The Making of the Moral Rights Case: The Factual and Legal Background of the 5Pointz Trial

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[Observing 5Pointz Trial], courtroom art by Elizabeth Williams (Nov. 3, 2017).

By Laura B. Richardson*

 

5Pointz, the world renowned “graffiti mecca” as it was once known, has become the subject of a legal battle which has culminated in a jury trial in the Eastern District of New York. Cohen v. G&M Realty L.P., 2017 U.S. Dist. LEXIS 50943 is a case brought by twenty-one graffiti artist plaintiffs against the defendant property owners of the 5Pointz buildings, for the destruction of 49 aerosol artworks (numbers of plaintiff-artists and works have been changing between 2013 and 2017). The artists are suing for infringement of their rights under the Visual Artists Rights Act 1990 (“VARA”), 17 U.S.C. § 106A, which protects rights of living artists whose visual art works are of recognized stature.

Background

In 1971, Jerry Wolkoff, a real estate developer from Brooklyn who started his own residential development company in his late teens, purchased an industrial complex in a “gritty” industrial neighborhood at 45–46 Davis Street, Long Island City, Queens, New York. The property extended across a 200,000 square-foot factory complex. Twenty years later, Wolkoff authorized the site to become the “Phun Phactory,” where graffiti artists were permitted to paint on the walls. The Phun Phactory was an effort by Pat DiLillo in the early 1990s to discourage illegal graffiti vandalism and create a legal space for local street artists to execute and display their work. 

In 2002, Jonathan Cohen (known by his tag name “Meres One”), a graffiti artist born in 1973 in the South Bronx and raised in Queens, New York, met with Wolkoff and offered to curate urban a.k.a. aerosol a.k.a graffiti works at the Queens complex. He proceeded to rename and develop the site, now known as 5Pointz, into an artistic hub. According to Cohen, Wolkoff welcomed graffiti art on his property with three rules: no pornography, no religion, and no politics to be painted at the site. Cohen was also aware that Wolkoff would one day develop the property, and that the buildings, and the paintings on their walls, would become history.

With Cohen’s curation, both the quality of artwork at 5Pointz and 5Pointz’s reputation grew significantly until it reached the level of an internationally celebrated open-air aerosol art exhibition. Between 2002 and 2013, numerous tourists and aerosol artists from all over the world visited 5Pointz to witness and paint at the iconic venue. With the increased tourism and artistic community presence, the surrounding neighborhood improved considerably.

“Save 5Pointz”

In the wake of a real estate boom in Long Island City beginning in 2010, Wolkoff was ready to capitalize on the rising property value and indicated his intent to redevelop the 5Pointz site into high-rise apartment towers. On August 21, 2013, the City Planning Commission, the responsible body for urban planning related to the growth and development of New York City, issued the permit for the demolition of the 5Pointz buildings and for the rebuilding on the site of two towers containing 800 luxury rentals and 200 affordable units. The City Planning Commission did require, as a condition for issuing the building permit, that the new residential complex include 3,300 square feet of exterior art panels “to be used to maintain artist street wall art in the area.”

In the petition filed on October 10, 2013, seventeen graffiti artists, including Cohen, sought to enjoin the demolition and to preserve 5Pointz for street artists. In addition, artists filed requests for landmark status evaluation by the New York City Landmark Preservation Commission (the “Commission”). The Commission, created in 1965, is responsible for protecting and regulating New York City’s architecturally, historically, and culturally significant buildings and sites. On August 20, 2013, it denied the request to designate 5Pointz as a landmark because the feature of interest—the artwork—had not been in existence for at least thirty years. Cohen also sought funding to acquire the 5Pointz site in order to “create the first aerosol art museum in the world” (Jonathan Cohen Direct Examination October 30, 2017).

Street Artists Go to Court

On October 10, 2013, artists, represented by Jeannine Leigh Widmer Chanes, sought a federal court order to preliminarily enjoin the destruction of the buildings, invoking their Visual Artists Rights Act 1990 (VARA) rights. On October 17, 2013, the Eastern District Court issued a temporary restraining order against the property owner, enjoining Wolkoff from altering the building in any way whilst the Court considered the plaintiffs’ motion. On November 12, 2013 the Court lifted the restraining order and denied the plaintiffs’ request for preliminary injunctive relief. Judge Block indicated that a written opinion would follow, and on November 20, his opinion explained that going to the issues of both irreparable harm and the balancing of the hardships, “the transient nature of the plaintiffs’ works” was the “ineluctable factor which preclude[d] either preliminary or permanent injunctive relief.”

Between November 12 and November 20, Wolkoff apparently denied artists access to 5Pointz and on November 19, he ordered 5Pointz whitewashed overnight, without any notification to the artists. In his deposition on Friday, November 3, 2017 Wolkoff admitted that he hired and paid in cash a crew of painters, who began covering 5Pointz with white (and blue and black) paint at 4 a.m.. Some of the murals were covered in their entirety, while others were partially obscured by whitewash, with ghosts of the mutilated art peeping from under the quick job of reclaiming 5Pointz by its legal owner. The compound structures were not actually demolished until months later in August 2014.

The artists subsequently sued, seeking damages for the destruction of visual works of art at 5Pointz, in violation of their rights under the Visual Artists Rights Act 1990.

In the defense’s opening statement on October 17th of the inaugural jury truly to hear a VARA case, Wolkoff’s attorneys characterized the whitewashing as a humanitarian act, “ripping off the Band-Aid” and covering the works so as to save the artists from the distress of seeing their art sit on the walls waiting for demolition for several months.

Moving up in the World

Graffiti and aerosol art has rapidly evolved from a type of illicit activity in its formative years to a hip and popular contemporary form of visual expression, legitimized both by the aesthetics and skills of the artists as well as the art market forces that have voted with increasing sales and popularity of this form of art. Street artists have been recognized by gallery owners and goers, with an increased number of exhibitions, as well as increased instances of infringements against street artists on behalf of fashion designers and corporations (McDonalds, Cavalli, Vince).

The 5Pointz case is important for its symbolism, where artists who have “street cred” and undeniable talent, are testing the limits of the established order separating the rarified world of “high art” from the fringe, which is likely to be relevant to the great “cross-section of society” referenced in the formulated legal language.

Moral rights of artists did not come naturally to the American jurisprudence. The Visual Artists Rights Act 1990, 17 U.S.C. § 106A (“VARA”) was enacted in response to the United States’ accession to the 1886 Berne Convention, which requires that member states protect copyright authors’ numerous moral rights. (Berne Convention for the Protection of Literary and Artistic Works, 1886, Article 6bis (1)). VARA grants the author of a “work of visual art” only the right to paternity and to prevent intentional distortion, mutilation or other modification of the work that would be prejudicial to their reputation; and, in the case of works of “recognized stature,” the right to prevent their destruction (17 U.S.C. §106A(a)).

One of the main issues, and indeed a deciding factor, in the pending 5Pointz case is whether the graffiti art murals are of “recognized stature”. This is a high bar to reach for a form of art born on the streets of poor urban neighborhoods and practiced predominantly by first and second generation immigrants. There has been relatively little case law on the statutory interpretation and application, but the standard for “recognized stature” that has been formulated and applied by the 2nd and 7th Circuit courts in previous cases has required: 

“(1) that the visual art in question has “stature,” i.e. is viewed as meritorious, and

(2) that this stature is “recognized” by art experts, other members of the artistic community, or by some cross-section of society.”

(Martin v. City of Indianapolis 192 F.3d 608 (7th Cir. 1999)); (Carter v. Helmsley-Spear, Inc., 861 F. Supp. 303 (S.D.N.Y. 1994) affirmed in part, vacated in part, reversed in part, 71 F.3d 77 (2d Cir. 1995)).

This case, having survived multiple motions for dismissal, has entered its trial stage on October 17th, 2017 before Senior District Judge Frederick Block at the Eastern District of New York Federal Courthouse in Brooklyn. With no precedent to follow, the case has been characterized by the Judge as “an odd ball cup of tea,” and it is uncertain whether the works of aerosol art will meet the standard of recognized stature required for a successful VARA claim. Years ago, in the early days of graffiti, which was regarded as mere vandalism or tagging, there likely would not have been a viable legal argument that graffiti could be a work of visual art of recognized stature. Just as the 5Pointz venue did, the 5Pointz case demonstrates the progress and evolution of graffiti into an established and legitimate form of art that requires vast technical skill and has aesthetic and cultural merit.

Regardless of the outcome, this case is a cautionary tale for artists as well as real property owners who permit graffiti art on their property to contemplate moral rights waivers as a safeguard against similar litigations. Given that the United States does not afford robust moral rights protections, VARA rights can be waived.

Closing arguments and jury instructions are scheduled for November 6, 2017.

* * *

5Pointz Chronology

1971– Jerry Wolkoff purchases property at 45–46 Davis Street Long Island City, Queens, New York.

1993 – The site is established as the “Phun Phactory” and Wolkoff grants artists permission to paint on building.

2002 – Jonathan Cohen becomes curator of 5Pointz.

2002-2013 – 5Pointz becomes internationally recognized “open air aerosol art museum” and “mecca of graffiti art” as top street artists flock to New York to paint at 5Pointz and tourists visit from all over the world to experience the murals at 5Pointz.

2010 – Real estate boom and sharp increase in property value in the Long Island City area.

August 21, 2013  New York City Landmark Preservation Commission denies granting 5Pointz landmark status.

August 21, 2013 – The City Planning Commission issues building permit authorizing the destruction of the 5Pointz buildings and the building of two-high rise towers containing 800 luxury rentals and more than 200 affordable units.

October 10, 2013 – Plaintiffs file complaint and motion for preliminary injunction to prevent the destruction of the premises, invoking their VARA rights.

October 17, 2013 – Court issues a temporary restraining order against the property owner.

November 12, 2013 – Court issues an order denying plaintiffs’ request for preliminary injunctive relief to prevent the destruction of their paintings.

November 19, 2013 – Whitewashing of building occurs overnight.

June 17, 2014 – Plaintiffs file the Cohen Complaint. In it, four claims are pled: (1) VARA, (2) intentional infliction of emotional distress (“IIED”), (3) conversion, and (4) property damage. 

August 2014– Demolition of whitewashed 5Pointz buildings.

June 3, 2015 – Maria Castillo and other artists (“Castillo Plaintiffs”) initiate a separate lawsuit against the defendants (“Castillo Matter”). As in Cohen, the Castillo Plaintiffs adduce the same four claims in their pleadings.

October 17, 2017 – Trial begins in Federal court, J. Block presiding.

* * *

*About the Author: Laura B. Richardson is serving as the Fall 2017 Postgraduate Legal Fellow with the Center for Art Law. She obtained her LLB from King’s College London in 2016 and is currently an LLM candidate at NYU School of Law with a specialization in Competition, Innovation and Information Law. She can be reached at lbr312@nyu.edu

 

Book Review: “A Tragic Fate: Law and Ethics in the Battle over Nazi-Looted Art”(2017)

By Jason Barnes*

Screen Shot 2017-10-25 at 4.06.39 PM.pngThe recent movie Woman of Gold and the Holocaust Expropriated Art Recovery Act enacted in 2016 reflect a steady interest in U.S. restitution of Nazi-expropriated art.  It is thus with impeccable timing that Nicholas O’Donnell’s first book— A Tragic Fate: Law and Ethics in the Battle over Nazi-Looted Art (2017), arrives on the scene, offering a treatise on the restitution of Nazi-looted art in the United States.  In it, O’Donnell describes the most important restitution-related litigation, international gatherings, and treaties in remarkable narratives that manage to stay fascinating while incorporating immense detail and nuance.

O’Donnell’s success on this front likely results from his background. He studied art history at Williams College and law at Boston College Law School. Now, he works as litigation partner at the Boston law firm, Worcester & Sullivan, where he has tried important art restitution cases, such as Philipp et al. v. Federal Republic of Germany et al., 15-cv-00266 (D. D.C.) (restitution of the Guelph Treasure).  He serves as the editor of the Art Law Report and is a member of the Art Law Committee for the New York City Bar Association.  A Tragic Fate really combines O’Donnell’s two loves—art and law—making him perfectly situated to write on the subject of Nazi-era looted art. O’Donnell is at an ease in his discussion of both the complex litigation procedural devices as well as the artists and art at issue in various cases.  His passion and knowledge of the subject are readily apparent in the monograph.

O’Donnell is at his best when telling the war stories in the battle for Nazi-looted art in the legal arena.  Most of the book is divided by restitution narratives, with each chapter covering an individual “battle” to recover an artwork through litigation.  These case-summary narratives include most, if not all, of the key restitution cases in the United States:  The Portrait of Wally (Chapter 3), Portrait of Adele Bloch Bauer (Chapter 4), the Herzog Collection (Chapter 7) and so on. It is through telling these narratives that O’Donnell explains the laws governing restitution. Any one of these individual case summaries on its own is illuminating but it is having them compiled together under one cover that makes the book particularly valuable.  It welcomes the juxtaposition of the different barriers to recovery, exposes the good-faith purchasers and jurisdictions that display a heightened hostility towards restitution claims, and shows how the obstacles to restitution claims have evolved over time.   

