022 having spent 20 plus years with the internet and accessible databases and the like and I think sometimes we forget that it wasn’t all that long ago in history where we didn’t have access to all of these catalogs and there weren’t accessible databases that listed all of the works that were looted by the Nazis. They existed in some form but it’s really in the years starting with 2000 going forward that we saw the explosion of online databases. So it’s not that unusual for a normal person at that time to not have seen even—
Katie Wilson-Milne: Not to know what’s in a museum.
Steve Schindler: —a catalog in a major museum.
David Barrett: I think that’s exactly right. And particularly a person who was not otherwise an art expert and didn’t know about these things.
Katie Wilson-Milne: So somewhat incredibly, a friend of the family tells Claude in 1999 that they’ve seen this painting in Spain. And so what does the family do at that point?
David Barrett: Well, the family very promptly thereafter—
Katie Wilson-Milne: 60 years after the family has lost this work, right? I mean, incredibly. About.
David Barrett: Yes, about 60 years after they’ve lost it they began a process which eventually lasted four or five years of trying to get Spain to do the right thing and to return the painting to them. They actually formally petitioned the Minister of Culture of Spain, who was also the chair of the board of the TBC Foundation, of the Thyssen-Bornemisza Foundation.
They petitioned formally for the return of the painting, and they pursued other diplomatic channels to try to convince Spain to return the painting. All of that was simply unsuccessful. Spain just kept saying, no, no, no, it’s our painting. We bought it. And at that time and really up to the present day it doesn’t seem to matter to Spain the circumstances under which the painting was taken from the Cassirer family.
Katie Wilson-Milne: Yeah, I have to say my main takeaway from this litigation, which listeners we will get to, and for good or bad is just as complicated as this story of the painting in the Cassirer family has been, but it is not disputed that the Nazis either stole this painting or obtained it under great duress. You know, I mean, there’s no argument that this was a voluntary sale, fair market value transaction. And some of these Nazi cases, that is the argument. And I think those are harder cases because not every sale that happened in the 30s and 40s in Europe was coerced or Nazi looting to the same degree or even at all.
And so those cases are complex and they’re hard and they at their heart are about whether there was really theft or looting or coercion. But here that’s not an issue. There’s no dispute that this painting was taken unlawfully and then transferred after that unlawfully. And the fact that the entire case, the entire argument from Spain accepts that and says it doesn’t matter is so striking. I think it feels unusual to us.
Steve Schindler: Right. And I think the other thing to just point out, and your brief makes reference to this, David, in the Ninth Circuit, is Spain is both a signatory and purportedly adheres to the whole range of international sort of protocols that have been—
Katie Wilson-Milne: Yeah. Ethical commitments, right.
Steve Schindler: —adopted, including the Washington Principles that were adopted in 1998 and others. And so to some extent, you know, this—
Katie Wilson-Milne: And what do those say? What are the principles?
Steve Schindler: Well, and we’ve discussed in the past on the podcast the Washington Principles, which came about from a conference that was held in the United States in Washington in 1998, attended by I think 44 nations at the time, who—
David Barrett: Including Spain.
Steve Schindler: —including Spain, who by the end basically came up with a set of principles that resolved to try to resolve these kinds of matters both informally and with regard to the truth as opposed to technicalities that sometimes we’ve seen, and certainly as we’ll discussed this case, which has been pending now for 17 years, I think. It rests on so many technical legal arguments.
Katie Wilson-Milne: Yeah. And just no dispute about the original wrongdoing, which is—
Steve Schindler: Right. Or the identity of the heirs, which is also—
Katie Wilson-Milne: Yeah. That’s correct. Right, right, right. Alright. So there’s a lawsuit. So David, presumably Spain rejects these administrative efforts to get the painting back by Claude Cassirer. And Claude luckily realizes there’s a statute of limitations, and he brings a lawsuit in California where he lives in 2005 to get possession of this painting and declare I guess it’s lawful owner. So if you could just sort of briefly sketch out the course of this litigation.
David Barrett: Well, it’s a long and it’s a torturous history.
Katie Wilson-Milne: It’s torturous. So we’re going to try to be gentle with our listeners.
