Product Disparagement and Its Impact on Connoisseurship

There is an urban myth among art experts. They relate the tale of a well-respected appraiser in New York City who attends a cocktail party of a prominent collector. While mingling among the guests, he stops to stare at a painting. A stranger approaches him and asks his opinion of the work. The appraiser wishing to show off his skills explains to the inquirer that the painting is indeed very nice, but he has seen better and it is not the artist's best example. The appraiser continues by highlighting features of the painting that make it not a masterpiece. A week goes by, and the appraiser receives a call from the hostess of the party. She exclaims, “What did you say to Mr. X? He no longer wishes to buy the painting!” And so a harrowing lawsuit of product disparagement against the appraiser begins. I am not sure if this story is true, but it intrigues me that more than one professional in the art world has retold a similar narrative. Product disparagement is what “goes bump in the night” for most art experts when they imagine the worst-case scenario after communicating their opinion about an object or artwork. In a general commercial context, product disparagement is a false statement about a product that hurts the owner of the product or its maker.[1] In the case of art connoisseurship, product disparagement is used as a means to sue for financial compensation when the comments, whether oral or written, have negatively affected the value and salability of an artwork.

FOUR ASPECTS OF PRODUCT DISPARAGEMENT

There are four aspects that a plaintiff must have to successfully sue for product disparagement: (1) falsity of statement, (2) publication to a third party, (3) intention of malice, and (4) special damages.[2] Falsity of statement requires the expert to make a statement that he/she knows is false or untrue; for instance, an Old Masters expert knows that a painting is by a follower of Anthony Van Dyck (Flemish, 1599-1641) but chooses to say that the work is by Van Dyck so that the work is perceived as more valuable. The second aspect refers to the expert making an oral or written declaration available to a third party, usually in reference to potential buyers. The third factor of malice is often applied in the context of art attribution when the expert is not qualified to judge the work, knew his/her assessment to be wrong, or did not perform reasonable due diligence. Finally, special damages must be shown and is typically in financial form such as the loss of a potential sale or a decrease in value due to an inaccurate attribution.[3] For most cases of product disparagement related to the art world, the plaintiff is often proving that his/her artwork is authentic contrary to the expert’s opinion. In examining several cases of product disparagement used in the context of art authentication, one can see the impact this concept has had on the art market and the liability of an expert opinion.

HAHN V. DUVEEN

Picture1.png

Figure 1

La Belle Ferronnière

Follower of Leonardo da Vinci, probably before 1750

Oil on canvas

In discussing product disparagement in the American legal system, one must hark back to the famous case that started it all – Hahn v. Duveen (New York Supreme Court, 1929). In 1920, Andrée Hahn planned to sell an oil on canvas portrait titled La belle ferronnière (see Figure 1) which was believed to be the work of Leonardo da Vinci (Italian, 1452-1519). The Kansas City Art Institute was planning to purchase the painting for $250,000 until the influential art dealer Sir Joseph Duveen questioned its authenticity. [4] Despite his esteemed reputation, many professionals in the art world knew of Duveen’s habit to freely provide opinions that often advanced his own financial interests.[5] Although Duveen was located in Great Britain and only saw the artwork in a photograph, he informed an American reporter that he believed the portrait was by a follower of Leonardo da Vinci and stated that the original resided in the Louvre. Duveen’s casual statement caused the Art Institute to withdraw its offer to purchase the work.[6] With the significant loss of a prospective buyer, Hahn sued Duveen for damages of $500,000 due to slander and product disparagement.[7] The case fascinated the public who viewed the legal battle as the everyday American versus the elitist art world. The painting even acquired the nickname “American Leonardo.” The subsequent four-week trial included scientific evidence as well as scholarly expertise. Hahn presented the expert opinion of George Sortais, a pigment analysis, and the testimony of “fingerprint experts” from Scotland Yard to prove the artwork was by Da Vinci. [8] In response, Duveen disputed the plaintiff’s authenticator by using his own connections with leading Renaissance art experts to refute the attribution.[9] The judge in the case advised the jury before deliberation:

