Restitution claims for Cranach paintings in the Norton Simon Museum revived by Ninth Circuit, case now hinges on act of state doctrine

Lexology 9 June 2014
By Nicholas M. O'Donnell 

The U.S. Court of Appeals for the Ninth Circuit restored on June 6, 2014 the claims by Marei von Saher against the Norton Simon Museum in Pasadena for the paintings Adam and Eve by Lucas Cranach the Elder.  The appeals court followed its decision in Cassirer v. Kingdom of Spain in December of last year, concerning the painting Rue Saint-Honoré, après-midi, effet de pluie by Camille Pissarro that was owned at one time by Lilly Cassirer, a Jewish collector who fled Germany in 1939.  While the panel of judges vacated the Von Saher dismissal that was premised on the idea that California’s revised statute of limitations was unconstitutional (instead finding that the law and claims withstand that scrutiny), the divided 2-1 panel sent the case back to the district court to determine if the claims were nonetheless barred under the “act of state doctrine”.  One dissenting judge would have upheld the dismissal on the grounds that the case would call into question Von Saher’s compensation from the Dutch government such that that would violate the foreign affairs doctrine.  That split on the act of state doctrine partially answers the lingering question of why Von Saher, argued the same day as Cassirer concerning the same California law, had gone undecided six months after Cassirer was resolved. 

Von Saher is emblematic of so many World War II restitution cases: the claims have survived another challenge, only to be sent back to the trial court with instructions that portend ominously.  Von Saher has now gone up and down to the appeals court twice, and whatever the result hereafter, it will surely return.  After last year’s oral argument, which the museum’s attorneys were pressed actively by the panel, the recent result was not entirely a surprise.  But the analytical path the 9th Circuit took to get there was somewhat unexpected, and has major implications for future restitution claims.  In particular, the court recited the Washington Principles as national policy, giving those principles legal teeth that have been absent to date.  Although the decision does not cite the Washington Principles as a basis for substantive claims, it still founds the decision on their statement of priorities, a significant appellate first.  Yet even so, the 9th Circuit raised the possibility of yet another defense—the act of state doctrine—that may still defeat the claim. 

The Dispute

The companion cases of Von Saher and Cassirer continue to be a procedural minefield, because they center on the same revised California statute of limitations.  But they also differ in important ways, in particular because Von Saher is a state law conversion case against a private California museum, while Cassirer seeks claims against a state museum under the Foreign Sovereign Immunities Act.  But developments in each have consistently driven developments in the other.

Plaintiff Marei Von Saher is the daughter-in-law and sole heir of Jacques Goudstikker, a well-known Dutch art dealer during the interwar period.  Goudstikker purchased two paintings by Lucas Cranach the Elder, Adam and Eve from the Soviet Union in 1931.  Goudstikker fled the Netherlands in 1940 following the German occupation.  His extensive collection was forcibly sold in two events; the first an auction by the German bank Alois Miedl who purchased Goudstikker’s art dealership and some his property; the second the expropriation by Hermann Göring of virtually the entire Goudstikker fine art collection, including the two Cranachs.  The U.S. Army recovered the Cranachs and they were returned to the Dutch government in 1946. 

Goudstikker’s widow filed timely claims with the Dutch government for her family’s property, and reached a settlement in 1952.  Under that settlement, she received most of the property obtained by Miedl, but the settlement did not cover the art collection taken by Göring.  The Dutch deadline for claims lapsed.  The paintings were then the subject of a claim concerning Goudstikker’s initial acquisition from the Soviet Union.  George Stroganoff-Scherbatoff successfully petitioned the Dutch government to return the paintings to him on the grounds that the Soviet Union had illegally taken the works before Goudstikker bought them.  Stroganoff-Scherbatoff eventually sold the Cranachs to the Norton Simon Art Foundation around 1971, and they have been exhibited by the Norton Simon Museum roughly since then.

In 1998, Von Saher filed a claim with the Dutch Secretary for Education, Culture, and Science, seeking the return of property taken by Göring.  The claim was rejected as untimely.  In 2007 Von Saher sued the Norton Simon Museum in U.S. District Court in California to return the Cranachs (alleging the inadequacy of the Dutch claims process), and the museum moved to dismiss.  The District Court dismissed the case on preemption grounds, concluding that the then-recent California law abolishing the statute of limitations for wartime artwork claims (California Section 354.3 of Code of Civil Procedure) “intrudes on the federal government’s exclusive power to make and resolve war, including the procedure for resolving war claims.”  This invokes what is called preemption; the doctrine under the Supremacy Clause of the United States Constitution that certain kinds of state laws must yield to federal statutes.  Preemption is generally divided into two categories: (1) “Field Preemption,” where an entire subject is sufficiently entrusted to federal law that any state law regulating it will impermissibly intrude and be unconstitutional (like immigration or copyright law), and (2) “Conflict Preemption,” where a particular state law is in direct conflict with a federal law, and the state law must yield.  As has been described by the Supreme Court, conflict preemption is the concept “that state laws that conflict with federal law are ‘without effect.’”

On appeal in 2010, the Von Saher Court of Appeals upheld the dismissal, because “the power to legislate restitution and reparation claims[] is one that has been exclusively reserved to the national government by the Constitution.”  After thus striking down the abolition of the statute of limitations, the court remanded for further proceedings to determine when Von Saher “discovered” her claim to the painting to enable the District Court to rule on whether the claim was timely under a more recently amended law that extended the statute of limitations for all art claims, not just World War II restitution cases.  The Court of Appeals relied on “conflict preemption” in reaching its 2010 result. 

