Cassirer v. Thyssen-Bornemisza Collection Foundation

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DAVID CASSIRER; AVA CASSIRER; No. 12-56159

UNITED JEWISH FEDERATION OF SAN

DIEGO COUNTY, a California non- D.C. No.

profit corporation, 2:05-cv-03459-

Plaintiffs-Appellants, GAF-E

v.

OPINION

THYSSEN-BORNEMISZA COLLECTION

FOUNDATION,

Defendant-Appellee.

Appeal from the United States District Court

for the Central District of California

Gary A. Feess, District Judge, Presiding

Argued and Submitted

August 22, 2013—Pasadena, California

Filed December 9, 2013

Before: Harry Pregerson, Dorothy W. Nelson,

and Kim McLane Wardlaw, Circuit Judges.

Opinion by Judge Pregerson

2 CASSIRER V. THYSSEN-BORNEMISZA

SUMMARY*

Field Preemption

The panel affirmed in part and reversed in part the district

court’s order granting the Thyssen-Bornemisza Collection

Foundation’s motion to dismiss the complaint in an action

brought to recover a masterpiece French impressionist

painting that was allegedly taken from the plaintiffs’

ancestors by the Nazi regime.

California Code of Civil Procedure § 338(c)(3) provides

for a six-year limitation period for the recovery of fine art

against a museum, gallery, auctioneer, or dealer. The panel

held that the district court erred in concluding that § 338

intruded on foreign affairs and therefore striking § 338 down

as unconstitutional on the basis of field preemption. The

panel further held that the district court correctly concluded

that the Foundation’s due process challenge to § 338(c)(3)

could not be resolved on the Foundation’s motion to dismiss.

Finally, the panel held that § 338(c)(3) does not violate the

Foundation’s First Amendment rights.

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

CASSIRER V. THYSSEN-BORNEMISZA 3

COUNSEL

Stuart R. Dunwoody (argued), Victor A. Kovner, and

Catherine E. Maxson, Davis Wright Tremaine LLP, Seattle,

Washington, for Plaintiffs-Appellants.

Thaddeus J. Stauber (argued), Sarah E. André, and Michael

O. Azat, Nixon Peabody LLP, Los Angeles, California, for

Defendant-Appellee.

Kamala D. Harris, Attorney General of California, Susan

Duncan Lee, Acting Solicitor General, Mark Breckler, Chief

Assistant Attorney General, Angela Sierra, Acting Senior

Assistant Attorney General, Antonette Benita Cordero and

Catherine Z. Ysrael, Deputy Attorneys General, Los Angeles,

California, for Amicus Curiae State of California.

Luis Li, Eric Tuttle, and Amelia L. B. Sargent, Munger Tolles

& Olson LLP, Los Angeles, California, for Amici Curiae

California Association of Museums.

4 CASSIRER V. THYSSEN-BORNEMISZA

OPINION

PREGERSON, Circuit Judge:

The Cassirers appeal the district court’s grant of the

Thyssen-Bornemisza Collection Foundation’s motion to

dismiss their complaint without leave to amend. The

Cassirers’ lawsuit seeks to recover a masterpiece French

impressionist painting that was allegedly taken from their

ancestors by the Nazi regime. For the Cassirers’ claims to be

timely, they must rely on amended California Code of Civil

Procedure § 338(c)(3), which provides for a six-year

limitation period for the recovery of fine art against a

museum, gallery, auctioneer, or dealer. The district court

held that § 338(c)(3), as amended, is unconstitutional on the

basis of field preemption. We have jurisdiction under

28 U.S.C. § 1291. We affirm in part, reverse in part, and

remand for further proceedings.

STANDARD OF REVIEW

We review the district court’s grant of the Foundation’s

motion to dismiss de novo. TwoRivers v. Lewis, 174 F.3d

987, 991 (9th Cir. 1999). In reviewing the Cassirers’ claims,

we treat the allegations in the complaint as true. Id.

FACTUAL AND PROCEDURAL BACKGROUND

Camille Pissarro completed the impressionist painting

Rue Saint-Honoré, après-midi, effet de pluie (the “Painting”)

in 1897. Julius Cassirer purchased the Painting in 1898. The

Cassirers were a well-known Jewish family that played a

prominent role in Germany’s economic and cultural life.

