United States District Court, S.D. New York
June 1, 2004.
RENÉ BOULÉ and CLAUDE BOULE, Plaintiffs, -against- INGRID HUTTON, LEONARD HUTTON GALLERIES, INC., MARK KHIDEKEL and REGINA KHIDEKEL, Defendants
The opinion of the court was delivered by: MIRIAM CEDARBAUM, Senior District Judge
The parties to this action dispute whether plaintiffs Claude and René Boulé have proved the elements of their claims under N.Y. Gen.
Bus. L. § 349 and their claims of common law unfair competition by
business disparagement. These claims were dismissed after a bench trial,
see Boulé v. Hutton, 138 F. Supp.2d 491 (S.D.N.Y. 2001), but remanded by
the Second Circuit for further consideration, see Boulé v. Hutton,
328 F.3d 84 (2d Cir. 2003). For the following reasons, plaintiffs have
failed to prove their § 349 claims but have proven all of the elements of
their claims of business disparagement.
Plaintiffs are Parisian art collectors who own a number of works
attributed to Lazar Khidekel, a Russian artist associated with the
Suprematist Movement. Claude BoulÉ is also an art historian specializing
in Russian Constructivism, which, like Suprematism, is a branch of
Russian Futurism. The Boules filed this action against Mark and Regina
Khidekel, a son and daughter-in-law of Lazar Khidekel, and against Ingrid
Hutton and the Leonard Hutton Galleries, Inc. ("Hutton Galleries"), the
art dealer and art gallery that exhibited and offered for sale a
collection of Khidekel works that Mark and Regina inherited from the
artist. The Boules sued under the Lanham Act, 15 U.S.C. § 1125(a),
claiming that defendants falsely disparaged the authenticity of the
Boulés' collection in order to promote the sale of the Khidekel artworks at the Hutton Galleries. The Boules also
asserted pendent state law claims, including violations of N.Y. Gen.
Bus. L. § 349, breach of contract, product disparagement, defamation,
tortious interference with business relationships, common law unfair
competition, unjust enrichment, common law fraud, prima facie tort, and
the tort of "false light." After partial summary judgment was granted in
favor of defendants on all but one of the Lanham Act claims, see Boulé
v. Hutton et al., 70 F. Supp.2d 378 (S.D.N.Y. 1999), a bench trial was
held from September 27 through October 6, 2000.
The following evidence, relevant to the remanded claims, was presented
during the trial. The Boules paid approximately 1.5 million French Francs
("FF") for 176 works on paper attributed to Khidekel. They bought the
works over a four-year period, beginning in 1984, from a private dealer
named Vladmir Tsarenkov. Tsarenkov did not provide the provenance of any
of the works that he sold to the Boules. In 1991, the Boules also
purchased an oil painting attributed to Khidekel from an auction in
The Boules were introduced to Mark Khidekel in 1988 at their home in
Paris. They showed Mark some of the Khidekels in their collection, and he
expressed no skepticism about the authenticity of the works. The Boules
and the Khidekels subsequently met several times at the Boulés' home, and
the Khidekels never expressed any reservations about the Boulé
collection. During a meeting in 1991, Mark agreed to sign certificates of authenticity
for 16 of the Boulés' Khidekels, for 2,500 FF per certificate.
Plaintiffs presented evidence that defendants later made several
statements disparaging the BoulÉs' collection of Khidekels. A curator,
Yvette Moch, testified that in October 1994, she approached Hutton in
order to show her the catalogue of an exhibition in Tanlay, France, which
had featured Khidekels from the Boulé collection. Upon seeing
reproductions of those works in the catalogue, Hutton commented, "that is
Upon visiting Hutton in late 1995 in order to borrow works for a
proposed art exhibition at the University of Iowa, another curator,
Patricia Railing, was told by Hutton that she would only lend works to
the exhibition if she could first see the complete list of works to be
included. Hutton stated that she did not "want [her] works contaminated
with fakes in an exhibition in which there are fakes." Railing understood
Hutton to be commenting on the authenticity of the Boulé collection. The
Khidekels later informed Railing that the BoulÉ collection was "not by my
father, they're fakes."