David Barrett: In large part, because Spain and the museum have raised virtually every obstacle one could think of to try to hold onto the painting, first, to try to prevent the courts from even getting to the merits, and then to try to hold onto the painting, because the painting was in the possession of the Spanish government or of a Spanish government agency, namely the museum, the lawsuit had to be brought under a statute called the Foreign Sovereign Immunities Act. And that statute allows lawsuits that otherwise would be barred against foreign nations under certain circumstances. One of those circumstances is if it is a claim for property that was expropriated in violation of international law. And so that is exactly what happened here. The Nazis stole a painting in violation of international law, and the painting is now in the possession of a sovereign nation. So the first battle was that Spain and the museum claimed that that exception didn’t apply. Their main argument was that the Nazis stole it and Spain didn’t steal it.
Steve Schindler: How did that turn out for them?
David Barrett: That turned out badly for them, as did most of their attempts to evade these claims.
Steve Schindler: But it’s a good example of just every procedural thing that they could argue they did.
David Barrett: They did. Exactly. And the trial court rejected that argument, and the Court of Appeals, which is called the Ninth Circuit Court of Appeals, first rejected it by a three judge panel, and then Spain requested what’s called en banc reconsideration, which means all the judges of the appeal court, in that court it’s 10 or 15 judges, rehear the case. And the en banc court reaffirmed the fact that the Nazis had stolen it. Did not allow Spain to evade that fact by claiming that they weren’t involved in the Nazi theft.
Katie Wilson-Milne: And just, again, I have to emphasize, so now the lawsuit has not even really started, right? And we’re years into the litigation. Multiple courts, gazillion dollars have been spent and we’re just arguing about whether the complaint can even be made against the museum. I mean, it’s just a truth of American litigation that this can happen, but this case is such an extreme example of how many years can go by before we even get started really.
David Barrett: That’s right. The case was filed, as you said, in 2005. The en banc decision of the Ninth Circuit was in 2010.
Katie Wilson-Milne: Insanity.
David Barrett: But then Spain for the first time, not the last, for the first time, tried to appeal that decision to the US Supreme Court.
Katie Wilson-Milne: Yeah, I remember now.
David Barrett: And in fact in that case and in the case that we just won, the United States government filed a friend of the court brief supporting the Cassirers and the Supreme Court rejected the request to review the case. That happened in 2011. Then we went back to the district court, to the trial court.
Katie Wilson-Milne: The trial court, yeah.
David Barrett: Trial court. And there was litigation over the statute of limitations. Ultimately, the TBC lost that litigation.
Katie Wilson-Milne: The museum is TBC.
David Barrett: Yeah, the museum— yes, I’m sorry— Lost that litigation in 2013. So that was the second time that the Court of Appeals heard the case.
Steve Schindler: Just in short form, what was the core of the statute of limitations argument? Because we’ve talked about this argument that’s—it almost always comes up in contested litigation here in the United States.
Katie Wilson-Milne: And we often talk about it in New York, so it’d be interesting to hear in California what the arguments are.
David Barrett: Under California law, the statute of limitations is a law passed by the state legislature. And the particular claim here— which is a claim for return of property— in California is generally subject to a three year statute of limitations. And this case actually would’ve been brought more than three years after Claude learned of the location of the painting, so unless there was some kind of suspension of the statute of limitations, it would actually have been time-barred as a traditional claim for the return of stolen property. However, in recognition of the issues raised by Nazi art claims, California had enacted a six year statute of limitations for cases seeking the recovery of a work of fine art that was brought against a museum, art gallery, or auctioneer or dealer.
So the argument was that the statute of limitations in fact was six years, not three years. And there were all kinds of arguments about whether that was—the museum said it wasn’t allowed. You weren’t allowed to extend the statute of limitations. They also argued that it interfered with the exercise of foreign policy by the United States government. All those claims were rejected, but that took us to 2013.
Katie Wilson-Milne: And interestingly, the United States government subsequently enacted a six year statute of limitations for these types of claims nationwide. So they seemed to take the bait in some way and confirm that that was in fact fair.
David Barrett: That’s correct. Congress passed what’s called the HEAR Act [Holocaust Expropriated Art Recovery Act of 2016] in 2015 or 2016, which essentially made it the federal rule as well.
Katie Wilson-Milne: And did that apply to this case? I mean, did that settle this issue or had it already been settled?
