- Homepage for the Wine Industry

Class Action Suit Claims Southern Glazer's charged for Alcoholic Beverages Clients Didn't Purchase

by Kerana Todorov
July 07, 2017

A class-action lawsuit accuses alcohol distributor giant Southern Glazer’s Wine and Spirits of routinely charging clients for alcohol they had not purchased, according to a federal complaint filed in Northern California.

James C. Nguyen, a liquor license holder for Arena Restaurant and Lounge LLC, seeks unspecified restitution and damages for fraud, unfair competition and other violations over the last four years, according to the complaint filed July 5 in San Jose. The lawsuit’s other plaintiffs are unnamed clients of Southern Glazer’s Wine and Spirits, a company that distributes 150 million cases of wine and spirits annually in the United States, Canada and the Caribbean.

Nguyen is listed as managing member of the LLC holding the general liquor license, the Arena Restaurant and Lounge LLC of San Jose, according to the California Department of Alcoholic Beverage Control. The license, which is active, is for beer, wine and distilled spirits, according to ABC spokesman John Carr.

According to the lawsuit, Southern Glazer’s Wine and Spirits allegedly provided clients’ confidential account and license numbers to third parties without consent. The third parties then allegedly used the information to charge alcohol on the clients’ accounts, creating tax liabilities and jeopardizing the clients’ liquor licenses and business operations, according to the 34-page court filing. The third parties also allegedly used the information to purchase alcohol without the distributor’s clients’ consent, according to the complaint.

The legal action lists other allegations. To meet sales quotas, Southern Glazer’s Wine and Spirits’ also allegedly allowed its employees to use clients’ accounts to purchase alcohol, store it and return it without refunding the money, according to the filing.

The lawsuit also alleges the company’s employees sold wine at reduced prices or gave free samples to entities who “may or may not” have valid liquor licenses, according to the court document. Southern Glazer’s Wine and Spirits then allegedly falsified documentation to avoid scrutiny, according to the lawsuit. And instead of addressing complaints, the company allegedly threatened to cut off supply, according to the filing.

Nguyen recently discovered the alleged deception when he found he had been assessed “thousands of dollars in taxes for liquor he supposedly purchased, but did not purchase, from Southern,” according to the complaint.

The legal action is for fraud, negligence and other claims, including breach of fiduciary duty of confidentiality and breach of contract.

A spokeswoman for Southern Glazer’s Wine and Spirits would not comment on the case. “We've just received the lawsuit and are reviewing the information. It is premature for us to comment any further at this time,” Cynthia Haas stated in an email.

In a written statement, Nguyen’s attorney, Scott Edward Cole, of Scott Cole & Associates in Oakland wrote “Southern’s clients trusted they’d be treated right--not charged for liquor they never bought, not forced to buy what they didn’t need. The sheer number of potential violations is jaw-dropping.” He added, “It’s time for the company to answer for these charges and make this right.”

The Department of Alcoholic Beverage Control would not confirm or deny if the distributor is under investigation.

Subscribe to Daily news Email

FREE Wine Business Daily News delivers the industry's top stories emailed to you from our editorial team.

Copyright© 1994-2017 by Wine Communications Group. All Rights Reserved. Copyright protection extends to all written material, graphics, backgrounds and layouts. None of this material may be reproduced for any reason without written permission of the Publisher. Wine Business Insider, Wine Business Monthly, Grower & Cellar News and Wine Market News are all trademarks of Wine Communications Group and will be protected to the fullest extent of the law.