Thursday, October 16, 2008
2011
From the AP: "Construction of The Barnes Foundation's new downtown home is slated to be complete by the end of 2011, a timetable that comes after years of legal battles over the future of the foundation and its multibillion-dollar art collection. Demolition of a former juvenile jail on the site is slated to begin this winter, with construction to start in fall 2009, officials announced at an event Wednesday evening. Interior work will begin after that, but no official opening date was set."
Friends of the Barnes member Robert Zaller is quoted as calling the move "a criminal conspiracy to bring about the biggest art heist since the Second World War" and vowed to keep fighting "until we stop it."
Mayor Michael Nutter said: "For all the hooting and hollering about the prospect of the Barnes coming to the parkway, there was a lot of hooting and hollering (by its neighbors) wanting them to shut down and leave. ... Sometimes you have to be a little careful what you wish for."
Friends of the Barnes member Robert Zaller is quoted as calling the move "a criminal conspiracy to bring about the biggest art heist since the Second World War" and vowed to keep fighting "until we stop it."
Mayor Michael Nutter said: "For all the hooting and hollering about the prospect of the Barnes coming to the parkway, there was a lot of hooting and hollering (by its neighbors) wanting them to shut down and leave. ... Sometimes you have to be a little careful what you wish for."
Wednesday, October 15, 2008
Minor Disagreement
In response to this post about his dispute with Sotheby’s, Halsey Minor sent me the following email (and permission to print it):
"Donn, just a few small facts you may wish to bear in mind. I do not live in New York. I split my time between San Francisco and Los Angeles. I have 5 kids in 2 cities and I have 10 companies and I like to collect — in many areas.
"The way I thought it was supposed to work was that people like me would not need to read every periodical on the planet so that we would have the background on the owner of every work of art we may wish to buy. I thought the millions of dollars I pay the auction houses every year was because they did the research for me. According to you its my responsibility, yet I pay Sotheby’s 15%. If you are right I need to stop collecting because I don’t have the time to do the research.
"I probably bid on 25 items that auction season across contemporary, design and American in New York, London and Paris and if you want me to be responsible for what I considered to be their job then you can kiss 95% of the auction buyers goodbye. We have lives and we pay the premium to be informed and protected. Clearly you think the auction houses should get paid for just existing (why call your people specialists then?) and people like me should dedicate our lives to reading every conceivable article, blog, tv show, etc. Because auction houses really don’t have specialists, it’s buyer beware. If your opinion prevails then there is no art industry any more. The more busy you are the more likely you are to have the money to buy art.
"I am quite frankly shocked that you don’t hold auction houses accountable for providing the most basic information to their customers."
I wrote back that I thought my post was pretty neutral, but that I would be remiss if I did not mention the fact that the auction house's interest had been publicly disclosed ahead of the sale; readers can make up their own minds as to what difference that should or should not make. I also said the point I was making at the close of the post was not that he had an obligation to "read every conceivable article, blog, tv show, etc," but rather that -- to the extent one buys into some version of the efficient market hypothesis for artworks -- we can assume that this widely publicized piece of information was fully reflected in the price of the work. What makes this case worth following is that it presents two questions that, to my knowledge at least, have not been answered before: (1) Is Sotheby's correct that a lot-by-lot disclosure of security interests is not required? and (2) Does the kind of relationship he had with his contact there give rise to the sorts of duties he claims Sotheby's owed to him? It’s clear Halsey thinks those are easy questions, but I'm not so sure.
To which he gave the following response (and I’ll stop here because this post is long enough):
"You must remember that for there to be an efficient market the market maker cannot withhold at their discretion information relevant to price. If you were to see the emails the court will see, what I believe is an obvious case will only become more so. How can they disavow a ‘financial interest’ when they needed the money to get repaid in what is clearly a very dicey situation? Lastly, you have not looked at the law on the books but if you do you will see that even when they claim to disclose, their disclosure is inadequate. If you want to see it done right, then look at Christies’ disclosure. Why the difference?