David Barrett: No, ultimately it did settle this issue. That was one of the things the Ninth Circuit relied on to say we don’t have to get into anything. Congress has acted. There’s a six year statute of limitations. Another very important aspect of both the California law and the federal law is that they very clearly specify that it is six years from actual notice or actual discovery. So the kind of implied notice that Spain has tried to argue for by saying that the painting was on public display and so forth, is that—
Katie Wilson-Milne: It’s not known or should have known, which is often the standard in many legal doctrines. It’s just actual knowledge.
David Barrett: It’s actual knowledge.
Katie Wilson-Milne: Yeah. It’s just particular.
David Barrett: And we think that that’s very important as a statement of policy of the United States and of California that it is actual knowledge.
Katie Wilson-Milne: Alright. So now we’re, what— we’re 11 years in, the US government settles this issue that you spent a few years on, and what happens after this?
Steve Schindler: And of course we’re nowhere near the merits.
Katie Wilson-Milne: We still have nothing to do with the actual substance of the case.
David Barrett: Actually, we did get to the merits. Somewhere in the early teens there was actually some discovery. A number of these things that you see in the Supreme Court appendix, the documents from the art galleries, the photographs of the painting and of the back of the painting, which by the way bear all sorts of hallmarks of the painting having been stolen.
There was discovery, the parties exchanged information. That’s when all of this history, the painting coming to the United States and being trafficked in the United States came out. And eventually in 2015, only 10 years after the case was filed, the district court first started addressing the merits. But in 2015, the issue on the merits were motions for summary judgment that both sides made.
Summary judgment meaning you don’t need a trial. We can just take all the facts that are undisputed and as a matter of law one side or the other wins. And at that time, the issue, which eventually got to the Supreme Court, first surfaced. And that is the issue that we call as lawyers choice of law.
And what choice of law means is that in a case in which there are multiple jurisdictions, whether multiple states in the United States or multiple nations, before the court can do anything it has to decide what law of what jurisdiction applies to the case. To clarify that a little bit, in this case as it turns out that really— the question of what law applies will almost certainly determine who wins and who loses. The reason is because under the law of the state of California, and indeed under the law of all states in the United States and many other countries including England, Australia—
Katie Wilson-Milne: Yeah, it’s a common law distinction.
David Barrett: —the so called common law, the law is very clear that a thief never acquires legal title, legal ownership of stolen property. And that anyone who acquires property from the thief, no matter how far removed they are from the thief and no matter whether they acted in complete good faith and paid fair value and had no knowledge or no reason to know that the property was stolen, no matter what, you can never acquire good ownership rights to stolen property. That is a very clear rule.
It has virtually no exceptions, and it is applied every day by courts in California and in the United States. On the other hand, the law of Spain, and to a certain extent the law of other countries in Europe that operate under what we call a civil law system, does allow a person who acquired stolen property to obtain good title or good ownership rights under certain conditions. And generally the conditions, I would say, involve the person that has to be acting in good faith, no basis to know the property is stolen. And Spain—
Katie Wilson-Milne: We would call that a good faith purchaser.
David Barrett: Yeah, exactly. And Spain goes one or two steps beyond that. Their law, and it’s a law that was passed when they adopted their civil code in 1889, 100 and what, 130 years ago and has never been changed. Their law is with respect to movable property objects, like a car or a gun or a painting, even if you acquired it with some reason to know that it was stolen you can still acquire good title if you possess it openly without trying to hide the fact that you have it for a period of six years. And even if you absolutely positively knew that it was stolen, you can still obtain good title if it’s been openly possessed for a period of 25 years.
Katie Wilson-Milne: And those two rules are what this case ultimately comes down to, right?
David Barrett: The California rule or the Spanish rule.
Katie Wilson-Milne: Yeah. I mean, the two Spanish rules that say even if you have some culpability
David Barrett: Yes. That’s right. Obviously if it was the 25 year rule the Cassirers would win. And ultimately what the trial court and the Ninth Circuit, in a later decision that we haven’t gotten to yet decided, was that even though the Baron, according to the courts, did not acquire good title, did not have any legitimate right to possess the painting—
Katie Wilson-Milne: Under Swiss Law.
