The case of the day is Cassirer v. Thyssen-Bornemisza Collection Foundation (S. Ct. 2022). Justice Kagan, who wrote the opinion for a unanimous court, is such a good writer that sometimes the cases she decides are harder than she makes them look. But I do think today’s case was an easy one.

Paul Cassirer was a German Jew who owned an art gallery. Camille Pissarro, the Impressionist painter, sold him Rue Saint-Honoré in the Afternoon, Effect of Rain in 1900. Paul’s heir, Lilly Cassirer, inherited the painting and hung it in her Berlin home. In 1939, she gave the paintings to the Nazis in return for an exit visa that allowed her to flee to England. She later came to the United States with her grandson, Claude, the plaintiff in today’s case.

The painting ended up in a private collection in the United States after the war. In 1976, Baron Hans Heinrich Thyssen-Bornemisza purchased the painting and kept in at his home in Switzerland. In the 1990s, he sold it, along with much of his collection, to the Foundation, set up and controlled by the Spanish government. The painting is now housed in the Foundation’s museum in Madrid. Claude learned of the painting’s whereabouts when he saw the museum’s 1999 catalogue.

Claude brought an action in the Central District of California. He asserted that the Foundation was not immune from suit because the painting had been taken in violation of international law. Claude prevailed on that issue; the Supreme Court denied cert. in 2011. Claude, though, did not live to see the Supreme Court’s cert. denial. He died in 2010, and his son, his daughter’s estate, and the Jewish Federation of San Diego County succeeded to his rights.

The case then proceeded to trial on the merits. The plaintiffs argued that California law should govern the merits of the case. The Foundation argued that Spanish law should govern. The judge, citing Ninth Circuit precedent, decided that federal common law provided the conflict of laws rule that should be used to decide what law substantively governed the claim, and that under federal common law conflicts principles, Spanish law governed. The Foundation prevailed at trial, and the judgment was affirmed on appeal. The plaintiffs sought Supreme Court review only on the question whether federal common law should govern the conflicts analysis, or whether the court should instead have applied California’s conflict of laws rules.

As I wrote at the outset, I think the case is pretty straightforward. The FSIA (28 U.S.C. § 1606) provides that in any case where the foreign sovereign defendant is not immune from jurisdiction, “the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances,” with an exception for punitive damages. What conflict of laws rule would the courts have applied if the museum had not been an instrumentality of the Spanish state? In light of Klaxon, they obviously would have applied California conflict of laws rules, because the case is pending in a federal court in California and does not arise under federal law. Justice Kagan’s basic conclusion was that in light of § 1606, the courts could not apply a rule to the foreign sovereign defendant different from the rule it would have applied to a private defendant. Once a plaintiff overcomes the jurisdictional hurdles of foreign sovereign immunity, the foreign sovereign has to be treated like any other litigant. Even leaving aside § 1606, the justices could see no special federal interest that would justify the creation of a special federal conflict of laws rule.

As a result of the decision, the judgment will be vacated and the case remanded for further proceedings. I suppose it’s possible that the court, applying California’s conflict of laws rules, could again conclude that Spanish law should govern. Or it could decide that California law should govern, in which case maybe a new trial will be necessary.

However, there’s more to say. Let’s take a brief excursion on federal common law. Here is a very simplified overview.

