Republic National Distributing Company (“RNDC“) announced that it plans to merge with Breakthru Beverage Group. According to RNDC’s President, Tom Cole, “the merger of RNDC and Breakthru will create strategic opportunities that will benefit our associates and our business partners in a rapidly changing and highly competitive marketplace. Much more than a growth opportunity, we are entering this venture to create something that is different, sustainable and transformative.”   Breakthru Beverage Group President & CEO Greg Baird said,  “Breakthru looks forward to joining forces with RNDC to establish an even stronger foundation of industry knowledge, talent, history and heritage. We see this as the launch pad to bring innovation to life and to usher in a new era for our business and industry.” According to RNDC, under the terms of the Letter of Intent, Tom Cole will serve as Chief Executive Officer; Bob Hendrickson as Chief Operating Officer; Danny Wirtz as Chief Growth and Strategy Officer; and Greg Baird as Chief Integration Officer. E. Lloyd Sobel’s role will be announced along with other key senior management appointments prior to the close of the transaction. The transaction is expected to close late in the second calendar quarter of 2018 subject to regulatory approvals and other customary closing conditions.  

Over the past several months we reported on the lawsuit between New York’s Empire Merchants and Breakthru Beverage. Empire had alleged through its complaint that from 2009 to 2016, the defendants collectively conspired and acted in a criminal scheme for a period of time over the past eight years to smuggle wine and spirits, worth millions of dollars, into New York to avoid New York’s high excise taxes and circumvent Empire’s distribution rights within New York. Judge Allyne Ross of the US District Court in the Eastern District dismissed the case and all claims against the defendants in a 37 page opinion. Click on the link for the complete opinion: According to the opinion as reported by the Chicago Tribune, “Empire alleges that defendants committed mail fraud,” the judge wrote. “However, plaintiff’s amended complaint fails to identify any specific use of the mails by defendants.” The judge also found that the defendants’ conduct “was not deceptive” as “The Maryland wholesalers and retailers, who were sellers of the liquor, were not deceived — they knowingly participated in the scheme,” Ross wrote. “The New York retailers, who purchased the liquor, were also knowing participants.” In a released statement to their employees, Rocky Wirtz, Breakthru co-chairman, and Danny Wirtz, vice chairman, said Thursday in an email to workers, “We were confident from day one that we would prevail and are gratified that the court ruled in our favor…….we are thankful for the many who stood by our side, including our suppliers and many…

The saga continues in the lawsuit between New York’s Empire Merchants and Breakthru Beverage. In our blog on September 21, 2016, we had reported that Empire Merchants filed federal fraud charges against a long list of defendants including, Breakthru, Reliable Churchill, and several Maryland retailers. Empire had alleged through its complaint that from 2009 to 2016, the defendants collectively conspired and acted in a criminal scheme for a period of time to smuggle wine and spirits, worth millions of dollars, into New York to avoid New York’s high excise taxes and circumvent Empire’s distribution rights within New York. Breakthru has filed a motion to dismiss the complaint claiming its subsidiary, Reliable, was just doing its job and filling orders. According to Wine & Spirits Daily, Empire has responded to Breakthru’s claims in a subsequent memorandum on February 22, claiming that Reliable was knowingly involved in the scheme and even “instructed [the Maryland retailers] how to remove ‘routing stickers’ identifying the Maryland origin of the alcohol with ‘heat guns’ and blowtorches.” Moreover, Reliable allegedly told them “if they bought in bulk, then it would provide label-free pallets to facilitate the scheme.” Empire has requested that the court rule against Breakthru’s motion to dismiss. In response, Breakthru and Reliable subsequently filed another memorandum last week in support of its motion to dismiss. Breakthru claims Empire is “now panicking over its doomed standalone corporate strategy, has turned to desperate litigation tactics to try to enhance its bargaining position in what it realizes is…