David Barrett: —under Swiss Law, when he acquired it in 1976, he was not a valid purchaser. Even notwithstanding that, the level of knowledge that the museum had, and I think we disagree very strongly with this factual decision by the courts, but it’s water under the bridge and we probably can’t challenge it any longer, even though the Baron could not give good title to Spain because he didn’t have good title, Spain nevertheless, the museum nevertheless wound up with good title, because it held the painting openly and notoriously for more than six years before the suit was filed.
And we can’t invoke the 25 year period, which would’ve made the claim timely, because Spain didn’t absolutely positively actually know that the painting was stolen, which the court describes as not rising to the level of criminal culpability, even though they had every reason otherwise to know it. If they didn’t actually know it, then it’s okay.
Katie Wilson-Milne: But the court, I mean, to be fair, the courts do— they list reasons for why Spain can’t be held to the level of criminal culpability in terms of knowledge, right? They did an investigation, they hired an outside law firm to look into this stuff. I mean, we don’t need to get into all those details, but there’s some reasoning behind not holding Spain to the highest level of criminal knowledge when it acquired these works.
David Barrett: Yes. There is some reasoning. On the other hand, Spain knew everything that the Baron knew because it was apparent from the face or the back of the painting, many of the suspicious circumstances.
Katie Wilson-Milne: Yeah. So David, so remind me, okay, so this summary judgment, the facts are all out. The summary judgment motions are teed up for a decision in 2015. Is the appeal on the statute of limitations going on at the same time or has that been—that must have been resolved, right? Because why would we—
David Barrett: No.
Katie Wilson-Milne: Okay. Well, how could it be that everyone’s spending all this time readying summary judgment motions when it may be moot if the statute of limitations has run?
David Barrett: Well, I guess that’s the way the case was litigated. In part, the statute of limitations depends on the facts, as we’ve just been discussing. The knowledge of various parties, both the Cassirers and the museum are relevant to the statute of limitations. And there was this issue of whether—if California law applied, then there was no doubt that Cassirers would win.
But if Spanish law applies you get into this much more complicated analysis that we have been discussing. And so the first thing that had to be resolved on summary judgment was which jurisdiction’s law applied.
Katie Wilson-Milne: And how was that resolved?
David Barrett: The trial court found that it was Spanish law and that under Spanish law the facts that had been proven were such that the six year period applied and the case was too late.
Katie Wilson-Milne: I think we have to talk a little bit about how they just came to that decision. Why would Spanish law apply? Or what was the reasoning behind that?
David Barrett: That’s the live issue today which still exists on our fifth trip to the Ninth Circuit, in this case.
Katie Wilson-Milne: Yeah, and it’s a predicate issue. So it’s kind of amazing that we’re through trial, right? We’re decades in and we’re still—the live issue is somewhat procedural.
Steve Schindler: Although the live issue is what law applies. I mean, think about that.
Katie Wilson-Milne: It precedes the merits.
Steve Schindler: Right.
David Barrett: Yeah. Yeah, I guess it is. I never really thought of it. In a way it’s backwards.
Katie Wilson-Milne: It’s backwards, I think.
David Barrett: But at the same time it’s taken us now what, six or seven years to litigate the issue of what law applies. So perhaps you could say it’s a good thing that we’ve also, in the meantime, we have had a trial. The trial which occurred in 2019, a one day hearing, was on the issue of the level of knowledge that the museum possessed, essentially. Which the courts determined, or the Ninth Circuit determined. On the third time the case went to the Ninth Circuit, the Ninth Circuit determined that while it was correct to apply Spanish law, the trial court had not applied Spanish law correctly, because it had not properly considered the level of the museum’s knowledge of the possible theft. So the trial, short brief trial, was held on the level of knowledge that the museum had.
That issue was decided by the trial court that it was not sufficient to give us the longer statute of limitations, and the Ninth Circuit affirmed that decision. But at the same time, the issue of whether California law or Spanish law applied had not actually been finally decided.
Katie Wilson-Milne: Nor is it now.
David Barrett: Nor is it now. That’s correct. And so after the Ninth Circuit decided that the Cassirers would lose, because under Spanish law the museum did not have actual knowledge, then we appealed the case for the, what, second or third time that it had been before the US Supreme Court.
In that appeal, which Supreme Court unanimously decided this past April of 2022, in that appeal, the issue was not whether California or Spanish law applied. The issue was whether the Ninth Circuit, when it decided that Spanish law applied, was using the correct choice of law rule.
