Case Review: Abbott Labs v. Feinberg (2020)

February 16, 2021

By SaBreigha Dixon.

Abbott Laboratories v. Feinberg, No. 1:18-cv-08468 (S.D.N.Y. Dec. 9, 2020).

At the heart of this case involving both art theft and forgery is Abbott Laboratories (“Abbott”), a corporation organized under Illinois state law that specializes in multinational medical devices and healthcare. A longtime patron of the arts, Abbott Laboratories acquired a corporate collection of fine art which decorates the halls of Abbott’s headquarters.^[1] In early 2016, Abbott hired an expert art appraiser to assess and update the valuation of several pieces of art in its current collection for insurance purposes. Several months later, in March 2016, the appraiser returned a report to Abbott laboratories informing the corporation that one piece of art in particular was a deliberate forgery of their original painting. The original oil painting, entitled “Maine Flowers” by Marsden Hartley and roughly worth $1 million, was purchased by Abbott Laboratories in 1960 from an art dealer in New York City (the “Painting”).

After learning about the forgery, Abbott Laboratories contacted law enforcement and began an investigation to locate the Painting. In 2018, the Painting was discovered to be in the possession of Carol Feinberg in New York City. Ms. Feinberg asserted that she purchased the Painting in good faith from an art gallery in 1993 from a New York art collector named Eric Kaufman. It is believed that the Painting was stolen in 1987, by a Mr. R. Duncan who sold it to Mr. Kaufman, after the painting was sent for offsite cleaning. Ms. Feinberg declined to give the Painting back to Abbott Laboratories and the parties were unable to negotiate a settlement. Instead, on August 31, 2018, Ms. Feinberg filed a declaratory judgment action in the Northern District of Illinois, seeking a declaration that she had title and was the rightful owner of the Painting.^[2] She also asserted that Abbott Laboratories was barred from asserting title to the Painting by the statute of limitations.^[3]

On September 17, 2018, Abbott Laboratories filed the current lawsuit in the Southern District of New York, asserting a replevin claim as well as a declaratory judgment that they were the rightful owner of the Painting. Abbott Laboratories sought immediate possession of the Painting and filed a motion to dismiss the Illinois action.^[4] The Illinois court granted Abbott Laboratories’ motion to transfer the case to the Southern District of New York pursuant to 28. U.S.C. 1404(a), which was granted on February 28, 2019 by this court.

Procedure

The case finally made it to trial on November 9, 2020. During oral arguments, Federal Judge Schofield heard attorneys for both parties argue over title to the oil painting. Grossman LLP, represented the Plaintiff and Pryor Cashman LLP, represented the Defendant. For the entirety of the trial and in all the preceding court documents, the identity of the Painting and its artist remained anonymous. In an order issued on December 2, 2020, the parties were asked if they had any objections to the disclosure of the name of the artists and titles of the painting being included in the Court’s findings of fact and conclusion of law.^[5] While the Defendant consented, the Plaintiff objected to the disclosure, fearing that it would compromise the work’s value due to the uncertainty surrounding its title.^[6] In the Court’s final holding, it was finally revealed that the oil painting is entitled “Maine Flowers” by American artist Marden Hartley and judgment was found in favor of Plaintiff Abbott Laboratories.^[7]

At trial, testimony was heard from various art experts and individuals including:

• Karmin Maritato, witness and employee responsible for managing Abbott Laboratories’ art collection;
• Lela Hersh, an art expert retained by Abbott Laboratories to help manage its art collection;
• Jamie Martin, owner of Orion Analytical LLC, where the the forensic analysis was performed that identified the forgery painting;
• Eric Kaufman, who purchased the painting from Duncan in 1987 and subsequently sold it to the Berry-Hill Galleries, which in then sold it to Defendant Carol Feinberg;
• Wendy Evans, who helped broker the sale of the painting from Duncan to Kaufman; and
• Barbara Levin, an art appraiser who coordinated authentication of Abbott Laboratories artworks in 2003.^[8]

Because this incident has been lengthy, beginning in 1987, a number of key individuals were deceased and thus unavailable for trial. This includes Robert Duncan, who allegedly sold the Painting, Carol Feinberg, the original Defendant in this suit, Luciano Liparini, who Defendants identified as the possible artist who created the copy of the painting, and a host of individuals who were involved in the sale of the painting prior to 1987.^[9]

Regarding Abbott Laboratories’ replevin claim, the Court decided that, despite the passage of time and the unavailability of some witnesses and other evidence, Abbott Laboratories met its burden of proof, proving that it held superior title to “Maine Flowers.”^[10] In order to prevail on a replevin claim, plaintiff must show that they demanded return of the property and the defendant refused the demand.^[11]

Here, the Court found the following chronology plausible:

• 1960: Abbott purchases the Painting from an art dealer named Albert Landry.
• 1987: the Painting is removed from their headquarters for restoration under the supervision of Duncan, through his company the Chicago Appraisers’ Association and that he had the Painting copied and returned the copy to the Plaintiff. He later sold the Painting to Kaufman, who resold it to the Berry-Hill Galleries in New York.
• 1993: Berry-Hill Galleries sells the Painting to Carol Feinberg.