"Sotheby’s has subjected themselves and their shareholders (hence the steep decline in stock price) to massive liability all because they could not admit they were wrong and discuss a solution like gentlemen. I didn’t file the lawsuit. I was just waiting for them to prove their case with documents which they claimed they were going to send. Instead of getting documents I was blindsided with a Federal lawsuit and a bunch of PR hyperactive people describing conversations they never took part in and were simply white boarded over the weekend as ‘a pr strategy.’ I am afraid the government only cut the head off of this snake. I think they have now set themselves up so that the rest of their behavior, well known to the industry, can get cleaned up. Its just too bad stockholders had to pay for so much hubris."
"Donn, just a few small facts you may wish to bear in mind. I do not live in New York. I split my time between San Francisco and Los Angeles. I have 5 kids in 2 cities and I have 10 companies and I like to collect — in many areas.
"The way I thought it was supposed to work was that people like me would not need to read every periodical on the planet so that we would have the background on the owner of every work of art we may wish to buy. I thought the millions of dollars I pay the auction houses every year was because they did the research for me. According to you its my responsibility, yet I pay Sotheby’s 15%. If you are right I need to stop collecting because I don’t have the time to do the research.
"I probably bid on 25 items that auction season across contemporary, design and American in New York, London and Paris and if you want me to be responsible for what I considered to be their job then you can kiss 95% of the auction buyers goodbye. We have lives and we pay the premium to be informed and protected. Clearly you think the auction houses should get paid for just existing (why call your people specialists then?) and people like me should dedicate our lives to reading every conceivable article, blog, tv show, etc. Because auction houses really don’t have specialists, it’s buyer beware. If your opinion prevails then there is no art industry any more. The more busy you are the more likely you are to have the money to buy art.
"I am quite frankly shocked that you don’t hold auction houses accountable for providing the most basic information to their customers."
I wrote back that I thought my post was pretty neutral, but that I would be remiss if I did not mention the fact that the auction house's interest had been publicly disclosed ahead of the sale; readers can make up their own minds as to what difference that should or should not make. I also said the point I was making at the close of the post was not that he had an obligation to "read every conceivable article, blog, tv show, etc," but rather that -- to the extent one buys into some version of the efficient market hypothesis for artworks -- we can assume that this widely publicized piece of information was fully reflected in the price of the work. What makes this case worth following is that it presents two questions that, to my knowledge at least, have not been answered before: (1) Is Sotheby's correct that a lot-by-lot disclosure of security interests is not required? and (2) Does the kind of relationship he had with his contact there give rise to the sorts of duties he claims Sotheby's owed to him? It’s clear Halsey thinks those are easy questions, but I'm not so sure.
To which he gave the following response (and I’ll stop here because this post is long enough):
"You must remember that for there to be an efficient market the market maker cannot withhold at their discretion information relevant to price. If you were to see the emails the court will see, what I believe is an obvious case will only become more so. How can they disavow a ‘financial interest’ when they needed the money to get repaid in what is clearly a very dicey situation? Lastly, you have not looked at the law on the books but if you do you will see that even when they claim to disclose, their disclosure is inadequate. If you want to see it done right, then look at Christies’ disclosure. Why the difference?
"Sotheby’s has subjected themselves and their shareholders (hence the steep decline in stock price) to massive liability all because they could not admit they were wrong and discuss a solution like gentlemen. I didn’t file the lawsuit. I was just waiting for them to prove their case with documents which they claimed they were going to send. Instead of getting documents I was blindsided with a Federal lawsuit and a bunch of PR hyperactive people describing conversations they never took part in and were simply white boarded over the weekend as ‘a pr strategy.’ I am afraid the government only cut the head off of this snake. I think they have now set themselves up so that the rest of their behavior, well known to the industry, can get cleaned up. Its just too bad stockholders had to pay for so much hubris."
Be Reasonable
Interesting rescission decision [$] in today's NY Law Journal in a state court case involving Christie's. In 2002 a company called SWCA signed an agreement with Christie's authorizing them to sell a Picasso sculpture for $5 million. The agreement granted Christie's the right to rescind the sale if it "reasonably determines that the sale may expose Christie's" to any liability, "including liability resulting from claims relating to ... authenticity." A few days later Christie's sold the work, and the agreement with the buyer allowed him to rescind the sale if the work was found to be inauthentic. A couple years later, Christie's "developed concerns about the authenticity" of the work, believing now that it is "a surmoulage, a bronze cast of a second or third generation bronze, rather than ... a bronze cast from the original clay master created by Picasso." According to the court, "most dealers consider surmoulages to be unauthentic." So in 2005 Christie's rescinded its sale to the buyer; it also sought a refund of the portion of the purchase price it had paid to SWCA. SWCA, which had a certificate of authenticity from the author of the catalogue raisonne of Picasso's sculpture and another from Picasso's son Claude, refused, and the lawsuit followed. Though the court expressed a fair degree of skepticism about the reasonableness of Christie's belief that it was exposed to liability (it said the decision "appears to have motivated more by rumor and speculation"), it held that "ultimately, whether Christie's belief was reasonable is a question of fact for the fact-finder," and so denied summary judgment. So, barring a settlement, it's on to trial.
