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Providing timely updates and commentary on legal issues in the museum and visual arts communities

Second Circuit Rules Schiele Drawing Not Stolen by Nazis

By Nicholas O'Donnell on Posted in Cultural Property, Restitution, World War II

The Second Circuit Court of Appeals has affirmed the judgment against David Bakalar concerning ownership of the drawing Seated Woman with Bent Left Leg (Torso).  It is a notable decision first and foremost because it affirms the District Court ruling on the merits of whether the drawing was stolen by the Nazis from the Austrian-Jewish collector Fritz Grünbaum—finding that it was not stolen.  Such a ruling is a rarity among wartime restitution cases, the overwhelming majority of which continue to founder on statutes of limitations and jurisdictional defenses.  Ironically, even though the court ruled that the work was not stolen and that the current owner could not prove good title, the current owner still prevailed.  The details are the key to understanding this case, best described in the District Court decision that the Appeals Court affirmed. 

Bakalar is the current owner of the Schiele drawing, having purchased it in good faith in 1964 from the Galerie St. Etienne in New York.  Bakalar sought a declaratory judgment that he holds good title to the painting. 

The background of the drawing from there gets more complicated.  The District Court found that Grünbaum owned the 1917 work prior to the start of World War II.  In 1938 Franz Kieslinger, a Nazi art appraiser, inventoried Grünbaum’s collection, but the Court could not determine if the drawing at issue was still a part of it.  Based on deposition testimony, the Court found that the drawing was sold to the Galerie Gutekunst in 1956 by Mathilde Lukacs, which later that same year sold it to the Galerie St. Etienne from which Bakalar purchased it.

Fritz Grünbaum’s own fate is better known, unfortunately.  In 1938 he was arrested and imprisoned at Dachau.  There, he signed a power of attorney in favor of his wife, Elisabeth.  Fritz died in Dachau in 1941, and Elisabeth was later interned and died in another concentration camp. 

The defendants were related to him in various respects.  Milos Vavra is the nephew of Fritz Grünbaum’s niece (his sister Elise Zozuli’s daughter).  Zozuli lived in Czechoslovakia after the war, and, according to the Court, made various efforts to obtain the return of Grünbaum property.  Various correspondence in the 1950s made reference to the “Brussels sisters,” taken to be Mathilde Lukacs—Elisabeth’s last surviving sibling—after which Zozuli made reference to the matter being “settled.”

The other plaintiff, Leon Fischer, is a relation of Elisabeth.  Elisabeth was survived by four siblings, one of whom (Max Herzl) survived the war but died in 1946.  Leon Fischer is his grandson, daughter of Rene Herzl. 

According to the Court, Fischer’s parents and grandparents remained in contact with Lukacs, even visiting her once in 1959.  No record exists of Fischer’s parents ever making a claim to the Grünbaum estate. 

An Austrian court declared Vavra and Fischer to be the Grünbaum heirs om 1999 and awarded each a 50% interest in the Grünbaum estate.  Apparently in 1963, a German court had declared two cousins of Fritz Grünbaum (Paul and Rita Reift) to be his heirs.  The Reifs were themselves unsuccessful in trying to win the return of a Schiele painting, Dead City III, from the Museum of Modern Art in New York. 

The Bakalar case was tried once, applying Swiss law, which allows a good faith purchaser to take title even if the object was stolen when it was acquired.  Applying that law, the Court found that Bakalar had good title to the drawing.  The defendants appealed, and the Court of Appeals ordered that New York law, which is quite different, must be applied.  In New York, “a thief cannot pass good title.”  Thus, if Vavra and Fischer made a threshold showing that they have an arguable claim to the drawing, Bakalar would bear the burden to prove that it was not stolen.

To make that showing, the defendants argued two theories.  First, that the drawing may have been stolen by the Nazis, or second, that Lukacs never acquired good title that she could pass to Bakalar. 

The Court found that the most reasonable inference from the fact that the drawing was in Grünbaum’s possession before his arrest and with Lukacs in 1956 was that the drawing remained in the family’s possession the entire time.  The alternative—that it was looted but returned to his sister-in-law, seemed implausible.  The mere fact that the collection was inventoried—almost certainly a prelude to the intended looting of it—there was no evidence that the confiscation ever took place.  Taking all this together, the Court found as a matter of fact that the drawing was not looted by the Nazis. 

