/>iFor nearly two decades, the fate of Camille Pissaro’s Rue St. Honoré, après midi, effet de pluie (Rue Saint-Honoré in the Afternoon. Effect of Rain) (1897) (the “Painting”)[1] has hung in the balance, as courts have considered a variety of questions raised by an action the heirs of an original owner brought for the return of Nazi-looted art.[2] The initial decisions addressed the question of the court’s jurisdiction to hear a claim for return of a work that is located in Spain[3] and whether too much time had passed before the case was brought.[4] Since 2015, the Cassirer case has chiefly focused on choice of law – whether the law of California or the law of Spain should apply.
In many instances, which law applies would make little difference. However, here, the choice of law likely determines whose claim to the Painting prevails. Under California law (as is true of most common law jurisdictions) stolen property remains stolen, even in later hands who had nothing to do with the theft. Under Spanish law, however, (as is true in many civil law jurisdictions) title to stolen property may vest in a later owner after the passage of time.
The latest decision in this long controversy revisits the question of choice of law, and specifically how a court is to decide which law would be more impaired by application of the other law.
Background
As with much Nazi-looted artwork, the history of the Painting is long and complex. Lilly Cassirer Neubauer inherited the Painting in 1926. As German Jews, Lilly and her husband were subjected to the discriminatory racial laws of the Third Reich, including the “Aryanization” of the property of German Jews. As part of this Aryanization, the Nazi government appointed Berlin art dealer Jackob Scheidwimmer to appraise the Painting. Scheidwimmer refused to permit Lilly to take the Painting out of Germany and demanded that she “sell” it to him. The payment – ca. $350 in Reichsmarks – was deposited in a blocked bank account to which Lilly had no access. Lilly and her husband fled Germany in 1939.
Scheidwimmer then exchanged the Painting for three German paintings from the collection of Julius Sulzbacher, a Jewish art collector. This “exchange” was no more consensual than the forced “sale” of the Painting. After the Sulzbacher family fled Germany, the Gestapo seized the Painting.
After the war, Both Lilly and Sulzbacher filed claims against Scheidwimmer, for restitution or compensation. In 1954, the U.S. Court of Restitution Appeals confirmed Lilly was the owner of the Painting. In 1957, Germany established a claims process for claims related to Nazi-looted property. Lilly dropped her claim against Scheidwimmer and filed a claim with Germany for compensation. At this time, everyone, Lilly included, believed the Painting to have been lost or destroyed in the war. In 1958, Lilly, Sulzbacher, and Germany entered into a settlement agreement with respect to the Painting and two of the three paintings Sulzbacher had “exchanged” for it. In that settlement, Lilly was paid the agreed value of the Painting as of April 1, 1956 (120,000 Deutschmarks).
The Painting, however, had not been destroyed. Instead, it appears to have been sold in a Nazi government auction, and then sold again in 1943 at the Lange Auction in Berlin. The Frank Perls Gallery of Beverly Hills moved the Painting from Germany to California in 1951 and sold it to collector Sidney Brody. The Painting was sold in 1952 to St. Louis art collector Sydney Schoenberg. It was then sold in 1976 to Baron Hans-Heinrich Thyssen-Bornemisza of Lugano, Switzerland (the Baron).
In 1988, the Baron and the Kingdom of Spain entered into an agreement for the Baron to loan his collection (the “Collection”) to Spain, and established a private, nonprofit foundation the Thyssen-Bornemisza Collection Foundation (the “Foundation”) to “maintain, conserve, publicly exhibit, and promote artwork from the Collection.” In 1993, Spain purchased the Collection from the Foundation. From October 1992 to the present, the Foundation has owned and publicly displayed the Painting at its museum in Madrid.
Lilly’s heirs discovered the painting at the Foundation in 2000, and petitioned Spain and the Foundation to return the painting. Spain’s Minister of Education, Culture and Sports denied that request. Subsequently, five members of the U.S. Congress wrote to the Minister, asking Spain and the Foundation to return the painting to Lilly’s heirs, which request was likewise refused.
On May 10, 2005, Lilly’s heir, Claude Cassirer, a resident of Los Angeles, filed suit against the Foundation and Spain in the U.S. District Court for the Central District of California.