“You will be very wary in accepting the conclusions of experts when such conclusions are not founded upon knowledge, experience, and study… Because a man claims to be an expert does not make him one.” [10]

In the end, the jury was hung with a court-ordered retrial, and the two parties subsequently decided to settle with Duveen paying $60,000[11] in damages plus court costs.[12]

In 2010, Jacqueline Hahn, the ninety-year old daughter of Andrée Hahn, auctioned the infamous La belle ferronnière at a Sotheby’s Old Masters sale. Sotheby’s cautiously listed the painting as a “follower of Leonardo da Vinci,” and the painting sold for $1.5 million.[13] In this rare instance, a contentious legal battle created an intriguing provenance for the work.[14] Interestingly, the painting is now considered by experts to be authored by a follower of Leonardo da Vinci. Despite the fact that Duveen was accurate in his assessment, the dealer publicized his expert opinion without performing the due diligence of inspecting the painting in-person.[15] The “American Leonardo” has become a cautionary tale for art experts and appraisers. Hahn v. Duveen continues to influence the intersection between art expertise and law by remaining a precedent for use of product disparagement in disputes of connoisseurship.[16]

KIRBY V. WILDENSTEIN

Rue de la Paix, Jean Beraud.png

Figure 2

Rue de la Paix, 1906

Jean Beraud (French, 1849-1935)

Oil on canvas

In Kirby v. Wildenstein (New York Southern District Court, 1992), the plaintiff’s need to prove special damages is highlighted. David Kirby consigned his painting La Rue de la Paix (see Figure 2) by Jean Beraud (French, 1849-1935) to Christie’s in 1988 with the promise of its attribution and inclusion in the artist’s catalogue raisonné. Before selling, the auction house solicited the opinion of art expert Daniel Wildenstein. After examining the painting, Wildenstein concluded that while it was likely authentic, its condition was troublesome due to poor restoration. After examining the provenance which traced the work back to the artist himself, Wildenstein agreed to mention La Rue de la Paix in the future catalogue raisonné; however, there would be a note about the painting’s damage due to “an abusive restoration and cleaning.”[17] Christie’s included the Beraud painting in an upcoming sale but did not disclose the condition issues as the expert allegedly suggested. When the Beraud painting received no bids at auction and remained unsold, Kirby sought $200,000 in damages for product disparagement against the art foundation l’Institute Wildenstein and its expert Daniel Wildenstein.[18] However, Wildenstein’s opinion of the painting was not made known to the buying public, and therefore, the plaintiff could not demonstrate his financial losses since he could not directly relate the passed lot as a result of the authenticator’s comment on condition.[19] Since Kirby failed to substantially prove his claim, the courts did not award financial compensation. Such a case further emphasizes the high standards of evidence that the plaintiff must demonstrate in a case of product disparagement.

SELZTER V. MORTON

LassoingALonghorn.png

Figure 3

Lassoing a Longhorn

Olaf Carl Seltzer (Danish/American, 1877-1957)

Watercolor on paper

The case of Selzter v. Morton (Montana Supreme Court, 2007) provides some hope for appraisers and experts alike against upset owners abusing the concept of product disparagement. In 2000, salt heir Steve Morton consigned his watercolor titled Lassoing a Longhorn (see Figure 3) to a regional Idaho auction house. Morton believed the painting to be an original work by Charles M. Russell (American, 1864-1926). The artwork was even signed “C. M. Russell 1913” and had a strong provenance as the painting was purchased from Kennedy Galleries of New York for $38,000 in 1972 by Morton.[20] The auction house contacted art expert Steve Seltzer to authenticate the work, and he concluded that the artwork was actually executed by his very own grandfather Olaf Carl Seltzer (Danish/American, 1877-1957), a contemporary of Russell.[21] Such an opinion decreased the auction estimate much to the dismay of Morton who was hoping to achieve at least $650,000 for the work. Morton’s attorney from the law firm Gibson, Dunn & Crutcher (GDC) sent a letter to Seltzer demanding him to recant his opinion and compensate Morton for his “defamatory remarks” that caused the painting to lose value.[22] Seltzer ignored the request, and Morton sued Seltzer for product disparagement. Yet the burden of proof, i.e. that the watercolor was by Charles M. Russell, remained the responsibility of the plaintiff.[23] Seltzer contacted his scholarly contemporaries in American Western paintings and obtained nine affidavits agreeing that the artwork in question bore a forged signature.[24] While Seltzer provided evidence for his attribution, Morton was unable to provide any contrary expert opinion that attributed his watercolor to Charles M. Russell. In response, Seltzer counter-sued Morton in 2002 for emotional distress and damaging his reputation in the art world. The Supreme Court of Montana awarded Seltzer $9.9 million stating that Morton’s law firm engaged in “legal thuggery.”[25] Morton v. Seltzer is a heartening tale of justice against those who abuse the legal process in order to manipulate expert opinions. 