Next, the Court addressed the argument that even if not stolen, Lukacs did not hold good title.  Bakalar responded to that argument by suggesting that the most logical explanation was that Lukacs obtained the work during her lifetime as a gift.  Defendants (relying on a passing observation from the Court of Appeals during the first appeal) suggested that no one could have made a gift of the painting, because the power of attorney that Grünbaum signed in Dachau was made under duress and void (and, therefore, any disposition thereafter by anyone other than Grünbaum was ineffective).  The District Court rejected this argument, pointing out that earlier cases cited for that proposition were ones in which the collected had “sold” the painting to the Nazis themselves, the very act of looting, which was later voided.  The District Court did hold, though, that however plausible the notion that Lukacs had received the drawing as a gift, there was no evidence at all of how she got it or a sufficient legal argument that she would have come to it as an heir under Austrian law.  As the party bearing the burden of proof, Bakalar failed, in the Court’s view, to prove that Lukacs ever acquired good title to the drawing. 

Yet Bakalar won the case on the defense of “laches.”  In layman’s terms, laches is the equivalent sitting on your hands, and failing to enforce your rights in a way that prejudices your opponent.  The District Court went through the history of Vavra’s and Fischer’s families’ awareness of the drawing, and their failure to seek to claim it.  The lack of any claim to the work while it changed hands ultimately prejudiced Bakalar, the District Court held, enough so that his defense carried the day and he won the trial.  Since this was not a preliminary determination, but a trial, the court was charged with actually addressing and ruling on the competing facts.  That is significant because it requires more deferential review by the Court of Appeals, and without evidence of “clear error” by the District Court (as opposed to a re-weighing of the evidence), the Court of Appeals had little difficulty in upholding the result.

This is one of the very few restitution claims that has made it to trial—twice—yet the claimant came away empty handed again.  Although there was a ruling on the merits about whether the work was stolen, the outcome actually makes sense.  As the Court noted, it is hard to imagine a scenario where the drawing was looted, yet ended up back in the same family that was part of the persecuted minority.  And, despite the objections that are often raised to laches as a defense, perhaps the simplest explanation really is correct, that the family never sought to get the drawing back because it was sold by the person who had the right to do so (Lukacs).  The take here is that claimants and owners can both take heart from this case; the most any litigant can ask for at the start of a case is the chance to lay out his or her story and argue the case. 

As with any trial, however, there is always a winner and a loser.

“Flea Market Renoir” May Have Been Stolen Decades Ago, Confusion Abounds

By Nicholas O'Donnell on Posted in Collections, Connoisseurship, Forgery, Standing

What was the feel-good, ersatz Antiques-Roadshow story of the summer may soon be one of the most prominent art law issues in the country.  A painting by Pierre-Auguste Renoir entitled “Paysage Bords de Seine” that was purchased at a flea market in 2010 for $7 and authenticated this year as genuine may turn out to have been stolen from the Baltimore Museum of Art. 

National news reported earlier this year the story of a Virginia woman who purchased a small painting in a golden frame with “RENOIR” engraved onto its frame.  Assuming it was a copy, she paid $7, brought it home, and gave it little further thought.  Earlier this year she brought it to the Potomack Co. auction house, which alerted her to the fact that it seemed to be a genuine Renoir.  An auction was scheduled, with estimates ranging as high as six figures. 

At that point there was not much of a legal angle to the story.  After the auction was announced, however, a Washington Post reporter examined the library at the Baltimore Museum of Art (what prompted the inquiry is still unclear).  There, in a box of effects relating to the Sadie May Collection given to the museum, the reporter found a provenance card that seemed to be for the painting to be auctioned.  The card notes that the painting, on a linen napkin, was painted for Renoir’s mistress, apparently at a restaurant on the Seine. 

As may be news to the non-museum public, early twentieth century acquisition records often consist of nothing more than printed index cards, which were carefully maintained and used as evidence of the history, or provenance, of the painting. 

