Govt Oppo to Staying Discovery

7/29/2019 Govt Oppo to Staying Discovery

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U.S. Department of Justice

United States Attorney

Southern District of New York

The Silvio J. Mollo BuildingOne Saint Andrews Plaza

New York, New York 10007

September 11, 2013By ECF and Fax

The Honorable George B. DanielsUnited States District JudgeSouthern District of New York500 Pearl StreetNew York, New York 10007

Re: United States v. A 10thCentury Cambodian Sandstone Statue

12 Civ. 2600 (GBD)

Dear Judge Daniels:

The Government writes in advance of tomorrows conference in this matter regarding themotion for judgment on the pleadings and to stay discovery filed by Claimants Sothebys Inc.and Ms. Ruspoli di Poggio Suasa (Claimants) on September 9, 2013 (the Motion). Whilethe Government will file a full response if necessary, we respectfully request that the Courtdispose of the Motion without the need for further briefing by (1) converting the Claimantsmotion for a judgment on the pleadings to a motion for summary judgment and deferring it untilthe close of discovery, and (2) denying the motion for a stay without further briefing.

Despite claiming that the Motion is ripe for resolution and should preclude furtherdiscovery, Claimants themselves attached and rely upon material produced by the Government indiscovery. This is not only plainly improper on a motion for judgment on the pleadings, itreflects Claimants own view that facts being elicited in discovery are relevant to the issue beforethe Court. Moreover, the sole new support for dismissal contained in the Motion aside fromthese discovery materials is an expert affidavit which does not contradict two of the three basesfor Cambodian ownership of the Duryodhana. This evidence therefore cannot eliminate all theGovernments theories of ownership, which the Court indicated would be required when itallowed Claimants to submit such a motion. Finally, Claimants have identified no basis for theCourt to reverse its prior determinations that a further stay of discovery is unwarranted.

Therefore, the Court should reject this effort to delay the case and relitigate issues piecemeal.

I. Background

As the Court is aware, the Government seeks in this action to forfeit all right, title andinterest in the Duryodhana, a statue stolen from the Prasat Chen Temple at Koh Ker inCambodia. After a brief initial period of document discovery, Claimants filed a motion todismiss the Complaint, during the pendency of which the Court stayed discovery. The

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The Honorable George B. DanielsSeptember 11, 2013

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Government then filed a motion for leave to amend the Complaint, which Claimants opposed.On March 28, 2013, the Court denied Claimants motion to dismiss, and granted theGovernments motion for leave to amend.

After the Government filed the Amended Complaint, Claimants answered on May 6,2013. On May 10, 2013, four days after the Answer was filed, Claimants requested that theCourt hold an immediate hearing on the meaning of Cambodian laws at issue in the case, anddefer discovery on all other topics until that hearing. The Government opposed that request, andthe Court held a conference to address the issue on July 2, 2013.

At the conference, the Court denied Claimants request and ordered discovery to proceed.(Tr. at 41-43.) The Court also stated that Claimants were free to present any expert report ormotion on the Cambodian legal issue and ask the Court to stay discovery while it addressed thatmotion in advance of summary judgment or trial, but that the Court would not consider doing sounless Claimants expert could eliminate any theory or possibility that the government canprove a theory of ownership. (Id. at 42-43.)

On September 9, 2013, Claimants filed the Motion. It is based in large part oncommunications produced in discovery by both Sothebys and Government, which Claimantsclaim show, in essence, that (1) the Cambodian government did not believe its nationalownership laws gave it ownership to the Duryodhana; (2) the State Department invented atheory of Cambodian ownership; and (3) that the Government caused Cambodia to stop seekingan amicable resolution of the ownership dispute with Sothebys, leading to this action.Claimants interpretation of the early stages of the Governments investigation in this matter issimply inaccurate, but their reliance on facts regarding Cambodia and the Governments

understanding of Cambodian law demonstrates that further discovery is required.

As for the notion that the Government was the obstacle to an amicable resolution here,the Government deferred bringing any action in this matter for more than a year after learning ofSothebys attempted sale of stolen property to allow Cambodia and Claimants to attempt toresolve the matter without litigation. That attempt failed not due to the Governmentsintervention, but because Claimants rejected the offer of a third party to buy the Duryodhana for$1 million and return it to Cambodia. In short, to the extent these events have any relevance herethey counsel against allowing Claimants to continue to delay the public airing of the facts.

