Can the New York Legislature Bring Back Authentication Boards? The Effect of Proposed Legislation on Liability for Art Authenticators

Abstract

Authenticators have been afraid of being held liable for their opinions since the seminal case of Hahn v. Duveen. However, the chilling effect of liability has become even more apparent in the past few years, since several artist foundations have been sued, and have closed their authentication boards to avoid the costs of defending more lawsuits. The New York Senate has passed a Bill S1229A to increase the legal protections for authenticators, but the state congress has yet to vote on the bill. This note lays out in Part I how authenticators, in particular artist foundations as authors of catalogues raisonnes, currently function in the art market, and how the financial stake in authenticity opinions has increased. It will also delineate the existing legal protections and liabilities that apply to authenticators, and how these liabilities have likely increased due to recent court decisions in New York. The increased potential for liability is now silencing some of the greatest authorities in the art community. Authentication boards were once seen as a solution to this liability issue, because they allowed experts to pool their risk and to come to a consensus. Now, many Boards are dissolving, as they have become the focus of too many jilted collectors. The closure of authentication boards has created a void in the art market: many owners are unable to secure the assurance of authenticity they need to sell their works at “appropriate” prices. Foundations as authors of catalogues raisonne are also exposed to more liability now, though they are still functioning. But if foundations stop publishing complete catalogues, the art market would become even less stable. Two recent landmark cases in New York that are at the center of this trend are Thome v. Alexander & Louisa Calder Foundation and Simon-Whelan v. Andy Warhol Foundation for the Visual Arts, Inc. Both of these precedents have troubling ramifications for authenticators. In Part II, this note will examine how proposed legislation (Bill S1229A) would (or would not) enhance legal protections for authenticators as intended. Bill S1229A may provide some protection for authenticators regarding tort liability by making it easier for defendants in frivolous suits to recover attorney fees, but it is not likely to provide enough protection to incentivize the authentication boards to return to the market. Finally, in Part III, this note will suggest a stronger scheme for protecting authenticators that the legislature could pass, while also recognizing the limitations the New York Legislature faces in addressing the current chilling effect on authenticators. If the New York Legislature wants to change this situation, they need to take more drastic measures to compensate authenticators for defending themselves in court, to cut short the time spent in court, and to disincentivize frivolous plaintiffs in the first place. This can be better achieved by implementing the unamended version of the bill, S1229, which makes it easier for authenticators to prevail on a motion to dismiss and to recover attorney fees. However, even the amended version provides only limited deterrence to lawsuits, given the continued potential liability under federal law, over which the New York legislature has no control.