Katie Wilson-Milne: Right. And let me paraphrase, because this is just so confusing for someone who’s not an attorney. So the semi substantive procedural issue is, does California substantive law or Spanish substantive law apply? Because if Spanish law applies there’s this concept of adverse possession, which means someone who doesn’t have good title from the beginning could get it because they’ve possessed it for a certain amount of time under certain circumstances.
That doctrine doesn’t exist in the United States, which highly, highly favors victims of theft, to put it simply. How you decide which law applies is also a legal doctrine called choice of law that needs to be decided as a way to pick the matrix by which the substantive law to be applied. And that process is also subject to disagreement and appeal and the whole kind of ladder of litigation that we’ve been talking about. So I think we’re continuing to move backwards here, David, from what law applies to how we even decide what law applies. And maybe you can explain how that matrix works.
David Barrett: Let me try then the terminology.
Katie Wilson-Milne: Because I can’t.
Steve Schindler: Yeah, and I still, frankly, many years after going to law school, I still get triggered slightly when people say, “choice of law” because I remember the choice of law class that we probably all took in law school that was incredibly confusing then as it is now.
Katie Wilson-Milne: Yeah.
Steve Schindler: So David—
David Barrett: I didn’t actually take it, and that’s probably for the best.
Katie Wilson-Milne: We try to avoid it, yeah.
David Barrett: Yeah, that’s probably for the best. Each state and jurisdiction has its own rules for how you make this decision about what substantive law to apply. And those rules differ, not always by a large amount, but definitely differ from jurisdiction to jurisdiction. When a case is brought in either state or federal court in the United States, the court generally applies the choice of law principles of the state in which the court is sitting.
So this case was brought in federal court in California, presumptively the court would apply California choice of law. However, the Ninth Circuit, the court of appeals that we’ve been talking about, about 20 or 30 years ago adopted a rule that said, in cases involving the Foreign Sovereign Immunities Act, which is what we have here, instead of applying the local choice of law rule, California choice of law, we are going to instead apply what the court called federal common law choice of law rules.
Katie Wilson-Milne: I thought I remembered from law school that there was no such thing as federal common law. Now this has confused me since diving into these materials again.
David Barrett: Right. Well, generally there is not. There clearly is no federal common law of substantive law, like contracts or torts, but there is effectively what you could call federal common law in some very narrow areas. Actually some not so narrow. One of them is actually admiralty, which is a pretty big area of law. But there is some kinds of federal common law.
What the Ninth Circuit said here is that rather than applying the state law principles of choice of law, we are going to invent as a federal court our own rules for how we choose which substantive law to apply. And they proceeded to do that in a number of cases over a period of 20 or 30 years.
They never really explained why they were doing it or why they were entitled to do it. Their failure to explain it is very troubling because, as you said earlier, Katie, the general principle is that there is no federal common law and the Supreme Court has made it very clear that federal courts can invent federal common law only in very narrow circumstances where there’s absolutely no other reason to do something but invent the law.
So the Ninth Circuit had this rule that there’s federal common law, and they applied their federal common law rule to say, “Spanish law governs here.” While the Ninth Circuit says federal common law applies to choice of law, there are four other federal courts of appeals around the country, including in New York and Washington DC, which have said, no, that’s absolutely wrong. The Foreign Sovereign Immunities Act clearly requires us to apply the law of the state where the trial court is sitting.
Katie Wilson-Milne: Which would be the default rule in—
David Barrett: Which would be the default rule.
Katie Wilson-Milne: —regular private litigation. Yeah.
David Barrett: Exactly. That would be the default rule. If you had a car accident in New Jersey and you lived in New York and you sued the defendant in New Jersey. You’d apply New Jersey Choice of Law rules. That’s the default rule. So four circuits said that. The Ninth Circuit had its own idiosyncratic idea that we should apply federal common law. And fortunately for us I guess, one of the reasons that the Supreme Court agrees to hear cases, and they only hear maybe 1% of the cases that they’re asked to hear, one of the reasons that they will hear cases is because there’s what’s called a conflict between the different circuit courts of appeals.
So we had a very clear conflict here. Four courts rejected federal common law. The Ninth Circuit insisted on it for a number of cases over many years. So based on that conflict and in addition based on some very clear language in the Foreign Sovereign Immunities Act, we brought the appeal to the Supreme Court and the Supreme Court agreed to hear it.
