The case of the day is Hulton v. Bayerische Staatsgemaldesammlungen (S.D.N.Y. 2018). Michael and Penny Hulton were the heirs of Alfred Flechtheim, a German Jew who was a prominent art collector before the war. Among other paintings, he had works by Beckmann, Gris, and Klee. When the Nazis came to power, Flechtheim fled to Paris, and as a result of Nazi persecution, he was “forced to place his property at the disposal” of Alfred Schulte, a “Nazi tax advisor.” Another Nazi, Alex Vömel, took over Flechtheim’s gallery.
It is unclear whether Vömel, Schulte, or someone else disposed of the Paintings; Plaintiffs merely allege that the Paintings were sold in Germany after Flechtheim’s flight. Flechtheim apparently never returned to Germany, dying in London in 1937.
The Bavarian State Paintings Collection now has the paintings, and it displays them in Munich. It had acquired them from Günther Franke, who claimed he had acquired them in 1932 or 1933. The Hultons said this was false, and that he had had actually acquired the paintings from Vömel or Schulte. They sued the Bavarian Collection for replevin, conversion, breach of fiduciary duty, unjust enrichment, and bailment. The Bavarian Collection asserted immunity under the FSIA, and the Hultons pointed to the expropriation exception.
The key point was that Vömel and Schulte were Nazis, and Vömel was an “opportunist and thief,” but neither of them was acting at the behest of the German state, at least according to the allegations of the complaint, at the time of the expropriation. Rather, they were “profiteers, capitalizing on the wholesale persecution of German Jews to extract unconscionable economic advantages for themselves.” The expropriation exception applies only when it is the foreign state itself that does the expropriating. Since the plaintiffs couldn’t allege that here, the court, apparently properly in light of several precedents cited, dismissed the action.
Of course, the Bavarian authorities would appear to be free to return the paintings to their rightful owners.