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…

A complaint was filed September 20, 2016, in the United States District Court for the Eastern District of New York involving two of the larger wine and spirit distributors in New York and Maryland. The Plaintiff, Empire Merchants LLC (“Empire”), part of the Charmer Sunbelt group, is suing its Maryland distributorship, Reliable Churchill LLLP, as well as, Breakthru Beverage’s co-chairman Charles Merinoff and President & CEO, Gregory L. Baird, and multiple retailers in New York and Maryland. Empire alleges through its complaint that from 2009 to 2016, the Defendants collectively conspired 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. According to Empire, the Maryland-based wholesaler delivered millions of dollars of alcohol to Cecil County retailers, who then sold the alcohol to complicit New York retailers, who, in turn, secretly smuggled the alcohol in trucks across state lines to New York. The Maryland wholesalers also obtained substantial indirect financial and reputational benefits by selling millions of dollars worth of extra liquor and wine to consumers in New York. The complaint states: “Specifically, by unlawfully smuggling and selling millions of dollars’ worth of extra liquor and wine to consumers in New York, the Maryland Wholesalers received additional bonuses, and avoided penalties, from certain liquor suppliers in return for far exceeding sales targets in supplier contracts. (These bonuses and corresponding penalties are typically based on the number of liquor cases sold, also referred to as…

New York’s Governor Cuomo must make a decision regarding legislation that would block the State Liquor Authority (“SLA”) from enforcing violations of out-of-state liquor laws by New York licensees, unless the violations were enforced by the other state. The bill summary notes it: “Limits the authority of the state liquor authority to penalize licensees based on perceived violations of the laws of other states, unless the conduct in question amounts to an independent violation of the alcoholic beverage control law or has resulted in a criminal conviction in another state.” This bill stems from the SLA’s investigation into Empire Wine, a retailer that shipped wine to consumers out-of-state, allegedly in violation of those other state’s laws. The SLA sought to enforce these violations through its ability to revoke, cancel or suspend a New York license due to “improper conduct by the licensee.” Craig Wolf, the president and CEO of WSWA, noted that the bill: “presents serious threats to the beverage alcohol regulatory system, and, if signed into law, will hamstring essential regulatory powers and operational independence of the New York State Liquor Authority.” Meanwhile, backers of the bill note that without it, the SLA would be permitted to pursue other New York licensees shipping direct to consumers in other states. Governor Cuomo must act on the bill today.