II. The Motion Should Be Converted to a Motion for Summary Judgment Because

It Relies on Documents Outside of the Pleadings.

Claimants Motion relies on a full 10 pages of supplemental facts which are entirelybeyond the pleadings. Claimants clearly ask the Court to consider the understanding ofCambodia and the State Departments regarding the Cambodian laws in ruling on the Motion.Where a party presents matters outside the pleadings on a motion for judgment on the pleadingsunder Rule 12(c) and they are not excluded by the Court, the motion must be treated as one for



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summary judgment under Rule 56, and all parties must be given a reasonable opportunity topresent all the material that is pertinent to the motion. F.R. Civ. P. 12(d).

Here, the Government is entitled not only to dispute Claimants theories regarding theunderstandings of Cambodia and U.S. Government personnel, but also to take discoveryregarding Sothebys own understanding of the Cambodian laws in question, and present thatpertinent evidence to the Court for its consideration in evaluating the Motion. Sothebys cannotsimultaneously present evidence of the former, while seeking to preclude any inquiry into thelatter. Therefore, the Court should convert the Motion to one for summary judgment and deferthe Governments response until a reasonable period after the close of discovery.

III. The Motion Does Not Present Any New Arguments or Expert Evidence That

Could Eliminate All of the Governments Theories of Ownership.

The Court indicated at the conference that early consideration of a new motion based onan expert report regarding the Cambodian law would be appropriate only if it could eliminate allof the Governments theories of ownership. The Motion, however, contradicts only one of theGovernments three asserted bases of Cambodian ownership. As set forth in more detail in theGovernment Reply in support of its motion for leave to amend, and its opposition to Claimantsrequest for a hearing on the Cambodian law, the Government alleges that the Cambodian Stategained ownership of the Duryodhana in three ways:

1) By acquir[ing] such property in the general manner by which private persons cometo own property, in this case by building the Duryodhana and the rest of the PrasatChen temple. SeeUnited States v. McClain, 545 F.2d 988 (5th Cir. 1977).

2) By operation of the law of May 6, 1925 (the May 6, 1925 Decree), and a similarlaw of March 9, 1900 law (the 1900 Decree) which provided that antiquities,including sculptures, that might be discovered on or in the grounds of land belongingto the state were also the property of the state. As the entire Koh Ker site was theproperty of the Cambodian State at the time of its construction, and never transferredto any private owner, the May 6, 1925 Decree and its 1900 predecessor clearly vestedownership of the Duryodhana in the State to the extent it had not previously owned it.

3) By operation of the law of May 16, 1925 (the May 16, 1925 Decree), whichdesignated Koh Ker and Prasat Chen as historical monuments and objects of French

Indochina, thereby declaring them to be property of the state.

The expert affidavit submitted by Claimants in support of their Motion disputes theGovernments interpretation of the May 16, 1925 Decree. (Declaration of Prof. AlexanderDeroche at 7(b).) If accepted by the Court, this would indeed dispose of the Governmentsthird theory of ownership. Professor Deroche actually confirms the Governments reading of theMay 6, 1925 Decree and the 1900 Decree, however, thereby bolstering, not refuting theGovernments second theory. (Id. at 7(c).) While Professor Deroche also states that he has



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found no law declaring the land at Koh Ker to be state property, no such law is necessary where,as here, the Cambodian State owned the land in ordinary manner. And finally, Prof. Derochedoes not even appear to mention the Governments first theory, which is that the Duryodhanaitself has always been owned by the Cambodian State in the ordinary manner.

The expert evidence presented by Claimants does not, therefore, refute two of theGovernments three theories of ownership. The other new evidence offered by Claimants is, asnoted above, improper on a motion for judgment on the pleadings. The remainder of ClaimantsMotion is simply yet another restatement of arguments previously made in Claimants priorsubmissions to the Court, which the Court rejected in denying the motion to dismiss and grantingleave to amend. While the Government will, of course, respond to these arguments once more ifthe Court wishes, there is no reason to allow Claimants to further delay this case by yet againlitigating this same issue, piecemeal. Instead, the Court should direct the parties to expeditiouslycomplete discovery and resolve all the issues in this case. (Tr. at 43.)