In this case, the card concludes with the entry “STOLEN FROM THE GALLERY, Nov. 17, 1951.”  No further details, no police report, just that.  The director of the Baltimore Museum of Art, Doreen Bolger, was quoted in the Washington Post as saying, “We want the painting back. That painting was associated with her, and she’s one of the most important donors in the museum,” she said.  “It was her decision that it would come to us.”

The auction house, however, has concerns that Sadie May might not have owned it when she gave it to the museum in the first place.  Further complicating matters is the possibility that the museum may have received some money for an insurance claim, raising the question of how that would affect title to the painting (if it were indeed the museum’s).  And, since so much time has passed since all of these events that it is unclear which of these issues could be asserted. 

The looks to be a complicated question of history, records, legitimacy of sale, and a host of art law issues.

Change to New York Art Consignment Statute Adds Protections, Risks

By Nicholas O'Donnell on Posted in Collections, Consignment, Legislation, Trusts

New York has passed an amendment to its Arts & Cultural Affairs law, N.Y. Arts & Cult. Aff. Law §12.01(2012), that is important for artist, galleries, and dealers alike.  It affects the consignment relationship and creates critical new duties—and liabilities, for the dealer on consignment.  Most importantly, it makes using any form of agreement drafted under the old law risky, particularly for the gallery or consignee.  Signed by Governor Cuomo this week, the law takes effect November 6, 2012.

Among the more notable art world scandals in recent memory is the collapse of the Salander O’Reilly Gallery, “one of city’s largest private galleries [] housed in an ornate, historic mansion on East 71st Street.”  Lawrence Salander and his gallery were charged with numerous counts of fraud, accused of “closing on fictitious sales—sometimes of works he did not own—and then using the money to pay off his sizable debt.  He sold the same piece to multiple parties or sold works without telling the owners, who had consigned them to Mr. Salander.”

The new law attempts to address this risk head-on by amending the provisions that deal with consignment.  Consignment as a general principle, whether of art, clothing, or other property, merely means that the consignor (here, the artist) entrusts the property (here, the art) to the consignee (here, the gallery) for sale under agreed-upon conditions, first and foremost the distribution of any resulting revenue.  This law addresses the consignment dynamic in the context of art.

First, the amended statute broadens the scope of the law itself, defining “successor in interest” of the artist considerably, to include categories like personal representative, testamentary beneficiary, trustee of a trust, heirs, and the like.  The upshot is that the class of persons who can enforce the rights under the statute has broadened.

Second, and most critically, it clarifies that under no circumstances can the artwork or proceeds that are held in trust be reached by the consignee’s (i.e., a gallery’s) creditors.  That is to say, even if an artist’s work is sold for $10,000,000, the gallery has no assets, and the creditors swoop in the very next day before the artist is paid her share, the creditors cannot touch that amount.  That cannot prevent outright fraud, but once a gallery/consignee is going underwater, it can protect the artists/consignors who have not yet settled up.

Lastly, even though the previous version of the law used language of “trust” to describe the property held by the consignee, the new law makes clear that any failure to obey the statute’s directives is not merely a breach of the contractual relationship between the parties, it is a breach of fiduciary duty, misconduct that generally entitles a plaintiff to a greater scope of damages, and which bars the defendant/consignee from raising certain kinds of defenses when self-dealing may be involved.  Moreover, a prevailing artist/consignor will recover her attorneys’ fees, a substantial risk and the exception to the traditional “American Rule” that all parties bear their own attorneys’ fees in civil cases, regardless of who wins.

As before, the protections of the statute cannot be waived prospectively, but that safeguard has been bolstered now to bar any waiver absent “words which clearly and specifically apprise the consignor that the consignor is waiving rights under this section with respect to proceeds from the sale of the consignor’s work. . . .”

Taken together, these changes affect any consignment situation in New York in important ways.  Clearly, the consignee/gallery party has a heightened duty and far greater risk in the event of a failure to adhere to the new provisions.  Artists and their successors now have additional tools to vindicate their rights.  And, most importantly, almost any standard contract form being used (not actual contracts already in existence, which are not affected) will be obsolete on November 6, 2012, when the law goes into effect.  Whatever protections galleries in particular thought they had about waiver and liability may no longer be effective.  Anyone involved in these kinds of transactions should review and consider their rights carefully with an attorney.

