In 1916, Karl Adler, a German Jew, purchased a Pablo Picasso painting now viewed as a masterpiece, “Woman Ironing,” from the owner of a prestigious gallery in Munich. But 22 years later, when he and his family fled Germany to escape Nazi persecution, he was forced to sell the painting back to the gallery for a pittance, according to a recently filed lawsuit that describes the sale as “a desperate attempt to raise cash needed to flee.” Now several of Adler’s distant relatives are suing the Solomon R. Guggenheim Foundation, to which the painting was donated more than four decades...