The New York State Senate has passed a bill relating to the liability of authenticators and appraisers. When I first saw the news it seemed like a minor development, but then I went and read the bill. It stripped out a material aspect of the bill first proposed last year that would have required plaintiffs seeking damages against authenticators to prove their case by clear and convincing evidence, a daunting standard. Heightened pleading requirements are still contained within the bill, but the attorneys’ fees provision has also been watered down, with such an award now discretionary rather than mandatory.
The bill is designed to address what has become a growing problem in the art world. Namely, where the authenticity of a painting is the key to its value (i.e., whether it is extremely valuable, or worthless), the appraiser or art historian rendering an opinion as to authenticity is in the crosshairs of everyone involved. The party asserting authenticity will be concerned about any statements to the contrary, while the party resisting the notion that a work is by a particular artist will want to avoid attribution of a work that may affect the value of other, indisputably authentic works. Where that much money is at stake, the stakes for everyone are raised.
In the first version, Senate Bill S6794 provided that a new Section 13.04 would have been added to the Arts & Cultural Affairs Law that read:
In any civil action brought against an authenticator that arises from or relates to the authenticator’s opinion or information concerning a work of fine art, the claimant shall:
- specify with particularity in the complaint facts sufficient to support each element of the claim or claims asserted; and
- prove the elements of such claim or claims by clear and convincing evidence.
This was a very high pleading standard and standard of proof, well more than the usual more-likely-than-not/preponderance of the evidence burden that is generally applicable to civil cases. The bill that passed last week, however (S1229-A), would now add a new section 15.12 to the Arts & Cultural Affairs Law to read:
IN ANY CIVIL ACTION BROUGHT AGAINST AN AUTHENTICATOR, AS DEFINED IN SUBDIVISION 23 OF SECTION 11.01 OF THIS CHAPTER, THAT ARISES FROM OR RELATES TO THE AUTHENTICATOR’S OPINION OR INFORMATION CONCERNING A VISUAL ART MULTIPLE OR WORK OF FINE ART, THE CLAIMANT SHALL SPECIFY WITH PARTICULARITY IN THE COMPLAINT FACTS SUFFICIENT TO SUPPORT EACH ELEMENT OF THE CLAIM OR CLAIMS ASSERTED.
That is effectively the same as sub-paragraph (a) in last year’s bill. But what about the rest? Heightened pleading is all well and good, but it is not a terribly difficult task. In addition, where any prevailing authenticator under the first bill was automatically entitled to his attorney’s fees, now it is in the discretion of the judge, an outcome that is of course unknowable at the start of a lawsuit. Consider the following pleading examples:
- Authenticator X was negligent in his opinion dated January 1, 2015 as to the authenticity of the Picasso purchased by plaintiff.
This easily satisfies general pleading requirements, but probably not pleading with particularity. Contrast:
- Authenticator X overlooked facts A, B, and C, as a result of which his opinion dated January 1, 2015 failed to conform to the duty he owed to the plaintiff under their agreement and applicable law.
That probably suffices, and any plaintiff who didn’t know what A, B, and C were probably wasn’t going to survive the pleading stage anyway when challenged. The point is, it is no real obstacle to initiating a lawsuit. The real disincentive to suing authenticators, in my view, came from the high burden of proof and from knowing that if you brought a claim and lost, you were automatically on the hook for the authenticator’s attorneys’ fees. Now, that fee award is discretionary.
Whatever you think of the concept, I don’t think there’s any question that the intended in terrorem effect of the original proposal has been diminished significantly. And if that was the whole point (which not everyone is buying)—to spare authenticators lawsuits they would likely win but at great cost—then what now? Hyperallergic posed the question, for example, of whether the Warhol Foundation and others that have stopped performing authentications would get back in the business.
With these changes, I highly doubt it.