The author’s skill of narrative is not confined to discussing U.S. litigation. It likewise applies to his discussion of the important international gatherings that form the international framework for the restitution of Nazi-looted art.  O’Donnell spends pages analyzing the 1998 Washington Conference—the first and arguably most important gathering on the restitution of Nazi-looted art.  In his exposition of the seminal conference, O’Donnell analyzes many of the nations’ statements offered at the conference.  This tact allows O’Donnell to nicely introduce the differing ways in which nations have responded to the issue of the restitution of artwork looted during the Nazi era.  He later returns to comparative law in Chapter 19, wherein he discusses nation-based restitution regimes.  These introductions to comparative law are a welcome addition to a book primarily focused on U.S. restitution because they give the reader the necessary context to make any normative judgments on U.S. restitution or ruminate on potential reforms.

Because of the technical nature of the book and O’Donnell’s consistent preference for both detail and accuracy, A Tragic Fate may be less accessible to a non-lawyer. Chapters, especially those focusing on particular litigation cases, read very much like a brief, both in structure and language.  The book is riddled with legal jargon, cross referencing, and is written in a style that though clear, at times, feels too formal. Arguably the biggest impediment to lay readers is the immense substantive legal detail that O’Donnell covers in the book. At the same, this very feature will certainly be welcomed by law students and lawyers interested in delving into the intricacies of property restitution practice.

The substantive content alone favors those with some formal legal education. The introduction quickly breezes through important aspects of U.S. restitution law, including discussion of statute of limitations rules such as discovery and demand-and-refusal.  But this introduction functions more as a refresher for those far removed from law school than a sufficient exposition for someone never introduced to those concepts before.  This criticism applies with even greater force to later discussions of complicated legal concepts, such as the Act of State Doctrine, Bernstein letters, general versus specific jurisdiction, Foreign Sovereign Immunities Act (FSIA), Federal Tort Claims Act (FTCA), and so on. 

In the midst of the case summaries, O’Donnell also opts to go into immense detail on the procedural nuances of the various cases – the different iterations of the lawsuit, how the parties have changed over time, jurisdictional issues.  For instance, in the chapter on Femme en Blanc (Chapter 3, pp 79-82), O’Donnell discusses the motions practice of the various litigants, including procedural decisions like a §1404 venue transfer request.  It’s noble that O’Donnell focuses on the procedural minutiae which oftentimes prove very important for ultimate success in trial.  But one wonders if the benefit of accuracy and detail is outweighed by decreased accessibility.  O’Donnell tries to militate against this unfortunate result by consistently defining terms and including a nice glossary and index to the end of his monograph. 

A Tragic Fate is an educational journey – well worth undertaking.  The book is well-researched and written with the clarity one would expect from an effective advocate and proponent of restitution of Nazi-era looted art.  The book will serve as good educational resource to law students and practitioners interested in learning more about this particular area of art law or simply general litigation in the United States; or those looking for mere entertainment by some incredible stories on some very important artwork.

Disclaimer: Book reviews are no substitute for reading and interacting with the book herein reviewed.

About the reviewer: Jason Barnes is a third-year JD candidate at Columbia Law School. He is serving as the Fall 2017 Legal Fellow with the Center for Art Law.  His note on the Holocaust Expropriated Art Recovery Act is forthcoming in the Columbia Journal of Transnational Law.  He can be reached at jpb2193@columbia.edu.

Vagaries of Valuation for Collections of Artwork

By Elizabeth Summers*

Screen Shot 2017-10-12 at 4.57.56 PMFor better or for worse, the world cares how much collectors pay for art. A record price realized at auction or in a “private” sale can create headlines in both art world publications and the national press. The final value of a collection, however, is determined only upon the collector’s death, when the personal representative of the estate assigns a value to the art for purposes of the federal estate tax. Issues surrounding the valuation of art have generated extensive and energetic litigation in the U.S. Tax Court and, by extension, considerable interest among estate planning attorneys.

General Rules of Estate Tax Valuation

The value of a decedent’s gross estate is determined by calculating the value of all property the decedent owned at the time of his or her death, wherever such property is situated. (IRC Section 2031) Under IRS regulations regarding valuation for estate tax purposes, the value of every item of property includible in a decedent’s gross estate is its fair market value at the time of the decedent’s death. (T.R. Section 20.2031-1(b)) The IRS defines “fair market value” as the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. With unique objects like individual works of art, the determination of a “fair market value” may be difficult. Fortunately, the IRS has provided additional guidance. Special rules apply to tangible personal property “having marked artistic or intrinsic value” of a value in excess of $3,000. Items that fall into this category must be formally appraised, and the appraiser must be competent in the specific subject matter of the appraisal. The appraisal of a painting of “artistic value” must include a description of the size and subject of the painting and the name of the artist. The appraisal must be filed with the estate tax return, along with a written statement by the executor containing a declaration that, under penalty of perjury, the appraisal is complete and accurate, and the appraiser both qualified and disinterested.

Valuation of Works of Art

While relatively minimal guidance exists in the Internal Revenue Code and Treasury Regulations specific to the valuation of art, subsequent IRS publications have created further special requirements for works of art that have been appraised at $50,000 or more and are transferred at death. The IRS now provides a procedure through which the executor of an estate may request a “Statement of Value.” The Statement of Value is effectively a pre-approved appraised value, issued by the IRS, that the executor may rely on to substantiate the value of a work of art for purposes of the estate tax. 

For the purpose of the Statement of Value requirements, the IRS defines “art” as “paintings, sculpture, watercolors, prints, drawings, ceramics, antique furniture, decorative arts, textiles, carpets, silver, rare manuscripts, historical memorabilia, and other similar objects.” The executor must request a Statement of Value for an item prior to filing the federal estate tax return that first reports the transfer of the art work. The request must include the following: a copy of the appraisal; a description of the work; the appraised fair market value; the cost, date and manner of acquisition; the date of death; and the location of the IRS District Office with jurisdiction over the estate tax return. The current fee for a Statement of Value is $5,700 for one to three items, and $290 for each additional item.

An appraisal submitted for purposes of securing a Statement of Value must contain, among other information, a detailed description of the work, a professional photograph, the specific basis for the valuation, and a statement that the appraisal was prepared for estate tax purposes. The appraiser must prepare, sign and date the appraisal and sign a statement attesting to his or her competency and expertise. The appraisal must be prepared within 60 days of the valuation date, and the executor must sign the request for the Statement of Value under penalty of perjury. While the Statement of Value procedure constitutes a kind of insurance against challenge for the valuation of an asset that might otherwise be subject to significant scrutiny, it can be time-consuming and expensive.

All returns selected for evaluation or requests for a Statement of Value that include an artwork with a claimed value in excess of $50,000 will be submitted to the IRS’s Art Appraisal Services department for possible review by the Commissioner’s Art Advisory Panel. The IRS established the Art Advisory Panel in 1968 for the purpose of assisting the IRS in evaluating appraisals of art. The Panel is composed of renowned curators, dealers and art historians from across the United States. In 2015, the most recent year for which a report is available, the Art Advisory Panel reviewed 446 appraisals of artworks, representing a total value of almost $650 million. Of these appraisals, the Panel recommended adjustments to the appraised value of the property approximately 65% of the time. While the IRS is not technically bound by the Panel’s recommendation, in practice, its opinion is generally decisive.

Because the outcome of an appraisal can dramatically affect the amount of estate tax the collector’s estate owes, it should come as no surprise that art appraisal issues have been extensively litigated in the Tax Court over the past decade. Following are some recent cases of interest.

Effect of Economic Forces in the Estate of Bernice Newberger v. Comm’r, T.C. Memo. 2015-246 (2015).

In some cases, the appraised value of a work may not be the best indicator of value and in such instances the Tax Court may also consider relevant sales and the effects of larger economic forces upon the art market. The variations in market and appraised value are well illustrated by the ruling by the Tax Court reached in regards to the Estate of Bernice Newberger . Upon Bernice Newberger’s death in July of 2009, her art collection included Pablo Picasso’s Tete de Femme (Jacqueline), an untitled work by Robert Motherwell, and Jean Dubuffet’s Element Bleu XV. In early 2010, Christie’s appraised the Picasso at $5 million. Sotheby’s appraised the Motherwell at $450,000 and the Dubuffet at $500,000. The Picasso sold in an auction at Christie’s on February 2, 2010, for over $12 million. The estate listed the appraised values on the estate tax return that it filed in October of 2010. The return made no reference to the 2010 February sales price of the Picasso. The estate continued to hold the Motherwell and Dubuffet.

The IRS issued a notice of deficiency stating that the Picasso, the Motherwell and the Dubuffet had values of $13 million, $1.5 million and $750,000, respectively. The IRS based its adjusted valuation on the February 2010 sales price of the Picasso, the sale of a comparable work by Motherwell for $1.4 million in November of 2010, and the sale of a comparable work by Dubuffet for $825,000 in November of 2007. The estate promptly appealed, asking the Tax Court to honor the original $5 million valuation because the Christie’s sale was “a fluke,” and arguing that the comparable sales prices for the Motherwell and the DuBuffet failed to take into account the effects of the global recession of 2008-2009.

In a remarkably nuanced decision, the Court held for the IRS in valuing the Picasso at $10 million, which the IRS expert had arrived at by adjusting the sales price to account for July 2009 market conditions. However, the Court held for the estate regarding the Motherwell and Dubuffet works, finding that the estate’s experts had properly taken into account the depressing effects of the global recession on the art market at the time of Ms. Newberger’s death. The Court made specific reference to the IRS expert’s “inexplicable” valuation of the estate’s Motherwell at a price above the sales price for the comparable work, which was sold in November of 2010, after the art market recovered.

Fractional Interests in the Estate of Elkins v. Comm’r, 767 F.3d 445 (5th Cir. 2014)

The ownership of a work of art can be divided into a number of fractional interests. While fractional interests allow the owner to discount the value of his or her property for lack of marketability and control, they can create significant hurdles for the appraiser.   

James Elkins built an impressive art collection over his lifetime, including works by Pablo Picasso, Jackson Pollock, Jasper Johns, Cy Twombly, and David Hockney. By the time of his death, James Elkins owned fractional interests in 64 pieces of artwork. Specifically, Elkins owned a 73.055% interest in 61 of the works, subject to a restrictive co-tenant’s agreement with his children (the holders of the remaining fractional interests), and a 50% interest in a grantor-retained income trust (“GRIT”) that owned 3 works. Following Elkins’ death in February of 2006, his executor valued his 73.055% interest in the 61 works owned in conjunction with his children at approximately $9.5 million, and his 50% interest in the GRIT at approximately $2.6 million. To reach this value, the executor commissioned an appraisal from Sotheby’s, determined Elkins’ pro-rata share of the value of the appraised works, and applied a 44% discount to the pro-rated appraised value for lack of marketability and control. The IRS issued a notice of deficiency valuing the estate’s 73.055% interest at approximately $18.4 million and the 50% interest in the GRIT at $5.3 million. See Estate of Elkins v. Comm’r, 140 T.C. 86 (2013). 

The Tax Court disregarded the restrictions in the co-tenancy agreement between Elkins and his children and, with it, the estate’s 40% discount. The discount was reduced to 10% to account for the uncertainties a hypothetical buyer would face in determining a resale value in light of Elkins’ children’s continuing interests in the works. Understandably, the estate appealed.

On appeal, the Fifth Circuit Court of Appeals reversed the Tax Court ruling and held that indeed the estate was entitled to a higher discount for the fractional ownership.

Conflicts of Interest in Estate of Kollsman v. Comm’r, T.C. Memo. 2017-40.

In evaluating an appraisal, the IRS will also scrutinize the motivations of the appraiser as it did in the review of the valuations submitted for the Estate of Kollsman. Upon her death, Eva Franzen Kollsman owned two old master paintings: Maypole by Pieter Brueghel the Younger, and Orpheus attributed to Jan Brueghel the Elder, Jan Brueghel the Younger, or a Brueghel studio. A Sotheby’s specialist sent a brief letter to the executor of Kollsman’s estate appraising Maypole at $500,000 and Orpheus at $100,000, which values the estate included on Kollsman’s federal estate tax return. The same specialist also sent another letter proposing that the estate grant Sotheby’s an exclusive right to auction both works, and stated an estimated value at auction of $600,000-800,000 for Maypole and $100,000-150,000 for Orpheus. The estate accepted Sotheby’s proposal. The IRS issued a notice of deficiency, finally asserting a value of $2.1 million for Maypole and $500,000 for Orpheus.

At trial, the Court essentially disregarded the Sotheby’s appraisal, believing the appraiser gave a low estimate in order to reduce the estate’s tax burden and “curry favor” with the executor for the purpose of securing the right to auction the works. The Court accepted the IRS’s valuations, applying only a 5% discount for the risks associated with cleaning the paintings and an additional 20% discount for Orpheus due to the work’s generally poor condition and the uncertainty of its attribution.

The manner of disposition of the collection may also be relevant for purposes of valuation. Some estates include a “blockage discount” in the calculation of the value of a collection. A blockage discount accounts for the difference in the overall value realized if a number of works by a single artist are liquidated at once, as opposed to being sold off one by one. Selling a large “block” of works risks flooding the market and devaluing all of the artist’s work. Blockage discounts have been utilized in a number of collectors’ and artists’ estates, including those of Georgia O’Keeffe and Andy Warhol.