Tuesday, October 14, 2008
Happy Ending for Sad Premonitions
The Goya engraving stolen in Colombia last month has been "found in a Bogota hotel room after a tip-off, investigators said." BBC News story here.
Fighting Forgery
In today's New York Law Journal, Joseph Gioconda argues that "the art community can learn from the actions taken by the luxury goods and consumer products industries as they face a similar threat from counterfeiters. These industries respond by demanding stricter penalties for offenders and stronger federal anticounterfeiting laws. ... Members of the art community can begin to combat forgers using some of the same federal anticounterfeiting laws, but to date they have not done so effectively."
Also in today's Law Journal [$], Benjamin Mulcahy surveys recent case law regarding the copyright termination right.
Also in today's Law Journal [$], Benjamin Mulcahy surveys recent case law regarding the copyright termination right.
"People are finally able to see what all the fuss has been about"
Nashville Public Radio reports that "the famous Stieglitz collection at Fisk University is in the public eye for the first time in nearly three years. ... The school had to meet a court deadline last week to put the art back on public display." (Chancellor Lyle's March decision gave the school until Oct. 6 to renovate the gallery and put the collection back on view.) Hours are 10-to-5 Tuesday through Saturday, so plan accordingly.
Monday, October 13, 2008
A Minor Update
Lee Rosenbaum had an update on Friday on Halsey Minor's battle with Sotheby's. Minor has filed an answer and counterclaim to Sotheby's breach of contract action in the Southern District of New York, and he's also filed a class action complaint in federal court in San Francisco. (Sotheby's has moved to enjoin the California lawsuit.) In both venues, he makes essentially two arguments:
1. The first is that Sotheby's didn't adequately disclose its economic interest in the work in the auction catalogue. (It had served as collateral for a loan to the consignor, Ralph Esmerian.) Sotheby's takes the position that the relevant New York City regulations do not require that such disclosure be made on a lot-by-lot basis: all that must be disclosed is the general practice of making loans to consignors. They say this interpretation was specifically blessed by the NYC Department of Consumer Affairs.
2. The second argument is that, separate and apart from the specific requirements of the regulations, Sotheby's had in this case "disguised itself as a sincere and honest art adviser to [Minor], while in reality acted as a self-profiter." The argument here is that, over time, Minor had formed a relationship with an employee in Sotheby's American Paintings Department in which she acted as his "art consultant and purchasing agent." Minor says he came to trust her, and "relied on her to provide him with honest advice in his dealings in the art market." Yet she too concealed from him the fact that Sotheby's had an interest in the subject painting.
One odd note, for all the talk of non-disclosure, is that, as Lee points out, Sotheby's interest in the painting had been mentioned in articles in the New York Times and Bloomberg (and perhaps other publications). Carol Vogel's widely-read "Inside Art" column on April 18 began: "The tumultuous saga of the jeweler Ralph O. Esmerian, who owes some $187 million to Merrill Lynch, $11.5 million to Sotheby’s and $7.5 million to Christie’s, continues. He is scheduled to pay down a chunk of his Sotheby’s debt on May 22 when that auction house sells his Edward Hicks painting 'The Peaceable Kingdom With the Leopard of Serenity.'" It continued: "When he took out loans, starting in 2005, to purchase the Fred Leighton retail jewelry business, ... he used his art and jewelry as collateral. He stopped making payments in the fall, and [Sotheby’s] decided to sell the Hicks painting." Esmerian himself was quoted as saying,"We believe that the proceeds will satisfy the loan. But if there is a remaining balance, Sotheby’s will give us over a year and a half to pay them back." If you accept any kind of efficient market hypothesis for art, it's hard to believe that information wasn't fully absorbed into the price of the work.
