Saturday, February 5, 2011

Federal Appeals Court Nixes Case by Heirs of Art Dealer Killed at Auschwitz, Citing No Jurisdiction Over Claim Against Germany

The U.S. heirs of Jewish art dealer Walter Westfeld, led by his 84-year-old nephew, lost their bid to have Germany compensate them for art seized by the Nazis and sold at compulsory auction in 1939.

On Wednesday, a three-judge panel of the 6th Circuit Court of Appeals affirmed the lower court's dismissal of their claim for lack of jurisdiction.  Plaintiffs didn't take the path that has succeeded for some victims of Nazi confiscation, who seek the restitution of seized artworks.  Instead, they sought monetary damages, and that effort failed.

One of the plaintiffs' Tennessee lawyers -- the nephew, Fred Westfield (right), lives in Tennessee, is a retired Vanderbilt University professor, and himself fled Germany in 1939 as part of Britain's Kindertransport -- stated that plaintiffs are weighing their options.  Although counsel didn't specify what those options might be, they could include a request for a rehearing by the entire 6th Circuit or an appeal to the U.S. Supreme Court.

Westfeld and His Art

For Germany, the victory on a jurisdictional issue avoids a trial on grim Holocaust facts.  When reached by this reporter, counsel for the German government declined to comment.

For plaintiffs, who sought millions of dollars, the loss is huge.  Westfeld's art holdings were substantial -- the 1939 auction catalogue lists some 500 paintings and tapestries, and it's alleged that aside from the catalogue listings Westfeld owned works by El Greco, van Dyck, and Rubens and that these works were also seized.

According to the plaintiffs, Westfeld had intended to bring the artworks to Nashville, where his brother lived, and sell them in the U.S. for his family's benefit.

Westfeld was arrested by the Nazis in 1938 and he was killed at Auschwitz, probably in 1943.

Sovereign Immunity

When the suit was filed in 2008, a spokesman for the German finance ministry told the Bloomberg News agency that "the big question here is sovereign immunity," and that proved to be the heirs' undoing.  The 6th Circuit held that under the federal Foreign Sovereign Immunities Act, Germany was indeed immune from suit.

Under the FSIA, foreign nations can't be sued here unless the claim comes within a specific statutory exception to that Act.  The plaintiffs failed to persuade the Court that their claim did.

In the ordinary case -- if any Nazi art seizure case can be called ordinary -- plaintiffs seek restitution of the confiscated artwork and bring suit under the "expropriation" exception to the FSIA, which permits jurisdiction where property is taken in violation of international law.  But in these cases artworks are readily identified and located.

Here the plaintiffs were not seeking the return of any specific artworks but, rather, the value of the artworks.  They argued that the Court had jurisdiction under the FSIA's "commercial activity" exception.  That exception requires, first, that an act be committed outside the U.S. that is "in connection with a commercial activity of the state elsewhere" and, second, that "that act causes a direct effect in the United States."

The Court Decision

The 6th Circuit determined that even if the seizure and auction of Westfeld's art was "commercial activity" of a foreign state -- it declined to decide that issue -- that action did not cause a "direct effect" in the U.S.  The Court found that though "the seizure undoubtedly prevented Westfeld from disposing of his collection," which "ultimately" affected his family in Nashville, the "direct effects" were in Germany, where Westfeld was.  Germany itself had no obligation to do anything in the U.S. and any effects felt here were not an "immediate consequence."

"Germany's actions did not extend beyond its borders. . . . As appalling as the Nazis' actions were, the reverberations felt from them in Nashville were derivative of Germany's seizure and not direct effects."

Attorney Howard Spiegler of New York art-law powerhouse Herrick, Feinstein, told this reporter yesterday that the "commercial activities" exception is a "difficult place to hang your hat" in these cases.

He explained that that specific exception is most often invoked by U.S. companies suing a foreign government for breach of contract, not for Nazi property seizures.  Spiegler also said that the 6th Circuit decision was "consistent" with other cases.

So why did Westfeld's heirs seek damages under this difficult exception and not the restitution of artworks under the expropriation exception, which plaintiffs' counsel when reached by phone yesterday acknowledged was the usual path?*

Plaintiffs' lawyers were understandably mum on the decision yesterday.  Two of the three attorneys declined to return telephone messages.  I asked the one lawyer who was willing to speak, but not for quoting, why plaintiffs didn't seek expropriation jurisdiction, and was told that it wasn't appropriate for the specifics of this case.  That lawyer did tell me, though, that of the 500 some artworks Westfeld owned, only a handful had been located.

Perhaps that factored into their strategy, although I could not secure an answer.

"It would be really difficult to locate all the works of art, which may be scattered around the world," Bloomberg quoted a lawyer for the heirs as saying in 2008.

One of those handful that has been located (the double portrait by 17th-century Dutch artist Eglon van der Neer, shown above) is in the U.S., in the Boston Museum of Fine Arts, which helped Westfeld's nephew obtain a frayed copy of the 1939 auction catalogue.

Meanwhile, a German court recognized another heir.  Westfeld had no children and never married but, as Bloomberg reported in 2008, he made a will naming Emilie Scheulen his heir, and in 1956 a Dusseldorf court declared her Westfeld's wife and heir.  Apparently, in the 1950s the German government compensated her for the loss of Westfeld's art.  Her heirs are now seeking restitution of specific paintings.

For their part, plaintiffs' papers refer to Scheulen as Westfeld's housekeeper, and Tennessee's probate court has declared the Nashville relatives his sole heirs.

* Proving jurisdiction under the expropriation exception is no cakewalk, either.  Maria Altmann's case to recover her aunt's Klimt paintings from Austria went all the way up to the Supreme Court on a jurisdictional question.

Images:  Fred Westfield photo from Tennessee Holocaust Commission website; Van der Neer painting from Boston Museum of Fine Arts website.