The IRS contested the application of a blockage discount to the appraisal of certain works of art owned by the estate of Lisa de Kooning, the daughter and sole heir of the abstract expressionist Willem de Kooning. Upon de Kooning’s death in 2013, Christie’s valued her collection of her father’s paintings and sculptures at $231 million. The estate commissioned two experts to calculate the amount for a blockage discount for the collection. The experts determined that the appropriate discount would be 60% for the paintings and 85% for the sculptures, and consequently valued the entire collection at a total of approximately $100 million. The estate submitted a request for a Statement of Value reflecting this amount. 

After consulting the Art Advisory Panel, who advised that the value of de Kooning’s works would only increase over time, the IRS rejected the blockage discount and issued a Statement of Value of approximately $255 million. This figure included a 50% discount for sculptures valued at over $100,000. Undeterred, the estate challenged the Statement of Value in its return and submitted additional information regarding the blockage discount. The IRS promptly disallowed the sculpture discount and, without making any adjustment to the Statement of Value, increased its value of the collection by $60 million to approximately $315 million. In February of 2017, the estate filed a case with the Tax Court to contest the IRS’s new position and the resulting $92 million tax bill. As of the date of this article, the case remains pending and the result shall be of keen interest to both estate planners and art law enthusiasts.

Conclusion

Despite the guidance provided by the IRS and relevant case law, the appraisal of art for estate tax purposes remains more of an art than a science. The valuation of artwork is intensely fact-specific, subject to a short time horizon, and dependent on the state of the art market. For those in New York City on November 10, 2017, the upcoming Art Law Day organized by the Appraisers Association of America might be of some interest.

Select Sources:

*About the Author: Elizabeth A. Summers is a Trusts and Estates Associate with a firm in Minneapolis, Minnesota, where she specializes in wealth transfer planning for high net worth individuals and families. 

Disclaimer: This article is intended for educational purposes only and is not meant to provide legal advice. Any views or opinions made in the linked article belong to the author alone. Readers are not meant to act or rely upon the information in this article and should consult a licensed attorney regarding their specific situation.

Giacometti: a Foundation, an Association, and a Catalogue Raisonné

By Colby Meagle*

Screen Shot 2017-09-29 at 11.17.22 AMRenowned Swiss sculptor and painter Alberto Giacometti passed away in 1966. Although he died childless, his legacy lives on as his works continue to grow in value and prestige across the world, strengthening his reputation as a prolific artist. One of the staples for retaining a robust art market for works posthumously is the existence of a catalogue raisonné. As demand for works grows, collectors need to reduce the risk of buying forgeries. In the 2000’s there was a ring of dealers and sellers marketing in forged Giacometti’s who are said to have made close to $9 million from their illegal business. One of the contributing factors to the forgers success may have been the lack of communication between the Giacometti Association and the subsequent Foundation, which halted progress in creating a dependable catalogue raisonné. Yet, despite the wake up call that a discovery of a forgery scandals produced, the market for Giacometti’s work has remained strong. The following is a discussion on how Giacometti’s overture has progressed.  

It is important to know that Giacometti’s death more half a century ago conveyed his droit morale rights, which are moral rights retained by the author (and recognized in France) of an artistic work, to his family, allowing family members to opine on authenticity of works created by their ancestors. French law recognizes perpetual moral rights, so that the artist’s reputation, Giacometti’s in this case, can be safeguarded absolutely. However, it can also lead to conflict between family members and copyright owners who disagree with what the artists would have wanted. This is true of Giacometti’s family members, who often found themselves in dispute with both the Association and the Foundation. The disagreements frequently concerned the right of authorship, or Droit à la Paternité, and the authenticity of works.      

Preparations for the Giacometti catalogue raisonné were commenced immediately after the artist’s death by his widow, Annette Giacometti, who resided in Paris at the time, and dutifully collected information and accumulated data over the following years. Before her death in 1993, Annette created the Giacometti Association (1986), intending it to be a place-holder until the Foundation described in Alberto’s will could be properly established (a daunting task due to heavy French regulations on Artist Foundations) (Reviving Giacometti’s Legacy, 2015). The association was housed in a building in the Cour de Rohan, in Paris.

Only in 2003, the Giacometti Foundation came into being; however, the Association did not dissolve as the settlor (Annette) intended. Rather, a lengthy and muddied string of disagreements and lawsuits, primarily in France, ensued, involving the two organizations and some of members of their staffs, as well as various family members, over the right to represent the artist. This caused quite a setback for the development of the catalogue raisonné. During one particular legal battle in 2001, brought by the Foundation against the Association, the court seized all of the papers and documents that the Association, and their secretary Mary Lisa Palmer, had been working on for over twenty years. Allegedly, nobody bothered to organize them as they were packed into boxes and taken under court order.

One incident made headlines in 2007, when Roland Dumas the executor of Annette’s estate, and the former French foreign minister, was convicted of illegally selling Giacometti’s works. The purchaser was Jacques Tajan, a notable auctioneer at the time, and he was likewise convicted for being involved in the conspiracy. Both men were said to have defrauded the foundation of nearly 2 million dollars from the sale of 14 sculptures and four paintings. (See “The case of the dishonourable Roland Dumas”).       

Thankfully, in 2013 there was a ceasefire between the warring parties. The Giacometti Association finally dissolved and any left over legal disputes were mostly resolved or abandoned. With the newly developed detent, the Giacometti Foundation was finally able to resume work on the Giacometti catalogue raisonné.

Much of the cataloging work is overseen by the foundation’s authenticator, Michèle Kieffer, who has an advanced degree in art history from Université Panthéon Sorbonne in Paris, and has been a research assistant at the Foundation before becoming the manager of the Giacometti Committee in 2015. She specializes  on Giacometti’s sculptures. Kieffer’s duties include organizing the day to day life of the Committee, being a liaison between auction houses and collectors, and elaborating the catalogue raisonné. 

In 2016, the Foundation published the first installment of the artist’s extensive body of work in the 2016 catalogue raisonné of Giacometti’s graphic works, Catalogue Raisonné of Prints by Alberto Giacometti (Berne: Editions Galerie Kornfeld, 2016). The first catalogue consists of two volumes of around 500 works and is accompanied by black and white photographs. The Foundation, employing around fifteen team members, continues to work on catalogue raisonnés for Giacometti’s paintings, drawings, and sculptures. In the meantime, the Foundation’s website www.fondation-giacometti.fr/ offers a large searchable database of his work.    

Catalogue Raisonné of Prints by Alberto Giacometti is available for purchase online at various resell sites, the average price for the two volume set is around $550.

Sources:

About the Author: Colby Meagle is a 2019 J.D. candidate at Pepperdine University School of Law. Prior to law school, she received her B.A. in Arts Administration and B.F.A from Elon University in 2016. She can be reached at colby.meagle@pepperdine.edu

 

Book Review: “Art Law: A Concise Guide for Artists, Curators, and Art Educators”(2016)

 

By Wylie Rechler*

Screen Shot 2017-07-27 at 11.38.45 AMEver wonder about the processes, complexities, and challenges revolving around an artist’s journey from studio to international renown? Or a collector’s campaign from inheritance to resale of an artwork with questionable title? Or a museum’s interactions with an artist’s intricate and controversial body of work so as to make it comprehensible for visitors? Michael E. Jones’ new book Art Law: A Concise Guide for Artists, Curators, and Art Educators (2016), provides a comprehensive overview of the loopholes and technicalities of the art market, including their historical transformations from it’s origin to the present day. Rich with examples and applications, Art Law compartmentalizes the often perplexing and convoluted legal concepts surrounding the art world into a digestible package of approaches. As a lawyer raised by an artist, Jones demonstrates a comprehension of the business and legal challenges artists face daily. Additionally, the author’s experiences as a “visual fine artist, art collector, consultant to museums, advisor to artists rights societies and individual artists, board trustee for an art college, author of an intellectual property rights book for artists, judge, university professor,” and more greatly contribute to his straightforward and intelligible explanations of complex and intricate notions (Preface, xi). 

 

Jones’ first chapter starts at the very beginning with “The Professional Artist’s Life”—an outlined examination chronicling the technical components of the contemporary visual artist’s career. From the importance of workspace and materials and marketing techniques, to taxes and estate planning, this chapter contains all the relevant legal concepts that apply to artists’ creative processes.  

The second chapter explores what the author terms “the gallery-auction-house-collector-major museum-complex” using examples of artists who have achieved entry into the exclusive bubble of the art market and those who have not, including … . This chapter offers an in-depth synopsis of the historical evolution of Western art through each major, instrumental artistic movement and school beginning with the Middle Ages’ concept of artist guilds. Jones then takes us to the Renaissance period—distinguished by the Medici patronage, innovations in oil painting techniques, and the importance of apprenticeships—followed by Neoclassical era’s emphasis on the academies and salons as the taste-makers of this time. Following this, we are informed about the impact of the invention of photography and innovations in printmaking. Subsequently, we are introduced to the first man to bring “financial leverage into the art market,” Paul Durand-Ruel (1831-1922) (P. 30) and the American ex-pat siblings who operated an artist salon out of their living room, Gertrude and Leo Stein. The Steins are highlighted as an example of how collectors, academics, and patrons can also serve as mentors and, thus, further impact the market for a particular artist. Jones moves on to discuss both the domestic and international impact of the 1913 Armory Show in New York City as a forum for the exchange of ideas. Here, Jones profiles collector, gallerist, and patron Peggy Guggenheim in her role as patron and taste-maker of the 20th century art world. The author notes that, after and around this time, art historians and writers—Clement Greenberg and Meyer Schapiro—also affected the market, in their capacity as artist promoters. Greenberg’s 1969 book Art and Culture grappled with the substance, significance, and historical context of Modernism in an unprecedented way. Jones concludes this chapter by discussing the emergence of photography and the Pop Art movement alongside developments within the art market, particularly the New York gallery scene. This section thoroughly details how the development of the art market paralleled each era’s art process—the medium used, the style in vogue, the training required, and the dialogue that revolved around the movement, the audience or the consumers of each new creative wave—and leans more toward being an art historical chapter as it closely examines the context of an art movement’s conception and how this shaped the art market as we know it today.

The third chapter chronicles the history of the American museum and its varying organizational structures, including incidents involving public disapproval of museum leadership. Museums appear to be a house of scholarship, exposure, and exhibition for all interested in diving deeper into cultural history of their society and that of others. Quoting the International Council of Museums (ICOM), Jones cites that museums are “in the service of society and its development… for the purposes of education, study, and enjoyment.” (47).  Quite often these instances of conflict and disapproval revolve around intolerant and disrespectful actions of the cultures of the museum’s visitors. Jones highlights the 2015 controversy concerning the Museum of Fine Arts Boston’s inviting visitors to come to the museum and dress up in a replica of the kimono worn by Camille Monet in Claude Monet’s La Japonaise. After protests and accusations of cultural appropriation and insensitivity, the museum cancelled this program and released an apology statement to those offended. Jones also discusses the broader issue of offensive objects on curated display, such as the Confederate flag. The Virginia Museum of Fine Art owned an adjacent parcel of land next door to the museum on it that it rented to the Sons of the Confederate Veterans. As it turns out the land housed a chapel which had served as the site for treating wounded Confederate soldiers during the Civil War. During their lease, the Sons of the Confederate Veterans flew a Confederate flag at the front of the building to symbolically commemorate their ancestors. The museum’s board criticized this gesture as a reversion to the promotion of the discriminatory and unjust Civil War-era ideologies of the Confederacy. The board reasoned that the front yard was the improper context for the exercising of this particular viewpoint and forced its removal. These two instances in American museum history grapple with the fiduciary responsibilities owed by a cultural institution to the public. There exists much ongoing debate over how broadly and narrowly the responsibilities of a museum should be interpreted. In addition to fiduciary duty to educate the public, Jones discusses the organizational structure of museum operations, which includes a board of directors, the adherence to the museum’s own code of ethics, and the necessity of holding onto a highly valuable art collection as a public trust.

Chapter Four, “Acquisitions: Good Title, Theft, Forgery, and Authentication,” delves into the issues regarding the transaction of an artwork, including provenance and appraisal. Jones begins by discussing the importance of a sound provenance prior to purchasing art by providing the logical first example of clouded title—a stolen work of art. In addition to database resources, such as the UK-based for-profit Art Loss Registry, the U.S. government is constantly trying to remedy the plight of those suffering from art crimes. In response to the Isabella Stewart Gardner Museum heist (in 1990), legislation passed in the mid-1990s made it a federal crime to steal art objects both older than 100 years and worth more than $5,000 or simply worth more than $100,000. Jones explains that a theft could be made by someone close to the artist, such as a gallery assistant.  Jones moves on to discuss how each state’s statute of limitations could impact an individual bringing a claim on account of a wrongly possessed artwork. He references O’Keefe v. Snyder—a case in which artist Georgia O’Keefe sought the return of paintings she’d made years prior from an adverse possessor who had acquired it as a bona fide purchaser. Jones also highlights the 1970 UNESCO Convention, as it circulated a code of ethics with respect to participating countries’ acquisitions of art objects. Under this code, U.S. museums run by federal agencies are not to acquire art objects illicitly removed from their country of origin (61).

