Last year, two trade groups of New York-based art and antiques dealers brought claims against New York State officials in the federal court for the Southern District of New York, seeking to invalidate a 2014 New York law that opens dealers up to criminal penalties for buying and selling antique ivory.[1] On March 21, 2019, Judge Lorna Schofield of the Southern District of New York permitted the trade groups’ Third Amended Complaint to proceed. The court now has before it two motions—one from the dealers for summary judgment and one from the State seeking dismissal of the case.[2] Those motions are now fully briefed and under submission with Judge Schofield.
The case considers the interaction between state and federal statutes on the sale and display of ivory. While the sale of ivory was largely banned by Congress through 1973 and 1988 amendments to the Endangered Species Act, the federal law contains exemptions for antiques and non-antique objects made up of less than 50% ivory.[3] The challenged New York law, however, has much narrower exemption provisions, and the dealers claim that the law prohibits them from selling and displaying hundreds of thousands of dollars’ worth of antiques.
New York State Environmental Conservation Law 11-0535-A (the “ECL”) regulates the intrastate sale of ivory, prohibiting commerce involving antiques made up of 20% ivory or more[4]—a lower threshold than even the most restrictive portions of the Endangered Species Act. Persons found in violation of the ECL face fines of up two times the value of the object or $3,000, whichever is greater, for the first offense, and three times the value of the object or $6,000, whichever is greater, for subsequent offenses.[5]
The dealers argue that the ECL is preempted by the Endangered Species Act, which does not have any percentage limitation for antiques, and contains exemptions for non-antique objects with de minimis amounts of ivory (defined as less than 50% ivory). Further, the dealers contend that “one can comply with federal law when it comes to the interstate or international sale of ivory and, at the same time, risk criminal prosecution and civil penalties for selling the very same item in intrastate commerce under state law.”[6] Therefore, “under this scenario, state law must yield to federal law.”[7] As an example of an entity harmed by the law, the dealers’ Third Amended Complaint offers European Decorative Arts Company (“EDAC”), which, “prior to the passage of [the ECL] . . . purchased an 18th century wood and ivory sculpture by Simon Troger (1685-1765) for $158,000 and planned on selling this work of art…on October 23-29, 2015,” but “was unable to because [the ECL] had gone into effect [which] prohibited such activity.”[8] According to the ECL, if EDAC were to sell that sculpture for its market value, it could face fines of up to $316,000.
As noted, the dealers filed several versions of their complaint. The original complaint was filed on March 20, 2018. Then, on April 5, 2018, the dealers filed a First Amended Complaint (“FAC”), adding references to similar cases in other circuits. For example, the FAC compares the case at bar to a recent case in New Jersey[9] where the State of New Jersey “conceded its law . . . was preempted by the [Endangered Species Act] in certain circumstances and agreed not to enforce it in a manner that would conflict with federal law.”[10] The FAC also cited an older Ninth Circuit case[11] which “struck down a California penal statute making it unlawful to sell boots intrastate made from the hides of African elephants because such conduct was legal under the [Endangered Species Act] which preempted state law on the subject.”[12]
After both the plaintiffs and defendant moved for summary judgment, Judge Schofield dismissed the First Amended Complaint without prejudice for lack of standing.[13] The plaintiffs, which are membership organizations, had not complied with pleading requirements applicable to an organization seeking to establish its standing to sue. In response, the dealers submitted a proposed Second Amended Complaint (“SAC”) alleging how the ECL harms specific, individual members of the dealer organizations.[14]
While Judge Schofield found that the dealers’ proposed SAC “correct[ed] the deficiencies identified in the Court’s February 1, 2019 order dismissing the Complaint,”[15] she nevertheless found that proposed pleading insufficient. Although the dealers stated in the proposed SAC that the ECL applied to both intrastate and interstate commerce,[16] the State asserted at a pre-trial conference that the ECL did not apply to interstate commerce, precisely because such state laws are preempted by federal law.[17] Judge Schofield ordered that the dealers refile their complaint to remove any reference to the ECL applying to interstate commerce.[18]
The State argues that, because the ECL applies only to intrastate commerce, it is expressly not preempted by federal law. The Endangered Species Act has a preemption clause that “preempts state laws only to the extent that they allow conduct prohibited by the Endangered Species Act, or that they prohibit conduct expressly permitted under the ESA.”[19] The State therefore contends that, because the Endangered Species Act only regulates interstate and international commerce, and the ECL regulates only intrastate commerce within New York, the Endangered Species Act does not preempt the ECL.