Happy (early) Birthday to the Art Law Report!

By Nicholas O'Donnell on Posted in Collections, Copyright, Cultural Property, Foreign Cultural Exchange Jurisdictional Immunity Clarification Act, Foreign Sovereign Immunities, Immunity from Seizure Act, Restitution

We launched the Art Law Report one year ago tomorrow.  Several dozen posts, thousands of visitors and many more views later, a very special thank you to everyone who has read and followed the blog.  The connections made literally all around the world are humbling and enlightening.  We continue to strive to provide an interesting selection of legal updates and issues, while offering an opinion and perspective that tries to improve the understanding both of those familiar with legal concepts, and those less so.  The continuing developments in copyright, FSIA, immunity from seizure, and other resitution issues in particular are certainly keeping us on our toes, and collections issues like the Barnes case are never too far away either.  Your links and comments are appriated, and we will keep linking to all those viewpoints from which we are learning too.  Here’s to another year of substantive conversation.

“Restitution and Repatriation, the Return of Cultural Objects” at DePaul University Next Month

By Nicholas O'Donnell on Posted in Antiquities, Cultural Property, Restitution, World War II

Next month’s symposium at DePaul University College of Law Center for Art, Museum & Cultural Heritage Law entitled “Restitution and Repatriation, the Return of Cultural Objects” looks terrific.  The keynote speaker will be Lynn Nicholas of The Rape of Europa fame, and other topics include provenance research, museum acquisitions, and the moral and ethical quandaries posed by restitution and repatriation claims.  The speaker lineup includes museum professionals and attorneys.  Hope to see you there.

Velvet Underground’s Copyright Claim Against Warhol Foundation is Dismissed, Trademark Case Goes On

By Nicholas O'Donnell on Posted in Copyright, Intellectual Property, Trademark

The U.S. District Court in Manhattan has dismissed the copyright claim filed by the Velvet Underground against the Warhol Foundation for the Visual Arts over the iconic “banana” image from the cover of the legendary The Velvet Underground and Nico album.  Without reaching the merits of the claim, the court ruled that the Velvet Underground had agreed previously not to sue on any copyright theories.  Reporting of the decision has been spotty at best, however, ranging from declaring a “win” for the Foundation, to suggestions that the copyright question was decided.  In fact, the Court did not reach the copyright issue, and the Velvet Underground still has other trademark-based claims that remain very much alive and unaffected by the decision.

The image in question stems from Andy Warhol’s collaboration with the band in the late 1960s.  He designed the album cover with the banana image, accompanied by his stylized signature, but unaccompanied by any copyright notice in the name of Warhol himself.  The album was not an immediate success, but the image became an iconic one, and the record is now recognized as one of rock history’s greats. 

Although the Velvet Underground had disbanded by 1972, it used the banana image to publicize a 1993 reunion tour and other publicity materials in the 90s.  The Velvet Underground also licensed the image for a vodka commercial in 2001. 

For its part, the Warhol Foundation licenses copyrights in a great number of Warhol works.  Among those it has licensed is the banana image.  The Foundation fired the first shot in 2009, accusing the band of infringing the Foundation’s copyright.  The band countered that the Foundation had no copyright in the work, and that the secondary meaning acquired by the image over the years belonged to the Velvet Underground, not the Foundation.  The acquisition of such secondary meaning can give rise to trademark, rather than copyright, protection, depending on to whom the meaning is attributable.  Put another way, is the image iconic because it’s a Warhol, or because it is on a famous album?  That is the trademark question. 

The Velvet Underground sued under several theories.  The first was a request for a declaration that the Foundation holds no copyright in the image.  The others are trademark claims related to the meaning acquired by the image as it relates to the band.  For reasons not explained in the order, after filing the complaint but before amending it, the Velvet Underground gave the Foundation what is known as a “covenant not to sue,” which is actually just what it sounds like.  Specifically, it was an agreement not to pursue any claim “for infringement of any statutory or common law copyright in the Banana Design. . . .” 