In addition, this chapter examines the challenges and methodologies behind art authentication. When the scholarly evidence of art experts has contradicting results or proves uncertain, those seeking to authenticate a work of art can now turn to scientific analysis. From analyzing strokes and mark-making from high resolution images of Pieter Bruegel’s drawings to testing the chemical components of Jackson Pollock’s “Matter” paintings, scientists have made great strides in developing authentication techniques. Due to innovations in authentication, there has been a rising trend in lawsuits brought against art institutions for denial or neglect of authenticity. For example, Mr. Lancelot William Thawytes brought suit against Sotheby’s London for under-estimating the value of a painting he consigned that Sotheby’s sold as attributed to a student of Caravaggio’s. Sir Denis Mahon, the buyer of the work, took several measures to restore and authenticate the painting. He ultimately found it to be a genuine Caravaggio and priced somewhere between £10 and £15 million. He paid only £42,000 for it at auction. Jones reminds his readers that the underlying risk behind all authentications is that “there is no absolutely undeniably objective nor infallible test to determine authenticity” (66).

The author appropriately dedicates the entire fifth chapter to the examination of the “ethical and legal challenges of Nazi-era art and cultural property,” organized as an overview of the evolution of confronting the impact of the Nazi regime on the highly valuable personal property of its victims (77). Jones aptly begins with the 2012 discovery of Cornelius Gurlitt’s hoard of over 1,300 artworks passed down from his grandfather, the Nazi art dealer Hildebrand Gurlitt. (Cite Vanity Fair article). Jones explains that discoveries, such as this one, reveal the great amount of work that is being done and that will need to be implemented in the  future. Two statutes enacted in 1998 by Congress were intended to help these efforts: the Holocaust Victims Redress Act promoting the return of stolen property and the Nazi War Crimes Disclosure Act ordering the declassification of Nazi records pertaining to war crimes. In addition to discussing forward-thinking legislation, Jones chronologically walks his readers through six landmark cases that demonstrate the challenges of the Nazi-era art restitution cases—Price v. United States, Menzel v. List, Solomon R. Guggenheim v. Lubell, Bakalar v. Vavra, the Portrait of Wally, and the Republic of Austria v. Altmann. Additionally, Jones highlights other instances of the repatriation of cultural property not involving Nazi-era claims. These include the Elgin Marbles from Greece, the head of King Sargon II from Iraq, a Cambodian mythical statute auctioned at Sotheby’s New York, and Native American religious and art objects on display in American institutions. Jones has managed to package a dense amount of case law and legislative information in a digestible format.

The sixth chapter details the complexities of contract formation within the context of buying, consigning, and selling art in today’s global market. From Article 2 of the Uniform Commercial Code, to the requirements of a valid contract—including offer and acceptance, consideration, etc.—Jones covers every principle of contract law that applies to the exchange of artworks. He introduces the components of Visual Artists’ Rights Act (VARA), discusses what happens when a party breaches or fails to perform their end of the bargain, and explains which remedies are available to the victim of a breach or nonperformance. The author even goes as far as to provide templates of two different kinds of commonly formed art contracts—a sample consignment agreement and a sample exhibit contract (104-116).

The following three chapters tackle the significance of artists’ rights in today’s cultural climate. First, Jones outlines the benefits and challenges of those artists seeking to enforce the reproduction rights of their artworks. The seventh chapter presents an overview of the dynamics of the circulation of “the tangible expression of an idea, not the idea itself” (119). Jones provides a brief history of the Copyright Act, including its compliance to the Berne Convention—in which American artists receive copyright protection from the approximately one hundred participating countries—and the Universal Copyright Convention—where American artists receive an additional twenty-five years of copyright protection. Jones also explains the requirements for a work to be eligible for copyright protection. For example, the creativity criterion demands that the work must be produced by “an exercise of human element” (123). The topic of copyright infringement is demonstrated through three well-known art law cases—Rogers v. Koons, Cariou v. Prince, and Leibovitz v. Paramount Pictures Corp. The eighth chapter explores artists’ rights independent of copyright laws—these moral rights “protect an artist’s non-economic interests” and apply “after the art is sold or transferred” (143). In addition to discussing how American moral rights laws for artists relate to European ones, Jones gives examples of case law within this body of law operates. See Mass. MoCA v. Buchel. The ninth chapter reviews first amendment concerns with respect to artistic expression, starting with censorship practices dating back to the sixteenth century when Pope Pius ordered artists to paint fig leaves to conceal the nudity of the figures depicted in Michelangelo’s Sistine Chapel frescoes. A more recent example that illustrates this controversy occurred when John D. Rockefeller Jr. commissioned Diego Rivera to paint a mural at Rockefeller Center. Rivera effectively breached his contract to paint a man at a crossroads by instead depicting Vladimir Lenin. Rivera was fired and the mural destroyed. The chapter also discusses the intersections of freedom of expression with defamation, obscenity, privacy violations, and trademark infringement, illustrated by the challenges faced by Robert Mapplethorpe, Arne Svenson, Robert Indiana, and more.

In the tenth and final chapter Jones concludes by reviewing the different avenues through which artists can receive funding: federal agencies, state councils promoting the arts, crowdfunding, and foundations established either by private collectors or artists. In addition to listing examples of grant sources, Jones provides a thorough examination of the ways through which an artist could go about applying and receiving such funds. Furthermore, Jones relates back to his first chapter by including applications of the law to various disputes regarding such private foundations supporting the arts. These foundations—the Robert Rauschenberg Foundation and the Barnes Foundation, for example—have faced lawsuits ranging from fiduciary responsibilities and compensation, to partnerships with other successful foundations.

While the cases Jones makes references to cases that might not have the freshest shelf life, this is case law that should be known and understood by every individual who is considering a career in or involving art law. Jones’s constant references to historical events and the evolution of ideas provides a wonderful insight for his readers. Not only has the author successfully penned a crash course in contract law, copyright law, property law, and Western art history in one extensive yet concise two hundred-page book—but he also applies each and every important legal concept to the ever-changing, always exciting art market.

About the Author: Michael C. Jones is a professor emeritus in the University of Massachusetts Lowell College of Fine Arts, Humanities, and Social Sciences. He conducts research in areas including intellectual property law for artists, international applications of copyright law, and sports law. Art Law is his fourth publication on the topic.  

Disclaimer: Book reviews are no substitute for reading and interacting with the book reviewed.

*About the reviewer: Wylie Rechler is a Summer 2017 Legal Intern with the Center for Art Law. She is a rising 2L, J.D. Candidate at the Benjamin N. Cardozo School of Law and graduated in 2016 from Cornell University with a B.A. in art history. While at Cornell, she studied art and business abroad at the Sotheby’s Institute of Art in London. She can be reached at rechler@law.cardozo.yu.edu.

Folding the White Cube: What Is Transforming the Gallery Scene in NYC?

by Alexandra Terrell*

Screen Shot 2017-07-19 at 4.29.31 PMSpeaking at a Stropheus Art Law event entitled “Letting Go of Brick and Mortar: The Future of the Gallery” in September 2016, Josh Baer noted that the notorious art scene in the Big Apple has always changed cyclically. He questioned, “How many [galleries] are going to be flourishing 5, 10, 20 years from now? I’m going to say not many. And it’s always been that way.” Several quintessential New York City galleries affirm Baer’s prediction. On Stellar Rays, Andrea Rosen Gallery, and Mike Weiss Gallery, amongst others, have recently closed their doors for good. Small and midsize galleries, which often play a pivotal role in helping promote emerging artists (JTT with Damon Zucconi and Sargent’s Daughters with Cy Gavin are two examples), have a hard time surviving New York City’s ever-changing and always-demanding “make it or else” zeitgeist, much like the artists they represent. With an influx of artist-types comes gentrification, followed by higher property taxes, and when the lease expires, a higher rental rate to renew. When these increases in overhead become unsustainable, galleries often move to more affordable areas, starting the cycle all over again. Today, some might call the process hypergentrification because it seems to have heightened and accelerated, with property taxes and rental rates skyrocketing to stratospheric levels and landlords unwilling to negotiate longer-term leases.

The Internet plays an important role in the changing art market, as do art fairs—galleries are no longer the sole source of viewership for an artist. Artists often display their work directly to an audience online, eliciting sales and promoting their work without the help of a gallery. As Michael Foley of Foley Gallery aptly puts it, “The things that gallerists have embraced over the years as additional tools may ultimately be our undoing.”  At the same time, however, the gallery offers a viewing experience that the dimensionless white space of the Internet cannot. It’s impossible to smell the paint or perceive a piece’s physical presence through the interface of a computer screen. To reconcile the innovations of the Internet age and costly real estate with the necessity of what Josh Baer describes as a “chemical view of art”, new models of gallerist-artist-client relationships have arisen, expanding the ways in which art is presented to the public. However, with diversified roles and the use of non-traditional spaces, gallerists take on new legal responsibilities.

The Essence of the Problem

Gallerists in New York City list many reasons for abandoning their brick-and-mortar spaces—the rise of art fairs, the burgeoning online art market, the desire to retreat from the grind of the art-industrial complex, and the changing nature of the art itself. Some even blame closed-minded clientele. Collectors have shifted their focus to “market-tested trophy works”, often buying such works online without viewing them in person. Because these works tend to be the domain of blue-chip galleries with multiple locations, they are the ones benefitting disproportionately from the online market while small and midsize galleries suffer.

In a recent article in the New York Times, Robin Pogrebin notes a widening economic divide between small galleries and large ones. She attributes this phenomenon to the exorbitant cost of real estate as well as the proliferation of expensive art fairs. Participating in certain art fairs can cost a gallery hundreds of thousands of dollars, virtually shutting out any gallery pulling in less than seven figures annually. Economic factors are not the only barrier to showing at major art fairs. Many are quite selective when choosing exhibitors, opting for galleries that represent well-recognized artists over those that promote emerging ones. According to The European Fine Art Foundation’s 2017 Economic Report, art fairs account to up to 41% of sales across the industry. Not only do small and midsize galleries not benefit from those sales, they have also witnessed a noticeable decline in foot traffic, diminishing their overall sales and forcing them to rely more heavily on their most loyal clients. While there is no obvious response to the economic impact of art fairs and the Internet on small and midsize galleries, it is easier to pin down a solution to rising real estate costs.

In March 2016, the Center for Art Law hosted a panel at Minus Space highlighting the central role the real estate market plays in the arts. Adam Sheffer, the president of the Art Dealers Association of America, relates that “you can never underestimate the significance of the relationship between the real estate and art markets.” Over the course of the post-war period, gallery hotspots shifted around the city, from the Upper East Side to Midtown to Soho to Chelsea to Williamsburg.  Because of the rent increases in Chelsea and the Meatpacking District, galleries there began searching for alternatives. As early as 2001, galleries started making the move from Chelsea to the Lower East Side and Chinatown, where the majority of locations are smaller and are often run by independent landlords. Pierogi Gallery, run by Joe Amrhein and Susan Swenson, made the leap from Williamsburg to the Lower East Side to escape rents that are just as high as those in Chelsea. Prices in the Lower East Side range from $100-$145 per square foot, but because of the smaller spaces available, the overall costs are less. For larger spaces on the Bowery, rents can go up to $200 per square foot, likely because of the willingness of more profitable tenants—hotels and restaurants, for example—to take on such high rates in the area.

In the mid-2000s, rent in Chelsea fell between $90-$100 per square foot. Compare that to today, when rent on the “best blocks” can be $120-$145 per square foot. With spaces ranging in size from 1500 – 5000 square feet, only well-established blue-chip galleries have any hope of sustaining further increases.  Few spaces can still be found for below $100 per square foot.  One prevailing condition guarantees a bit of stability for galleries in Chelsea—retailers have been hesitant to move in. As a result, the rental rates are also highly dependent on what galleries are willing to pay. If no gallery can pay the rate, the space sits empty. With the Hudson Yards development being erected just above Chelsea, the situation may change.  However, the upside is that with these upscale residences moving in, more affluent clientele move in as well.

Rent is expected to continue to increase even in lower-priced regions—the Lower East Side, Williamsburg, and Bushwick—so galleries remain in search of less charted areas. For some, that means Harlem, for others, it means Queens. A few have gone even further outside traditional realms, changing course and representing artists in the absence of a brick-and-mortar space.

The Source of High Rental Rates

How is it that rent can continue to increase? The answer is pretty simple: there is no commercial rent control law in New York. New York City had one from 1945 to 1963, but when it expired, there was little impetus to renew it because, as James Parrott, the deputy director and chief economist of the Fiscal Policy Institute, explains, “the real estate community has always been aggressive in campaign contributions… and, by doing so, they’ve successfully prevented anything that would restrict them.”

Where rent control is nonexistent, a gallery’s saving grace can be the terms of its lease agreement.  Commercial lease agreements are often the result of an extensive negotiation process. Critical terms can make or break the leasing business. These terms include the length of the lease, the rent and any allowable increases, whether insurance, property taxes and maintenance costs are included in the rental rate or paid separately, and how disputes are to be settled.

There are two major types of commercial lease: a gross commercial lease and a commercial net lease. In a gross commercial lease, the tenant pays the landlord a fixed monthly fee. It is the landlord’s responsibility to cover all operating expenses of the building, including liability insurance and property taxes. This type of lease may initially be more expensive than a net lease, but it can protect the tenant should operating costs increase in the future. In a commercial net lease, the tenant is responsible for paying some of the operating costs of the building. These most commonly include property taxes, insurance, and maintenance, usually all based on the proportion of rentable space the tenant is leasing. When all three expenses are included, the lease is called a “triple net lease”. Negotiating these terms can be complex.