In the catalogue for the Hutton Galleries' February and March 1995 show
of Khidekels owned by Mark and Regina, Hutton wrote: "We present for the
first time anywhere the work of Lazar Markovich Khidekel. . . . In his
lifetime [Lazar Khidekel] never had a solo show, nor did he or his family
ever sell or part with any of his works."
In January 1996, Mark, Regina, and Hutton sent a letter on the
letterhead of the Hutton Galleries to at least twenty-five museums
worldwide. The letter informed its recipients that the writers repudiated
the catalogue of an exhibition of Boulé Khidekels held at the Musée d'art
de Joliette, Quebec, Canada in 1992, and that the writers would not
permit those works to be cited in connection with any works by Khidekel
coming from the Khidekel family or from the Hutton Galleries.
In its February 1996 issue, ARTnews published a 13-page article
entitled, "The Betrayal of the Russian Avant Garde." The article reported
on the prevalence of incorrectly attributed works and forgeries in
Russian avant-garde art and discussed works by several artists, including
Khidekel. Regina was quoted in the article as follows:
When [Mark and Regina] finally saw the works, which
belong to Paris collectors Claude and RenÉ Boulé, they
were . . . puzzled. "I don't know whether they're
fakes or works of somebody else," says Regina. "I only
know and we are absolutely sure, that they have
nothing to do with Khidekel."
In a February 23, 1996 article in the Montreal publication Le Devoir,
Regina is quoted as saying, "I am categorical: these works are not by
Khidekel." In the February 22-28, 1996 issue of the Montreal periodical
Voir, Mark and Regina are quoted as saying that the works in the BoulÉs'
collection are "not those of Khidekel." The Voir article also republished
one of Regina's statements in the ARTnews article.
Mark and Regina also made statements in which they denied that they had
initially endorsed the BoulÉ Khidekels. In the ARTnews article, Mark and
Regina are quoted as saying that upon seeing the Boulé collection at the
Boulés' Paris home for the first time, "they told the Boules the works
were not Khidekels."
In the February 23, 1996 Le Devoir article, Regina is quoted as saying
that "neither she nor her husband ever `authenticated' anything and that
fake certificates were forged."
The majority of plaintiffs' claims required them to prove the falsity
of defendants' statements. But plaintiffs were unable to establish by a
preponderance of the evidence that the Khidekels in their collection were
authentic. Accordingly, they could not prove that defendants' statements
that impugned the authenticity of the collection were false. See Boulé,
138 F. Supp.2d at 503-04. However, plaintiffs did prove both that the
Khidekels expressed no skepticism upon first viewing the BoulÉ collection
and that Mark Khidekel had signed the sixteen certificates of
authenticity. Accordingly, plaintiffs proved that the Khidekels'
statements to the contrary were false.
Judgment was entered in favor of plaintiffs on their claim of breach of
contract, which was premised on the agreement by which Mark provided the
certificates of authenticity, and on two of their claims of libel per se.
Because they could not prove the authenticity of their collection, the Boules recovered only
restitution damages for the former claim; because they could not prove
actual damage to Claude Boulé's reputation as an art historian, they
recovered only nominal damages for the latter claims. See id. at 508. The
remainder of plaintiffs' claims were dismissed.
On appeal, the Second Circuit affirmed the majority of the factual
findings and legal conclusions. The Court remanded plaintiffs' claims
under N.Y. Gen. Bus. L. § 349, noting that because § 349 requires proof
of a deceptive practice, not necessarily a false statement, all of
defendants' statements must be analyzed under § 349. Boulé, 328 F.3d at
93. The Court also remanded plaintiffs' disparagement claims that were
based on statements found to be false. See id. The Court noted that while
the Boules had pleaded unfair competition by product disparagement and by
disparagement of their business, they characterized this claim on appeal
as one of "defamation of another's business." Id. at 94 & n.8.