While Defendants asserted this was insufficient evidence, they repeatedly failed to meet their burden refuting Plaintiff’s right to title.^[12]

Court Ruling

(1) Title to “Maine Flowers”

It is more likely than not that Abbott Laboratories was able to obtain title to “Maine Flowers” by purchasing it in 1960 from an art dealer named Albert Landry. Numerous items of evidence showcased the painting’s record of ownership from its first sale up until the Plaintiff’s ownership of it. This was further supported by Maritato’s testimony that Abbott Labs’ record keeping practices were thorough and credible. Furthermore, Defendants even conceded that “Abbott has evidence that it possessed the painting…” but insisted that “Abbott’s claims are about the painting’s title.” Ultimately the Court was able to conclude that the Plaintiff met its burden of proof, showing that it purchased and owned the original painting in 1960.^[13]

(2) Taking of the Painting

It is also more likely than not that Duncan took the painting from Abbott Laboratories headquarters and replaced it in 1987. ^[14] Duncan was originally hired to appraise and restore the Plaintiff’s art collection. Records show that the painting was sent offsite for this process and no evidence suggests that it was ever entrusted to a different entity at that time, to which Maritato testified. The court rejected Defendants’ argument that a third party had access to the painting who then sold it to Duncan, based on inadmissible hearsay. Defendant also relied on circumstantial evidence which only minimally supported the position that the painting was gifted or transferred to someone else.^[15]

(3) Sale of the Painting

Since it is likely that Duncan took the painting, it is also more likely than not that he sold it as well.^[16] Duncan approached Kaufman with an offer to sell the painting in 1987, representing that he had acquired “Maine Flowers” from a woman or family that brought it to him for appraisal. Kaufman did his own due diligence into Duncan and the painting, but ultimately relied on his decision to purchase the painting on the fact that it had no current liens on it and that Duncan was a respected and established appraiser in the industry. Kaufman was then later able to sell the painting to Berry-Hill for $250,000. Later on, it would also be revealed that certain charcoal drawings that Duncan had sold to Kaufman’s partner Hoff, were fraudulent, though they still had no suspicion about the painting at that time.

(4) Authenticity

In late 2002 or early 2003, Abbott Laboratories retained an appraiser who noted that a French artwork in their collection was likely a forgery. Levin was then retained to coordinate authentication of various artworks in their collection. Levin identified several works that required priority treatment based on their appraisal value, including “Maine Flowers.” Levin contacted Dr. Driscoll of Babcock Galleries, who requested photographs of the copied painting, but did not initially ask to see it in person, stating that it would have been an “expensive proposition.”^[17] Driscoll initially asserted in a letter to Levin that, based on the photograph, Abbott Laboratories’ painting seemed consistent with other paintings done by Marsden Hartley. However, Driscoll later testified, before dying, that “authenticity judgments based on photographs are not reliable” and that “a statement that a work of art is ‘consistent’ with an artist’s other work meant he was ‘not sure’ of authenticity” and he would need to see the painting in person to provide a definitive authentication.^[18] Because of the initial statement by Driscoll and the fact that the copy was so similar to the original, Levin did not have the physical painting sent off for authentication until 2016, among a group of various paintings to be authenticated. The Court concluded that based on this evidence, Abbott Laboratories did not initially obtain a definitive authenticity opinion from Driscoll.

