Barnet v. Ministry Sports of the Hellenic Republic

• Decision Date: 21 June 2019
• Docket Number: 18 Civ. 4963 (KPF)
• Citation: 391 F.Supp.3d 291
• Parties: Howard J. BARNET, Peter L. Barnet, Jane L. Barnet, and Sotheby's Inc., Plaintiffs, v. MINISTRY OF CULTURE AND SPORTS OF THE HELLENIC REPUBLIC, Defendant.
• Court: U.S. District Court — Southern District of New York

391 F.Supp.3d 291

Howard J. BARNET, Peter L. Barnet, Jane L. Barnet, and Sotheby's Inc., Plaintiffs,

v.MINISTRY OF CULTURE AND SPORTS OF THE HELLENIC REPUBLIC, Defendant.

18 Civ. 4963 (KPF)

United States District Court, S.D. New York.

Signed June 21, 2019

Gary Stein, Schulte Roth & Zabel LLP, New York, NY, for Plaintiffs.

Leila Alexandra Amineddoleh, Amineddoleh and Associates LLC, New York, NY, for Defendant.

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:

This action revolves around the disputed ownership of a centuries-old, 14-centimeter-tall, bronze figure of a horse (the "Bronze Horse"). Plaintiffs Howard J. Barnet, Peter L. Barnet, and Jane L. Barnet (collectively, the "Barnet Plaintiffs"), along with Sotheby's, Inc. ("Sotheby's," and together with the Barnet Plaintiffs, "Plaintiffs"), bring this action against Defendant Ministry of Culture and Sports of the Hellenic Republic (the "Ministry" or "Greece"), seeking a declaratory judgment that the Barnet Plaintiffs are the lawful owners of the Bronze Horse and, further, that Sotheby's may sell the figure on their behalf. Defendant, for its part, contends that the Bronze Horse was illegally removed from Greece and should be repatriated.

Rather than resolve these issues through the litigation, Defendant asserts immunity from litigation, and moves to dismiss Plaintiffs' Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1). Specifically, Defendant argues that (i) the Court lacks subject matter jurisdiction over Plaintiffs' claims pursuant to the Foreign Sovereign Immunities Act (the "FSIA"), 28 U.S.C. §§ 1602 - 11 ; and (ii) Plaintiff Sotheby's lacks Article III standing because it does not sufficiently allege injury-in-fact. For the reasons set forth herein, Defendant's motion is denied.

BACKGROUND¹

A. Factual Background

On November 16, 1973, Howard and Saretta Barnet purchased the Bronze Horse. (Compl. ¶ 21). The figure, which dates back to the 8th Century B.C.E., is an example of a common style of Greek statutes depicting horses from the Geometric period. (Id. at ¶¶ 16, 33). The Barnets added the Bronze Horse to their private art collection, displaying it at their New York home for more than 20 years. (Id. at ¶ 24). In 1992, Howard Barnet passed away and the ownership of the figure vested entirely in Saretta Barnet. (Id. at ¶ 26). In 2012, ownership of the Bronze Horse was transferred to the 2012 Saretta Barnet Revocable Trust (the "Trust"), of which the Barnet Plaintiffs are the sole trustees. (Id. at ¶ 28).

In July 2017, after Saretta Barnet's death, the Barnet Plaintiffs consigned the Bronze Horse to Sotheby's for sale, along with numerous other items from the Barnet collection. (Compl. ¶¶ 29-30). Sotheby's planned to sell the Bronze Horse at an auction scheduled for May 14, 2018, in New York, New York. (Id. at ¶ 31). As is customary prior to any auction, on April 25, 2018, Sotheby's published an auction catalog online that included the Bronze Horse. (Id. at ¶¶ 32-33). The auction catalog described the provenance, or ownership history, of the Bronze Horse, which potential buyers use to confirm the authenticity of a work of art. (Id. at ¶ 34).

As described in its provenance, on May 6, 1967, the Bronze Horse was sold at a public auction in Switzerland by Münzen und Medaillen, a reputable European auction house, to an undisclosed buyer. (Compl. ¶ 23). At a later date, the Bronze Horse was acquired by Robin Symes from the 1967 auction purchaser. (Id. at ¶ 36).² Howard and Saretta Barnet acquired the Bronze Horse from Mr. Symes on November 3, 1973. (Id. at ¶ 34).

On May 11, 2018, the Friday prior to the Monday auction, Defendant emailed a letter to Sotheby's, demanding that the auction house immediately withdraw the Bronze Horse from the auction and repatriate the figure to Greece (the "Demand Letter"). (Compl. ¶¶ 37, 39). The Ministry asserted that the Bronze Horse is cultural property that had been stolen from Greece, in violation of Greek patrimony laws. (Id. at ¶ 38). In support of Greece's claim of ownership, the Demand Letter referred to the figure's prior connection to Robin Symes, which had been publically disclosed in the Sotheby's auction catalog. (Id. at ¶ 43). In closing, the letter noted that Greece "reserves the right to take the necessary legal action in the competent courts in order to repatriate the coin [sic ]." (Demand Letter 2).