Procedural History: A Long Road
In 2015, the district court held that Spanish law with respect to stolen property should apply, and granted summary judgment in favor of the Foundation[5] On appeal, the U.S. Court of Appeals for the Ninth Circuit reversed the District Court, holding that if the Foundation were found to have “had actual knowledge the Painting was stolen…[it] could not have acquired title to the Painting through acquisitive prescription.”[6] Following a bench trial, the District Court found that the Foundation did not have actual knowledge that the Painting had been stolen, and so had acquired title to the Painting under Spanish law. The Cassirers appealed again to the Ninth Circuit, which affirmed the District Court’s decision, holding that “[b]ecause the district court’s finding that [the Foundation] lacked actual knowledge that the Painting was stolen is supported by inferences that may be drawn from facts in the record, it is not clearly erroneous.”[7]
The U.S. Supreme Court granted certiorari, and on April 21, 2022, issued its decision, rejecting the Ninth Circuit’s choice-of-law analysis.[8] The issue wasn’t which substantive law (California or Spain) should apply, but whether the courts below had employed the correct choice-of-law rule for making the determination. The Ninth Circuit (and the District Court, as well) had employed a choice-of-law rule derived from federal common law. The Court framed the issue as “whether a court in an FSIA case raising non-federal claims (relating to property, torts, contracts, and so forth) should apply the forum State’s choice-of-law rule, or instead use a federal one.”[9] It will be helpful to briefly consider the Supreme Court’s decision and reasoning before analyzing the Ninth Circuit’s May 22, 2023, decision.
The SCOTUS Decision
In order to understand the Court’s analysis and its holding, it is necessary first to consider how a U.S. court comes to have jurisdiction to hear a case against a museum such as the Foundation, which is an instrumentality (or agency) of a foreign government. As the Court explains:
Under the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. §§ 1602 et seq., a foreign state or instrumentality is amenable in specified circumstances to suit in an American court….[The FSIA] provides the sovereign actor with immunity unless the claim against it falls within a specified exception….The complaint here asserted that the statute’s expropriation exception applied. That exception removes immunity for cases involving ‘rights in property taken in violation of international law.’…At a prior stage of this litigation, the courts below held that the Nazi confiscation of Rue Saint-Honoré brought [Cassirer’s] suit against the Foundation within the expropriation exception.[10]
Since, under the FSIA, any claim for relief not entitled to immunity is liable in the same manner and to the same extent as a “private individual under the circumstance,”[11]the Court reasoned there could be no deviation from the choice-of-law rule that would apply in a case against a private individual. The choice-of-law rule “must mirror the rule that would apply in a similar suit between private parties.”[12] The rationale, the Court said, is simple:
Consider two suits seeking recovery of a painting – one suit against a foreign-state- controlled museum (as here), the other against a private museum. If the choice-of-law rules in the two suits differed, so might the substantive law in fact chosen. And if the substantive law differed, so might the suits’ outcomes.[13]
The Court remanded the case back to the Ninth Circuit for further consideration.
The Ninth Circuit Decision: California’s Choice-of-Law Rule and a Question
The Ninth Circuit issued its decision on May 22, 2023, applying the “governmental interest test,” which is California’s choice-of-law rule.[14] This test entails three steps: (1) “a court must determine ‘whether the relevant law of each of the potentially affected jurisdictions with regard to the particular issue in question is the same or different,’” (2) “if the law is different, ‘the court examines each jurisdiction’s interest in the application of its own law under the circumstances of the particular case to determine whether a true conflict exists,’” and (3) “if there is a true conflict, the court ‘carefully evaluates and compares the nature and strength of the interest of each jurisdiction in the application of its own law to determine which state’s interest would be more impaired if its policy were subordinated to the policy of the other state.’”[15]
The Ninth Circuit analyzed each of the test’s three steps. On the test’s first step, it concluded that “[b]ecause Spanish law expressly recognizes ‘that title to chattels may pass through qualified, extended possession,’…while no California judicial decision or statute has ever authorized such a practice, and California law has made clear that ‘[s]tolen property remains stolen property, no matter how many years have transpired from the date of the theft,’…the relevant laws of these jurisdictions are different ‘with regard to the particular issue in question.’”[16]
In considering the test’s second step, the court concluded that a true conflict existed, since both jurisdictions had a legitimate interest in the application of their own laws.[17] The court noted that “Spain has an interest in regulating conduct that occurs within its borders, including applying its long-standing rule governing acquisitive prescription of personal property, which assures Spanish residents that their title to personal property is protected after they have possessed the property in good faith for a set period of time.”[18] Likewise, the court observed, California “has shown it has an interest in enabling residents to recover stolen personal property, even when it is in the hands of good faith purchasers, and a particular interest when that stolen property is Holocaust-era art.”[19]
It is in applying the third element of the test – comparing the degree of impairment of the two jurisdictions if their law were subordinated to the law of the other jurisdiction – that a problem arises for the court. The court notes a distinction between the ways that courts analyze choice-of-law questions in cases arising in tort and those cases addressing questions of property. “While federal common law provided guidance on how its choice-of-law rules should be applied to property cases,” the court stated, “…California’s choice-of-law rules do not.”[20] Without overt guidance, the court looked to those decisions that have applied California’s choice-of-law rules, which were limited to “tort actions where a California resident, who has suffered a physical injury due to the negligent conduct of a defendant in a different jurisdiction, being an action to impose liability on that defendant.”[21] While those courts applying California’s choice-of-law rules to tort actions had considered a number of factors, the most important actor by far was the “situs where the tortious conduct and physical injury occurred.”[22] This factor was, the court found, unhelpful in the context of a stolen property action.