The ideal situation is one in which the tenant does not face unexpected costs in the middle of a lease. It is not uncommon for landlords to include a “Compliance with Laws” clause in the lease agreement. This clause can place responsibility on the tenant to ensure the building is up to code in compliance with the law, exposing the tenant to the expenses of unanticipated renovations and upgrades.  A tenant-friendly clause should require that the landlord warrant that the building is in compliance at the time the tenant takes possession. This limits the tenant’s responsibility for any non-compliance that existed before occupancy. If the tenant is moving into a space that was previously occupied by a similar business, the agreement should require the landlord to warrant that the space is code-compliant for the intended business activities. If the tenant agrees to take on additional compliance responsibilities, they should be very clearly specified within the lease.

Depending on which type of lease is secured, property tax increases are another variable that can desiccate a gallery’s finances. The Official Website of the City of New York provides information about how annual property tax rates are calculated. The Department of Finance determines the market value of the property, which differs depending on the class of property in question. In New York City, there are four property classes. All commercial and industrial properties, including office and retail buildings are included in Class 4. For Class 4 properties, the Department of Finance bases its market value calculation on income earning potential and expenses as well as some statistical modeling. This figure is multiplied by 45% to determine the assessed value of the property. The assessed value is then multiplied by the property tax rate—in the case of Class 4 properties, the tax rate is 10.6%. Within this calculation, the property’s market value is the biggest unknown, and it is the culprit for the escalating property taxes. Betty Cuningham, who moved her gallery to the Lower East Side in 2014, recounts, “Chelsea was getting way too expensive; our real estate taxes alone had gone from $1,500 the second year to $42,000 the last year.” With this wild card in the mix, the need for a fair lease agreement, one that might mitigate the damage of an unexpected tax increase, becomes exceedingly apparent.

The landlord, who typically has more experience in negotiations and holds greater bargaining power over the process, often drafts the final lease agreement. Under such circumstances, it is not difficult for a landlord to draft an agreement that favors his or her interests. Given the complexities involved in negotiating a commercial lease and the clear inequality of bargaining power between small business owners and real estate monoliths, a solution is required. It need not be novel. In fact, it may already exist.

Legislative Change: The Small Business Jobs Survival Act

Rewind back to the mid-1980s when City Council Member Ruth Messinger proposed the Small Business Jobs Survival Act (“SBJSA”). The SBJSA and its New York State counterpart, the Small Business Survival Act (“SBSA”), aim to rebalance the bargaining power through two major provisions. The first is that, barring certain exceptional circumstances enumerated in the SBJSA, the tenant has a right to demand a 10-year lease renewal. This counteracts the tendency for landlords to offer only shorter-term leases to capitalize on their ability to hike the rent once a lease expires. Additionally, if the tenant considers the terms of a lease renewal unacceptable, the SBJSA prescribes a very detailed arbitration process. Even at the end of that process, should the tenant remain unhappy with the agreed-upon rent, he or she can elect to pay the previous rental rate plus 10% without penalty.

The SBJSA has been discussed in City Council intermittently for the past 30 years. In recent years, the exponential rate of rent inflation and the resulting number of small business closures have brought the SBJSA back into focus. Though it would take some major lobbying to enact it, the SBJSA remains a viable solution to the devastating effects of skyrocketing real estate prices. Increased vacancies have so affected the streetscape that a website called Vacant New York has been established to document them. The dire situation has pushed City Council to discuss not only the SBJSA, but also the possibility of exempting small businesses from Commercial Rent Tax or introducing tax incentives for landlords to maintain their current rental rates. While organizations like Two Trees offer subsidies to cultural spaces to offset operational costs, there are not nearly enough available to aid every gallery in need. Instead of waiting for additional funding or legislative change, gallerists have gotten creative, crafting inventive solutions to overcome their financial plight and stay loyal to their artists and clients.

Creative Solutions and Their Legal Implications

Galleries are traditionally thought to be pristine white cubical spaces, static and permanent, changing only due to the art they exhibit. Owing primarily to the tough economic climate of New York’s real estate market, gallerists have had to be increasingly flexible, dynamic, and sometimes even nomadic. While some have chosen to relocate to evade financial straits, it seems even that is not a viable long-term solution. Many gallerists have accordingly chosen more radical revisions of their business model.

With established patronage and strong artist loyalty, some gallerists choose to move away from the City altogether and seek out cheaper locales from which to conduct their business. This has worked for Bill Brady, who owned ATM Gallery on 27th Street in NYC before moving to Kansas City to open up Bill Brady Gallery.  Then there are Monya Rowe who moved her gallery to St. Augustine, Florida and Jeff Bailey who moved to Hudson, New York. All three maintain a strong presence in the art market despite their more remote headquarters.

An increasingly popular solution to unsustainable real estate prices has been to adopt a pop-up model. In an interview with Stropheus Art Law, Sasha Wolf describes that she decided to vacate her brick-and-mortar space for a multitude of reasons. The most compelling reason for her, however, was increased freedom—both personal and economic. She retreated from public view, pulling the artists she represents with her. Her clients had few qualms about the increased privacy, but her artists rely on their works being shown to the public. To resolve this, Sasha organizes pop-up exhibitions. For her, this model offers her the opportunity to work at her own pace, maintain variety in her daily routine, and spend more time away from New York to meet with clients and artists. For her clients, it offers a greater sense of exclusivity and a more intimate transactional experience. For her artists, it allows them to have a say in choosing the space in which they show their work and maintains their public presence. In the same interview, David Dixon describes that there is certainly some appeal to showing in varied spaces. Artists can play a more curatorial role in finding a space specifically suited to their work or one that casts it in a new light. Without the pressure to keep pace with surrounding galleries, there seem to be fewer entrenched rules for a pop-up exhibition, which can be as short as a day or as long as a few weeks.

Another form of gallery ownership is the seasonal gallery, which offers a consistent physical space with temporal flexibility. One example is Topless at 91-02 Rockaway Beach Boulevard. Jenni Crain and Brent Birnbaum, co-founders and co-directors, revive the space each summer to stage four three-week shows from mid-June to late August. Running pop-up and seasonal spaces rather than year-round brick-and-mortar locations can free up a gallerist’s time and resources so that they can travel to art fairs without significant overhead.

For some gallery owners, staying afloat means diversifying the business and scaling up. This can be through the addition of a coffee shop or bookstore, or by transforming part of the space into a bar or dance venue by night. In the late 1980s, Gavin Brown had the idea to open up the bar Passerby adjacent to his West 15th Street gallery space, Gavin Brown’s enterprise. With a dance floor designed and installed by artist Piotr Uklanski, the venue attracted an eclectic mix of the subcultural elite. Even with his imaginative business model and memorable exhibitions, however, in 2014, Gavin Brown was forced to relocate when a developer bought his headquarters. In 2016, he opened a new space in a 19th-century building in Harlem after a complex renovation process.  The Knockdown Center took a different approach to diversification. It has a bar, yes, but the owners, artists Michael Merck and Tyler Myers, went one step further. They rent out parts of the 60,000 square foot refurbished brick factory for events—anything  from weddings to beer festivals.

Other galleries thrive by moving off the beaten path not only in terms of location, but also in the nature the space itself. Hood Gallery is a converted shipping container in Bushwick. Founded by Tom Koehler in 2013, the space is dry-walled and has electricity, but no heat. The unique space acts as a medium, often inspiring the final form of an artist’s exhibition. It is a space that provokes experimentation. Add to that its lack of an official website and its hidden locale, it is unsurprising that it has fashioned a scene unto itself.

Still other gallerists have put a more personal spin on the shifting landscape, bringing the gallery closer to home—or rather, into the home. Sister in Bushwick was founded by artist-curators Jenny Lee and Zuriel Waters in 2015. It is a micro-exhibition space, only 30 inches wide, situated in the front window of their apartment. When Sister has an opening, viewers wander through the apartment to socialize, but to see the art, they must go outside and look into the front window. This window setup allows the founders to show work 24/7 without any real intrusion upon their daily lives. Eddysroom, also somewhere in Brooklyn—its   address is not even listed online—is semi-private. It is accessible by appointment only, and news of opening receptions is communicated directly from the gallerist, Mr. Eddy, to prospective attendees with a request to refrain from passing the address and phone number to others. Founded by three artists, 106 Green inhabits the living room of 104 (no, not 106) Green Avenue in Greenpoint, Brooklyn and is open only on Sundays.  Artist Michael Fleming founded MOUNTAIN in 2016 and runs it out of his Bushwick apartment at 284 Siegel Street. He opens his doors for events, receptions, and by appointment. Most of these home-based artist-run galleries are not money-making ventures. Rather than profit, the goal is to interact with other artists and to foster community. It is to provide artists who have little intention of entering the mainstream with a place to show their work and generate discourse around it.

Though a seemingly straightforward response to the unaffordable commercial space, the in-home gallery comes with its own legal implications. New York City’s Zoning Resolution regulates the in-home business, or what it calls a “home occupation”. According to the by-laws, a home-based business can occupy up to 25% of the home’s space and may only sell goods produced on site. Certain types of enterprises are prohibited, though a gallery is not one of them. The problem, then, is that for most galleries, the works they sell are not created on site. As well, some galleries open up their entire home for exhibitions, showing pieces all throughout the space, not in just 25% of it. The semi-private nature of many in-home galleries makes them unlikely to attract special attention from neighbors, but there is the possibility that a complaint could throw a wrench into the operation. The Official Website of the City of New York has a complaint portal that links directly to a submission form specifically for illegal use of a residence as a business. With this in mind, the reasons to keep in-home galleries more clandestine may extend beyond simply maintaining domestic privacy.

In the midst of all this, a gallerist must consider where his or her legal responsibilities lie. With new roles come new responsibilities. In September 2016, Richard Lehun of Stropheus Art Law, speaking on the same panel as Josh Baer,  offered an overview of the hybrid gallerist’s legal obligations. A gallerist’s primary responsibility is to the artist. When gallerists free themselves from their physical space, though they may assume the role of an art advisor or dealer in the process, their responsibility to their artists remains intact. An art advisor must be loyal exclusively to the buyer, whereas an art dealer in the secondary market owes their loyalty to the seller. When a gallerist becomes all three, they could potentially face a conflict of interest that may be irresolvable.

        When a gallerist forms a relationship with an artist, he or she has special fiduciary duties to the artist. These include managing the consigned artworks, the funds held in trust, and the funds derived from the representation relationship. Where a gallerist also acts as an art advisor, which is generally the case in the contemporary art market, his or her duties multiply, and so does potential liability. Mr. Lehun details these areas of potential liability in his presentation, which can be viewed here.

 

Conclusion:

Perhaps, through it all, the shifting scene is what is best for artists. It has compelled gallerists and artist-curators alike to invent new spaces, folding the white cube of the traditional gallery and providing artists with more opportunity for curatorial experimentation. For some small and midsize gallerists, the harsh economic climate signaled their end, while for others, it harnessed their entrepreneurial spirit, driving them into unknown territory. Michele Robecchi, an editor at Phaidon, offers his take on the situation, “If you let your business be ruled by apocalyptic predictions, you’re inevitably doomed to fail.” Financial relief may come in the form of legislative change, though it is unclear when that might occur. Despite all the challenges it has faced, it seems unlikely that the brick-and-mortar gallery is going to become completely extinct anytime soon. Ultimately, these new models act to counterbalance an increasingly commercial and homogeneous art market, reserving wall space for a diverse community of emerging artists. Gallerists have found several workable models to maintain the gallery’s physical presence, and they will continue to find more to survive the times.

 

Works Cited:

About the Author: Alexandra Terrell, the May 2017 Center for Art Law intern, is a rising second-year J.D. Candidate at the Schulich School of Law at Dalhousie University in Halifax, Nova Scotia. With a B.A. in Visual Art from Yale University, she plans to pursue a legal career within the art world. She can be reached at alexandra.terrell@dal.ca.

 

Give and Take: on Jeff Koons mastering contractual and statutory relationships with other artists

By Madeleine Conlin*

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Photo by Jeff Ferzoco

Contemporary blue-chip artist and controversial figure Jeff Koons has long been known for developing concepts, then leaving the implementation of his designs to studio assistants to execute the vision. Historically studio assistants are young or mid-career artists who specialize in drawing, painting, photography, sculpture, and other mediums necessary to making their employer’s ideas a reality. Drawing inspiration from a number of predecessors and contemporaries, including French-American artist Duchamp and his readymades, Ukrainian A. Rogers, and many of the old European masters, Koons describes his art in terms of its potential to help him and others achieve “a higher level of consciousness.” However, despite his unconventional creative process, Koons does not consider the contributions of his studio workers to go beyond those of hire help, and affirms that all of his work is entirely his own since they merely follow instructions, and are not allowed creative liberties. Koons sees himself comparable to a fashion designer, who creates an idea, then employs other individuals to make the product.

