2018 Art Lawsuit Decisions

Several appraisers and readers of the AW Blog have sent me the recent Artsy post on the 7 important lawsuit decisions from 2018.

The seven decisions include

1.  Jeff Koons works, Tananbaum vs Gagosian Gallery
2. Sotheby's and the Greek Horse
3. Robert Indiana's estate
4. Holocaust restitution and two Egon Schiele works
5. Resale Royalties in California
6. 5Pointz
7. Animal Photos and Copyrights

All very interesting to read.

Artsy reports

In 2018, millions of dollars and significant precedents hung in the balance in a slew of major lawsuits—ranging from feuds over blue-chip artworks to restitution cases of Nazi-looted art to fights over recently deceased artists’ estates. Some of the seven most significant cases of the year, broken down below, are ongoing and warrant keeping an eye on for updates in the new year; others that concluded this year will continue to shape the art law landscape well into 2019 and beyond.

Overdue Koons
Filed on April 19, 2018

The most verbose art lawsuit of the year may well have been the one filed by hedge fund manager, collector, and Museum of Modern Art trustee Steven Tananbaum against artist Jeff Koons’s studio and Gagosian Gallery in April. In it, Tananbaum accused Koons and Larry Gagosian of colluding in an elaborate scheme—described in the complaint as “Ponzi meets The Producers”—to squeeze collectors for millions of dollars with the promise of delivering technically complex sculptures at later dates; Tananbaum said that these delivery dates were perpetually and unreasonably pushed back. “At heart, this interest-free loan System—unbeknownst to the collectors—is less about creating timeless works of art and more about creating an ouroboros by which [Koons and Gagosian] maintain a never-depleting source of funds at the expense of eager and trusting collectors,” the complaint stated.

Why it matters
Beyond its flowery language, erudite analogies, and conspiratorial accusations, Tananbaum’s lawsuit offered a rare glimpse into the inner workings of the very top echelons of the contemporary art market, revealing exactly how Koons finances the production of his largest works by pre-selling editions and using payments in installments to fund the production process. At the time the lawsuit was filed, Tananbaum had paid the artist and Gagosian upwards of $13 million over the course of five years for three stainless-steel sculptures, none of which had been completed. In October, Gagosian filed a motion to have the case dismissed, claiming that because Tananbaum is a “sophisticated art collector,” he should have known that this might happen. In November, Tananbaum and Gagosian filed competing memos, suggesting that this feud is unlikely to end amicably—or anytime soon.

Sotheby’s and the Greek horse
Filed on June 5, 2018
On May 11th, as Sotheby’s was preparing to auction a sculpture of a small bronze horse from the 8th century B.C.E., it received a letter from the Greek Ministry of Culture and Sports raising serious doubts about the object’s provenance. The letter suggested that the sculpture may have been illegally exported from Greece, and called on the auction house to remove the artifact from its May 14th sale. Sotheby’s reluctantly acquiesced, saying that the Greek claims were “without any basis in law or fact,” but had “placed a cloud on the marketability of the item.”
The following month, while the Greek agency was still gathering information about the object’s provenance, Sotheby’s and the sculpture’s consignors, the estate of Howard and Saretta Barnet, sued Greece. The auction house’s legal move, commonly known as declaratory judgment, inverted the dynamic of the case, making the original claimant, Greece, the defendant because of financial losses Sotheby’s incurred as a result of what it alleges was an unjustified claim. In November, attorneys for Greece filed a motion to have the lawsuit thrown out, arguing that the U.S. District Court where Sotheby’s filed its suit doesn’t have the jurisdiction to hear a case involving a foreign nation, per the terms of the Foreign Sovereign Immunities Act.

Why it matters
Declaratory judgment is a legal tactic that has been used recently by U.S. museums to preempt and prevent Nazi loot restitution claims. However, in this instance, Sotheby’s is pursuing it to not only avoid a possible restitution, but also to clear the way for a sale. It could set a startling precedent, discouraging foreign governments from raising the alarm about sales of potentially ill-gotten artifacts for fear of reprisal at a time when a great deal of attention is nonetheless trained on the trade in looted objects and efforts for repatriation.

Love lost over Robert Indiana’s estate
Filed on May 18, 2018
The day before Pop artist Robert Indiana died, the foundation that controls the copyright to his iconic “LOVE” works filed a lawsuit against the artist’s longtime assistant and caretaker, Jamie Thomas, and the art publisher Michael McKenzie, accusing them of taking advantage of the “bedridden and infirm” artist. Their complaint alleged that Thomas—to whom Indiana had given power of attorney in 2016—and McKenzie had “isolated Indiana from his friends and supporters, forged some of Indiana’s most recognizable works, exhibited the fraudulent works in museums, and sold the fraudulent works to unsuspecting collectors for millions of dollars.” Since Indiana’s death on May 19th, the fate of his $60 million estate—as well as his wish for his longtime home on the Maine island of Vinalhaven to become a museum—have been mired in legal limbo that could last for upwards of two years. Already, two works from his estate have been sold at auction to help cover the rapidly mounting legal fees.

Why it matters
Regardless of the validity of the claims, this case highlights the potential vulnerability of older artists to people looking to take advantage of their deteriorating health in order to eventually profit from their legacies and estates. The prospect of years of litigation has cast doubt over the likelihood that Indiana’s home and studio of 40 years, which is on the National Register of Historic Places, will be turned into a museum, per his wishes. And the outcome of the lawsuit could leave the authenticity of a number of works currently attributed to Indiana and sold in the last years of his life in a gray zone; according to the lawsuit, McKenzie’s publishing house produced a number of “derivative” editions in 2016 based on Indiana’s work, which the suit dismisses as forgeries.