CASSIRER V. THYSSEN-BORNEMISZA 5

When Julius died, his son Fritz and Fritz’s wife, Lilly,

inherited the Painting.

In 1939, Lilly decided to flee Germany because of the

discriminatory Nuremberg Laws enacted in 1935 that stripped

Jews of their civil rights and citizenship. Lilly and Fritz had

to obtain permission to leave Germany and had to subject any

works of art that they wished to take with them to an official

appraiser. The appraiser was appointed by the Nazis. He told

Lilly that she could not take the Painting out of Germany.

The appraiser demanded that Lilly hand the Painting over to

him for a payment of 900 Reichsmarks (around $360 at 1939

exchange rates). Lilly surrendered the Painting.

In 1943, the Painting was sold to an anonymous

purchaser. After the war, Lilly attempted to locate the

Painting without success. She obtained compensation for the

loss of the Painting in the German courts. When Lilly died in

1962, she named her grandson Claude Cassirer as her sole

heir.

In 1976, Baron Hans-Heinrich Thyssen-Bornemisza, one

of the world’s most prolific private art collectors, bought the

Painting. In 1993, the Thyssen-Bornemisza Collection

Foundation (the “Foundation”), an agency of the Kingdom of

Spain, purchased the Thyssen-Bornemisza collection,

including the Painting. Spain provided a palace to house the

Thyssen-Bornemisza Museum.

In 2000, Claude first discovered that the Painting was on

display in the Thyssen-Bornemisza Museum. By that time,

he was living in California. Claude filed this lawsuit in May

2005 against the Foundation and the Kingdom of Spain.

6 CASSIRER V. THYSSEN-BORNEMISZA

Defendants filed an initial motion to dismiss on the

ground that the district court lacked subject matter

jurisdiction over the dispute. The district court ruled that it

had subject matter jurisdiction under the Foreign Sovereign

Immunity Act’s exception to sovereign immunity for lawsuits

involving rights in property taken in violation of international

law. That decision was upheld by a three-judge panel and an

en banc panel of the Ninth Circuit. See Cassirer v. Kingdom

of Spain, 580 F.3d 1048, 1064 (9th Cir. 2009); Cassirer v.

Kingdom of Spain, 616 F.3d 1019, 1037 (9th Cir. 2010) (en

banc).

After the en banc ruling, Claude died. On remand,

Claude’s heirs — his son David, daughter Ava, and the

United Jewish Federation of San Diego County — were

substituted as plaintiffs (collectively, the “Cassirers”). The

Cassirers voluntarily dismissed Spain, and the Foundation

agreed not to challenge personal jurisdiction.

The Foundation moved to dismiss the Cassirers’

complaint on the ground that § 338(c)(3), as amended, is

unconstitutional. The district court granted the motion to

dismiss without leave to amend on the grounds that:

(1) § 338(c)(3) is unconstitutional under foreign affairs field

preemption; and (2) as a consequence, the Cassirers’ claims

are untimely under the more general three-year statute of

limitations for recovery of property. The Cassirers timely

appealed.

STATUTORY BACKGROUND

At the time the Cassirers initiated their lawsuit, the

California Code of Civil Procedure provided a three-year

general statute of limitations for “[a]n action for taking,

CASSIRER V. THYSSEN-BORNEMISZA 7

detaining, or injuring any goods or chattels, including actions

for the specific recovery of personal property.” Cal. Civ.

Proc. Code § 338(c) (1998). In filing their lawsuit, however,

the Cassirers relied on the then-applicable California Code of

Civil Procedure § 354.3 enacted in 2002. That statute

provided that the owner of “Holocaust-era artwork” —

defined as an “article of artistic significance taken as a result

of Nazi persecution during the period of 1929 to 1945” —

may recover the article from “any museum or gallery” so long

as the action is commenced by December 31, 2010. Cal. Civ.

Proc. Code § 354.3. We struck down § 354.3 as

unconstitutional on the basis of field preemption in Von Saher

v. Norton Simon Museum of Art at Pasadena, 578 F.3d 1016,

1026–30 (9th Cir. 2009), as amended by 592 F.3d 954 (9th

Cir. 2010).