Steve Schindler: And so tell us a little bit, David, then what did the Supreme Court do and how does that then bring us back to where the litigants are today?
Katie Wilson-Milne: Yeah. And the Supreme Court decides this in this year, right? So we’re not sure how to decide which law will apply in 2022. But we do know that in California the district court and the Ninth Circuit applied this idea of federal common law choice of law, thereby found that Spanish law applied. And under that rubric Spain got to keep the painting, right?
David Barrett: That’s correct. And another thing that we did to increase the likelihood the Supreme Court would hear this case is that we presented the court with a rather narrow question. And that narrow question was, “is the Ninth Circuit right or wrong to have this doctrine of federal common law for choice of law?”
That was the issue before the Supreme Court. And we were clear, and the court’s clear in its opinion, they are not deciding anything except whether California choice of law applies or federal common law choice of law applies. That’s the only thing the Supreme Court decided.
Katie Wilson-Milne: It’s not about the merits of the case at all.
David Barrett: It’s not even about choice of law.
Katie Wilson-Milne: Yeah. It’s not even about choice of law.
Steve Schindler: It’s kind of interesting that given what you’ve just said, and I think it was very good advocacy, I think, to be able to get the case to the Supreme Court under these conditions, but given what you just said it strikes me as then somewhat unusual that they appended to their decision this very moving photograph that you’ve described of Lilly Cassirer’s apartment in Berlin with a photograph of the Pissarro hanging in it. Given the fact that they weren’t deciding the merits at all and were deciding this split among the circuits about, you know, choice of law application that they then threw that in.
Katie Wilson-Milne: Yeah. Maybe we should say what they decided and then we can talk about the opinion. But yeah, I agree. I mean, and we can talk a little bit about Supreme Court advocacy strategy here, which some of our listeners know one of the main arguments you need to make to get a cert petition granted is that there’s a meaningful circuit split that affects sort of the fairness of litigants depending on where a suit is brought in the United States.
And so that clearly existed here. There was a circuit split on this narrow issue. choice of law issue. But, David, we know in your papers that although that issue was very narrow, the story you told the court was much broader, right? I mean, you used this narrow issue to inform the court about this case and the facts and the stories. And although the court properly held to its role to decide the narrow legal issue and said very clearly that it was making no comment on the merits of the case, it clearly was moved by that. So maybe you can talk a little bit about that strategy and then what your takeaway from the court’s decision is, which held— by the way— that there’s no federal common law of choice of law, right?
David Barrett: Yes. That is correct. The court ruled in our favor. It said that the Ninth Circuit was wrong in applying federal common law to this choice of law question and therefore the court flatly decided that California choice of law must be applied in this case.
Katie Wilson-Milne: Not that California law would apply to the case, just the California choice of law would apply.
David Barrett: That’s correct. And actually in its 2015 decision, the summary judgment decision where the district court decided or was required really to apply federal common law, the court also alternatively decided that even under the California choice of law rules, it would apply Spanish substantive law.
Katie Wilson-Milne: Right.
David Barrett: So the district court has actually ruled on that question. The Ninth Circuit has not ruled on that question. And what the Supreme Court did after we won or when we won, is that it sent the case back to the Ninth Circuit to consider how California choice of law rules should be applied in this particular case.
Steve Schindler: Not surprisingly, the Museum’s counsel refers a lot to the district court decision, or a little bit more.
Katie Wilson-Milne: Yeah. Their strategy is to make this seem decided either way, right, to some degree.
David Barrett: Yeah. Well, and again, it was at least as an alternative ground, it was decided in 2015 by the district court. There has been a lot of water under the bridge, including with respect to California and national policy with respect to stolen art and even changes, I think, in the way the museum world looks at stolen art since 2015. But anyway, that’s all in front of the Ninth Circuit. And in fact, there is going to be oral argument in the Ninth Circuit in December of this year on this case.
Katie Wilson-Milne: So let me see if I have this right. So let’s say the Ninth Circuit decides that California substantive law does apply, then what happens? It goes to the trial court again, and there’s a brand new trial?
David Barrett: No.
Katie Wilson-Milne: No.