The Court held that the covenant not to sue eliminated any dispute about whether the Foundation has a copyright.  This is an extremely narrow holding; the Court did not find that no disagreement exists about who has the copyright, but rather no party with standing to bring that disagreement is before the court.  In other words, since the band promised it wouldn’t sue, the only relief it could seek is what is known as an “advisory opinion”—which the federal courts are forbidden under the Constitution from issuing.  The covenant extinguished the controversy between the parties, even if the question remains unanswered.  As the Court stated, the Velvet Underground “has simply expressed an ‘intangible worry, unanchored in time,’ that is ‘insufficient to support an “actual or imminent” injury’ and fails to present a justiciable controversy.” 

The Court rejected the Velvet Underground’s argument that even without a claim over the copyright itself, the Foundation might assert the copyright as a defense to the trademark claim.  Very much open, therefore, are the questions about the fame of the image as it relates to the band versus Warhol himself, questions that may provide interesting answers as the case goes forward.  Any suggestions that the case is over are premature, indeed, a letter was just submitted to the Court asking for additonal time to engage in the fact discovery process.

U.S. Asks Court Not to Sanction Russian Defendants in Chabad Library Case—What Now?

By Nicholas O'Donnell on Posted in Foreign Sovereign Immunities, Restitution, World War II

Casting further doubt on the practical possibility of using the Foreign Sovereign Immunities Act (FSIA) to recover cultural artifacts, the U.S. Government has at long last weighed in on the Chabad plaintiffs’ request for contempt sanctions against the Russian defendants, defendants who have defied for more than two years a judgment to return the library of the late Menachem Schneerson.  Rightly or wrongly, this is another example of the waning utility of the FSIA to seek restitution of works held abroad, and does not bode well for the ongoing embargo by Russian museums against cultural artifact loans to the United States. 

As readers of the Art Law Report will recall, the Chabad plaintiffs have made repeated requests to the District Court in Washington, DC to inflict some kind of compulsion against the Russian defendants.  After asking that the defendants be held in contempt and fined monetarily until they complied with the judgment, the Court solicited the views of the United States.  After several delays, the U.S. finally weighed in and asked the Court not to sanction the defendants.

The U.S. offered two arguments, one statutory and one discretionary.  As to the statute itself, the U.S. correctly pointed out that the FSIA distinguishes between immunity from suit and immunity from execution (a topic much discussed here).  28 U.S.C. § 1610(a) waives immunity from execution only as to property in the United States.  The U.S. argues, therefore, that contempt sanctions are improper because the statute and the caselaw interpreting it do not allow for the execution on property outside the United States, which it is undisputed that the Schneerson library is.  In other words, the U.S. argues, the Chabad plaintiffs are asking the court “to assert just such extraterritorial jurisdiction over tangible property possessed by Russia in Russian territory.” 

This argument is unpersuasive.  The Chabad plaintiffs already have a judgment—not just an order—compelling the return of the Schneerson Library.  No one is proposing to attach or execute on the property in Russia; given the utter contempt that the Russian authorities have shown for the U.S. courts there would be no reason even to try.  What the Chabad plaintiffs in fact ask the Court to do is to fine the Russian defendants until they comply.  Even then, the fine would accumulate and be unenforceable—except as to assets in the United States, against which the FSIA offers no immunity.  In other words, the real statutory question is whether the FSIA contemplates that a foreign sovereign may be compelled to surrender tangible property outside the United States by seizing property inside the United States.  The U.S. response is silent on this question and, in our view, fails to persuade as a result.

The second argument advanced by the U.S. is that even if the FSIA would allow contempt sanctions, the Court should decline to enter them as a matter of prudence.  This is because doing so would damage “the United States’ interest in promoting resolution of the dispute between Chabad and Russia over the Collection.”  As authority for that proposition, the U.S. cites “accepted rules of public international law” and the risk that other states would fail to accord the U.S. reciprocity were it to be sued, instances in which the U.S. itself typically relies on its own sovereign immunity. 

Lastly, the government touts its efforts to broker a resolution.  It summarizes those efforts as “high-level diplomatic efforts with Russia to secure the transfer of the Collection. . . . which, as is so often the case, with diplomacy, require perseverance and consistency.”  Contempt sanctions, the government argues, would upset that balance.