Shortly after the ruling in Von Saher, the California

Legislature amended § 338, the general statute of limitations

provisions. The original provisions of § 338(c) were

renumbered as § 338(c)(1) and § 338(c)(2). The Legislature

added a new provision, (c)(3), which is at the heart of this

appeal, that provides for a six-year statute of limitations for

“an action for the specific recovery of a work of fine art

brought against a museum, gallery, auctioneer, or dealer.”

Cal. Civ. Proc. Code § 338(c)(3) (2011). The amended

statute specifies that the six-year period is triggered on “the

actual discovery” by plaintiff of (1) “[t]he identity and the

whereabouts of the work of fine art” and (2) “[i]nformation

or facts that are sufficient to indicate that the claimant has a

claim for a possessory interest in the work of fine art that was

unlawfully taken or stolen.” Id. § 338(c)(3)(A)(i)–(ii). The

statute applies to “all pending and future actions commenced

on or before December 31, 2017,” so long as “the action

concerns a work of fine art that was taken within 100 years

8 CASSIRER V. THYSSEN-BORNEMISZA

prior to the date of enactment of this statute.” Id.

§ 338(c)(3)(B). That includes any pending actions that have

not yet reached final judgment or whose time to appeal has

not expired. Id.

DISCUSSION

A. Foreign Affairs Preemption Standards

“The Constitution gives the federal government the

exclusive authority to administer foreign affairs.” Movsesian

v. Victoria Versicherung AG, 670 F.3d 1067, 1071 (9th Cir.

2012) (en banc), cert. denied, 133 S. Ct. 2795 (2013).

Accordingly, “state laws that intrude on this exclusively

federal power are preempted” under the foreign affairs

doctrine. Id.

Under foreign affairs preemption there are two grounds

for preemption: (1) conflict preemption and (2) field

preemption. Id. Conflict preemption occurs when a state acts

under its traditional power, but the state law conflicts with a

federal action such as a treaty, federal statute, or executive

branch policy. Id. at 1071–72. The district court held that

§ 338(c) was not preempted on the basis of conflict

preemption, and the Foundation does not challenge that ruling

on appeal.

Field preemption occurs when a state, “in the absence of

any express federal policy . . . intrudes on the field of foreign

affairs without addressing a traditional state responsibility.”

Id. at 1072. The Cassirers argue that the district court erred

when it held that § 338(c)(3), as amended, is unconstitutional

on the basis of field preemption. We agree.

CASSIRER V. THYSSEN-BORNEMISZA 9

B. Whether Cal. Civ. Proc. Code § 338(c)(3) is

Unconstitutional on the Basis of Field Preemption

Field preemption exists “when a state law (1) has no

serious claim to be addressing a traditional state

responsibility and (2) intrudes on the federal government’s

foreign affairs power.” Id. at 1074.

We need not consider whether § 338(c)(3) addresses an

area of traditional state responsibility, because we conclude

that § 338(c)(3) does not intrude on the federal government’s

foreign affairs power.

To intrude on the federal government’s foreign affairs

power, a statute must have “‘more than some incidental or

indirect effect’ on foreign affairs.” Movsesian, 670 F.3d at

1076 (quoting Zschernig v. Miller, 389 U.S. 429, 434 (1968)).

For example, in Zschernig v. Miller, the Supreme Court

struck down as unconstitutional an Oregon probate statute on

the basis of field preemption. 389 U.S. at 430-41. There, the

Oregon statute provided that nonresident aliens could not

receive personal property unless they could show:

(1) the existence of a reciprocal right of a

United States citizen to take property on the

same terms as a citizen or inhabitant of the

foreign country; (2) the right of United States

citizens to receive payment here of funds from

estates in the foreign country; and (3) the right

of the foreign heirs to receive the proceeds of

Oregon estates “without confiscation.”

Id. at 431–32 (quoting Or. Rev. Stat. § 111.070 (1957)).