Defendant’s Affirmative Defenses

The Defendants also raised a number of affirmative defenses including laches, entrustment, and unclean hands, to bar Plaintiff’s claim of title.^[19] They argued that Abbott Laboratories should have recognized the theft of their painting prior to 2016, that they were prejudiced by the passage of time which resulted in most of the key witnesses and documents being unavailable, that Carol Feinberg bought the painting in good faith, and that Abbott Laboratories had “unclean hands,” because they knew of the theft and decided to quietly sweep it under the rug until now. Ultimately, the Court did not find that the Defendants met their burden on any of these claims:

• First, it is not standard practice to check an artwork for changes after restoration, so Plaintiff had no reason to believe that forgeries were being substituted for the artworks they were sending out.
• Second, Defendant’s offered no evidence or expert testimony to contradict Driscoll’s initial statements that should have led the Plaintiff to believe they were in possession of a fake.
• Third, the Defendants were not prejudiced because the Plaintiff did not unduly bring its replevin claim. Defendants provided no evidence to support that the Plaintiffs’ records should have a reason to conclude that they were in possession of a forgery, and while testimony from the deceased would have been helpful, it is not enough to carry the Defendant’s burden to demonstrate how they were prejudiced.
• Fourth, while Defendants’ claim that Ms. Feinberg purchased the painting in good faith, they failed to provide any evidence that Abbott Laboratories sold it in the first place. It is more likely than not that when Abbott Laboratories turned over “Maine Flowers” to CAA for cleaning in 1987, it was not knowingly entrusting it to an art merchant who might sell it.
• Finally, nothing in the record shows that Abbott Laboratories acted immorally or in bad faith. The preponderance of evidence shows that Duncan, not an employee of Abbott Laboratories, took the painting. As a result, Abbott Laboratories conducted the appropriate investigation upon discovering the forgery. While in hindsight, there may have been more appropriate steps, or better approaches that Abbott Laboratories could have implemented, the court found that it did not obviate the due diligence that they demonstrated in attempting to authenticate their artwork.

As a result, the Plaintiff has overall demonstrated that they have superior title to “Maine Flowers”, and prevailed on their claims.^[20]

Takeaways

William Charron, the lawyer representing the Feinberg family, told Artnet News that they are “disappointed by the court’s ruling, which has the effect of endorsing gross negligence by a corporation over its art collection, at the cost of punishing good-faith current owners.”^[21] Abbott Laboratories declined to comment, but they are still investigating the whereabouts of several other artworks in an effort to recover them.^[22]

Buying high-value art has always been considered a risky venture. Around twenty-five to fifty percent of works currently circulated in the market are fakes, forgeries, misattributions and unknowns.^[23] And although high-value art typically goes through a rigorous research and appraisal process to be authenticated, studies show that about one out of ten artworks held in museums are deemed to be fake.^[24] The problem of fraudulent art has grown even more with the expansion of online art auctions in recent decades. There are also been new and more sophisticated methods to forging artworks that have led to an increase in forgeries.^[25] This case illustrates the importance of not only having certificates of authenticity, but also up to date records of any artworks one might be in possession of. And while it is an expensive option, having works regularly authenticated after they are sent offsite may prevent ordeals such as this and give collectors peace of mind.

Endnotes:

1. Verified complaint in Abbott Laboratories v. Feinberg, No. 1:18-cv-08468 (S.D.N.Y. filed Sept. 17, 2018). ↑
2. Id., at 3 ¶ 12. ↑
3. Verified Answer, Abbott Laboratories v. Feinberg at 1 ¶ 1. ↑
4. Motion to Consolidate Cases, Abbott Laboratories v. Feinberg. ↑
5. Order 178, Abbott Laboratories v. Feinberg. ↑
6. See Letters 179-180, Abbott Laboratories v. Feinberg. ↑
7. Abbott Laboratories v. Feinberg, No. 1:18-cv-08468 (S.D.N.Y. Dec. 9, 2020). ↑
8. Id. at 2-3. ↑
9. Id. at 3. ↑
10. Id. at 4. ↑
11. Id. at 5. ↑
12. Id. at 5. ↑
13. Id. at 8. ↑
14. Id. ↑
15. Id. at 9-10. ↑
16. Id. at 11. ↑
17. Id. ↑
18. Id. ↑
19. Id. ↑
20. Id. ↑
21. Eileen Kinsella, A $1 Million Marsden Hartley That Was Stolen 30 Years Ago and Replaced With a Forgery Is Finally Returning to Its Original Owner, Art New News, (Dec. 11, 2020). ↑
22. Id. ↑
23. Dehlia Barman, Buying and Selling Art with Confidence Post COVID-19, ArtTactic Editorial, (Oct. 2, 2020. ↑
24. Id. ↑
25. Daniel Victor and Christine Hauser, California Man Pleads Guilty in $6 Million Art Fraud Case, New York Times (Mar. 13, 2020). ↑

About the Author: SaBreigha Dixon is a 3L at New York Law School. She has undergraduate degrees from the University of Akron in criminal justice and political science. SaBreigha is a current member of NYLS’S Media, Entertainment, Fashion Law Association and hopes to pursue a career in intellectual property, particularly copyrights and trademarks as it pertains to art, fashion, and beauty law.