THOME V. ALEXANDER & LOUIS CALDER FOUNDATION

In the instance of Thome v. Alexander & Louis Calder Foundation (New York Appellate Court, 2009), the courts ruled that experts and foundations do have the right to decline to authenticate.[26] In 1975, Joel Thome claimed to have directly commissioned the artist Alexander Calder (American, 1898-1976) to create a smaller version of the stage set from a 1936 production of an Erik Satie composition. According to Thome, Calder agreed to create the set including a fragment known as Eight Black Leaves but unfortunately died before the whole project and reproduction of the performance was completed.[27] When Thome planned to sell Eight Black Leaves in 1997, he contacted the Calder Foundation to authenticate it and include the surviving segment in the artist’s catalogue raisonné. However, the Foundation never authenticated the piece which Thome said prevented him from successfully selling the work. Thome sued the Calder Foundation and sought a judgment that his item was an authentic Calder work.[28] However, the New York courts ruled that the Calder Foundation did not have a duty to authenticate Eight Black Leaves.[29] It is also worth mentioning that the foundation had its own collection of 22,000 Calder works. Thome argued that the Foundation was self-dealing resulting in a conflict of interest and that a limited availability of Calder art available in the marketplace would be desirable for them.[30] Nevertheless the court’s ruling set an example for which an art owner does not have the authority to order authentication or inclusion in a catalogue raisonné by an expert, authentication committee, or foundation.

THE COST OF DUE DILIGENCE

With the value of “blue chip” art continuing to soar, economic risks for both owners and experts alike have proportionally increased.[31] Although the qualified opinion of an expert has taken on even greater significance, the probability of facing a product disparagement lawsuit has become a stronger possibility even when due diligence is performed. This is especially true for those art authenticators and appraisers working in New York where the majority of product disparagement lawsuits take place. The high financial risk regarding the assessment of art has negatively impacted the marketplace causing a growing reluctance from professionals to share their expertise.[32] In fact, this fear has created a type of self-imposed censorship in the art world to the detriment of open professional dialogue. Simply put, the benefits of exchanging views and connoisseurship outweighs the risk of being sued.[33] It is very likely that the majority of experts, authenticators, appraisers, and specialists refrain from sharing opinions which keeps forgeries and misattributed works in the market.[34] The lack of raising “red flags” allows false works to continue to exist in the open market and further mislead the public.

Growth of litigation surrounding art authentication in the United States has also caused art institutions to refrain from verifying attribution. Institutions like the Andy Warhol Foundation for the Visual Arts, the Roy Lichtenstein Foundation, the Pollock-Krasner Authentication Board, and the Noguchi Museum have decided to no longer authenticate works in order to avoid possible litigation.[35] After already being involved in several lawsuits, these respected foundations cannot afford the cost of bearing the bad news to another disgruntled and litigious-minded owner nor can they rely on their insurance companies to guarantee coverage. It is sadly ironic that these organizations abstain from verifying works since they were often formed for the very purpose of authentication. This decline in qualified attributions has also extended to catalogue raisonnés in which the authors are increasingly phrasing their descriptions in a cloud of ambiguity. Some catalogues have decided to skirt the issue of disparagement by identifying specific works as “works in progress.” For example, the Calder Foundation has gone so far as to encourage the public to make their own judgement using the online data presented by the Foundation.[36]