10 CASSIRER V. THYSSEN-BORNEMISZA

As applied, “Oregon judges in construing [the Oregon

probate statute sought] to ascertain whether ‘rights’ protected

by foreign law are the same ‘rights’ that citizens of Oregon

enjoy.” Id. at 440. In so doing, Oregon courts had repeatedly

determined that if “the alleged foreign ‘right’ may be

vindicated only through Communist-controlled state agencies,

then there is no ‘right’ of the type [the Oregon statute]

requires.” Id. Consequently, the Oregon statute “ha[d] a

direct impact upon foreign relations.” Id. at 441.

In our other field preemption cases, we found intrusion

into foreign affairs on the face of the statutes. Section 354.3,

the statute for Holocaust-era artwork, explicitly created a

“special rule that applie[d] only to a newly defined class” of

plaintiffs who had suffered wartime injuries. Von Saher,

592 F.3d at 966 (quoting Deutsch v. Turner Corp., 324 F.3d

692, 708 (9th Cir. 2003)). Section 354.4 “express[ed] a

distinct political point of view on a specific matter of foreign

policy” by labeling the actions of the Ottoman Empire

“genocide” and providing relief only for “‘Armenian

Genocide victim[s].’” Movsesian, 670 F.3d at 1076 (quoting

Cal. Civ. Proc. Code § 354.4(b)). Likewise, § 354.6 intruded

on the federal government’s foreign affairs power because

“California [sought] to redress wrongs committed in the

course of the Second World War” by providing a right of

recovery only to “‘Second World War slave labor victims’

and ‘Second World War forced labor victims.’” Deutsch,

324 F.3d at 712.

The district court concluded that § 338(c)(3) intruded on

foreign affairs on two grounds: (1) § 338(c)(3) created a

remedy for wartime injuries and (2) § 338(c)(3) is

functionally equivalent to unconstitutional § 354.3. We

conclude that the district court erred on both counts.

CASSIRER V. THYSSEN-BORNEMISZA 11

First, the district court accurately noted that under Von

Saher, Movsesian, and Deutsch, “states may not create their

own remedies to the problem of looted Holocaust-era art or

other wartime injuries, and they may not require their courts

to make politically sensitive determinations on matters of

foreign policy.”1 Section 338(c)(3), however, does not create

a remedy for wartime injuries by creating a new cause of

action for the recovery of artwork. Contra Von Saher,

592 F.3d at 966. Section 338(c)(3) extends the statute of

limitations for preexisting claims concerning a class of

artwork that is unrelated to foreign affairs on its face. It does

not require that those claims arise out of wartime injuries, or

from any other specific source that might implicate the

federal government’s foreign affairs power. Because

§ 338(c)(3) is silent on matters of foreign affairs, it does not

convey “a ‘distinct juristic personality’ from that of the

United States when it comes to matters of foreign affairs.’”

Id. at 965. Nor is there any evidence in the record at this

stage in the proceedings that California courts, as in

Zschernig, are applying § 338(c)(3) to “establish [the State’s]

own foreign policy.” 389 U.S. at 441.

1

The district court initially reasoned that adjudicating the Cassirers’

claims would require it “to review the legitimacy of the compensation

provided to Lilly Cassirer Neubauer by the German government in 1958”

because “whether [Lilly] was adequately compensated for the Painting

will necessarily bear on the question whether [the Cassirers] retain title to

it today.” But in considering the Cassirers’ motion for reconsideration, the

district court acknowledged that this would not be the case. The district

court held that the German Federal Court of Justice’s written decision in

Sachs v. Deutches Historisches Museum shows that “under German law,

the compensation received by Ms. Neubauer in 1958 did not divest her or

her heirs of title to the [Painting].”

12 CASSIRER V. THYSSEN-BORNEMISZA

Second, the district court incorrectly determined that

§ 338(c)(3) was functionally equivalent to unconstitutional

§ 354.3. The district court emphasized that the statute “limits

its application to claims to art taken after 1910” by fraud or

duress, which “clearly indicates that the extended limitations

period encompasses Holocaust-era claims.” But whether a

statute of limitations may permit Holocaust era-claims is not

the test for preemption. In Von Saher, we remanded

plaintiff’s claims so that the district court could determine

whether plaintiff’s claims to recover Holocaust-era artwork

were timely under the general provisions of § 338, before the

statute was amended. 592 F.3d at 968–70.

