Lynn Villency Cohen: Museum art sale ruling was a sound judgment
The latest and last legal challenge in a series of maneuvers over the deaccession of the art collection was decided this week by the states's appellate court, a three judge panel, which affirmed the lower court's decision to dismiss the three plaintiffs, museum members, for lack of standing by Superior Court Judge John Agostini in November 2017.
The plaintiffs' appeal argued that as members of the museum, they had a right to challenge the museum's governing decision to sell the museum's art works, and that this sale represented a breach of contract to these member plaintiffs. Had this case — dating from January of 2018, and argued in early September —been overturned on appeal by the state appellate court, it would have served up particularly bad precedent; as a call to arms for unnecessary litigation against nonprofit museum boards, the majority of whom operate with a high degree of ethics and integrity. The Massachusetts Appellate Court ruled sensibly.
ESSENCE OF THE CASE
With that said, let's dig deeper into the essence of this case. Here are the central questions at play: what does it mean to be a member of a museum? What are the benefits and general rights of those who pay to be museum members? And do the rights of members extend to matters pertaining to institutional governance?
For the Berkshire Museum, like most museums, one can become a member at a host of different levels; from a $50 individual membership, a $75 family membership to the higher membership levels at $500-$1000. Generally, one purchases a basic annual membership for free entry, and at higher levels for the additional benefits of free passes, acknowledgement on the website and newsletter, and private tours of the collection. Notably, there is nothing specified about the rights of members to, for example, attend Board of Trustees meetings or vote on institutional management matters. In the majority of cases, one purchases a museum membership for the simple reason of saving entry fees based on a calculus of the number of visits made annually. It is doubtful that one purchases a museum membership for a few hundred dollars believes they will have influence on the governing of that institution.
The attorney for the plaintiffs in the appellate case argued that just as shareholders in public corporations have the right to pursue legal cases against company financial mismanagement, members of Massachusetts nonprofit institutions similarly have the right to bring suit against trustees who have breached their fiduciary duty. In the case of the Berkshire Museum's sale of the core art collection, Berkshire Museum members and the Berkshire County community have indeed been deprived of viewing these works. But have they incurred real injury and financial harm, as in the case of shareholders who own stocks in a company that have lost value as a result of financial mismanagement? I think not.
Imagine if the average member of a nonprofit museum, historical society, or historical home were dissatisfied with, for example, a change in the institution's operating hours, a decision to close off one gallery room to the public, or a move of a particular collection to another area of the building. And if these members had the time and resources to bring forth litigation against the institution's trustees; consider how that would actually inflict harm to the institution burdening leadership with a groundswell of suits, many frivolous and unnecessary, with legal costs and time incurred in responding to these challenges.
While the Berkshire Museum case represents a near pinnacle of unethical management in pushing the deaccession limits with an unprecedented number of works sold, a gain of multi-millions from the sale, and a specified use of the sale proceeds to fund the overall operations; the majority of non profit institutions are managed by effective board members who guide institutions with a high degree of professionalism, integrity and ethics.
While operations of the nonprofit sector are not scrutinized to the degree that many feel necessary, there are multiple lines of defense for citizens to pursue. Museum members and donors should question the institution directly and engage in a dialogue. A member can also contact the news media to investigate a legitimate concern and if necessary, contact the state attorney general, the official who serves as the primary investigator and watchdog for public charities. On a Federal level there is the Exempt Organizations Division of the Internal Revenue Service charged with ensuring that the nonprofit sector comply with tax rules applicable to charities.
There is no question that the Berkshire Museum case was compromised by the Massachusetts attorney general where local and state politics influenced an agreement that was wholly unjust. But here there is also recourse, as voters head to the ballot box and have the opportunity to elect a new attorney general.
This latest appellate case was a Hail Mary pass amid a disappointing and fundamentally unjust outcome in the sale of the Berkshire Museum art collection. It was a last-ditch effort that would have altered the nonprofit landscape at great expense for the many institutions that function effectively. Had the Massachusetts Appeals Court ruled for the plaintiffs, it still would not bring back the art collection which has been all but sold off. The appeals decision ensures that the hundreds of Massachusetts museums, historical societies and historic homes that operate ethically will not be burdened with a dramatic increase in unnecessary litigation.
Lynn Villency Cohen is an art historian and writer.
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