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August 12, 2010 5:49 PM

Ninth Circuit Says Suit Against Spain Over Pissarro Painting Can Proceed

Posted by Drew Combs

In a 9-2 en banc ruling Thursday, the U.S. Court of Appeals for the Ninth Circuit upheld a lower court decision allowing a lawsuit over a Camille Pissarro masterpiece confiscated from its owner by a Nazi official in 1939 to proceed against Spain and the state art foundation now in possession of the painting.

The suit was filed in 2005 in the Central District of California by Claude Cassirer, an American whose Jewish grandmother sold the impressionist painting--titled "Rue Saint-Honore, Apres Midi, Effet de Pluie" and currently valued at $20 million, according to The Associated Press--under duress for $360 in exchange for being allowed by the Nazis to leave Berlin safely.

Over the next 37 years, the painting was bought and sold several times in Europe and the United States. It eventually wound up in the collection of Baron Hans-Heinrich Thyssen-Bornemisza, which is now owned by the government of Spain and housed at the Museo Thyssen-Bornemisza.

In an effort to have the suit dismissed, the Spanish government and the art foundation argued to the Ninth Circuit that sovereign immunity as outlined in the Foreign Sovereign Immunities Act bar Cassirer’s claims because, among other things, the foundation doesn't engage in commercial activity in the United States.

Represented by lawyers from Nixon Peabody and Alston & Bird, the defendants also sought to have the suit dismissed for lack of case or controversy, personal jurisdiction, and proper venue. (The Alston & Bird lawyer handling the case has since moved to Smith Gambrell & Russell.)

Since a final judgment has not yet been entered at the trial level, the appeals court only reviewed the district court’s denial of defendants’ motions to dismiss for lack of subject matter jurisdiction based on sovereign immunity. According to the court, sovereign immunity falls within “a small category of collateral orders that are separate from the merits and can’t effectively be reviewed on appeal from a final judgment.”

Cassirer’s lawyers from Davis Wright Tremaine have argued that the “international takings” and “expropriation” exceptions in FISA that allow courts to exercise jurisdiction over foreign states should apply in this situation. Spain and the art foundation have argued that since Germany, not Spain, took the painting in violation of international law the exception should not apply. Spain has also argued that Cassirer should have exhausted his legal remedies in Germany or Spain before seeking a remedy in the U.S. courts.

In its decision, the Ninth Circuit ruled that sovereign immunity “does not require the foreign state against whom the claim is made to be the one that took the property.” The court also said it was satisfied that the record supports the district court’s finding of sufficient commercial activity between the United States and the foundation.

The en banc ruling largely hews to the conclusion reached by a Ninth Circuit panel last year. As reported by The Am Law Daily at the time, that panel remanded the case to the district court, leaving Spain with one final basis on which to pursue a dismissal: how far the FSIA requires plaintiffs to go in exhausting legal remedies elsewhere before filing suit in the U.S.

The latest ruling, though, eliminates even that option. “The statute does not mandate that the plaintiff exhaust local remedies for jurisdiction to lie,” the Ninth Circuit wrote. (While Cassirer never filed suit in Spain, he did at one time ask the chair of the art foundation’s board to return the painting. That request was refused.)

Stuart Dunwoody, the Davis Wright partner heading up Cassirer's legal team, says “It has been five years since we filed this case and my client is now 89 years old, but we are glad to be going back to the district court.”

Smith Gambrell partner William Barron, who represents Spain, says “This was a ruling about jurisdiction. I think we will have a clear victory at trial once we get to the merits of the case.”

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