• Ever since the adoption of the Constitution, the law has been that “the laws of the several states, except where the constitution, treaties, or statutes of the United States shall otherwise require or provide, shall be regarded as rules of decision in trials at common law in the courts of the United States in cases where they apply.” (I’ve quoted the Judiciary Act of 1789 here; the law is still on the books, with very slightly modified language). The rule is problematic because of American federalism. Each state has its own courts, and the United States as a whole has a system of federal courts. Perhaps in some areas of the law that are not federal but also not strictly local, there is a need for national uniformity.
• In the bad old days, the rule was that the federal courts could decide diversity cases (cases between citizens of different states that did not arise under federal law) under the general common law, even if the state courts took a different view of the common law. Here is Justice Story, in Swift v. Tyson (1842), a case about the rights of what we would call a holder in due course of a negotiable instrument: “In the ordinary use of language it will hardly be contended that the decisions of Courts constitute laws. They are, at most, only evidence of what the laws are; and are not of themselves laws. They are often reexamined, reversed, and qualified by the Courts themselves, whenever they are found to be either defective, or ill-founded, or otherwise incorrect. The laws of a state are more usually understood to mean the rules and enactments promulgated by the legislative authority thereof, or long established local customs having the force of laws. In all the various cases which have hitherto come before us for decision, this Court have uniformly supposed, that the true interpretation of the thirty-fourth section limited its application to state laws strictly local, that is to say, to the positive statutes of the state, and construction thereof adopted by the local tribunals, and to rights and titles to things having a permanent locality, such as the rights and titles to real estate, and other matters immovable and intraterritorial in their nature and character.  It never has been supposed by us, that the section did apply, or was designed to apply, to questions of a more general nature, not at all dependent upon local statutes or local usages of a fixed and permanent operation, as, for example, to the construction of ordinary contracts or other written instruments, and especially to questions of general commercial law, where the state tribunals are called upon to perform the like functions as ourselves, that is, to ascertain upon general reasoning and legal analogies, what is the true exposition of the contract or instrument, or what is the just rule furnished by the principles of commercial law to govern the case. ” I don’t disagree with the main criticism of Swift that I discuss below, but I admit that I have some sympathy for Justice Story’s reasoning, which the courts later comprehensively rejected and which Justice Holmes later pooh-poohed as a theory of the general law as a “brooding omnipresence in the sky.” So this is more of a digression than I had planned, but to me an important difference between hard-nosed, no-nonsense, empirical legal realism and pie-in-the-sky, idealistic, naive common law judging is mostly about what attitude towards judging we should want judges to have, and the degree of humility versus Beethovenesque creative genius we should want in our judges. Okay, I will stop before I get myself into trouble.
• Swift v. Tyson meant that the federal courts could give a uniform interpretation of the general common law nationwide. The main practical problem with Swift v. Tyson was that state courts did not follow the lead of federal courts, but adhered to their own reading of the common law. Thus outcomes of identical cases could differ depending on whether the case was in state or federal court. Here is Justice Brandeis in Erie v. Tompkins (1938), the case that overruled Swift: “Diversity of citizenship jurisdiction was conferred in order to prevent apprehended discrimination in state courts against those not citizens of the state. Swift v. Tyson introduced grave discrimination by noncitizens against citizens. It made rights enjoyed under the unwritten ‘general law’ vary according to whether enforcement was sought in the state or in the federal court; and the privilege of selecting the court in which the right should be determined was conferred upon the noncitizen. Thus, the doctrine rendered impossible equal protection of the law. In attempting to promote uniformity of law throughout the United States, the doctrine had prevented uniformity in the administration of the law of the state.”
• What about conflict of laws? Is there a body of federal conflicts law, or do federal courts have to follow state conflicts law in diversity cases? In Klaxon Co. v. Stentor Electric Manufacturing Co. (1941), the Supreme Court said that federal courts should follow state conflict of laws rules in such cases, with the aim, as in Erie, of ensuring that diversity cases would be decided consistently in the state and federal courts within a state. Here is what Justice Reed wrote: “We are of opinion that the prohibition declared in Erie R. Co. v. Tompkins against such independent determinations by the federal courts extends to the field of conflict of laws. The conflict of laws rules to be applied by the federal court in Delaware must conform to those prevailing in Delaware’s state courts. Otherwise, the accident of diversity of citizenship would constantly disturb equal administration of justice in coordinate state and federal courts sitting side by side. Any other ruling would do violence to the principle of uniformity within a state upon which the Tompkins decision is based.”

With this background in mind, I do want to note one wrinkle. The reason Swift v. Tyson was a problem was that if a plaintiff sued a defendant on a non-federal claim in state court, the defendant would sometimes have the right to remove the case to federal court, but sometimes not. If the plaintiff sued in his own state and the defendant was not a citizen of that state, and if the amount in controversy exceeded a jurisdictional minimum, then the defendant has the option to have the case heard in the federal court. If the defendant always had the right to remove, then there would have been no real risk of divergence between state and federal courts. But since the case would sometimes have to proceed in the state court, the problem of similar cases being decided differently was real. On the other hand, in cases arising under federal law, the defendant basically always has the right to have the case heard in federal court, so there is little risk of serious divergence between state and federal courts.

The FSIA is an oddity because it provides foreign states with the right to remove claims to federal court whether the claims arise under federal law or under state law. Since foreign sovereigns almost invariably remove cases filed against them in state court, and since more or less all FSIA litigation is therefore decided in the federal courts, perhaps the risk of inconsistent outcomes that motivated Erie in the first place is missing in the FSIA conflict of laws context? Since essentially no cases will be decided in the state courts, there is little risk of developing federal conflict of laws rules that will lead to different outcomes than the state conflict of laws rules applied in state court. Note that Erie itself is still important in FSIA cases, even if Klaxon is not, because there will be cases against private defendants in state court, decided under state law, that are factually similar to cases in federal courts against foreign sovereigns and that ought to be decided similarly.