Hear, HEAR
Filed in 2015, decided in April 2018
A complicated restitution case involving two Egon Schiele watercolors tested the Holocaust Expropriated Art Recovery (HEAR) Act, which President Barack Obama signed into law in December 2016. Acting on the claims of three heirs of Franz Friedrich “Fritz” Grünbaum—a Viennese cabaret singer who was killed by the Nazis in 1941 at the Dachau concentration camp—authorities had seized the two Schieles, Woman In a Black Pinafore (1911) and Woman Hiding Her Face (1912), collectively estimated at $5 million to $7 million, from the booth of London-based dealer Richard Nagy at the Salon of Art + Design fair in November 2015. In April of this year, a New York judge found in favor of the Grünbaum heirs.

Why it matters
The case proved the significance of the HEAR Act, which changed the statute of limitations requirements surrounding Nazi loot restitution claims. Indeed, a 2005 claim by two of Grünbaum’s heirs seeking the return of a Schiele work from a Boston collector was tossed because the court deemed that the heirs had waited too long to file their claim. The HEAR Act gives heirs six years from the moment they become aware of a work’s location, or their possible claim to it, to take action. Having seemingly learned from their previous claim, the heirs filed for the two Schiele watercolors on the last day of the Salon of Art + Design fair where Nagy was offering them.

Resale royalties quashed in California
Decided on July 6, 2018
Resale royalties for visual art—whereby artists or their estates receive a small percentage of the sale price of their work when it trades hands at auction—remain elusive in the U.S. This year, a federal appeals court in San Francisco essentially struck down the only such law on the books in the U.S.: the California Resale Royalties Act (CRRA) of 1977. In its ruling, the court restricted the law to only apply to sales that took place in California in 1977, finding that CRRA had been superseded by a federal copyright law that took effect at the beginning of 1978. The appeals court ruled that CRRA conflicted with the 1978 copyright law, which holds that copyright owners lose control over future sales of their works after the first time they’re sold.

Why it matters
Resale royalty laws, based on the French legal concept of droit de suite, exist in many countries, including most of the European Union, and in virtually every other artistic field, but they are consistently shot down in the U.S. Supporters of the law argue that it’s only right for artists to receive a percentage of the profits that collectors may make from buying and selling their work, and that such royalties could be particularly valuable for younger artists and those who enjoy little financial stability. Others argue that the law would only benefit famous and wealthy artists and their estates, who tend to be the ones with the most robust secondary markets. Federal resale royalties bills have been introduced in 2011, 2014, and 2015, and have been aggressively lobbied against by Christie’s and Sotheby’s. In September, a bipartisan coalition in the House of Representatives introduced a new version of the bill, the American Royalties Too Act of 2018 (or ART Act).

Seven-figure win for 5Pointz artists
Filed in June 2015, decided in February 2018
More than four years after property owner Jerry Wolkoff had his building in Long Island City, the graffiti center 5Pointz, largely white-washed overnight, a group of 21 artists whose works were wiped out were awarded $6.7 million. The federal judge who found in favor the artists, Judge Frederic Block, awarded them the maximum amount of damages—$150,000 per lost work—because Wolkoff’s destruction had been so deliberate. Indeed, for years, he had permitted the site to be used as a kind of outdoor gallery, where artist and curator Jonathan Cohen managed an ever-evolving array of murals, with the understanding that the site would eventually be developed. But in late 2013, with demolition looming, Wolkoff had the works painted over without warning, making it impossible for the artists to preserve them through documentation.

Why it matters
The ruling—which Wolkoff appealed—is particularly significant because it marked the first time that the protections afforded by the Visual Artists Rights Act (VARA) had been extended to the work of graffiti and street artists (described in the lawsuit as “aerosol artists”). VARA was adopted in 1990 to protect “works of recognized stature” from being distorted, damaged, modified, or destroyed. The 5Pointz ruling extended those rights to works that were both temporary and had been created on someone else’s property. Judge Block’s opinion in the case also cited the significance of blog and media coverage and “social media buzz” about 5Pointz as factors that gave the lost murals “recognized stature,” thereby helping to clarify and modernize one of the more ambiguous phrases in VARA.

Monkey selfie denied
Filed in September 2015, decided in April 2018

One of the most important selfies not taken by a Kardashian was created in a jungle on the Indonesian island of Sulawesi, when a six-year-old crested macaque named Naruto grabbed British nature photographer David Slater’s camera and snapped a series of candid self-portraits. One of them, in which Naruto is framed diagonally and sports a toothy grin, became a viral sensation known as the “monkey selfie” when Slater released it in 2011 and included Naruto in his self-published book, Wildlife Personalities (2014). Then, in 2015, People for the Ethical Treatment of Animals (PETA) sued Slater on behalf of Naruto, claiming that the copyright for the photos rightfully belonged to the macaque and proposing to administer any income from the photos on behalf of the monkey to benefit Sulawesi’s crested macaques. In April, the Ninth Circuit Court of Appeals upheld a lower court’s decision siding with Slater. Nonetheless, per the terms of a 2017 agreement between Slater and PETA, the photographer will donate a quarter of any revenue from sales of the Naruto photos to organizations that protect crested macaques on Sulawesi.

Why it matters
The appeals court’s decision clarified an important legal point: Animals cannot file copyright infringement lawsuits. However, the Ninth Circuit Court of Appeals’s three-judge panel did not rule definitively on whether or not humans could own the copyrights for photographs shot by an animal—or, for that matter, by a robot.

Source: Artsy

---