This argument is hard to take seriously.  Assuming that the diplomatic efforts are as high-level as the government suggests, they have failed, utterly, for literally years now.  Indeed, as time has gone on, the Russian officials who speak out on the matter have taken only to insulting the U.S. judiciary system in continually bolder terms.

Instead, and in keeping with the increasing use of the Foreign Affairs Doctrine to dismiss restitution suits, the U.S. position underscores the apparent futility of the FSIA as a tool for restitution.  Given the U.S. argument, persuasive or not, the Court will likely defer or turn down the request for sanctions, making the entire—ostensibly successful—lawsuit actually unsuccessful.  It is hard to imagine a more recalcitrant defendant than these, yet they will likely escape any consequence.  Anyone given thought to resorting to the FSIA to seek restitution should think on this cautionary tale.

Court Denies Request to Amend Complaint Seeking Forfeiture of Mask of Ka-Nefer-Nefer

By Nicholas O'Donnell on Posted in Civil Forfeiture, Collections, Customs

 

The U.S. District Court in St. Louis has denied the government’s request to amend the complaint seeking civil forfeiture of the Mask of Ka-Nefer-Nefer from the St. Louis Art Museum.  Echoing some of the timeliness points we made after the government’s request for reconsideration of the dismissal of the case was denied on June 1, the court noted that the government had previously requested on May 7 another week to move for permission to amend the complaint (in various filings the government had essentially asked for leniency to plead more specific facts to support the allegations of customs violations).  Although the court’s opinion does not actually say that it denied the most recent motion as too late, the reference to May 7 and a week’s time from that date can hardly be accidental—the motion for leave to amend was not filed until June 8, weeks after the time for which the government asked.  In the interim, final judgment had entered, after which an amended pleading is no longer an option.

So the Mask will remain at the St. Louis Art Museum, and the government must convince the 8th Circuit Court of Appeals to reinstate the case.  We will be watching the developments.

Barnes Foundation Relocation Under Attack Again but Unlikely to Come Out Differently

By Nicholas O'Donnell on Posted in Collections, Cy Pres

The Barnes relocation, and challenges to it, are both in the news again.  Apparently former Barnes CEO Kimberly Camp—who held that office when much of the push was made to justify the need to relocate to Center City in Philadelphia—posted a blog entry about the financial condition of the Foundation at the time.  She writes:

“The Barnes has always belonged in Merion. Its circumstance required its relocation. That circumstance was not bankruptcy. I shared that fact with a reporter a few weeks before the opening, and he told me that I had dropped his jaw.  Bankruptcy was not the reason we filed the petition to move the Foundation to the city.  At the time the petition was filed, the Barnes Foundation had a cash surplus and we had no debt – none.  But, saying so made the rescue so much more gallant.”

News soon came that the Friends of the Barnes, who had challenged the alteration to the Foundation that permitted the move, had renewed its petition to reopen the case challenging the move.  Given the centrality of the Barnes’s arguments that financial circumstances compelled the move, the Friends argue that Camp’s statements are “absolutely contrary to the position and information presented by the Barnes Foundation” during court hearings in 2003 and 2004.”  Thus, they say, the case should be revisited. 

The Friends’ renewed efforts have received much coverage in recent days, including thoughtful posts from Lee Rosenbaum and Donn Zaretsky.  Our take, however, is a little to the side of that.  That is to say, even if the Friends were correct about the substantive importance of Camp’s statements, it does not alter the legal basis on which the Friends were turned away again and again from challenging the Barnes’s relocation.  Namely, the Pennsylvania courts ruled repeatedly that private interests like the Friends have no standing to challenge the administration of a trust.  In fact, the court was so frustrated by the necessity of having to repeat this point that the last time it refused to reopen the case it awarded the Foundation its attorneys’ fees—from the Friends.  Whatever the fallout from Camp’s statements, it seems hard to imagine that this development would alter any court’s analysis of the standing question that it has addressed on so many occasions. 

Whether or not falling short of bankruptcy or actual insolvency is inconsistent in any important way with the reasons the Barnes advanced is a different question, but one that the Attorney General is likely the only one with standing even to raise.

