Tuesday, November 07, 2017

BREAKING NEWS: Injunction denied in Berkshire Museum case (UPDATED 2X)

Story here.  More later.

UPDATE:  Lots of interesting stuff in the decision.  There are a number of museum directors in my Deaccessioning Hall of Fame, and we recently added our first scholar-in-residence.  Now we've got our first judge.  Some reactions, in no particular order:

1.  There were recently some efforts by the usual anti-deaccessioning crowd to downplay the museum's financial difficulties, but Judge Agostini gives that argument short shrift:  "There appears to be no dispute that the Museum is in serious financial trouble. ... Although the extent of the financial woes is disputed, it is beyond cavil that the Museum's financial outlook is bleak."  So stop caviling.

2.  He points out (at p. 6) that "deaccessioning items from a museum is neither illegal nor unethical per se and every proposed deacesssion must be examined on its own merits."  That's a pretty good statement of the anti-anti-deaccessioning position.

3.  The decision basically proceeds in two movements.  First, nobody but the Attorney General has standing to sue.  And, as for the Attorney General ... oh, does he take the Attorney General to the woodshed.  He points out that the AG was "made aware of the proposed sale" in June, at which point it "commenced a detailed and thorough review":  it "requested and reviewed numerous documents, conducted over 20 informal interviews, met with Museum officials in Pittsfield, had no fewer than 20 conference calls with Museum counsel and fielded more than 400 contacts by individuals interested in the transaction."  In September, when the November sale was announced, the AG "took no steps to intervene or even express dissatisfaction."  It wasn't until Oct. 30, two days before the court hearing, that the AG got involved, and even then did not "assert the the Museum breached its fiduciary duties, only that it has 'concerns' and needs more time to complete its investigation."

"Putting aside the issue of why four months was insufficient to complete this inquiry," the Court continued, the AG failed to specify "what information is necessary to complete its review, what attempts it has made to obtain such information, and when it will be in a position to offer its opinion."  The Court calls the AG "a reluctant warrior," and notes, dryly: "this request to enjoin based on concerns is unusual."

4.   The Attorney General didn't fare much better when the Court finally turned to the substantive question whether the museum's trustees breached their fiduciary duty.  It points out, first of all, that "the Attorney General, agreeing that the Museum was in dire straits, conceded at oral argument that the Trustees' decision to deaccession ... was in good faith."  It then goes on to note that the AG "cites no case, statute, or [AG] policy in support of the proposition that, to be reasonable, corporate board decisions must follow the professional ethics of the field."  In other words, the AAMD and their allies in the Deaccession Police do not make the law.

Let's stop there for a second because this is an important point.  The Court here is rejecting the argument that the museum's decision was unreasonable because it "would result in sanctions" by the museum associations.  The Deaccession Police have had some success with this argument in the past -- most notably, in the case of the Corcoran -- which has always struck me as remarkable.  It seems to me the argument is:

If you do X, we will smack you.
It is unreasonable and a breach of fiduciary duty to do something that results in your being smacked.
Therefore, it is a breach of fiduciary duty to do X.

Judge Agostini rejects that argument.  "The Trustees evidently considered the ethical implications of their decision and weighed those implications heavily."

5.   He also dismisses, in one quick footnote (n.11), the argument we hear over and over from the Deaccession Police "that deaccessions of this nature will chill relations with potential future donors to the Berkshire Museum, and to museums in general."  This argument, he says, "overlooks the simple fact that donors are free to restrict their gifts in express terms, and, quite often, they do."

6.  Nobody seemed to press the argument that works can't be sold because they are held in the public trust ... but maybe that's because there's no such thing as the public trust.

7.  The bottom, bottom line:  The trustees here "undertook a deliberate and careful review of the available options and chose what they believed to be the appropriate course.  That was their duty. Though the Attorney General, the non-governmental plaintiffs, and perhaps many in the public might disagree with the resulting decision, the law does not hold the Trustees to a standard of popular or political approval.  Rather, the law requires reasonable care under the circumstances, and there is no evidence that the Trustees afforded this decision less than reasonable care."  In other words:  once again, the Deaccession Police, writing on Twitter, do not make the law.

8.  The Court closes with one last shot at the Attorney General -- "it is bewildering that the [AG] would seek such an injunction ... when its investigation has uncovered no evidence of bad faith, no conflict of interest, no breach of loyalty, no express gift restrictions, and yielded unconvincing evidence of implied gift restrictions or a breach of reasonable care during a two-year decision-making process" -- and expressly frames its decision as vindicating "the rights of a charitable board to make thoughtful decisions to steer its charity through troubled times."

UPDATE 2:  Felix Salmon needs a drink.  (Scroll around for his other thoughts on the decision.) And Brian Frye called it.  (Yes, he did.)