1. The first is that Sotheby's didn't adequately disclose its economic interest in the work in the auction catalogue. (It had served as collateral for a loan to the consignor, Ralph Esmerian.) Sotheby's takes the position that the relevant New York City regulations do not require that such disclosure be made on a lot-by-lot basis: all that must be disclosed is the general practice of making loans to consignors. They say this interpretation was specifically blessed by the NYC Department of Consumer Affairs.
2. The second argument is that, separate and apart from the specific requirements of the regulations, Sotheby's had in this case "disguised itself as a sincere and honest art adviser to [Minor], while in reality acted as a self-profiter." The argument here is that, over time, Minor had formed a relationship with an employee in Sotheby's American Paintings Department in which she acted as his "art consultant and purchasing agent." Minor says he came to trust her, and "relied on her to provide him with honest advice in his dealings in the art market." Yet she too concealed from him the fact that Sotheby's had an interest in the subject painting.
One odd note, for all the talk of non-disclosure, is that, as Lee points out, Sotheby's interest in the painting had been mentioned in articles in the New York Times and Bloomberg (and perhaps other publications). Carol Vogel's widely-read "Inside Art" column on April 18 began: "The tumultuous saga of the jeweler Ralph O. Esmerian, who owes some $187 million to Merrill Lynch, $11.5 million to Sotheby’s and $7.5 million to Christie’s, continues. He is scheduled to pay down a chunk of his Sotheby’s debt on May 22 when that auction house sells his Edward Hicks painting 'The Peaceable Kingdom With the Leopard of Serenity.'" It continued: "When he took out loans, starting in 2005, to purchase the Fred Leighton retail jewelry business, ... he used his art and jewelry as collateral. He stopped making payments in the fall, and [Sotheby’s] decided to sell the Hicks painting." Esmerian himself was quoted as saying,"We believe that the proceeds will satisfy the loan. But if there is a remaining balance, Sotheby’s will give us over a year and a half to pay them back." If you accept any kind of efficient market hypothesis for art, it's hard to believe that information wasn't fully absorbed into the price of the work.
Some Kinda Love
From ARTINFO: "Artist Ed Stross is facing 30 days in jail, two years probation, and a $500 fine for adding the word 'love' to his own mural in Roseville, Mich., a Detroit suburb." The ACLU is apparently making a last ditch effort to get the case re-heard.
The Legal Satyricon describes how we got here. It seems the Michigan Court of Appeals had overturned Stross's conviction on the grounds that the ordinance in question was an unconstitutional restriction of his First Amendment rights. But the Michigan Supreme Court reversed, on timeliness grounds:
"At the time defendant’s variance was granted, then-current MCL 125.585(11) required a party to challenge the constitutionality of the variance within 21 days. Defendant’s painting the word 'LOVE' on the sign clearly violated the 'lettering' condition of the variance. Because this statute prescribed the relevant procedure for challenging the constitutionality of the conditions, defendant was obligated to challenge these conditions in accordance with this procedure. His failure to do so precludes him from raising his constitutional challenge eight years later."
The Legal Satyricon describes how we got here. It seems the Michigan Court of Appeals had overturned Stross's conviction on the grounds that the ordinance in question was an unconstitutional restriction of his First Amendment rights. But the Michigan Supreme Court reversed, on timeliness grounds:
"At the time defendant’s variance was granted, then-current MCL 125.585(11) required a party to challenge the constitutionality of the variance within 21 days. Defendant’s painting the word 'LOVE' on the sign clearly violated the 'lettering' condition of the variance. Because this statute prescribed the relevant procedure for challenging the constitutionality of the conditions, defendant was obligated to challenge these conditions in accordance with this procedure. His failure to do so precludes him from raising his constitutional challenge eight years later."
Back to you, Professor Tate
Gans, Crawford, and Blattmachr respond to Joshua Tate's response to their piece in the Yale Law Journal's "Pocket Part" on the estate taxation of post-death publicity rights.
Art futures
Online prediction market Intrade has created a futures market based on the Mei Moses All Art Index. The Financial Times has the story here. Here is the relevant page at Intrade.