Screen Shot 2017-07-07 at 2.08.52 PMThe method of producing art with help of others, perhaps better skilled, is not new and many, from Andy Warhol to Gerhard Richter, have relied on studio assistants to make art. The subject of employment and labor law in the arts is, however, less well known. In 2015, efforts were initiated by several Koons workers to form a union; however, these attempts were thwarted by a series of layoffs which continued over the course of the next few years. In July of 2016, an article in Art F City announced that many of Koons’ workers were laid off in the preceding week (the same workers had begun to form a workers union in the months just before this occurred). Based on what the anonymous source told Art F City, Delaware-incorporated company Jeff Koons LLC fired everyone who had started working for the corporation after June 1st, 2015. Another downsizing occurred recently, and the company fired half of its painting staff on June 13, 2017. This cut the number of painters down to 30 from its previous 60 person team. Some of the assistants that Jeff Koons LLC laid off in June were employed by the artist for over a decade. In all, there have been 3 reported rounds of layoffs since 2015, each around the same time of year. While the reasons for laying off all of these artist-workers were not publicly given, the first one seems to have coincided with the workers’ unionizing processes. This timing has led to speculation by some that perhaps the two actions are related.

Unions are formed to maintain a balance of power between employers and employees, and to ensure that employers uphold certain practices, some of which include fair wages, benefits, and reasonable working conditions. Union formation, however, is a complicated process. First, an individual must petition their coworkers to form an organizing committee. Then, the committee must meet with legal counsel, or with a chosen union representative. Based on this meeting, the group can decide if the union would be effective and useful in their own workplace, and if so, each must fill out a union authorization card. Union representatives and individuals from the organizing committee are responsible for garnering interest and support from roughly 75-80% of their coworkers in order to formalize the union. Once the target percentage has been reached, each interested party member must fill out and file union authorization cards with the National Labor Relations Board and petition for an election. This election request is then processed by the board, which will subsequently conduct a secret ballot election at the workplace to ensure that the majority of members actually wish to be represented by the union. If so, then the board will certify the union, which means that by law, the employer must bargain in good faith with the workers’ union. Moving forward, the union and employer can work together to address issues or concerns in the workplace, and eventually create new contracts regarding the working conditions (that again, must be voted on by every worker later on). Unionizing, while incredibly useful for balancing the power between authority figures and workers, is not an easy process — to say the least.

While it is unknown whether or not Jeff Koons LLC did indeed fire its workers for unionizing, if they did, it could mean trouble for the company. According to the National Labor Relations Act (NLRA), it is illegal for employers to:

  • Prohibit [employees] from soliciting for a union during non-work time, such as before or after work or during break times; or from distributing union literature during non-work time, in non-work areas, such as parking lots or break rooms;
  • Question [employees] about your union support or activities in a manner that discourages [them] from engaging in that activity;
  • Fire, demote, or transfer [employees], or reduce [their] hours or change [their] shift, or otherwise take adverse action against [them], or threaten to take any of these actions, because [they] join or support a union, or because [they] engage in concerted activity for mutual aid and protection, or because [they] choose not to engage in any such activity;
  • Threaten to close [their] workplace if workers choose a union to represent them;
  • Promise or grant promotions, pay raises, or other benefits to discourage or encourage union support;
  • Prohibit [them] from wearing union hats, buttons, t-shirts, and pins in the workplace except under special circumstances;
  • Spy on or videotape peaceful union activities and gatherings or pretend to do so.

The NLRA is explicit in that union members cannot be fired for joining, starting, or partaking in the union in any way. The state of New York provides additional protection for employees through the New York State Employee Relations Act, which states that union members also have the right to organize, bargain collectively, and to strike. If Jeff Koons LLC fired its workers for their unionization efforts, the company could face legal consequences. In the earlier 2000s, Koons had as many as 120 assistants in his studio, but after cutting the staff in half more than once in the last few years, sources claim that there are only about 30 people still working for the company. There has been no account of any successful union formation. Reportedly, some of the laid off studio assistants threatened to bring legal action against Koons in 2015, but none have been reported yet. As of now, no new action has been taken, and it is unclear whether or not the union workers or any of the ex employees will be filing against Jeff Koons LLC for interfering with the unionizing process. A savvy businessman, Koons probably has his contractors sign Non Disclosure Agreements (NDAs), as none of the reporters for these cases have not been able to gather much information from the studio assistants and individuals who were fired. Jeff Koons LLC was filed with the New York State Department of Corporation in 2005 as a foreign limited liability company, and it is likely that the workers’ compensation is handled through the company, as well as other financial matters.

These labor law concerns are only the newest emerging conversations relating to Koons’ non traditional style of creation. His employment of assistants has been a topic of discussion for many years. In an interview in March 2016, in which Koons opened up about his creative process and the concepts behind his art, the interviewer asserted that he seemed not to “suffer in solitude” like some renowned artists do, and called his work “communal art.” Koons responded to this insinuation emphatically: “My work is generated from myself and it comes from a process of following my intuition and through letting things resonate over a period of time. I’ve had people around me who … I’ve been able to use to help me realize some of these different works. But at the end of the day, I’m responsible for everything. So the creative process is not communal. I’m in front of it, because it’s the gesture.” Koons takes an approach to his work that mimics the style of esteemed clothing designers, architects, or a company’s “idea man.” While he leans on other artists to assist him in creating the physical manifestation of those ideas, the art would not exist without his conceiving of it and directing his team in its implementation.

As a widely known and too-big-to-fail artist, Koons frequently stands in the public eye, and each of his pieces faces immense scrutiny, making his attention to detail and desire for perfection extremely important to the success of his work. According to Koons, one key part of grasping one of his pieces is to understand what he is trying to accomplish on a conceptual level. Koons does not place as much emphasis on the process, as on the discovery of higher states of beauty, or the bringing together of polarities through his work. It is the outcome and presentation of each piece or series that Koons finds most salient; it likely does not hurt that the financial rewards are ever-expanding. He often states that he wants his work to express broader ideas — where some artists, such as Jackson Pollock, are very focused on the motions and methods of the production of art, Koons focuses on delivering a message through design concepts: “I believe in communication. That’s how I think about the viewer. It’s not to get any response from them, other than what I put into it… the excitement, the energy. You know, I make something because I’m in awe and wonder of what that idea is and what that will be like. I’m excited by it. I just want them to feel that.” Since the outcome of the piece matters most, it needs to achieve the degree of perfection Koons envisions to succeed in his mind.

In 2012, a few years before the first round of layoffs, John Powers, a 21 year old art student who worked for Koons at an hourly rate of  $14, described his experience with Koons in the New York Times. Powers spent most of his time painting in a color-by-numbers-esque fashion. He worked three nights a week and on Saturdays for around five months, spending his time in the studio working tediously on a highly detailed piece titled, “Cracked Egg.” (The painting was accidentally destroyed in the studio and a second edition of the same piece was begun and later sold in 2003 at a London Christie’s auction for $501,933). Illustrating Koons’ perfectionism in the studio and in his creative process, Powers stated that Koons would frequently fire individuals who failed to meet his standards. Powers managed to please Koons during his painting endeavors, but he only stayed with the studio for about six months total, quitting soon after the destruction of the first version of the piece. While some, like Powers, only work for a very brief time in the studio, Koons has had a loyal following of several assistants who, until recent layoffs, had been with the studio for over 10 years.

Perhaps Koons demands a lot from his workers, but that is not necessarily unusual — many work providers have high expectations for their hirees, especially if they wish to make a profit. Based on numbers and name recognition Koons seems to succeed. Some of his works have made record prices at auction, and he is broadly recognized as one of the most financially successful living artists. One especially lucrative piece, Balloon Dog (Orange) (1994-2000), sold for $58.4 million dollars in 2013 at a Christie’s auction, setting the reported record at the time for the most expensive piece of fine art by a living artist sold at auction. Koons made five unique Balloon Dogs (Magenta, Yellow, Red, Blue, and Orange) from stainless steel with different color coatings as part of his Celebration Series, with the help of the roughly 120 assistants who worked for him at the time. Other pieces have reached similar lofty prices at various auctions, including Jim Beam – J.B. Turner Train (1986), which sold for $33.7 million, Tulips (1995-2004), which sold for $33.6 million, and many more, all of which have been purchased for upwards of one million dollars, and all created by the workers in his studio. Koons works, regularly produced as multiples, draw upon a variety of techniques and skills that are not mastered by the mastermind behind them. While his artwork is often pricey to create, since he often works with materials such as stainless steel or porcelain, the sale revenues from each piece or series can be tremendous. He does not confine himself to working with any particular gallery, but rather shows his work in various museums, galleries, and auctions houses, and even works as a contract artist for interested — and affluent — buyers.

For workers like Powers, an art student at the time of his employment, it is likely difficult to reconcile the amount of pay received and the high-pressure work environment of the Koons studio with these sale prices and the fame of the pieces, much of which is not credited to the literal makers. Current minimum wage laws in New York City (as of December 31, 2016) require companies with less than ten employees to pay at least $10.50 per hour and companies with eleven or more employees to pay at least $11.00 per hour. Koons seems to have been clearing the pay standards, at least according to the sources that spoke with Artnet News and Art F City. Many of the artists fired this year were earning about $21 per hour, a higher rate than the one Powers received for his work in 2012 ($14 per hour). The difference in the hourly rate reported in 2012 and in 2017 may be reflective of terms negotiated by Koons in 2015 with his employees to discourage them from forming a union at that time, or due to increased profit since then. Artnet News reported that according to their source, some of the individuals fired this time had also not received severance beyond the last day’s pay (which, if promised upon their initial hiring, would be another breach of the NY State Employee Relations Act). New York State laws do not mandate that employers offer benefits or wage supplements, but if they are offered verbally or in writing upon the employment of new workers, failure to comply to those agreements is considered a misdemeanor. The original reasons behind the studio assistants’ desire to form a union in 2015, and current possible explanations for firing these workers, both remain obscure.

In statements, Jeff Koons LLC has publicly attributed each round of cuts to substandard sales and downsizing, or to a lower need for labor due to smaller or fewer projects. This would be reasonable, except that Koons’ other financial actions and ongoing projects do not seem to match those claims. In 2015, the year in which the first round of cuts were made, and the same year that some of the workers began to unionize, Jeff Koons LLC spent $23.7 million on purchasing three new adjacent studio spaces in Hudson Yards, with plans to move into the larger site from their current Chelsea location. Even earlier, in 2014, Koons spent an estimated $4.85 million constructing a 21,726 square-foot mega-mansion out of two neighboring houses on the Upper East Side. Perhaps then, the cuts are not financially incentivized, but rather due to a basic lack of need for assistance in his studio. Koons stated that he was not working on any major shows in 2015, hence the layoffs, although the Gazing Ball series of paintings with sculptures went on view that year in November. Since 2015, Koons has worked on collaborative projects with Burton (2014-2016), Google (2016), and Louis Vuitton (2017-ongoing) on snowboard designs, iPhone cases, and a designer handbag collection. Other “solo” (non-collaborative) works that he has completed since 2014 include his piece Bouquet of Tulips (2016), Gazing Ball (Bottlerack) (2016), Seated Ballerina (2017), eleven new editions of previous paintings and sculptures, and various contract-based pieces. He has also reportedly become involved in the development of virtual reality-based art in the past few months. And yet, each year for the past three years, during the summer months, Jeff Koons LLC has made substantial cutbacks to his studio staff, which leads to the question, why?

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Given his impressive legal and financial footprint, it is worth remembering that Koons had to work his way up to his international stardom. He too worked various jobs similar to the positions of the studio assistants he employs now, including a position selling memberships at the Museum of Modern Art in NY, where he worked as a young man scraping to get by. He even worked as a studio assistant for Ed Paschke, where he worked so hard that he would sometimes go home with bloody fingers from stretching canvases. Koons’ baggage and meteoric rise from a MoMA public services employee to a world famous artist, as popular as he and his works have become, is constantly subjected to public scrutiny, including his record sheet as an employer.

Select Sources:

*About the Author: Madeleine Conlin is a rising Junior undergraduate at Yale University studying Psychology and English. She is spending the summer as an intern at the Center for Art Law. She can be contacted at madeleine.conlin@yale.edu.

Disclaimer: This article is intended for educational purposes only and is not meant to provide legal advice. Any views or opinions made in the linked article are the authors alone. Readers are not meant to act or rely upon the information in this article and should consult a licensed attorney.

 

Post Co-Authorship and Past Congeniality: Creative Relationship Spoils

By Colby A. Meagle*

Screen Shot 2017-06-28 at 10.51.01 AMSynergy is the sharing of talent and ideas, the combining of two or more minds in order to produce a product superior to anything one is capable of creating alone. Partnerships may look like a constructive arrangement, one where everyone benefits, and maybe that is the case at the beginning, but what happens when the relationship falls apart? What is the consequence of that fleeting love affair, or late night bar fight? In the context of art law and partnerships dissolving, who gets custody of the “kids”, a.k.a. the artwork? Artists are romanticized for their passionate relationships that include both personal and work related matters. But all too often these fiery affairs go up in flames and the issues of authorship and ownership are brought front and center. The following is a review of three recent legal battles that have highlighted these difficulties, as well as a brief discussion on the prominent applicable laws that underlie the arguments.

Cases & Controversies

In a pending case Chan v Schatz, authorship is in dispute.  Generally, to determine if work has been co-authored courts look at the intention of the parties to create a joint work. If the intent is lacking, it is likely not a joint work, but they also consider if there were substantial contributions made to the work, and the extent of control exerted over the work (Aalmuhammed v. Lee). Artist Eric Chan, well known for his abstract paintings and sculptures, is in the midst of a divorce from Heather Schatz. The split has prompted him to take precautionary actions by filing suit for a declaratory judgment naming him the sole creator of his works, therefore excluding Schatz from a co-authorship claim. He, represented by Lindsay Elizabeth Hogan of Grossman LLP, and she, now represented by Andrew Berger of Tannenbaum Helpern Syracuse & Hirschtritt LLP, were married in 1992. The suit encompasses 1139 works created during the span of their quarter century marriage.