In 2012, the Norton Simon’s second motion to dismiss was granted by the District Court, not on a finding of timeliness, but rather on the notion that complaints about the Dutch restitution claims process were preempted by the Executive Branch’s foreign affairs domain. Von Saher v. Norton Simon Museum of Art, 862 F. Supp. 2d 1044, 1052-53 (2012).  That is to say, the idea that Von Saher’s claim necessarily implicated a judgment about the propriety of the Dutch restitution proceedings—including in both the settlement with Von Saher and the rulings with regard to George Stroganoff-Scherbatoff—a judgment that conflicted with the foreign affairs objectives of the United States. 

The 2014 Opinion

The same panel of judges in Cassirer last year similarly sent the Cassirers’ claim back for litigation, but reviewed the revised California statute claims under the concept of “field preemption,” not “conflict preemption” as the Von Saher court opinion now has.  Having just recently found the revised California statute of limitations to be constitutional (making Von Saher’s claims timely), the remaining question was whether any other doctrine would bar her claims specifically. 

Most notably, the 9th Circuit posed the question like this: do Von Saher’s claims conflict with the foreign policy of the United States with regard to restitution?  In answering that question “no,” the 9th  Circuit shifted its analysis from its earlier decisions in the same case about whether the revised statute of limitations was itself a restitution mechanism (also answered in the negative by Cassirer), but whether claims either revived by the California law generally, or Von Saher’s case specifically, conflict with the actual current foreign policy of the United States.  The court went so far as to effectively concede that it had previously given too much weight to briefs filed by the Solicitor General, rather than inquiring as to the substantive policy independently. 

That is a significant difference, because it required the court to reach a conclusion as to what the nation’s foreign policy is.  Here, for the first time in the holding of a U.S. decision, the 9th Circuit invoked the Washington Conference Principles on Nazi Stolen Art.  The court summarized the policies evident in the Washington Principles as they relate to foreign policy as follows:

(1) a commitment to respect the finality of “appropriate actions” taken by foreign nations to facilitate the internal restitution of plundered art; (2) a pledge to identify Nazi-looted art that has not been restituted and to publicize those artworks in order to facilitate the identification of prewar owners and their heirs; (3) the encouragement of prewar owners and their heirs to come  forward and claim art that has not been restituted; (4) concerted efforts to achieve expeditious, just and fair outcomes when heirs claim ownership to looted art; (5) the encouragement of everyone, including public and private institutions, to follow the Washington Principles; and (6) a recommendation that every effort be made to remedy the consequences of forced sales. 

Viewed in this light, the court found Von Saher’s claims consistent with that policy, and thus not preempted by it.  Indeed, the court identified Von Saher’s claims as just those that the Washington Principles were intended to advance, or at least permit to have their day in court.  The court noted the hostility that Goudstikker’s widow could have faced had she filed a claim earlier in Holland.  This too is a significant recognition.  Most World War II art restitution cases have foundered against neutral rules that often ignored the particular context of postwar Europe.  This opens up some possibility for a more expansive view.

In its instructions on remand to the District Court, the 9th Circuit identified one theory that might yet defeat the claims, however: the act of state doctrine.  This legal doctrine holds that notwithstanding a U.S. court’s jurisdiction to hear claims, it should avoid as a matter of prudence any case that concerns the act of a sovereign nation against one of its subjects.  In the restitution context, Yale University v. Konowaloff is a clear application of this.  Yale sued preemptively to confirm its title to the iconic Van Gogh The Night Café from claims by Konowaloff.  Earlier this year, the District of Connecticut awarded summary judgment to Yale, arguing that whatever the lawlessness of Soviet declarations of the abolition of private property, the harm suffered by Konowaloff’s predecessor was unquestionably the result of an official Soviet act against a Soviet citizen. 

In the Von Saher case, the Court posited that the act of returning the paintings to Stroganoff-Scherbatoff might itself constitute an act of state beyond review.  In effect, the argument would go, even if returning the Cranachs to Stroganoff-Scherbatoff deprived Goudstikker’s widow of what was otherwise her property, that deprivation was an act by the Dutch government to the detriment of a Dutch citizen, and thus beyond review. 

The opinion thus leaves open yet another idea that could defeat the claims.  When the 9th Circuit restored Cassirer last year, it went to great lengths to distinguish its opinion from the notion that the Cassirers could use the case a means to attack the fairness of what Lilly Cassirer had been paid by Germany after the war, because that could implicate the foreign affairs of the United States.  The Cassirer opinion blessed the revised California statute of limitations as consistent with that concern.  Yet Von Saher shares a factual parallel there—after all, she has challenged the fairness of the Dutch proceedings.  Thus, even if her claims survive the act of state doctrine challenge, she may be back in the same boat when the case returns to the Court of Appeals—as might Cassirer as a matter of fact rather than law. 

As a practical matter then, it is fair to ask whether it really matters if the reason that the Dutch restitution actions do ultimately win this case for the Norton Simon was an application of the act of state doctrine, or of foreign affairs preemption.  But as with the recent tide of restitution cases, expect the analysis of this opinion to feature heavily in future claims.
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