In von Saher v. Norton Simon Museum of Art at Pasadena, 2009 WL 2516336 (9th Cir. August 19, 2009), the Ninth Circuit struck down Section 354.3 of California's Civil Code. Section 354.3 extended the statute of limitations until December 31, 2010 for the recovery of Holocaust-era art.
In a gross misreading of history, the court found that California's permitting Holocaust art claims to proceed against museums and galleries somehow impinged on the federal government's powers to deal with reparations.
The dissent, by Judge Pregerson, got it right. Judge Pregerson said that permitting lawsuits against museums and galleries present in California has nothing to do with permitting claims against a foreign power.
Fortunately, the court permitted von Saher's claims to proceed under Section 338 of California's Civil Code which applies a discovery rule to the statute of limitations.
But there is plenty of federal precedent on using the federal courts to unwind Nazi-era looting transactions. With over six million despoiled and murdered, a lot of art and other personal property flooded the world market, and particularly the U.S. art market during and after World War II. Americans with strong dollars profited from the tragedy by building great collections of European art. The federal government has always had a strong policy of using the courts to unwind Nazi-era transactions. The "Berstein" exception to the Act of State Doctrine is precisely such a strong federal policy in this area. In the Bernstein case, the U.S. State Department told the federal judiciary to suspend the act of state doctrine and not give the Nazi regime the deference ordinarily due a foreign sovereign.
Why are the federal courts recently so often hostile to permitting property stolen from Jews to be returned? There is no conceivable federal interest in stopping California from permitting persons to recover stolen private property.
Lucas Cranach the Elder's Adam and Eve.
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