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May 29th, 2014
A Cautionary Tale For Cases Involving Damaged Artwork
Law360, New York (May 28, 2014, 10:35 AM ET) - Cases involving damaged artwork often turn on expert testimony. How much is the art worth? What are the comparables? What are the plaintiff’s damages? The last thing a litigant needs is to have a court exclude her expert’s testimony — particularly after the expert has done a lot of work. But that’s what happened in Oleg Cassini Inc. v. Electrolux Home Products Inc., No. 11 Civ. 1237, (S.D.N.Y. Apr. 5, 2014).
Last month, a federal court excluded the plaintiff’s highly qualified art appraiser from testifying as an expert witness, even though she used a well-accepted appraisal methodology because the court found the expert’s application of the methodology to the facts of the case was unreliable. The decision is a cautionary tale for those handling cases involving damaged artwork. Appraisers and counsel should follow the practice pointers set out in the Cassini decision in order to ensure that their expert opinions are admissible into evidence.
The plaintiff, Oleg Cassini Inc., claimed that a clothes dryer manufactured by the defendant, Electrolux Home Products Inc., caused a fire at the Long Island, New York, estate of the deceased fashion designer Oleg Cassini. The fire allegedly caused significant smoke and water damage to the plaintiff’s property, including original sketches, drawings and artwork created by Cassini, which were stored in the basement of the property.
Two years after the fire, the plaintiff hired an appraiser to provide an expert opinion as to the loss in value to the damaged artwork. The expert physically inspected some of the works and viewed photographs of other works.
Following her inspection, the expert prepared a 165-page expert report. The valuation portion of the report is only four pages long (150 pages of the report contain photographs of the damaged works, and the remainder of the report consists of the expert’s curriculum vitae, a short affidavit and a certification concerning the scope of the project, and disclaimer provisions).
The report assigns values to the damaged property by category, providing only minimal descriptions of the damaged works. For example, the report includes the following descriptions and corresponding valuations:
- A group of (16) sixteen original hand painted pieces of art by Oleg Cassini. Each piece measures 22 ½” high by 22 1/2” wide. $13,600.
- A group of (5) original fabric designs hand painted by Oleg Cassini. Each piece of art measures 22 1.2” high x 14 ¼” wide. $4,000.”
Additionally, the expert relied on others to value some of the damaged items, including a manuscript and some other books, which she apparently was not able to appraise herself.
Several years after the expert rendered her report, defense counsel conducted her deposition. At the deposition, the expert was unable to produce the back-up data for the report, which was destroyed in a flood caused by Hurricane Sandy. Months later, she produced recreated back-up research to the defendant.
The Motion to Exclude
The defendant filed a motion in limine to exclude the plaintiff’s expert report pursuant to Rule 702 of the Federal Rules of Evidence (“FRE 702”). That rule provides that “[a] witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify” regarding an area of specialized knowledge provided that it “will help the trier of fact to understand the evidence or to determine a fact in issue” where (1) “the testimony is based on sufficient facts or data,” (2) “the testimony is the product of reliable principles and methods,” and (3) “the expert has reliably applied the principles and methods to the facts of the case.” FRE 702; see also Daubert v. Merrell Dow Pharmas., 509 U.S. 579 (1993).
The defendant first argued that that plaintiff’s proferred expert witness was not qualified to testify as an expert because she had not maintained an active career performing appraisals, did not have a company website, and did not advertise her business. The court summarily rejected that argument, finding that she was sufficiently qualified to serve as an expert witness. The court noted that the expert had significant training in the relevant field — she had undergraduate and graduate degrees in fine art and design, was a certified appraiser under the Uniform Standards of Professional Appraisal Practice (“USPAP”), and was active with the Appraisers Association of America. Additionally, she had significant relevant experience since she appraised artwork for decades and has appraised other fashion designers’ work.
The defendant did not challenge the methodology used by the expert — the comparative market data approach — which is the most commonly applied method for appraising personal property. By that method, the expert assigns a value based upon past prices for similar works by the same artist, or similar works by another artist of equal standing and related reputation. The court noted that other courts have accepted this appraisal technique in other cases involving damaged art. See, e.g., Davis v. Carroll, 937 F. Supp. 2d 390, 415 (S.D.N.Y. 2013); Joseph P. Carroll Ltd. v. Baker, 889 F. Supp. 2d 593, 600-01 (S.D.N.Y. 2012); Estate of Mitchell, 101 T.C.M. 1435, at *13-*14 (T.C. 2011).
Since the expert was qualified and her appraisal methodology was sound, then what was the problem? The application of the methodology to the specific facts of the case at hand, said the court.