"IMMEDIATE CASH ONLY"
Bloomberg reports that a former Enron exec is being sued by a New York gallery "for allegedly trying to extort more than $150,000 by claiming a painting he bought was a forgery. Historical Design, Inc., an art gallery on East 61st Street in Manhattan, said Shankman purchased three works of art in November 1997 for $40,000. The gallery said Shankman complained this year that one of them ... was a fake. He threatened to 'go public' unless he was paid least $150,000, the gallery said in court papers."
The case actually raises some interesting issues involving the law on extortion. As lawprof Jim Lindgren points out, "someone with an underlying legal claim may threaten to expose it to reach a reasonable settlement. Yet if the amount sought is so substantially out of line with the injury and the threat to embarrass is a big part of the threat, then a criminal charge of extortion can be established." He mentions the case of Autumn Jackson, "who may have been [Bill] Cosby's [out-of-wedlock] daughter, [and who] threatened exposure unless he paid her $40 million. Despite having some possible claim for support as a child, she was convicted because of the excessiveness of her claims and the threats of exposure."
So one issue in the case will be: where did Shankman get his $150,000 figure? Is that out of line with his (claimed) injury? Or is it a good faith estimate of his damages, with the threat to expose the gallery merely a secondary issue?
The case actually raises some interesting issues involving the law on extortion. As lawprof Jim Lindgren points out, "someone with an underlying legal claim may threaten to expose it to reach a reasonable settlement. Yet if the amount sought is so substantially out of line with the injury and the threat to embarrass is a big part of the threat, then a criminal charge of extortion can be established." He mentions the case of Autumn Jackson, "who may have been [Bill] Cosby's [out-of-wedlock] daughter, [and who] threatened exposure unless he paid her $40 million. Despite having some possible claim for support as a child, she was convicted because of the excessiveness of her claims and the threats of exposure."
So one issue in the case will be: where did Shankman get his $150,000 figure? Is that out of line with his (claimed) injury? Or is it a good faith estimate of his damages, with the threat to expose the gallery merely a secondary issue?
"It’s inexcusable and it’s intolerable, and it needs to change"
An art law story in, of all places, the sports pages of the New York Daily News: Wayne Coffey looks at New York's proposed "dead celebrities bill," focusing on the case of tennis legend Arthur Ashe. He reports that the legislation "is expected to be reintroduced in January," and adds:
"The Authors Guild, the nation’s largest society of published authors, among other arts organizations, has lobbied hard against the bill, viewing it as a massive assault on the First Amendment. Other detractors insist it is nothing but a greed-driven, legal gambit by Marilyn Monroe LLC, a company that successfully got a dead-celebrities bill passed in California last year, and is now turning its attention to New York, aiming to elbow photographers who own Monroe photos out of their way."
For another vote for the greed-driven-gambit-by-a-single-company theory, see here.
"The Authors Guild, the nation’s largest society of published authors, among other arts organizations, has lobbied hard against the bill, viewing it as a massive assault on the First Amendment. Other detractors insist it is nothing but a greed-driven, legal gambit by Marilyn Monroe LLC, a company that successfully got a dead-celebrities bill passed in California last year, and is now turning its attention to New York, aiming to elbow photographers who own Monroe photos out of their way."
For another vote for the greed-driven-gambit-by-a-single-company theory, see here.
Friday, October 10, 2008
Dream On (UPDATED)
More from Carol Vogel today on the appearance of the Steve Wynn-owned "La Rêve" in New York (see earlier post here). The show opens Wednesday at Acquavella Galleries.
UPDATE: More from Christopher Knight of the LA Times.
UPDATE: More from Christopher Knight of the LA Times.
Thursday, October 09, 2008
More on the Langmuir Decision
Gregory Gibson, author of Hubert's Freaks (about Bob Langmuir's Arbus photos), criticizes this post of mine (as well as "nearly every other article on the affair") for "characteriz[ing] Bayo Ogunsanya as an innocent 'collector,'" when the truth is that "as Bayo admitted to me himself, he was a dealer who for years had been buying items at storage unit auctions and selling them at flea markets, ephemera shows and on eBay."
I should say in defense that I wasn't "characterizing" Ogunsanya one way or the other: I was merely quoting from the court's decision, which, coming as it did on a motion to dismiss the complaint, accepted Ogunsanya's version of the facts (see footnote 1 of the decision: "The facts set forth here are contained principally in the complaint. As I must, I accept them as true for purposes of this motion").
