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Litigation: Wine Institute and Member Wineries File Suit to Stop Illinois False Claims Act Lawsuits

July 28, 2015

Wine Institute, along with three of its member wineries - Chimney Rock Winery, the Miner Family Winery, and Staglin Family Vineyard - filed suit in Cook County, Illinois to fight a flood of predatory “Illinois False Claims Act” lawsuits. The defendants in the lawsuit are the Illinois Department of Revenue and the Illinois Attorney General.

The legal action comes in response to a spate of opportunistic lawsuits – 179 cases filed against wineries and more than 300 cases filed thus far – by Stephen B. Diamond, a private attorney. Those lawsuits claim wineries should have charged tax on shipping fees associated with online purchases delivered to Illinois. The suits take advantage of an Illinois law that allows “citizen whistleblowers” to sue in the name of the state and collect a generous percentage of any funds recovered for the state.

In a memorandum to members, Wine Institute said it explored administrative and legislative options for solutions to stop the actions against wineries.

“When these solutions were not forthcoming, we retained the services of ReedSmith, LLC in Chicago to represent us in the current litigation. Wine Institute appreciates the participation of the plaintiff wineries, as well as support from the Napa Valley Vintners which has provided assistance with expenses incurred in the litigation.”

“While our litigation will not immediately provide a remedy for those wineries already in litigation, our goal in bringing this action is to put a stop to IFCA lawsuits against wineries in the future and to clarify the confusion surrounding when/if a winery should be collecting taxes on shipping fees.”

For background on the "Qui Tam" lawsuits, see:

Illinois Qui Tam Lawsuits—Private Enforcement Of a State Claim: A Bonanza For A Plaintiff’s Lawyer And A Rip-Off Of Retailers

Illinois Attorney Targeting Wineries

and, Qui Tam Troubles Continue in Illinois


 

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