While Chan and Schatz lived and worked together Schatz appears to have provided assistance in managing the studio. While Chan admits Schatz occasionally provided advice, and suggested concepts for pieces, he maintains in his complaint that, “her contributions were not themselves fixed independent creative expressions.” Furthermore, Chan “never intended that [his wife] would be his co-author,” rather, throughout the entirety of the relationship his understanding was that he was unequivocally the sole author of his works. This is despite the fact that the work was and is displayed under the joint name “ChanSchatz,” which he claims was merely a homage to his relationship and love for his wife.

However, Schatz feels differently. She asserts that her contributions were significant, as proven by the use of the joint name and their long history of working together publicly. As such, Schatz feels entitled to be credited as a co-creator of the work. So, while Chan maintains there was no intent for co-authorship, Schatz claims that her contributions were material.  

Chan is seeking to resolve this controversy by approaching the court for a declaratory judgment “that he is the sole author of all of the Chan Works” (Chan Complaint). A ruling in his favor would grant him status as the only author, and to full intellectual property rights over the art. Conversely, if the court side with Schatz, then the rights and credits will be shared between the two now-estranged lovers. The case is to be tried to a jury, with amended complaints due in July, 2017.

Another couple that frequently appears in the public eye, Marina Abromović and Frank Uwe Ulay, have also faced their fair share of legal issues. Following their tear-jerking reunion at Marina’s retrospective, Ulay filed suit as a citizen of Holland in Dutch courts in retribution for a breach of contract relating to joint works created before the duo’s split in 1988. Ulay was eventually awarded twenty percent of the net sales of their work by Amsterdam courts, in accordance with the contract they signed in 1999, along with legal fees and backdated royalties (theguardian.com). Abramovich v Ulay highlights how important it is for artist couples to document their arrangements. Without the contract, Ulay would have faced a more difficult legal battle in the pursuance of receiving fair compensation for his contributions.

Payment was not the only issue addressed in the Dutch filings:  attribution for future displays and documentations was also resolved. The question of whose name comes first may seem insignificant, but to many artists it is of the utmost importance, marking one as superior or more influential if named first. The courts decided that works from 1976 to 1980 be listed as by “Ulay/Abramović” and those from 1981 to 1988 as “Abramović/Ulay.” It is possible that the courts considered, based on the evidence presented, whose artistic vision was dominant in creating the work during those times to determine this order, although their reasoning for this specific division was not explicitly stated. Regardless, the suit is evidence that even the seemingly minute details, such as the name order, can cause conflict, and should be considered when drafting a partnership contract.

Artists involved in romantic relationships are not the only ones at risk of authorship and credit-related legal issues: friends and acquaintances can face similar  difficulties. Moi v Chihuly Studio, inc., is instructive. In his complaint, Michael Moi alleges that renowned glass artist Dale Chihuly not only took credit for work they created together but refused to pay him at all over a period of fifteen years. Plaintiff Michael Moi worked as studio assistant to Chihuly from 1999-2014. His contributions included helping in the creation of paintings, which he claims to have co-authored, as well as forging Chihuly’s signature– under the direction of the artist — on numerous pieces. The visual works he helped produced were consequently sold to the benefit of and attributed only to Chihuly. During his time working for Chihuly, Moi was “repeatedly and consistently” promised future compensation, and Moi relied on their friendship as assurance that this was true, and that he would eventually be paid. However, the complaint puts forth that, at no point did Moi receive the promised payment. Chihuly denies the claims, stating that he has long employed studio assistants, and that the suit is merely an attempt to extort him. Moi is seeking the recovery of damages for the missing payments and proceeds of his work under the Copyright Act and the Visual Artists Rights Act (VARA).

The lack of an employee contract is important here, because without it Moi may not have any claims to the intellectual property. Under the typical contract for work or contributions to work, the creator remains the author, and the owner/contractor of the work retains all the economic rights to the work, including its copyrights. Thus, a pivotal point in the case for his claims under the Copyright Act, may be whether he was a partner and co-author of the work, or an employee of the studio.    

Conflict Foresight/Preparation

How might disputes over authorship between collaborators (spouses or business partners) have been avoided? One possibility was to have a private agreement detailing the nature of their working relationship, including exactly who would be credited as the author of the works. The agreements could also have covered various other issues of copyright ownership for the works, along with ownership of the physical pieces if a split were ever to occur. The value of the initial challenges forming these contracts would far outweigh the difficulties the pairs now face in resolving their disputes.

Artists Jack Beal and Sondra Freckelton provide an example of this forward-thinking precautionary action. Sondra was a successful sculptor in the 1970’s before she transferred into watercolor painting. Her husband Jack Beal was an American realist painter until his death in 2013. The two included a written agreement in their marriage certificate to provide that they would have an equal partnership in both marital and artistic endeavors. Sondra felt that this agreement was extremely important to maintaining her valued independence as artist, as well as to ensuring that her husband and his career would not overshadow her own.

However, the reality is that most artists, and people in general for that matter, are not anticipating the demise of a relationship upon its commencement. For this reason, contracts are rarely drafted, and often one partner could even feel insulted by the other for asking for official documents to be created – seeing it as a testimonial to the relationship’s inevitable demise. So while the creation of a contract in every working relationship is ideal, the frequency of their actual existence is much smaller. Even if one does manage to make a contractual agreement, there may still be issues of enforcement depending on the contract’s nature and terms, as evident by the Abromović – Ulay suit.

That is not say that one can’t go overboard with preparation. One couple made Internet news, when their specific contract request went viral. The couple was getting married and in need of a wedding photographer. The odd part is, they wished to include a clause in their contract stipulating that if they ever got divorced they would receive a full refund for their photographs, as they would no longer need them. Needless to say, they had quite a difficult time finding someone willing to accept such an agreement (PetaPixel.com). So, while planning is encouraged, it is possible to go too far. One should find a happy medium, somewhere between a fully stocked fallout bunker and never getting a flu shot, perhaps the contract equivalent of a first aid kit.       

Distribution of Assets: Tangible and Intangible

When relationships end, many artists may be surprised to learn that in most states, artwork is considered marital property unless provided otherwise in a prenuptial agreement. This means that during a divorce, artwork is part of the property that is divided 50/50.

In relation to works created by one or both partners, the first step is to make an accounting of all the works made and sold during the marriage and their location. It is worth remembering that works in progress should be included. This step should be taken seriously since in the case of an accidental omission, one could face charges for fraud, and the other spouse could either keep the omitted work or all the profits from its sale. The work must also be assigned a value, perhaps a touchy subject. But if both sides can agree, it can be much simpler and faster to have a single appraisal completed than arguing over whose is correct.

Copyright should also be kept in mind during the distribution of assists. Although the work may be going to both parties, the copyright remains with the original creator and must be transferred separately to the new owner. This becomes important if the spouse who holds the work but did not create it wishes to sell the work or license it, as they will need the corresponding rights. The transfer of which must be explicitly detailed in the allocation of the artworks during the proceedings. It is also important to note here, that in the case of co-authors, each author has equal copyright rights.   

Lastly, there are issues that may arise under VARA (the Visual Artist Rights Act of 1990). VARA provides some protection to the artist’s work regardless of ownership. It allows, among other rights, “the right to prevent distortion, mutilation, or modification that would prejudice the author’s honor or reputation”. This means that in the case of a rather heated divorce you shouldn’t plan on keeping your spouse’s work only to burn it in a fit of rage or revenge, to do so would be a violation of their rights and you could face charges (not equal in value to the fun of your bonfire).

Conclusion

In summary, matters of heart and business are complicated, throw art into the mix and you have a recipe for calamity. Whether it is determining who receives credit for the work, or who ultimately gets to keep the work, small steps along the way in contractile prep paired with a little legal advice can lead to less headache, if not less heartache in the long run.

Select Sources:

  1. Complaint, Moi v. Chihuly Studio, inc., (Wash. Super. 2017).
  2. Complaint, Chan v. Schatz, 1:17-cv-03042 (S.D.N.Y. Apr. 26 2017)
  3. THE VISUAL ARTISTS RIGHTS ACT OF 1990, 136 Cong Rec E 3716
  4. 17 U.S.C.S. § 101 (LexisNexis, Lexis Advance through PL 115-37, approved 6/2/17)
  5. Ben Quinn and Noah Charney, Marina Abramović ex-partner Ulay claims victory in case about joint works, Sep. 21, 2016, available at https://www.theguardian.com/artanddesign/2016/sep/21/ulay-claims-legal-victory-in-case-against-ex-partner-marina-abramovic
  6. Nichole Martinez, What Happened to Art in a Divorce? [Hint: Get an Art Appraiser], Nov. 8, 2016, available at https://artlawjournal.com/art-appraiser-divorce/
  7. Daniel Grant, Love and Marriage, Artist Style, Dec. 17, 2010, available at http://www.huffingtonpost.com/daniel-grant/love-and-marriage-artist-_b_784179.html
  8. Christies, How deep is your love?, last visited Jun. 12, 2017, available at http://www.christies.com/features/10-most-famous-art-couples-of-20th-century-7062-1.aspx
  9. Noah Charney, Ulay v Marina: how art’s power couple went to war, Nov. 17, 2015, available at, https://www.theguardian.com/artanddesign/2015/nov/11/marina-abramovic-ulay-performance-art-sued-lawsuit
  10. Columbia Law School, Keep Your Copyrights, available at, http://www.law.columbia.edu/keep-your-copyrights/copyrights/know-your-rights/joint-works
  11. PetaPixel, Wedding Photographer Asked for Refund Guarantee in Case of Divorce, (2017), available at https://petapixel.com/2017/06/07/wedding-photographer-asked-refund-guarantee-case-divorce/
  12. Aalmuhammed v. Lee, 202 F.3d 1227 (9th Cir. 2000)

*About the Author: Colby Meagle is a 2019 J.D. candidate at Pepperdine University School of Law. Prior to law school, she received her B.A. in Arts Administration and B.F.A from Elon University in 2016. She can be reached at colby.meagle@pepperdine.edu

Disclaimer: This article is intended for educational purposes only and is not meant to provide legal advice. Any views or opinions made in the linked article are the authors alone. Readers are not meant to act or rely upon the information in this article and should consult a licensed attorney.

 

Bring Me the Head of King David: Questions of Attribution and the Responsibility of Museums

By Center for Art Law Team*

Art forgery has long been a siren of the art world. Dark yet beguiling, it ranges from misidentification of orphaned works to forgers deliberately passing off fakes on the market. Some forgeries gain notoriety because they contain all the elements of  catch-me-if-you-can intrigue: outsmarting experts, creating intricate webs of deception, evading discovery, collecting a hefty prize. Other forgeries endure in perpetual obscurity, only caught years or decades after the fact (if at all). This spring the Center for Art Law hosted an evening on the topic, screening Orson Welles’ F for Fake and featuring Aaron Crowell’s remarks about root causes for transactions involving fakes. Though forgery implicates all spheres of the art economy, its effect on reputations and credibility is particularly noteworthy in the context of museums’ roles in the public and educational sectors.

As part of a series of seminars given at the Metropolitan Museum of Art in 1967, director Thomas P. F. Hoving stated that taking fakes and their detection seriously is a key part of the Museum’s educational obligations. But he also quoted art historian Max Friedländer’s qualifying statement that, while it is an error to collect a fake, it is as much “a sin to stamp a genuine piece with the seal of falsehood”. In his 1996 book on art forgery, False Impressions, Hoving also suggested that the entire art market was 40 percent forgeries. More recently, the art critic Michael Glover estimates that at least 20 percent of paintings held by major museums will be attributed to a different painter by the end of the 21st century. It is unsurprising, then, that at times misattribution in museums would be inevitable. The key questions are: how should museums treat the subject of attribution and respond to allegations of forgery? What responsibilities do curators have to the members of the public? And what actions can museums take to prevent or uncover forgeries in their collections?

What are Museums’ Legal and Ethical Responsibilities?

There are no explicit regulations regarding museums’ obligations to investigate and disclose purported fakes. Ultimately, the art market polices itself and curators and museum administrators have their boards of directors to report to and codes of ethics to uphold. However, these codes sparsely mention fakes and forgeries.

The American Alliance of Museum’s (“AAM”) Code of Ethics expresses the common tenet that museums are stewards of the world’s natural and cultural common property, holding their collections for the benefit of the public. It does not mention fakes or forgeries, but exhibiting and acquiring such items unawares conceivably threatens the core mission by taking resources away from genuine artifacts. Interestingly, the American Association of Art Museum Curators’ ethical guide, the Professional Practices for Art Museum Curators, and the American Association of Art Museum Directors’ Code of Ethics, also overlook issues of fakes and forgeries. The exception to this is the American Association of Art Museum Directors’ Professional Practices in Art Museums, but forgery is mentioned just once, merely as a potential reason to deaccession an art object. Given the recent interest in fakes and forgeries as a cultural phenomenon, museums have been collecting and exhibiting fakes for their unique albeit detrimental effect on the art history canon.