In response to the dealers’ citation to the Ninth Circuit’s H.J. Justin decision, the State argues that “unlike the case at hand, . . . [that case] hold[s] only that the California statute (Cal. Penal Code, § 653o) making it illegal to ‘import into this state for commercial purposes, to possess with intent to sell, or to sell within the state’ any ivory products was preempted to the extent that it forbade commercial activities for which plaintiffs possessed federal permits”[20] and that the dealers here “pleaded no facts stating or suggesting that they hold permits issued under the [Endangered Species Act] or under any [Fish and Wildlife Service] regulation authorizing them to engage in the intrastate sale of ivory, or that the [New York State Department of Environmental Conservation] has failed to respect the terms of any federal permit Plaintiffs hold to trade ivory to the extent set forth in that permit.”[21] This suggests that the State’s position is that the ECL or its penalties would not apply to any item for which a New York dealer had a federal permit or license to sell, even if that item were otherwise illegal to sell under the ECL, and even if that item were only sold through intrastate commerce in New York. It bears questioning, then, what the purpose or goal of the ECL would be if it could relatively easily be circumvented through the procurement of a federal license.
Between 2007 and 2017 (the latest year for which we have statistics), the physical, non-internet New York market for elephant ivory declined.[22] A study by TRAFFIC, a non-profit focusing on the reduction of the trade of wildlife, attributed this decline to “increased law enforcement and public awareness.”[23] However, the study notes, “it is possible that stocks are shifting out of the historical physical markets and into internet sales and/or other states without strict regulation.”[24]
It will be interesting to see whether Judge Schofield’s decision—one way or the other—has a real-world effect on the sale in New York of antiques containing ivory.
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[1] Art and Antique Dealers League of Americas, Inc. v. Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. filed Mar. 20, 2018).
[2] Judge Schofield also ruled in March that the parties’ motions addressed to the earlier pleadings were deemed addressed to the current pleading, and no further briefing was necessary. Endorsed Letter, Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. Mar. 8, 2019).
[4] N.Y. Env. Conservation Law 11-0535-A(3).
[5] N.Y. Env. Conservation Law 71-0925(16).
[6] Plaintiffs’ Third Amended Complaint ¶ 8, Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. filed Mar. 19, 2019).
[7] Id.
[8] Id. ¶ 13.
[9] Conservation Force v. Porrino, 16-cv-04124(FLW) (April 25, 2017, Wolfson, U.S.D.J), 2017 U.S. Dist. LEXIS 62380, *2-4.
[10] Plaintiffs’ First Amended Complaint ¶ 58,Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. filed Apr. 5, 2018).
[11] H.J. Justin & Sons, Inc. v. Deukmejian, 702 F.2d 758 (9th Cir. 1983).
[12] Plaintiffs’ First Amended Complaint ¶ 58, Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. filed Apr. 5, 2018).
[13] Opinion and Order re Motion for Summary Judgment, Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. filed Feb. 1, 2019).
[14] Plaintiffs’ Proposed Revised Complaint, Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. filed Feb. 21, 2019).
[15] Order Terminating Letter Motion for Leave to File Document, Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. filed Feb. 22, 2019).
[16] Plaintiffs’ Second Amended Complaint, Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. filed Feb. 28, 2019).
[17] Order, Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. filed Mar. 13, 2019).
[18] Id.
[19] Memorandum of Law in Support of Defendant’s Cross-Motion to Dismiss and in Opposition to Plaintiff’s Motion for Summary Judgement at 14, Seggos, No. 1:18-cv-02504-LGS (S.D.N.Y. filed Aug. 3, 2018).
[20] Id. at 15.
[21] Id. at 15-16.
[22] Trade study sets new baseline for monitoring US elephant ivory market, TRAFFIC (Jul. 26, 2017), https://www.traffic.org/publications/reports/trade-study-sets-new-baseline-for-monitoring-us-elephant-ivory-market/.
[23] Rachel Kramer, Robin Sawyer, Sal Amato & Peter LaFontaine, The US Elephant Ivory Market: A New Baseline (TRAFFIC July 2017) at 8.
[24] Id.