The Demand Letter, irrespective of its merit, placed a cloud over the Bronze Horse's marketability, impairing Sotheby's ability to sell it on behalf of the Barnet family. (Compl. ¶¶ 51-52). Accordingly, Sotheby's immediately withdrew the Bronze Horse from the auction. (Id. at ¶ 52). Several days later, Sotheby's responded to the Demand Letter, rejecting Greece's claim of ownership, and inviting the Ministry of Culture to provide any other evidence to support its initial assertions. (Id. at ¶¶ 53-54). At present, the Bronze Horse is located in New York, New York. (Id. at ¶ 56).

B. Procedural Background

Plaintiffs filed the Complaint in this action on June 5, 2018. (Dkt. #1). On September 12, 2018, Defendant requested leave to file a motion to dismiss. (Dkt. #15). On October 2, 2018, the Court held a pre-motion conference and set a briefing schedule for Defendant's motion to dismiss. (Dkt. #18). Defendant moved to dismiss the Complaint on November 5, 2018. (Dkt. #20). Plaintiffs filed an opposition brief on December 7, 2018. (Dkt. #22-23). This motion became fully briefed when Defendant filed its reply brief on December 21, 2018. (Dkt. #26-28).

DISCUSSION

A. Motions to Dismiss Under Rule 12(b)(1)

Rule 12(b)(1) permits a party to move to dismiss a complaint for "lack of subject-matter jurisdiction." Fed. R. Civ. P. 12(b)(1). "A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Lyons v. Litton Loan Servicing LP , 158 F. Supp. 3d 211, 218 (S.D.N.Y. 2016) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) ).

The Second Circuit has drawn a distinction between two types of Rule 12(b)(1) motions: (i) facial motions and (ii) fact-based motions. See Carter v. HealthPort Technologies, LLC , 822 F.3d 47, 56-57 (2d Cir. 2016) ; see also Katz v. Donna Karan Co., L.L.C. , 872 F.3d 114, 119 (2d Cir. 2017). A facial Rule 12(b)(1) motion is one "based solely on the allegations of the complaint or the complaint and exhibits attached to it." Carter , 822 F.3d at 56. A plaintiff opposing such a motion bears "no evidentiary burden." Id. Instead, to resolve a facial Rule 12(b)(1) motion, a district court must "determine whether [the complaint and its exhibits] allege[ ] facts that" establish subject matter jurisdiction. Id. (quoting Amidax Trading Grp. v. S.W.I.F.T. SCRL , 671 F.3d 140, 145 (2d Cir. 2011) (per curiam)). And to make that determination, a court must accept as true the complaint's allegations "and draw[ ] all reasonable inferences in favor of the plaintiff." Id. at 57 (internal quotation marks and citation omitted).

"Alternatively, a defendant is permitted to make a fact-based Rule 12(b)(1) motion, proffering evidence beyond the complaint and its exhibits." Carter , 822 F.3d at 57. "In opposition to such a motion, [a plaintiff] must ‘come forward with evidence of their own to controvert that presented by the defendant,’ or may instead ‘rely on the allegations in the[ir p]leading if the evidence proffered by the defendant is immaterial because it does not contradict plausible allegations that are themselves sufficient to show standing.’ " Katz , 872 F.3d at 119 (internal citations and quotations omitted). If a defendant supports his fact-based Rule 12(b)(1) motion with "material and controverted" "extrinsic evidence," a "district court will need to make findings of fact in aid of its decision as to subject matter jurisdiction." Carter , 822 F.3d at 57.

B. The Court Has Subject Matter Jurisdiction Under the Commercial Activity Exception of the Foreign Sovereign Immunities Act

Defendant argues principally that this Court lacks jurisdiction to consider Plaintiffs' claims due to Defendant's sovereign immunity. (Def. Br. 6-21). However, the Court finds that the act in question — Defendant's transmission of the Demand Letter, which halted the auction of the Bronze Horse — falls within the FSIA's commercial activity exception. As a result, Defendant is not immune from suit.

1. The Commercial Exception to the Foreign Sovereign Immunities Act

"The FSIA provides the sole basis for obtaining jurisdiction over a foreign state in federal court." Anglo-Iberia Underwriting Mgmt. v. P.T. Jamsostek , 600 F.3d 171, 174-75 (2d Cir. 2010). Broadly, a foreign state is immune from federal court jurisdiction, unless a specific exception in the FSIA applies. See Matar v. Dichter , 563 F.3d 9, 12 (2d Cir. 2009). If such an exception applies, "the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances." 28 U.S.C. § 1606.

Here, Plaintiffs argue that Defendant's behavior falls within the commercial activity exception to the FSIA. (Pl. Opp. 7). The third prong of that exception, known as the "direct-effect clause," abrogates sovereign immunity when the action is based upon "an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States." 28 U.S.C. § 1605(a)(2). To establish jurisdiction on that basis, the action must be (i) based upon an act outside the United States; (ii) that was taken in connection with a commercial activity of the foreign sovereign; and (iii) that caused a direct effect in the United States. See Petersen Energia Inversora S.A.U. v. Argentine Republic & YPF S.A. , 895 F.3d 194, 204 (2d Cir. 2018).

At the motion to dismiss stage, the defendant must first make a prima facie showing that it is a foreign state under...