Lacking adequate guidance on how this prong of the test should be applied to stolen property, the court certified a question to the California Supreme Court, asking for guidance on how the comparative impairment analysis should be applied.
The Road Ahead
For the Painting, an already long and tortuous road will continue, growing even longer and more tortuous. With guidance from the California Supreme Court on how to apply the comparison test to stolen property, the Ninth Circuit will complete its choice-of-law analysis, but the outcome of that analysis is far from clear. For observers of the case, perhaps the best advice in the interim is that Pissaro himself gave to a young art student: “The eye should not be fixed on one point, but should take in everything, while observing the reflections which the colours produce on their surroundings.”
[1] See an image of the painting.
[2] For some background on Nazi-looted art, see my previous discussions: (1) “Restitution of Cultural Objects Taken During World War II, Part I,” and (2) “Restitution of Cultural Objects Taken During World War II, Part II.”
[3]See Cassirer v. Kingdom of Spain, et al., 461 F.Supp.2d 1157 (C.D. Cal. 2006) (denying Spain’s motion to dismiss for lack of jurisdiction), aff’d in part by Cassirer v. Kingdom of Spain, et al., 616 F.3d 1019 (9th Cir. 2010).
[4] The Foundation moved to dismiss the case, challenging California Civil Procedure Code Section 338(c)(3)(A), which extended the statute of limitations and permits claims to be brought within six years of actual discovery for “the specific recovery of a work of fine art brought against a museum, gallery, auctioneer, or dealer, in the case of an unlawful taking or theft …. of a work of fine art, including a taking or theft by means of fraud or duress.” The District Court held that 338(c)(3)(A) was an unconstitutional intrusion upon the federal government’s foreign affairs power. See Cassirer v. Thyssen-Bornemisza Collection Foundation, Case No. CV-05-3459-GAF, 2012 WL 12875771 (C.D. Cal. May 24, 2012). The Ninth Circuit disagreed, holding that “§ 338(c)(3) does not intrude on the federal government’s foreign affairs power.” Cassirer v. Thyssen-Bornemisza Collection Foundation, 737 F.3d 613, 617 (9th Cir. 2013). For a discussion of California’s statute of limitations for actions to recover stolen property, see my previous discussion of the von Saher case.
[5] For a discussion of the District Court’s 2015 decision, see my previous article, “Cassirer v. Thyssen-Bornemisza Collection Foundation: Application of Spanish Law of Adverse Possession Vests Title to Pissaro Painting in Spanish Museum, Not Original Owner’s Heirs.”
[6] Cassirer v. Thyssen-Bornemisza Collection Foundation, 862 F.3d 951, 973 (9th Cir. 2017).
[7] Cassirer et. al. v. Thyssen-Bornemisza Collection Foundation, 824 Fed. Appx. 452, 457 (9th Cir. 2020).
[8] Cassirer et. al. v. Thyssen-Bornemisza Collection Foundation, 142 S.Ct. 1502 (2022).
[9] Id. at 1507.
[10] Id. at 1506-7.
[11] 28 U.S.C. § 1606.
[12] 142 S.Ct. at 1508.
[13] Id.
[14] Cassirer et. al. v. Thyssen-Bornemisza Collection Foundation, Case No. 19-55616, 2023 WL 3576289, at *22 (9th Cir. May 22, 2023).
[15] Id.
[16] Id. at *6.
[17] The dissent objects to the majority’s conclusion, arguing instead that it is not at all clear that California law does not recognize acquisition of title to personal property by adverse possession. The dissent distinguishes between a thief not being able to pass good title and an innocent third party being able to acquire title by virtue of adverse possession. There is, then, the dissent argues, only a “false conflict,” and “Spain is the only interested jurisdiction and therefore its law applies.” Id. at *16.
[18] Id. at *8.
[19] Id.
[20] Id. at *9.
[21] Id.
[22] Id. at *10.