First, the court faulted the expert for failing to show that her testimony was based on sufficient facts and data. For example, the expert appraised some items that she did not view in person, and others, such as the manuscript and press books, that fell outside her area expertise and required consultation with other individuals. Also troubling to the court was the fact that the report failed to include any references to the sources and materials that the expert relied upon in assessing the artwork.
Second, the court found that it had no way of assessing whether the expert’s application of the comparative market data approach to the facts provided was reliable. Although the expert’s report includes photos of the damaged works and values assigned to those works, it “lacks any ‘actual calculations with detailed and complete information elucidating how the expert arrived at the damage figure.’” Oleg Cassini Inc., 2014 1468118, at *8 (citing Great White Bear LLC v. Mervyns LLC, No. 06 Civ. 13358, (S.D.N.Y. May 2, 2008 (excluding expert testimony for failure to show “how” and “why” expert arrived at opinions). Significantly, the expert failed to identify the comparable sales on which she relied to value Mr. Cassini’s works. She also failed to provide any information as to whether she considered only auction sales (which are preferable to private sales for valuation purposes under USPAP standards) or when the comparable sales occurred (USPAP requires appraisers to consider sales that are as close to the effective date as possible), Additionally, she did not explain what factors she considered in selecting comparable works (such as theme, period of work, style), and how she weighed those factors.
Therefore, the court held that, despite the presumption of admissibility normally afforded to experts, the plaintiff failed to show that the expert’s testimony and report were reliable under FRE 702.
The Oleg Cassini case should serve as a reminder that counsel, litigants and experts cannot simply assume that a court will admit into evidence the opinions of a qualified expert who employs a well-accepted methodology. Because the courts take seriously their role as “gatekeeper” to preclude expert testimony that falls short of the standard set forth in FRE 702, those handling cases involving damaged artwork should avoid the stumbling blocks that mired the plaintiffs’ expert in Cassini, and follow these practice pointers.
Limit opinions to scope of qualifications.
An expert should only appraise items for which she is qualified to provide an expert opinion. For example, if an expert specializes in contemporary artwork, and nevertheless appraises chinaware, it is reasonable to anticipate that opposing counsel, and even the court, would find the expert unqualified to render such an opinion.
Inspect the works in person.
The court in Cassini chastised the expert for failing to personally examine all of the damaged items, and for relying on photographs of the damaged works that were taken by others rather than herself. Therefore, a prudent expert should inspect all of the damaged items personally where possible. The expert should also take photographs of the damaged works at the time of the inspection, and should include those photographs in the report, rather than photographs taken by third parties.
Explain selection of comparables and include in the report.
The expert should specifically include photographs and a detailed description of the comparable sales of works upon which she relies. She should identify when the comparable work was sold, the sales price, and manner in which the sale was conducted (i.e., auction or private sale). She should also explain the reason why those works were selected as comparables, and should explain how she applied the industry appraisal standards in order to appraise the work in question.
Show your work.
Even if the values that the expert assigns to the works are appropriate, the court may nonetheless reject the expert’s opinions if the expert does not explain how she calculated the figures included in the report. Absent such an explanation, the court will not be able to determine whether the appraiser correctly applied the appraisal technique, and the opinions could be rejected.
Include all supporting data in the report.
Rule 26(a)(2)(B) of the Federal Rules of Civil Procedure requires all expert reports to include ”the facts or data considered by the witness” in forming her opinions. Therefore, the expert should include all necessary back-up data in her report.
Save records in another location.
Years can pass between the time an appraisal is conducted and the time the appraiser testifies at deposition or at trial. During that time, documents can be lost or destroyed. In order to ensure that the expert’s complete file will be available in the future, the expert should save the file in electronic version, with a copy stored at an offsite location for preservation purposes where possible.
Expert reports from appraisers are critical in cases involving damaged artwork. While an expert’s opinion is presumptively admissible, the Cassini decision is a reminder that every opinion of an expert, even a seasoned one, is vulnerable to being second-guessed by a court.
In order to avoid being caught at trial without an expert in your camp, litigants and their counsel should heed the warnings of the Cassini decision, and follow the roadmap set out by the Cassini court to ensure that the expert’s opinions will be admissible under FRE 702.
Other Published Articles
Copyright Considerations as Art Galleries and Museums Move Online in the Wake of COVID-19
Bright Ideas, a publication of the Intellectual Property Section of the New York State Bar Association published Amelia Brankov’s article “Copyright Considerations as Art Galleries and Museums Move Online in the Wake of COVID-19.” View Article
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Law360 published Jeremy S. Goldman’s article “Designers, Beware Copyright Office Font Protection Reversal” about the extent to which fonts are subject to copyright protection. (Behind paywall) View Article
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November 4 2020