And in fact, § 338 is not functionally equivalent to

unconstitutional § 354.3. While § 354.3 covered only claims

to recover “Holocaust-era artwork,” § 338(c)(3) extends to

any “work of fine art.” Indeed, since its enactment, non-

Holocaust-era artwork cases have invoked § 338(c)(3). See

W. Prelacy of the Armenian Apostolic Church v. J. Paul Getty

Museum, No. BC438824 (L.A. Cnty. Super. Ct. Aug. 1, 2011)

(suing over a manuscript allegedly stolen in 1915); Rafaelli

v. Getty Images, Inc., No. 2:12-cv-00563-CAS-PJW (C.D.

Cal. Jan. 20, 2012) (suing over photographs created in the

1970s).

We find that the district court erred in concluding that

§ 338 intrudes on foreign affairs. We thus conclude that the

district court erred in striking § 338 down as unconstitutional

on the basis of field preemption.

CASSIRER V. THYSSEN-BORNEMISZA 13

C. Whether § 338(c)(3) Violates the Foundation’s Due

Process Rights

The Foundation argues that § 338(c)(3) violates its due

process rights by retroactively stripping it of its vested

property interest acquired in the Painting when the

longstanding three-year statute of limitations period expired.

We affirm the district court’s ruling that “the Foundation

cannot establish such a claim on the basis of the current

record.”

In Campbell v. Holt, the Supreme Court established that:

It may . . . very well be held that in an action

to recover real or personal property, where the

question is as to the removal of the bar of the

statute of limitations by a legislative act

passed after the bar has become perfect, that

such act deprives the party of his property

without due process of law. The reason is

that, by the law in existence before the

repealing act, the property had become the

defendant’s. Both the legal title and the real

ownership had become vested in him, and to

give the act the effect of transferring this title

to plaintiff would be to deprive him of his

property without due process of law.

Campbell v. Holt, 115 U.S. 620, 623 (1885).

But as the district court emphasized, Campbell applies

only when the property at issue had vested and had become

the defendant’s. The Supreme Court explained in Chase

Securities Corp. v. Donaldson that, “where lapse of time has

14 CASSIRER V. THYSSEN-BORNEMISZA

not invested a party with title to real or personal property, a

state legislature, consistently with the Fourteenth

Amendment, may repeal or extend a statute of limitations.”

325 U.S. 304, 311-12 (1945) (emphasis added). Accordingly,

we have explained that “[w]here a lapse of time has not

invested a party with title to real or personal property, a state

legislature may extend a lapsed statute of limitations without

violating the fourteenth amendment, regardless of whether the

effect is seen as creating or reviving a barred claim.” Starks

v. S. E. Rykoff Co., 673 F.2d 1106, 1109 (9th Cir. 1982).

The district court found that whether a lapse of time

invested the Foundation with title to the Painting required the

development of the following factual disputes, not pleaded in

the complaint: (1) the history of the Painting’s transfer;

(2) whether the Painting was stolen in the Foundation’s chain

of title; (3) whether the Foundation’s possession of the

Painting was uninterrupted for adverse possession purposes;

and (4) whether the Foundation’s possession of the Painting

was open for adverse possession purposes. None of these

factual disputes are resolved in the Foundation’s favor by the

facts pleaded in the complaint.

We disagree with the Cassirers, however, that the

Foundation’s due process claim may be resolved conclusively

in the Cassirers’ favor at this juncture. The Cassirers claim

that the constitutional analysis utilized in Campbell and

Chase is outdated and that the modern approach is to evaluate

whether § 338(c)(3) passes rational basis review. But the

Cassirers do not proffer any authority that involves whether

the statute at issue harmed a defendant’s interest in a vested

property right. Instead, they rely on inapposite cases. See,

e.g., Campanelli v. Allstate Life Ins. Co., 322 F.3d 1086, 1100

(9th Cir. 2003) (stating “retrospective economic legislation

CASSIRER V. THYSSEN-BORNEMISZA 15

must only pass rational basis review” (quoting Gen. Motors

Corp. v. Romein, 503 U.S. 181, 191 (1992) (emphasis

added))); Lyon v. Agusta S.P.A., 252 F.3d 1078, 1086 (9th

Cir. 2001) (“[T]he Supreme Court has not blanched when

settled economic expectations were upset, as long as the

legislature was pursuing a rational policy.” (emphasis

added)). The Cassirers have not shown that § 338(c)(3) need

only pass rational basis review if, in fact, the Foundation had

a vested interest in the Painting. We conclude that the district

court correctly held that the Foundation’s due process

challenge cannot be resolved on the Foundation’s motion to

dismiss.