Government Tries to Save “Mask of Ka-Nefer-Nefer” Case Against St. Louis Art Museum, but Did U.S. Miss Its Own Deadline?

By Nicholas O'Donnell on Posted in Civil Forfeiture, Collections, Customs, Restitution

After the U.S. District Court denied the government’s Motion to Reconsider its earlier dismissal of the claim to the Mask of Ka-Nefer-Nefer in the St. Louis Museum of Art, the government has tried another procedure to revive the case, one that is normally unremarkable.  A review of the filings in the case raises the question, however, of whether that attempt is too late and the government’s only hopes now rest on an appeal.  That is, the government may have promised the Court that it would file any request to file a new complaint of the sort it just did by no later than two weeks ago and missed its own self-imposed deadline. 

The U.S. government has been trying to seize the Mask in what is called a civil forfeiture action, which is essentially what happens when someone allegedly brings an object into the United States in violation of customs laws.  The U.S. alleges that the Mask was stolen before it was brought into the United States, which would be a violation of 19 U.S.C. § 1595a, among other laws.  In a civil forfeiture case, the United States actually sues the object (hence the case United States v. Mask of Ka-Nefer-Nefer), and it is up to anyone claiming ownership (i.e., the St. Louis Art Museum) to file a claim to it.  The burdens of proof for a claimant are more difficult than in a traditional civil lawsuit (e.g., Claimant v. Museum), and after the Second Circuit’s ruling last year in United States v. Davis, the good faith of the claimant is arguably irrelevant.

The District Court dismissed the civil forfeiture case earlier this year.  The government filed on April 6, 2012 a “Motion for Enlargement of Time to File Motion for Reconsideration and/or to Seek Leave to File Amended Complaint Prior to Entry of Judgment.”  A final judgment is the end of a case, but it is different than an order allowing a motion to dismiss, there is a short time gap between those two actions by the Court.  If the District Court had entered final judgment, the District Court no longer has any jurisdiction to do anything (including change its mind), and the government would have been out of options other than an appeal. 

Such a motion is a fairly routine occurrence.  Once a case goes up on appeal, the losing party is fighting merely for the chance to start all over again, and even if successful that takes months or years.  It is rare and it may seem odd to ask the same judge to second-guess herself, but sometimes a court can be convinced that an important fact was overlooked or even that it got the law wrong.  Similarly, amending a complaint before substantial litigation is generally favored as a means to get to the substance of a case rather than start again after an appeal.

The April 6 motion asked for more time to seek the option to (a) ask the District Court to change its mind, or (b) ask for permission to file a new Complaint with different allegations that might defeat the motion to dismiss that had been allowed.  The District Court allowed the April 6 motion for more time, and the government promptly moved the Court to reconsider its decision.  Two weeks ago, the District Court denied that motion, declined to change the result, and set the deadline for filing the Notice of Appeal that initiates an appeal. 

Now, the government is trying option (b), that is, asking for permission to amend the Complaint to include different allegations that, assumed to be true, the government believes would justify the claim as a matter of law (the government would still have to prove them, but the case would survive).

Here, again, one would expect leave to amend the complaint to be given.  But looking back at the April 6, 2012 motion, the government requested at the time (emphasis added):

“That the Court withhold entry of judgment in the instant matter until May 7, 2012, or until such time as the Court has ruled on any motion for reconsideration or motion for leave to file an amended complaint that the United States may file within that time, whichever is later. . . .”

There is an argument to be made that the government asked for a delay in the entry of judgment only until May 7, 2012 (more than a month ago) or until a ruling on its motion for reconsideration (two weeks ago), and that it promised it would file any such motions within that time.  That is to say, the government ran the risk by filing sequential motions that the motion for reconsideration would be denied before it sought leave to amend, but that it has now missed its own self-imposed deadline.  The consequence of this could be either that the St. Louis Art Museum could ask for the immediate entry of judgment notwithstanding the motion, or simply argue that the Motion for Leave to File an Amended Complaint is untimely and should therefore be denied.  Either way, the case would go up on appeal rather than proceed to the determination of the claims.

As always, stay tuned. . . .