By Michael O’Neill.
History of the Art
The United States Supreme Court recently granted certiorari in the case of Cassirer v. Thyssen-Bornemisza Collection Found., 862 F.3d 951 (9th Cir. 2017). Cassirer’s grandmother owned Rue Saint Honoré, après-midi, effet de pluie, oil on canvas, 81 x 65 cm (1897) by Camille Pissarro (the “Painting”) from 1926 until 1939 when she was forced to surrender the painting in order to obtain an exit visa to flee Nazi Germany. This painting was later sold at auction in 1943 to an unknown buyer and resurfaced in the United States in 1951. In the United States, various private parties owned the painting until it went up for auction again in 1976. That year, a Swiss art collector purchased the Painting in New York and proceeded to publicly display the painting in Switzerland until 1992. In 1993, Spain funded the purchase of the Painting through the Thyssen-Bornemisza Collection Foundation (the “Foundation”), a corporation wholly owned by the Spanish government. No one believed the painting was looted by the Nazis at the time of the 1976 or 1993 sales. In 2001, the plaintiff learned of the Painting’s whereabouts and demanded its return. Spain refused to return the painting and in 2005, the plaintiff filed suit in the U.S. District Court for the Central District of California against Spain and the Foundation.
Cassirer’s lawsuit seeks the return of the Painting, claiming that it is stolen Nazi art. Under California law, thieves cannot pass good title to anyone, so Cassirer argues that the Foundation does not actually own the Painting and the proper title passed by succession to him and the other co-heirs of his grandma. A key issue that is intertwined with the question for which the Supreme Court granted certiorari is whether California law applies to this case.
Since states and countries have different laws, in all civil cases, the court has to decide which state or country’s law should govern the dispute. There are a variety of approaches to this “choice-of-law” analysis, but for the purposes of this dispute only two are relevant. California employs a comparative impairment choice-of-law test and federal courts employ the interest analysis described in the Restatement (Second) of Conflict of Laws. In both approaches, the court makes a preliminary determination about whether there is a “true conflict” between laws that might apply to the dispute—that is to say that each of the competing jurisdictions care about the subject matter of the case at hand. In this case, the court found a true conflict between California law and Spanish law, because both California and Spain are interested in protecting the property rights of their inhabitants. California law would require the return of the Painting; Spanish law would not. Since the outcome depends on which law applies, the court has to decide which choice-of-law test to follow and then pick California or Spanish law according to that test.
This choice-of-law test decision piqued the interest of the United States Supreme Court. The plaintiff would not ordinarily be able to sue an instrumentality of Spain at all because of sovereign immunity, but was able to sue in this case due to the Foreign Sovereign Immunities Act (“FSIA”). Under the FSIA, foreign sovereigns are liable “to the same extent as a private individual under like circumstances.” If the plaintiff were suing another individual for theft or conversion, the California choice-of-law would clearly control, even if the case took place in federal court. This is because theft and conversion are state law rights of action and federal courts follow the forum state’s choice-of-law rules in diversity cases or when exercising supplemental jurisdiction over state law claims. However, as noted above, federal courts employ their own choice-of-law test in cases arising under federal law.
Several circuits read the FSIA’s language to mean that state choice-of-law rules should apply to the dispute. These courts make the reasonable conclusion that a private individual under “like circumstances” would be sued in state court or brought into federal court in such a way where state choice-of-law rules would apply. The Ninth Circuit bucked this conclusion, reasoning that the FSIA both waives sovereign immunity and creates a federal right of action—making the case one of federal question, where federal choice-of-law should govern. According to the Ninth Circuit, a person in “like circumstances” would be a person brought into federal court by a case arising under federal law.
It is difficult to untangle the circuits’ divergent views about this piece of statutory interpretation because of the ambiguity of the phrase “a person in like circumstances” as applied to this case. If the Foundation were a private individual, personal jurisdiction would apply to them. Due to constitutional restrictions on personal jurisdiction, it is unlikely that a Spanish citizen with no contacts to a California plaintiff could be sued in a California court. If Spain is to be treated as “a private individual in like circumstances,” should Spain be able to object to personal jurisdiction in this case even though foreign sovereigns are not classically understood as persons for Fifth Amendment purposes? If not, and if the Ninth Circuit’s use of the federal choice-of-law rules is incorrect, it seems likely that a plaintiff suing under the FSIA could file a lawsuit in any of the 50 states and could thereby elect to apply any state’s choice-of-law rules.
The actual application of the choice-of-law tests is not important in this case—the District court actually conducted a California choice-of-law analysis in addition to a federal Restatement interest analysis. The District Court found that both analyses would have Spanish law apply to the dispute, and this makes sense. The Painting is located in Spain, and California’s only connection to the dispute comes from the plaintiff’s decision to move there in 1980, as well as the plaintiff’s decision to file the lawsuit in California.
Overall, the Court’s granting of certiorari in this case may forecast a dramatic shift in choice-of-law litigation. It is impossible to predict what the Court will do, but when the District Court has already made a finding that California’s choice-of-law rules lead to the same outcome as federal choice-of-law, it seems likely that the United States Supreme Court is interested in this case as a way to set out broad new precedent, rather than simply clean up a minor circuit split that might not affect the outcome of the case. As things currently stand, Arizona is in the fortunate position of following the Restatement (Second) of Conflicts of Laws for both Torts and contracts—the same test followed by federal courts in cases arising under federal law. This means that the Court’s decision is unlikely to change the nature of Arizona litigation except insofar as the decision might make California a marginally less attractive place for forum-shopping plaintiffs to choose.