David Barrett: Effectively the case is over. I think everyone agrees and all the courts have said under California law the thief can’t have good titles, so the painting belongs—
Steve Schindler: Right, and they’ve resolved the statute of limitations issues already. So that’s really— there would be nothing left after that.
Katie Wilson-Milne: Even though there was no trial that adjudicated the merits of these claims under California law, all the parties understand. All the parties would drop it because they know what the outcome would be.
David Barrett: Well, I don’t want to necessarily predict what the museum might do, but one way or another, I believe that all of the substantive issues have been decided.
Steve Schindler: Right. So we may by the end of 2022 have a decision.
Katie Wilson-Milne: Probably 2023. Oral arguments in December.
Steve Schindler: Or maybe they’ve written the decision.
Katie Wilson-Milne: Yeah, maybe.
David Barrett: No. There’s actually— there’s even another complication.
Steve Schindler: And yes, what would that be?
David Barrett: If you can bear it, there’s another complication, which is that when a federal court is faced with deciding a new and complex issue of state law that has not really been clearly decided by the State Supreme Court, the federal court can actually ask the state court to decide that question.
Steve Schindler: What would be the question that would be certified to the Court of Appeals in California? I’m a little confused at this point, because it seemed like that if California choice of law rules apply, what is the novel question that’s sort of undecided in that?
David Barrett: We suggested a couple of questions to the Ninth Circuit that it may want to certify. The principle idea is that under the California Choice of Law rules you look at what the law is in each of the jurisdictions in California and in Spain, and you understand what the reason is for that rule or why that rule is important to the state or important to the country of Spain. And then you do kind of a comparison of the importance of the rule to each of the jurisdictions, and you consider how much the interests of each jurisdiction would be harmed if you adopted the rule of the other jurisdiction. So it’s called analysis of comparative impairment.
For example, the District Court said, well, it’s very simple, Spain has a rule that says you can have adverse possession of personal property. California doesn’t have that rule. And so I’m not sure if it’s clear as the district court made it sound, but in Spain it’s where the painting is located. And at least under a lot of traditional choice of law rules, the location of the property is of some importance.
And so the District court said, well, so Spain’s interest will be more impaired. What we’re arguing, and the California Attorney General agrees with us very strongly, is that first of all it’s not so clear that the fact that the painting is in Spain makes all that much difference. The painting had contact with a lot of countries, including Germany, the United States, California, Switzerland, Spain.
Katie Wilson-Milne: So that’s where we are. 2022 from the 1926 where we start this story.
David Barrett: Oh no, 1900.
Katie Wilson-Milne: 1900, when it enters the Cassirer family, right, before Lilly gets it. I guess my concluding thought here, I know when we’re specifically talking about the litigations is that I was so struck both, as we’ve discussed, by the Supreme Court’s very brief opinion on what choice of law rules apply, deciding a circuit split, that they attach this photo of the work in the Cassirer family home. Completely gratuitous, nothing to do with their opinion, and it clearly is sending a signal, a moral, ethical, non-legal signal to the parties. And looking back at the papers, I saw that the trial court in its decision after trial, finding basically in favor substantively for Spain, that they could keep the painting in a not incredibly brief section said this is the wrong thing.
They went out of their way to say, we made a legal decision that Spain or the museum is the legal owner, but this is not ethically correct. And it goes against principles that Spain itself has signed up for and it’s not our job and we have no authority to enforce these moral codes, but there’s an ethical problem here.And that’s unusual that a court would step out of its lane to do that. And I think both the Supreme Court including that photograph, and the trial court saying that to Spain, even though Spain then pushes on for years, as you said, David, is moving and, conflicting. Well, thank you so much, David. This is a very complex story and a complex litigation, and we will certainly keep our listeners posted on what happens, right?
Steve Schindler: Right. And I should also say that we have invited the lawyer for the museum onto the podcast.
Katie Wilson-Milne: Yep. That would be great.
Steve Schindler: And we’re hoping that he’ll take us up on it. But thank you David and good luck.
David Barrett: Thank you. Thank you very much. It’s been a pleasure talking about it.
Steve Schindler: And that’s it for today’s podcast. Please subscribe to us wherever you get your podcasts and send us feedback at firstname.lastname@example.org. 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.
Steve Schindler: 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. 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.
Music by Chris Thompson. Produced by Jackie Santos.