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March 28th, 2014
Lawmakers Introduce Legislation to Protect Art Authenticators
Earlier this month, Senators Elizabeth Little and George Latimer and Assemblymember Linda B. Rosenthal introduced a bill (S.6794/A.9016) (the "Bill") that would amend the New York Arts and Cultural Affairs Law to provide certain protections for experts rendering opinions regarding the authenticity, attribution or authorship of works of fine art. If passed into law, New York will be the first state to enact legislation of this type, and the Bill could serve as a prototype for similar legislation in other states.
As reflected by the Bill's definition of "authenticator," the Bill is intended to incentivize two general categories of art experts. The first category includes those persons and entities that are recognized by the visual arts community as having expertise regarding the artist or artwork in question and provide good-faith opinions as to the authenticity, attribution, or authorship of a work of fine art. The Bill includes within its coverage authors of catalogues raisonné or other scholarly texts containing authenticity opinions. The second category includes those persons or entities recognized in the visual arts or scientific community as having expertise in uncovering facts that serve as a direct basis for an authenticity opinion (e.g. forensic scientists). Importantly, the Bill excludes from coverage those who render opinions about works in which they either have a financial interest, or have an interest in any transaction involving the work in question (other than mere compensation for the expert's services).
The Bill would require a plaintiff suing an authenticator about an opinion to:
- Satisfy a heightened pleading standard. The proposed law would make it more difficult to bring a claim against an authenticator by requiring the plaintiff to plead with particularity the facts sufficient to support each element of the claim asserted. This represents a heightened standard compared to the usual pleading requirement where it is generally sufficient to plead enough facts to put the defendant on notice of the claims being asserted. The proposed law would import a heightened pleading standard such as that applied to fraud claims under Rule 9(b) of the Federal Rules of Civil Procedure and Rule 3016 of the New York Civil Practice Law and Rules.
- Meet a heightened burden of proof. Under the proposed law, a plaintiff suing an authenticator must prove the elements of her claim by clear and convincing evidence, rather than the preponderance-of-the-evidence standard that typically applies in most civil actions.
- Pay attorneys' fees, costs and expenses. Absent a statute or agreement to the contrary, each party to a litigation in the United States ordinarily pays her own attorneys' fees, regardless of whether or not she prevails in the case. Under the proposed law, an authenticator that prevails will be entitled to recover attorneys' fees, expenses and costs from the plaintiff.
The proposed law would apply to all opinions as to the authenticity, attribution or authorship of a work provided to any third party after the law's effective date.
Proponents of the bill believe that it is necessary to incentivize experts to continue to authenticate works in light of the chilling effect of recent litigation. For example, litigation against artists' foundations such as the Andy Warhol Foundation for the Visual Arts and the Pollock-Krasner Foundation has caused these and other foundations to discontinue their authenticating activities for fear of costly lawsuits. Supporters of the Bill also argue that the closure of New York's oldest art gallery, Knoedler & Company, following claims that the gallery sold millions of dollars of forged art, highlights the need for experts to freely express their opinions about the authenticity of artwork without fear of baseless litigation.
Opponents of the bill believe that it will give authenticators too much authority, and will unfairly insulate their opinions from judicial scrutiny.
If you have any questions about this proposed legislation or any other art-related legal issues, please contact Amelia Brankov at (212) 826 5574 or firstname.lastname@example.org or any other member of the Frankfurt Kurnit Art Law Group or Intellectual Property Group.
Other Art Law Alerts
Recent NYS Sales Tax Law Change Affects Art Sales Between Related Entities
On August 14, 2017, the New York State Department of Taxation & Finance issued a Technical Memorandum, TSB-M-17(4)S, which will be of interest to many New York-area art dealers and collectors.
August 23 2017
Appraisal Relied on by Estate Undervalued Paintings by $1.77 Million
Recently, in Estate of Kollsman v. Commissioner the U.S. Tax Court held that an art collector's estate significantly underreported the value of two artworks for estate tax purposes. The problem: the estate relied on appraisals by an auction house specialist who had an incentive to "lowball" the appraisals to win the right to later auction the works. In addition to this conflict of interest, the court found that the values reported by the estate were unpersuasive because the auction house specialist exaggerated the dirtiness of the paintings and failed to adjust his appraisals after one of the works sold at auction for approximately five times more than the reported value. Here's what you need to know about the case.
April 4 2017
Court Holds Art Advisor Must Pay Collector $1.05MM for Fraud
A New York court has ruled that an art advisor who brokered the sale of a collector's painting and secretly pocketed $1 million will have to pay the money back. Because the dispute turned on the advisor's agreement with the collector and what kind of legal duty the advisor owed to the collector, the case offers valuable lessons for people structuring art transactions. Here's what you need to know.
March 21 2017