The point could be made that if art experts were not in fear of legal repercussions for their remarks, they would be less scrupulous in their assessments. George Mason University alumna Jeffrey Orenstein believes that product disparagement is well-suited to the art world as an efficient safeguard against the unique influence art experts have on the market and encourages them to perform due diligence.[37] After all, the plaintiff must meet a high standard of proof to claim financial compensation as seen in the cases of Kirby v. Wildenstein and Morton v. Seltzer. The ever present threat of product disparagement does provide incentive for experts to perform due diligence. Yet, the qualified opinions of art experts are rarely clear-cut. Authenticator analysis relies not only on historical and technical information, but is also based on more elusive factors like the nuanced traits of an artist’s oeuvre and interpretation of current scholarship. Unlike science, connoisseurship is subjective and attributions are subject to change with new discoveries and technological advances.[38]

ART AUTHENTICATION PROTECTION BILL

In contrast to the legal or medical professions, there is no established form of protection against lawsuits alleging malpractice. Rarely can an appraiser, authenticator, or artist foundation afford to fight costly and time-draining legal battles with unsatisfied clients.

To help rectify this vulnerability, an Art Authentication Protection Bill was proposed in 2014 to curtail frivolous lawsuits against authenticators.[39] The Bill defines an art authenticator as “a person or entity recognized in the visual arts community as having expertise regarding the artist, work of fine art, or visual art multiple, or a person or entity recognized in the visual arts or scientific community as having expertise in uncovering facts that serve as a direct basis, in whole or in part, for an opinion as to the authenticity, attribution or authorship of a work of fine art or visual art multiple.”[40]  With approval by the New York State Senate in June of 2015, the Bill is a significant initial step towards proper protection for experts against clients who misuse the legal system.

Amendments to the Art and Cultural Affairs Law in New York are ongoing. The proposed acts essentially require product disparagement claims to be more substantial before they can proceed in court along with the possibly of fee-shifting when a ruling favors the defendant. In other words, the plaintiff would have to provide specific facts for each claim with a higher burden of preponderance, and the expert would be compensated for legal fees if successful in his or her defense.[41] Efforts are also being made to define an authenticator or expert as an art professional with no financial interest in the outcome of attribution.

THE MAYOR GALLERY LTD. V. THE AGNES MARTIN CATALOGUE RAISONNÉ LLC

agnesmartin

Figure 4

Agnes Martin with Level and Ladder, 1960

Alexander Liberman (Ukranian, 1912-1999)

Photograph archived from Getty Research Institute

The more recent case of Mayor Gallery vs. Agnes Martin Catalogue Raisonné et al. (New York Superior Court, 2018) has demonstrated the effectiveness of limiting art expert liability. Prior to the 2012 establishment of the Agnes Martin Catalogue Raisonné (AMCR), the Mayor Gallery based in London sold thirteen works they attributed to the artist Agnes Martin (Canadian/American 1912-2004). With the formal gathering of records for all the artist’s works by AMCR, four collectors submitted their signed Martin pieces purchased at the Mayor Gallery to the newly formed authentication committee. The works were declined inclusion by AMCR for their online publication without any communication as to the rationale. Although Mayor Gallery was only directly involved with the resubmission of one artwork to AMCR, they sued for $7.2 million in damages. The defendants included not just the AMCR as an entity but also its managing member, director, catalogue’s editor, several committee members, and the owner of Pace Gallery who represents the Martin estate. Among the seven causes of action, the plaintiff’s claim included product disparagement. The Gallery argued that the refusal to include the works in the catalogue raisonné equated to a declaration that they were fake and therefore “worthless.” [42] The Gallery also argued that there was no choice but to submit the works to AMCR, which requires the signing of their Examination Agreement. On April 5, 2018, the court dismissed the entire complaint with many in the art world viewing the case as a small victory for experts.