D. Whether § 338(c)(3) Violates the Foundation’s First

Amendment Rights

The Foundation argues that § 338(c)(3) violates its First

Amendment rights because § 338(c)(3) targets museums and

art galleries “for unfavorable treatment.” We disagree.

The district court correctly reasoned that § 338(c)(3)

“does not ‘burden’ expression in any manner cognizable

under the Supreme Court’s First Amendment jurisprudence.”

The Foundation relies solely on cases in which the statutes at

issue imposed a tax on certain entities engaged in free speech

activities. See Minneapolis Star & Tribune Co. v. Minn.

Com’r of Revenue, 460 U.S. 575, 592–93 (1983) (holding that

a state’s “special tax on the press [which] limit[ed] its effect

to only a few newspapers” was subject to strict scrutiny and

was unconstitutional); Festival Enters., Inc. v. City of

Pleasant Hill, 182 Cal. App. 3d 960, 962 (1986) (holding

“that the city’s ‘admissions tax,’ as applied to plaintiff theater

owners, impose[d] an impermissible burden on protected

speech”). Section 338(c)(3) does not impose a tax on the

16 CASSIRER V. THYSSEN-BORNEMISZA

Foundation. Further, the statute merely permits a claim to go

forward or not depending on the timing of the discovery of

the claim, not on the basis of any protected speech.

We therefore conclude that the Foundation failed to

demonstrate that § 338(c)(3) burdens its right to free speech.

It follows that § 338(c)(3) is not subject to strict scrutiny.

Section 338(c)(3) passes rational basis review because it is

rationally related to the goals of extending and clarifying the

statute of limitations period. The Legislature could rationally

choose to extend the statute of limitations period to six years

for actions against certain entities that it deemed

“sophisticated.” Sen. Comm. on the Judiciary, June 21, 2010,

at 5. The Legislature believed that museums, galleries,

auctioneers, and dealers have access to methods of tracing

title to their artifacts and are on notice that often “lost

artifacts have a break in the chain of title.” Id.2 The

Legislature clarified that the statute of limitations period for

the six-year period is triggered on actual notice. Thus,

§ 338(c)(3) passes rational basis review and is not

unconstitutional.

2

The Foundation contends that the California Legislature improperly

declined to incorporate California’s borrowing statute into § 338(c)(3).

California’s borrowing statute provides that when a cause of action arises

in another state or foreign country and would be barred in that state or

country, “the action cannot be brought in California.” Cal. Civ. Proc.

Code § 361. The Legislature’s decision not to apply the borrowing statute

is rationally related to the goal of providing additional time to recover

stolen artwork because of the complex legal problems involved with such

claims. Further, the Foundation incorrectly argues that museums and

galleries will never be able to escape a claim that is barred in another

jurisdiction. Even absent § 361, California law follows choice of law

rules in the event “the conflict concerns a statute of limitations.” Deutsch,

324 F.3d at 716. Thus, another jurisdiction’s statute of limitations period

may apply to plaintiff’s claim under a choice of law analysis. Id.

CASSIRER V. THYSSEN-BORNEMISZA 17

CONCLUSION

We AFFIRM in part and REVERSE in part the district

court’s order dismissing the Cassirers’ complaint. We

REVERSE the district court’s finding that § 338(c)(3) is

preempted on the basis of field preemption. We AFFIRM the

district court’s rulings that the Foundation’s due process

challenge is not viable on a motion to dismiss and that

§ 338(c)(3) does not violate the Foundation’s First

Amendment rights. We REMAND for further proceedings

consistent with this opinion. Each party shall bear its own

costs on appeal.

AFFIRMED in part, REVERSED in part, and

REMANDED.