Beyond that, it's not clear how much turns on the correct characterization of Ogunsanya. In section C of the decision, the court takes on Langmuir's argument that "the identity of Diane Arbus as the photographer was not a matter peculiarly within his own knowledge, and Ogunsanya could have found it out for himself." In rejecting that argument, the court points out, first, that "in the absence of 'hints of . . . falsity' that might trigger a heightened requirement of diligence, Ogunsanya was not required to exercise due diligence." It then adds that "it is not enough for Langmuir to show that the identity of the photographer was not peculiarly within his knowledge. He must further show that the means of obtaining that knowledge were available to Ogunsanya by the exercise of ordinary intelligence" -- yet, here, "only those intimately familiar with Arbus's technique - scholars, experts, and curators - would be qualified to attribute these 'lost' photographs to Arbus. Indeed, at the time of Langmuir's purchase, even the most comprehensive catalogue of Arbus's oeuvre would not have included these prints." It is only after setting out these general principles -- which don't really depend on any particular characterization of Ogunsanya -- that the court (which, again, is constrained at this stage of the proceedings to accept Ogunsanya's version of the facts) mentions that he was "an unsophisticated memorabilia collector who simply bought a trunk at storage house auction." But it's certainly possible to read this section of the decision as suggesting that, if Ogunsanya could not have discovered that the photos were by Arbus "by the exercise of ordinary intelligence," then Langmuir's argument fails even if Ogunsanya is more accurately characterized as a dealer than a collector.
I should say in defense that I wasn't "characterizing" Ogunsanya one way or the other: I was merely quoting from the court's decision, which, coming as it did on a motion to dismiss the complaint, accepted Ogunsanya's version of the facts (see footnote 1 of the decision: "The facts set forth here are contained principally in the complaint. As I must, I accept them as true for purposes of this motion").
Beyond that, it's not clear how much turns on the correct characterization of Ogunsanya. In section C of the decision, the court takes on Langmuir's argument that "the identity of Diane Arbus as the photographer was not a matter peculiarly within his own knowledge, and Ogunsanya could have found it out for himself." In rejecting that argument, the court points out, first, that "in the absence of 'hints of . . . falsity' that might trigger a heightened requirement of diligence, Ogunsanya was not required to exercise due diligence." It then adds that "it is not enough for Langmuir to show that the identity of the photographer was not peculiarly within his knowledge. He must further show that the means of obtaining that knowledge were available to Ogunsanya by the exercise of ordinary intelligence" -- yet, here, "only those intimately familiar with Arbus's technique - scholars, experts, and curators - would be qualified to attribute these 'lost' photographs to Arbus. Indeed, at the time of Langmuir's purchase, even the most comprehensive catalogue of Arbus's oeuvre would not have included these prints." It is only after setting out these general principles -- which don't really depend on any particular characterization of Ogunsanya -- that the court (which, again, is constrained at this stage of the proceedings to accept Ogunsanya's version of the facts) mentions that he was "an unsophisticated memorabilia collector who simply bought a trunk at storage house auction." But it's certainly possible to read this section of the decision as suggesting that, if Ogunsanya could not have discovered that the photos were by Arbus "by the exercise of ordinary intelligence," then Langmuir's argument fails even if Ogunsanya is more accurately characterized as a dealer than a collector.
Tuesday, October 07, 2008
Not Happening
Public Knowledge's Gigi Sohn reports that, with Congress adjourned, it's wait till next year for the orphan works bill.
Monday, October 06, 2008
Friede Family Feud
In today's New York Times, the "indispensable" Kate Taylor reports on a series of lawsuits surrounding a 4,000-piece collection of tribal art from New Guinea that is "generally regarded as the best of its kind in private hands." The collection had been promised by John Friede to the de Young Museum in San Francisco, but "litigation in three states, with [Friede's] two brothers, the museum and Sotheby’s auction house all laying claim to the art," has put the gift in doubt.
Lee Rosenbaum recalls a previous Friede fracas here.
Lee Rosenbaum recalls a previous Friede fracas here.
Friday, October 03, 2008
Fight the power
You may have seen the news last week that the Corcoran Gallery plans to deaccession 10 paintings in December. You didn't think Lee Rosenbaum would take this lying down, now did you?
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