In relation to product disparagement, Mayor Gallery failed to provide convincing evidence that the works were authentic nor did they show malice or third-party damages. As to the lack of disclosed reasoning for the exclusion of the works, the Gallery had signed the Examination Agreement thereby entering a contract that the submitted work was under the sole discretion of the AMCR. This agreement included a waiver against possible claims and also that the submitter will receive no explanation as how the committee came to their conclusions. The court determined that AMCR consequently had no responsibility to provide any reasons for their decisions nor were they allowed an opportunity to rebut. The use of an examination agreement underscores the importance of a signed agreement in limiting the liability of authenticators, especially when the signed written contract is upheld by the legal system.

The Gallery’s argument as to the weight of the opinion of the catalogue raisonné committee does raise a continuing debate as to whether or not a catalogue raisonné is equivalent to a third-party statement to the public. Many owners and dealers have argued that when a work is included, omitted, accepted, or rejected by a formal authenticating body and/or publication, it is treated by general audiences as the litmus test for verification. Precedence has yet to be clearly established in court about the third-party influence of the catalogue raisonné and its make-or-break impact on an artwork’s market value.

The court also awarded the defendants the full cost of their legal fees while simultaneously granting the Mayor Gallery leave to file an amended complaint. As noted earlier, the fee-shifting provision is still new for authentication lawsuits and will likely continue to be utilized in final decisions when claims are dismissed or in favor of the defendant. It will be interesting to see if the Gallery will pursue further litigation.[43]

CONCLUSION

The judge’s instructions to the Hahn v. Duveen jury still resonates in today’s litigious society. Calling oneself an expert is not a sufficient defense in the case of product disparagement. Since the art market is in constant flux, the safeguards an appraiser or expert can have is experience, knowledge, due diligence, and a really good signed contract. It can also help to remember to keep your art opinions to yourself at social gatherings. With a combination of clearer precedence in art authentication cases and the formation of legal protection for art experts, unsubstantiated lawsuits will likely taper off and be replaced with proper use of verifiable claims of product disparagement. Balanced rights for owners and experts alike will hopefully foster a resurgence of dialogue surrounding authentication issues to the benefit all involved.

Courtney Ahlstrom Christy, ISA CAPP, AAA AM is Co-Editor of Worthwhile Magazine and principal of Ahlstrom Appraisals LLC.  Courtney can be reached at ahlstromappraisals.com.

© Courtney Ahlstrom Christy 2018

The information in this article is for general informational purposes only and is not considered legal advice or a legal opinion. In addition, topics may not necessarily reflect the most current legal developments. Seek the advice of a legal professional before acting upon any of the information included in the text above.

FOOTNOTES

[1] DiTommasso Lubin,“Trademark Infringement and Product Disparagement,” DiTomaaso Lubin: Business & Commercial Litigation Attorneys website, http://www.thebusinesslitigators.com/trademark-infringement-and-product-disparagement.html, 2014.

[2] Judith B Prowda, Visual Art and the Law: A Handbook for Professionals (London: Lund Humphries, 1998), 437.

[3] Ronald D. Spencer ed., The Expert versus the Object: Judging Fakes and False Attributions in the Visual Arts, (London: Oxford University Press, 2004), 152.

[4] William T. McGrath, “As 1929 case shows, incautious art experts risk disparagement claims,” Chicago Daily Law Bulletin, January 30, 2014.

[5] Jeffrey Orenstein, “Show me the Monet: The Suitability of Product Disparagement to Art Experts,” George Mason Law Review, 2005-2006, 926.

[6] Anne-Marie Rhodes, “Authenticity and Legal Liability,” International Society of Appraisers Annual Conference Assets 2013, excerpt from Art Law & Transactions (Carolina Academic Press, 2011), April 15, 2013, 5.

[7] Unknown, “$500,000 Suit Hangs on Da Vinci Fingers,” The New York Times, November 5, 1924.

[8] Wendy Moonan, “Sotheby’s New York, Important Old Master Paintings, 28 January 2010,” New York Social Diary, http://www.newyorksocialdiary.com/art-set/2010/la-belle-ferronniere, January 2010.

[9] Chicago Daily Law Bulletin, January 30, 2014.

[10] Ibid.