I. Plaintiffs' Claims under N.Y. Gen. Bus. L. § 349
To prevail on a § 349 claim, a plaintiff must show that "(1) the
defendant's deceptive acts were directed at consumers, (2) the acts are
misleading in a material way, and (3) the plaintiff has been injured as a result." Maurizio v. Goldsmith, 230 F.3d 518, 521
(2d Cir. 2000) (per curiam).
A representation or act is deceptive within the meaning of § 349 if it
is "likely to mislead a reasonable consumer acting reasonably under the
circumstances." Oswego Laborers' Local 214 Pension Fund v. Marine Midland
Bank, N.A., 85 N.Y.2d 20, 26 (1995). Plaintiffs need not show that
defendants intended to defraud or mislead consumers. See id.
Although § 349 is primarily a consumer protection statute, courts have
determined that "corporate competitors now have standing to bring a claim
under this [statute] . . . so long as some harm to the public at large is
at issue," Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256, 264 (2d
Cir. 1995) (quoting Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc.,
786 F. Supp. 182, 215 (E.D.N.Y.), vacated in part on other grounds,
973 F.2d 1033 (2d Cir. 1992)). Specifically, plaintiffs suing as
competitors under § 349 must show that the defendant's allegedly
deceptive practice "affects the public interest in New York." Id. See
also Azby Brokerage, Inc. v. Allstate Ins. Co., 681 F. Supp. 1084, 1089
n.6 (S.D.N.Y. 1988) ("the gravamen of the complaint must be consumer
injury or harm to the public interest").
The Boulés contend that defendants' statements caused two types
of public harm in New York. First, defendants deceived consumers into believing that authentic Khidekels were available
only from the Hutton Galleries and from Khidekel's heirs.
Second, defendants' statements deprived the public of the opportunity
to purchase, study, view, and appreciate the BoulÉ Khidekels. Even
assuming that the Boules can satisfy all of the other elements of their
claims under § 349, they cannot succeed because they have not shown harm
to the public interest in New York. The first type of public harm they
articulate is purely speculative. Plaintiffs failed to offer evidence at
trial that showed that consumers, in New York or elsewhere, were
interested in purchasing art by Khidekel. The evidence showed that a 1995
Hutton Galleries exhibition of several dozen Khidekels from Mark and
Regina's collection resulted in only four sales, two of which were pieces
not on display. The Boules consigned four of their Khidekels to a
Parisian gallery owner, Edith Flak, for display at the April 1995 Art
Messe in Frankfurt, but none of those works were sold. Furthermore,
plaintiffs did not present evidence that New York consumers had any access
to the BoulÉ Khidekels, so it is unclear how deceptive statements about
plaintiffs' collection would have affected New York consumers in any way.
While the Boules loaned Khidekels from their collection to museums, they
did so only in Europe and Canada. Their attempts to sell pieces from the
collection occurred only in Europe. Plaintiffs also failed to show how New York consumers were injured.
Plaintiffs did not present evidence that the New York purchasers of
Khidekels from the Hutton Galleries paid a premium for the artworks
because of a false belief in the rarity of authentic Khidekels. And if
the claim is simply that defendants lied to consumers, it is difficult to
see how such lies injure consumers if the consumers do not act on the
Plaintiffs' second claimed consumer injury that the public was
deprived of the ability to purchase, study, view, and appreciate the
BoulÉ Khidekels is also flawed. First, it is not clear whether this
type of harm is cognizable under § 349. Courts generally find that
competitors state a claim under § 349 only when they allege some harm to
the public health or safety. See, e.g., Securitron, 65 F.3d at 264-65
(holding that the plaintiff had adequately shown harm to the public
interest, in part because defendants "gave false information . . . [to] a
regulatory agency primarily concerned with the safety of the public");
Sports Traveler, Inc. v. Advance Magazine Publishers, No. 96 Civ. 5150
(JFK), 1997 WL 137443, at *2 (S.D.N.Y. Mar. 24, 1997) ("[F]ederal courts
have interpreted the statute's scope as limited to the types of offenses
to the public interest that would trigger Federal Trade Commission
intervention under 15 U.S.C. § 45, such as potential danger to the public
health or safety."). A claim that consumers have been denied the ability to appreciate art is not such a claim.