IV. A Stay of Discovery Is Not Warranted.

Even if the Court believes the Motion should not be postponed until the summaryjudgment stage, a discovery stay is totally unwarranted. As discussed above, Claimants have notpresented dispositive new expert testimony, as the Court indicated would be the minimumrequirement to slow down the discovery schedule. Moreover, they have themselves takenadvantage of discovery produced by the Government to support their motion, while seeking todeny the Government equivalent discovery. Under these circumstances, a stay of discoverywould plainly be inappropriate.

Aside from restating arguments from their last request to restrict discovery, which theCourt found unpersuasive, Claimants now argue that a stay is warranted because of Governmentdiscovery requests that are allegedly burdensome. If Claimants believe the Government hasmade unduly burdensome requests, the remedy is to object to the requests. That Claimantsobject to the scope of the Governments requests is not a basis to stay discovery.

Finally, Claimants suggest that the Governments conduct of its early investigation in thismatter in some way supports a stay of discovery. In light of that, the Government is forced topoint out that during that period, as described below, Sothebys provided false and misleadinginformation to the Government in an effort to prevent the Government from obtaining the truefacts regarding the theft of the Duryodhana from a third party. Thus, to the extent the events of

2011 are relevant here, they militate strongly against allowing Claimants to continue to concealthe facts regarding this case.

On March 22, 2011, Special Agent Brent Easter of Homeland Security Investigationsforwarded Jane A. Levine, Sothebys Worldwide Director of Compliance, an email he hadreceived from a representative of Spink and Sons (Spink), the auction house which originallysold the Duryodhana on the Western art market in 1975. (Exhibit A at 1193.) Spink hadinformed Easter due to ownership changes since 1975, the current iteration of Spink had no



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records from that time, but that Christies, which had owned Spink after 1975, might have them.(Id. at 1193-1194.) Easter asked Levine if he [s]hould contact Christies, or do you have solidprovenance[.] (Id. at 1193.) In response, Levine discouraged Easter from contacting Christies,assuring him that Sothebys had identified two individuals who presently have no financialinterest in the property and who personally saw the piece in London in the late 1960s. (Id.)

The information provided by Levine was simply false. As shown by the Spink recordsultimately obtained by the Government from Christies, the Duryodhana was only stolen fromPrasat Chen in 1972. Moreover, the sources with no financial interest presently were in factthe original seller of the piece, who conspired with the looting network to steal it from PrasatChen (the Collector), and Sothebys own retained art expert, who was herself was a longtimeassociate of the Collector. Had Levine accurately identified her sources, of course, theGovernment would have discounted their obviously self-interested statements. Instead, shewithheld their identities and suggested they lacked a motive to lie. In short, Sothebys chiefcompliance officer provided false and misleading provenance information to the Governmentwhile discouraging the Government from obtaining the documents that ultimately showed thatasserted provenance to be false.

Both before and after this action, Claimants have sought at every turn to prevent theGovernment from unearthing the facts about the theft and sale of the Duryodhana. At everystage of this proceeding they have invented a new reason why going forward with discoverywould be inappropriate. Discovery has already been halted for nearly a year while they foughtfirst the motion to dismiss, and then their request for a hearing on the Cambodian law. Now theyseek to stay discovery yet again. The Court should not permit them to do so.

V.

Conclusion

For the reasons set forth above, the Government requests that the Court (1) convert theClaimants motion for a judgment on the pleadings to a motion for summary judgment and deferthe Governments response until the close of discovery, and (2) deny the motion for a staywithout further briefing.

Respectfully submitted,

PREET BHARARAUnited States Attorney

By: /s/Alexander WilsonAlexander Wilson/Sarah E. PaulAssistant United States AttorneySouthern District of New York(212) 637-2453/2326

cc: Peter G. Neiman, Esq. (by email)



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Exhibit A

Case 1:12-cv-02600-GBD Document 63-1 Filed 09/12/13 Page 1 of 3


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Govt Oppo to Staying Discovery

Documents

Transcript of Govt Oppo to Staying Discovery