[11] International Society of Appraisers Annual Conference Assets 2013, excerpt from Art Law & Transactions (Carolina Academic Press, 2011), 1.

[12] Chicago Daily Law Bulletin, January 30, 2014.

[13] New York Social Diary, January 2010.

[14] Chicago Daily Law Bulletin, January 30, 2014.

[15] Patricia Cohen, “In Art, Freedom of Expression Doesn’t Extend to Is It Real?,” The New York Times, http://www.nytimes.com/2012/06/20/arts/design/art-scholars-fear-lawsuits-in-declaring-works-real-or-fake.html?_r=0 , June 19 2012.

[16] Chicago Daily Law Bulletin, January 30, 2014.

[17] Ralph E. Lerner and Judith Bresler, Art Law: The Guide for Collectors, Investors, Dealers, & Artists, (New York: Practicing Law Institute, 2012, 4th edition), 496.

[18] Ibid.

[19] George Mason Law Review, 915.

[20]  “W. Steve Selzter” page on Askart, http://www.askart.com/askart/artist.aspx?artist=11160132, accessed March 20, 2015.

[21] Art Law: The Guide for Collectors, Investors, Dealers, & Artists, 424.

[22] IMS Expert Services, “Law Firm Ordered to Pay Expert $11M,” IMS Expert Services Blog, http://www.ims-expertservices.com/bullseye/april-2007/law-firm-ordered-to-pay-expert-11m/ April 17, 2007.

[23] George Mason Law Review, 909.

[24] IMS Expert Services, “Law Firm Ordered to Pay Expert $11M”, Bullseye Legal Blog, April 17, 2007.

[25] Art Law: The Guide for Collectors, Investors, Dealers, & Artists, 425.

[26] Charles and Thomas Danziger, “On the Case: The Real Deal on Authenticity,” Artnet News, https://news. artnet.com/market/on-the-case-the-real-deal-on-authenticity-14695, May 8, 2014.

[27] Ibid.

[28] Jo Backer Laird and Caroline W. Trowbridge, “Limitations on liability of authors of catalogues raisonné,” Lexology, http://www.lexology.com/library/detail.aspx?g=b96463ff-9944-420f-b0b6-c54f088a48a2 , March 19, 2010.

[29] Ibid.

[30] Irina Tarsis, “The Shifting Sands of Art Authentication: As Calder Foundation finds itself in court again who will have the last word regarding authentication?,” Center for Art Law, http://itsartlaw.com/2014/04/23/shifty-art-authentication/, April 23, 2014.

[31] International Society of Appraisers Annual Conference Assets 2013, excerpt from Art Law & Transactions (Carolina Academic Press, 2011), 1.

[32] George Mason Law Review, 906.

[33] “In Art, Freedom of Expression Doesn’t Extend to Is It Real?,” The New York Times, June 19, 2012.

[34]  Ibid.

[35]  Ibid.

[36]  Ibid.

[37] George Mason Law Review, 907.

[38] Center for Art Law, 2014.

[39] Ibid.

[40] Judith Bressler, quoted in “Hot Topics in Art Law 2014” by Megan E. Noh, Esq., Center for Art Law, https://itsartlaw.com/2014/03/17/ny-city-bar-tackles-hot-topics-in-art-law-2014/, March 17, 2014.

[41] “Senate Passes Bill to Protect Art Authenticators”, The New York State Senate, https://www.nysenate.gov/newsroom/press-releases/senate-passes-bill-protect-art-authenticators, June 15, 2015.

[42] Laura Gilbert, “London’s Mayor Gallery files lawsuit against Agnes Martin catalogue raisonne“, The Art Newspaper, https://authenticationinart.org/pdf/artmarket/new-authenticity-dispute.pdf, October 25, 2016,

[43] For further discussion on the case, see Kate Lucas, “Encouraging News For Art Authenticators: New York State Court Tosses Claims Against Agnes Martin’s Catalogue Raisonné”,  Grossman LLP Art Law Blog, https://www.grossmanllp.com/encouraging-news-for-art-authenticators-new-york, April 11, 2018.