Even if this aesthetic injury is an appropriate ground for relief under
§ 349, plaintiffs have not proved it. In addition to the lack of proof of
New York interest in Khidekel or New York access to the Boulé
collection, plaintiffs failed to show that their collection of Khidekels
is authentic. There can be no injury to those who have been deprived of
the ability to purchase, study, or enjoy certain works of art where it
has not been established that those artworks are authentic.
Furthermore, several of defendants' statements could not have had any
impact on New York consumers. Several were published in French in
Canadian periodicals. Moch and Railing were not affiliated with museums
or galleries in New York. Plaintiffs do not persuasively explain how
these statements could have affected the public interest in New York.
The evidence at trial showed that New York consumers had little or no
interest in purchasing Khidekels and no access to Khidekels other than
those offered by the Hutton Galleries. The evidence did not show how
defendants' deceptive statements could have caused consumer injury.
Accordingly, plaintiffs have not shown that defendants' statements
injured the public interest in New York by misleading consumers as to
reliable sources for authentic Khidekels or by denying consumers the
ability to appreciate and purchase the Boulé Khidekels. II. Plaintiffs' Disparagement Claims
In remanding these claims for further consideration, the Second Circuit
noted that "[w]here a statement impugns `the basic integrity' of a
business, an action for defamation per se lies, and general damages are
presumed. Nonetheless, actual damages must be proved with competent
evidence of injury." See BoulÉ, 328 F.3d at 94 (citations omitted)
(citing Ruder & Finn Inc. v. Seaboard Surety Co., 52 N.Y.2d 663, 670
(1981)). See also Fashion Boutique of Short Hills, Inc. v. Fendi USA,
Inc., 314 F.3d 48, 59 (2d Cir. 2002). Only defendants' statements that
were found to be false were remanded for further consideration. Boulé,
328 F.3d at 93.
The questions remaining on remand are whether the BoulÉs' art
collection can be considered a "business" for the purpose of these
claims, whether these statements impugned the integrity of that
business, and whether the Boules proved actual damages. With respect to
the first question, defendants argue that the collection is not a
business, but they cite no case that defines "business" in the context of
a claim of unfair competition by business disparagement. In assessing
plaintiffs' Lanham Act claims upon defendants' motion for summary
judgment, I held that plaintiffs had standing to sue under the Act as
"commercial parties," because they showed "more than a mere economic
interest in what they own. . . . In the context of the art market, where plaintiffs own a significant percentage of the extant
works attributed to one artist, where plaintiffs have taken steps to
promote their collection, and where plaintiffs contracted to sell a
substantial number of those works, plaintiffs have a sufficient
commercial interest at stake to give them standing to sue under section
43(a) of the Lanham Act." Boulé, 70 F. Supp.2d at 386. Evidence at trial
confirmed that the Boules exhibited their collection widely and made
plans with Edith Flak to create a market for Khidekels in Paris by
consigning to her a significant number of works. Defendants have offered
no reason why plaintiffs' art collection should not be considered a
business under the common law of unfair competition by disparagement.
It is clear that these statements impugned the integrity of the
Boulés' art collection and the reputation of the Boules as sellers
of art. Indeed, these statements can be seen as more harmful to the
Boules in the business context than the statements averring that the
Khidekels in their collection were fake. The latter claim suggests only
that the Boules may have erroneously purchased works of art which they
believed were by Khidekel. But defendants' false statements to the effect
that the Boules possessed and relied upon forged certificates of
authenticity, and that they persisted in displaying and seeking to sell
artworks which they had been informed were fakes by the individual who had signed those certificates, impute far more sinister
motives to the Boules. They suggest that the Boules sought to
deliberately deceive prospective purchasers of their collection by
supporting the uncertain provenance of the works with certificates of
authenticity they knew to be forgeries. In the business disparagement
context, an insinuation of conscious or willful wrongdoing would be far
more damaging to the reputation or integrity of the Boulé collection than
a suggestion that the Boules may simply have been mistaken about the
provenance of some of their pieces.