Regarding faked antiquities, the American Association of Museums announced in 2008 “New Standards on Collecting of Archaeological Material and Ancient Art”, which advocated reference to the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export, and Transfer of Ownership of Cultural Property. The section on existing collections stipulated that, in the interests of public trust, research and accountability, museums should “make available the known ownership history of archeological material and ancient art in their collections, and make serious efforts to allocate time and funding to conduct research on objects where provenance is incomplete or uncertain.”

The antiquities trade is susceptible to forgeries, as writes Leila A. Amineddoleh, an art lawyer specializing in art and cultural heritage law, and an adjunct professor at Fordham University School of Law. This susceptibility comes down to trade in unprovenanced antiquities being driven by demand, including from within the black market. For example, a large number of purported Coptic sculptures from the late fourth century in Egypt entered the international art market in the 1960s, at a time when Coptic art was not widely understood by scholars, yet was popular with collectors. Recently, historians have concluded that most of them – including a considerable collection within the Brooklyn Museum – are fake, thereby distorting our understanding of Christian iconography in ancient Egyptian art. Accountability for museums, most of which are privately owned in the US, seems to come more from public pressure and bad press. In 2009, The Brooklyn Museum responded to these unflattering allegations by planning an entire exhibition dedicated to the forgeries. Some scholars, such as the art crime professor Noah Charney, have noted that museums may only assume moderate shame in acquiring forgeries.  

Another explanation for the lack of rigid rules in this area is Hoving’s idea that it is anathema for an expert to dub an authentic work as fake. This opinion appears to be shared throughout his field. In a 2011 publication, Professor Andrew Stewart of the University of California posits that the “sin” of accusing a genuine antiquity as fake is “much more heinous” than authenticating a forgery). According to Stewart, such can be associated with a rush to judgment and the imposition of one’s own ego on the object. According to Sharon Flescher, the Director of the International Foundation of Art Research (IFAR), art attributions can and do shift over time. In her essay on IFAR in Ronald D. Spencer’s 2004 book, The Expert versus the Object: Judging Fakes and False Attributions in the Visual Arts, Flescher argues that scholars should not be encumbered by threats of litigation or pressure from the art market to make such determinations.

A Tale of Two Heads

Screen Shot 2017-06-21 at 12.02.37 PMImage: the Metropolitan Museum of Art’s Head of King David, #38.180, whose authentication is questioned by Robert Walsh. The Met’s website gives the following data: c. 1145, made in Paris, fine-grained limestone, 33lb.

In 2012, Robert Walsh, a New York antiques dealer, purchased a limestone head at a Greenwich Village antiques store, believing it to be a sleeper. (A sleeper is an orphaned artifact which may become attributed to a known and famous creator.) Walsh learned that that the Metropolitan Museum of Art was exhibiting a similar head, apparently originating from the Cathedral de Notre-Dame, and began investigating. Where did Met acquire its sculpture, and what did the two pieces have in common? These questions led Walsh down a twisting, years-long road of research.

The Met describes its sculpture as a head of King David, originating from the St. Anne portal of the west facade of the Cathedral de Notre-Dame in Paris. The portals contained monumental sculptures of each of the Kings of Judah, which were decapitated and presumably destroyed in the political fervor of the French Revolution.

Walsh researched both pieces using scientific analysis, provenance and stylistic research, and theorized that the Met was exhibiting a 1920s copy of his own authentic sculpture. He concluded that neither sculpture originated from the Cathedral de Notre-Dame, but that his was a French antique, and that there were some inconsistencies in the Met sculpture’s provenance. The Met sculpture was sold by a French art dealer, Georges Demotte, who was active in the 1920s and 1930s and who is believed to have sold forgeries to museums. Demotte’s original catalogue listing of the piece for his New York gallery in 1930 contained no mention of either Notre-Dame or King David. Instead, the sculpture was said to have been discovered in St. Germain de Pres, which is located further down the River Seine. Walsh believes that the author of the Met’s work is Emile Boutron, an accomplished conservator and forger employed by Georges Demotte.

Allegedly, these findings were shared with Met’s Medieval Department in 2012, but the curators were unconvinced that their King David was inauthentic. Walsh later contacted the Louvre, which had purchased a very similar sculptural head, also from the controversial Demotte New York Gallery, in 1934. According to Walsh, the Louvre removed the sculpture from public display. 

In 2014, Walsh, through his company Latipac, Inc. (now dissolved), served a Summons with Notice on the Met, apparently seeking to preclude the Met from challenging the authenticity of Walsh’s sculpture. Other threatened causes of action, which did not manifest in court action, were breach of the museum’s Collection Management Policy (on a theory that Latipac is its intended third-party beneficiary), as well as a series of tortious actions, including defamation, interference with prospective economic relations, injurious falsehood and product disparagement.

In October 2014, both sculptures were reportedly drilled and tested at the Met by an expert in French limestone from the the Limestone Sculpture Provenance Project at the University of Missouri at St. Louis. The test results revealed that Walsh’s sculpture consists of Burgundian limestone, whereas the Met sculpture was sculpted from Paris Lutetian limestone.

The Subtle Art of Authentication

In an effort to curb fakes and forgeries in the art market and in museum collections, three general methods of authentication have emerged.

1. Provenance Research:

Provenance is the record of the ownership or chain of title of a work of art or antique. Works with clear, substantiated and complete provenances are naturally of a higher financial value, based on risk and return. (For more on this, see Gail Feigenbaum and Inge Jackson Reist’s 2012 book “Provenance: An Alternate History of Art” and Art Watch UK’s upcoming publication detailing the proceedings of its 2015 London conference “Art, Law and Crises of Connoisseurship”). Works with questionable or incomplete provenances, such as the Met’s sculpture, will often lead an authenticator to research further the object’s history and affiliation with suspicious characters appearing within the chain of title.

The circumstances of the Met’s acquisition of its sculpture are noteworthy. According to Walsh, James Rorimer, one of the Monuments Men and 1930s curator for medieval art at the Met, oversaw the 1937 acquisition of the Met sculpture from the renowned dealer Arnold Seligmann for $2,500. Apparently, Seligmann had purchased it from Demotte’s New York Gallery in 1934. The 1930 Demotte Gallery Sculpted Portraits exhibition catalogue listed it as “Head #9, Crowned King’s Head”, and claimed it was excavated from St. Germain de Pres. Also in the Sculpted Portraits catalogue was an entry for “Head #10”, which the Louvre acquired from Demotte in 1934. Whether Rorimer believed Head #9 to be real or not, he clearly believed it to be worth acquiring for the museum. The Met’s sculpture was not included in the 1970 medieval sculpture catalogue, The Year 1200: A Centennial Exhibition at the Metropolitan Museum of Art, where over 50 stone sculptures – including a series of heads – were showcased together with medieval mosaics, coins, stained glass, frescoes and other artefacts.

2. Scientific data

Business of authenticating is a risky proposition. Increasingly, scientific expertise and methods are used for testing of different artifacts depending on the age and materials of the piece. Testing methods may include elemental analysis, microspectroscopy, molecular analysis, carbon-dating, pigment analysis, x-ray fluorescence, and even fingerprint testing. The most common indicator that a work of art is forged is the detection of materials  on the work which were not manufactured or used until after the work’s purported era. Orion Analytical, a private lab which was purchased by Sotheby’s in 2016, was one of the most highly regarded art analysis companies in the United States, as it combined scientific testing with connoisseurship. Sotheby’s cited the use of modern materials in an alleged old master work as grounds for revoking a private sale and seeking reimbursement from the broker in a recently filed lawsuit regarding an £8.4 million Frans Hals painting which turned out to be a forgery.  

Similarly, the famous forger Wolfgang Beltracchi, who was convicted in 2011 and released from prison in 2015 after he and his wife sold hundreds of fake works attributed to Pablo Picasso, Fernard Léger, Max Ernst and others, was ultimately exposed through forensic analysis. Dr. Nicholas Eastaugh tested the pigments of a painting the Beltracchis claimed to be by the Dutch artist Heinrich Campendonk, and uncovered titanium white, which did not exist in 1915 when the work was supposedly painted.

The forensic testing of Walsh and the Met’s sculptures, done by the University of Missouri’s limestone experts as part of the settlement agreement, assisted with identifying the source of the material used, but fell short of providing the date of creation to the objects. Although  scientific analysis may be helpful in determining whether an object is fake, it is unable to confirm an object’s authenticity without the stylistic knowledge of a connoisseur.

3. Connoisseurship 

The least precise and most subjective form of authentication is connoisseurship, or expert aesthetic judgment. It relies upon an expert’s training, expertise, and – more often than not – gut instincts. Expert opinions are heavily relied upon by dealers, auction houses and museums. Connoisseurship is at once heavily subject to corruption, and powerful enough to hold sway in court.

Connoisseurs have been known to be fooled by highly skilled forgers. Last year’s Knoedler trial revealed how a single artist could paint, from his garage in Queens, a raft of fake de Koonings, Rothkos, Pollocks and other masterpieces, which would pass muster with some of the most prominent experts and gallerists. Similarly, Wolfgang Beltracchi duped scholars, museums, auction houses, gallerists, and even Max Ernst’s widow, with his numerous forgeries. In a recent documentary on Beltracchi, he brags that his forged Vermeers, Rembrandts and Leonardos are currently in circulation, and that Leonardo da Vinci’s work is “not difficult” to copy.

Walsh relied on his own connoisseurship and his belief that he uncovered in the Greenwich village antiques store a valuable and probably medieval find. According to him, experts in Paris with deep knowledge of the facades of the Cathedral de Notre-Dame were adamant that such a sculpture did not match the Cathedral’s sculptural program.

The Object v. the World: Curatorial Sins

Museum directors, experienced or non, may be faced with claims and possibilities of having fakes in their collections. For the Expert versus the Object: Judging Fakes and False Attributions in the Visual Arts, attorney Ronald D. Spencer conducted an interview with the former director of the Frick Museum, Samuel Sachs II. According to Sachs, museums should be ready to purchase high-quality and interesting work even if there are ongoing authentication disputes: “Ultimately, aesthetic quality holds sway even over matters of attribution or authenticity. Museums can hang a picture that is absolutely, certifiably by artist X, but if it is a weak picture, why do it?”.

It appears that encyclopedic art museums, including the Met, abide by this rule of thumb. Another rule of thumb: shock or disbelief should come not from having acquired a forgery but from inaction when flags are raised about authenticity. And such flags are raised regularly for most museums. One of the most notorious art hoaxes of the 20th century involves the Met’s acquisition of three “Etruscan” terracotta warriors from 1915 – 1921. Following their exhibition in 1933, scholars began to suspect, on grounds of connoisseurship, that the statues were anachronistic to the Etruscan style. The statues were finally scientifically tested in 1960, and their glazes revealed the presence of manganese, a mineral uncharacteristic to Etruscan sculpture. Months later, the sculptor Alfredo Fioravanti signed an affidavit confessing that the statues were forged. Brothers Pio and Alfonso Ricardi had fabricated them for the dealer Domenico Fuschini. In 1961, the Met accepted that the works were inauthentic.

The Metropolitan Museum of Art announced yesterday that, as a result of recently completed studies, its three “Etruscan” terracotta statues must be considered of doubtful authenticity. For some years there have been conflicting claims about these statues on stylistic grounds. Recently the staff of the Museum began a series of modern scientific and technical analyses. These developed convincing proof that these famous statues were not made in ancient times.

~ Feb. 14, 1961 Press Release

Critics of the Etruscan misattribution point out the Met’s lackluster investigations and ignorance of many “red flags” during the 30 years of their exhibition. Hoving would later go on to suggest that Gisela Richter, the Greek and Roman curator who acquired the pieces for the Met, was likely taken in by “pride” and “curatorial greed”.

Pride, greed, sloth, wrath… these art market sins allow forgeries to penetrate and pollute collections. However, hiding the existence of embarrassing yet known forgeries directly undermines museums’ obligations to expose and educate the general public about its cultural history – a responsibility espoused by the AAM in its various policy documents. It is safe to say that museums should, as organizations of public trust, act impartially and employ third party experts to investigate such claims, working collegially with individuals who present sound theories that a work’s authenticity is questionable. After all, forgers can be incredibly skillful, and even the most renowned connoisseurs can be duped.

A biblical character, King David was known to have been righteous and effective in administering justice. The dispute over his representation and the motives behind the actions of various private and public players, if nothing else, may help provide a measure of justice to the subject of due diligence in authentication. And that’s something worth losing your head over.

List of Sources

Disclaimer: This article is intended for educational purposes only and is not meant to provide legal or business advice.

Job Posting: Art Law Associate (NYC)

Cahill, Cossu, Noh & Robinson LLP (CCNR)  is seeking an Associate. CCNR is a boutique firm which provides a wide range of litigation and transactional services to its clients. The firm is best known for its focus on matters arising in the art world, in addition it represents variety of clients (including those in fashion and publishing) in diverse engagements that involve intellectual property, employment, nonprofit, as well as commercial litigation.

Responsibilities for a candidate with 2-5 years’ experience, including litigation, will include:

  • Legal research
  • Drafting legal briefs and other litigation documents
  • Documenting transactions and related due diligence
  • Pro Bono engagements
  • Professional activities in law and the art world

Contact: CAHILL PARTNERS llp 70 West 40th Street, New York, NY 10018 (T) 212-719-4400