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Class Action Suit Accusing Southern-Glazers of Unfair Business Practices Dismissed

by Kerana Todorov
September 13, 2018

A federal judge in San Jose has dismissed a class-action lawsuit against Southern Glazer’s Wine and Spirits LLC, the nation’s largest wine distributor, according to court records.

U.S. District Judge Lucy Koh on Monday tossed out the complaint restaurant owners and others filed against the nation’s largest wine distributor for alleged unfair business practices and fraud, according to court filings.

Among other allegations, the plaintiffs alleged the distributor charged clients for alcohol they did not want to buy, exposing them to tax liabilities, according to the plaintiffs’ filings.

The initial complaint filed in 2017 had been amended three times. The court dismissed the third amended complaint with prejudice, which means the plaintiffs were not allowed to file a new complaint, according to the court order.

Arena Restaurant and Lounge LLC of San Jose in July 2017 filed the initial complaint. The complaint also accused Southern Glazer’s Wine and Spirits of sharing account information with third-parties, knowing these entities would charge alcohol to the retailers’ accounts without authorization, according to court documents.

The restaurant’s managing member and alcohol license holder, James C. Nguyen, sought unspecified dames and restitution for the allegations committed over a four-year time period, according to court filings.

The parties wrangled in court over the last year, with the plaintiffs filing three amended complaints and the defendants repeatedly seeking to have the allegations cited in the lawsuit dismissed, according to court documents. In the end, the court sided with the defendant.

“As we have stated several times, this lawsuit never had any merit. The plaintiffs were given four chances to state a valid claim against us, and they could not. We are gratified that the court recognized the legal and factual insufficiencies of the Third Amended Complaint and dismissed the case with prejudice, Southern Glazer’s Wine and Spirits Vice President and General Counsel Alan Greenspan stated in an email Wednesday.

A representative for the plaintiffs could not be reached to comment on the case.

The judge cited the lack of details related to allegations of misconduct listed in the complaints and other deficiencies, according to court filings. The court previously had warned the plaintiffs of the deficiencies; the same deficiencies were present in the third amended complaint, leading the court to conclude “further leave to amend would be futile,” according to Monday’s order granting the motion to dismiss the third amended complaint with prejudice.

The last amended complaint – the third amended complaint - listed series of allegations, including fraud, selling alcohol below cost to achieve maximum profitability and market share, offering illegal secret rebates to destroy competition, threats and intimidation, breach of contract and unfair business practices, according to court records.

The other plaintiffs cited in the lawsuit include Pacific Restaurants LLC of Del Mar, Calif.; Vine and Barrel LLC of Petaluma, Calif.; and Room and Service Fine Food and Liquor in San Francisco.

Arena Restaurant is now closed, according to a Web search. Its alcohol license has was transferred to a new owner in April, according to the California Department of Alcoholic Beverage Control. Room and Serve Fine Food and Liquor was sold in June 2017, according to court records.

Southern Wine and Spirits of America, Inc. in 2016 merged with Glazer’s Inc. to form Southern Glazer’s Wine and Spirits. It is now the United States’ largest wine distributor, distributing more than 150 million cases of wine and spirits a year to 350,000 retail and restaurants in 44 states, according to court filings.

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