The final issue is whether plaintiffs have offered evidence of actual
damage. Because defendants' defamatory statements appeared in articles
that also contained injurious but nonactionable allegations by defendants
to the effect that the Boulé Khidekels were fake, it is difficult
to gauge the full extent of the damage done by the defamatory statements.
The Boules attempt to cure this deficiency by submitting additional
evidence of their damages. However, the new affidavits the Boules offer
involve allegedly defamatory statements made by defendants that were not
raised at trial, as well as information intended to overturn findings of
fact that were not challenged on appeal. Plaintiffs have offered no
persuasive justification for reopening the evidence to admit this new
Although the damage to the reputation of the entire Boule collection is not susceptible to precise calculation, it is clear that
these statements destroyed the value of the sixteen drawings for which
Mark Khidekel provided certificates of authenticity. While they likely
contributed to the diminution of value of the remainder of the Khidekels
in the Boulé collection, any attempt to gauge that damage would be too
The next question is how to assess the value of those sixteen drawings.
Plaintiffs have not offered credible evidence of the market value of
their Khidekel collection, both because they failed to establish that a
market for Khidekel drawings exists, and because they failed to prove
that these artworks were, in fact, authentic Khidekels. However, they did
offer competent evidence of how much they paid for the entirety of their
collection of 176 Khidekel drawings: approximately 1.5 million FF, which
equaled $201,177.66 at the prevailing rate of exchange in 1996, when the
defamatory statements were made. The average cost of each drawing would
therefore have been $1,143. The cost of the sixteen drawings for which
certificates of authenticity were provided would, by this analysis, be
$18,288.88. This is a reasonable assessment of the least amount of
damages plaintiffs suffered from defendants' disparagement of their
Plaintiffs argue that they are entitled to prejudgment interest. N.Y.
C.P.L.R. § 5001(a) provides that: Interest shall be recovered upon a sum awarded because
of a breach of performance of a contract, or because
of an act or omission depriving or otherwise
interfering with title to, or possession or enjoyment
of, property, except that in an action of an equitable
nature, interest and the rate and date from which it
shall be computed shall be in the court's discretion.
The New York Court of Appeals has observed that § 5001 "is phrased
broadly and is designed to obliterate all distinctions that may turn on
the form of the action . . ., the type of property involved, or the
nature of the encroachment upon the plaintiff's property interests."
DeLong Corp. v. Morrison-Knudsen Co., 14 N.Y.2d 346, 349 (1964) (citation
omitted). Other courts applying New York law "have without qualification
awarded interest as a matter of right whenever any tortious conduct
causes pecuniary damage to tangible or intangible property interests."
Mallis v. Bankers Trust Co., 717 F.2d 683, 695 (2d Cir. 1983) (collecting
cases). It is clear that the Khidekels' intentional, defamatory
statements damaged the pecuniary value of the Boulé collection.
Accordingly, plaintiffs are entitled to prejudgment interest from
February 1996 at the statutory rate of 9%. See N.Y. C.P.L.R. § 5004.
For the foregoing reasons, plaintiffs have failed to carry their burden
of proving by a preponderance of the evidence all of the elements of
their claims under N.Y. Gen. Bus. L. § 349. But, plaintiffs have succeeded on one claim of unfair competition by
disparagement against Mark and Regina Khidekel and one claim of unfair
competition by disparagement against Regina Khidekel. For these claims,
damages of $18,288.87 are awarded in favor of plaintiffs against the
The Clerk is directed to enter a supplementary judgment for plaintiffs
and against Mark and Regina Khidekel in the amount of $18,288.88 plus
simple interest at the rate of 9% per annum from February 1996 to the
date of entry of the supplementary judgment.
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