Michigan wine shipping lawsuit targets Napa vintner, 3 others
Michigan is suing three wineries, including one in the Napa Valley, plus a wine retailer alleging they shipped wine into Michigan without obtaining the proper licenses.
The four lawsuits, filed by Michigan Attorney General Dana Nessel on May 5, come at a time of online sales growth for the wine industry and as more and more states are loosening regulation on shipping wines across state lines.
Michigan allows such shipments only by companies holding a “direct shipper” license.
Defendants in the Michigan suits are Calistoga’s Villa Amorosa (doing business as Castello di Amorosa), Schmidt Family Vineyards LLC in Oregon, Lamberts Vintage Wines LLC in West Virginia, and Taste Wine LLC in New York City. The lawsuits claim that the defendants shipped wines to Michigan before and after receiving state cease-and-desist letters.
Documents submitted to the U.S. District Court for the Western District of Michigan stated Michigan Liquor Control Commission investigators worked undercover acting as consumers wishing to purchase wine directly. They went to each merchant’s website and placed orders online.
“All of these entities were warned in advance to stop making illegal sales and shipments into Michigan by the attorney general via cease-and-desist letters. They failed to heed these warnings prior to the suits being filed,” said Lynsey Mukomel, press secretary in the office of public information & Education in the Michigan Department of Attorney General.
She indicated that concerns had arisen over several years among local distributors, industry leaders and organizations, such as the Michigan Beer & Wholesalers Association who believed that wine from other states was entering Michigan in violation of liquor control laws.
“We applaud Attorney General Dana Nessel for her aggressive approach to stopping out-of-state retailers from illegally shipping into Michigan,” said Spencer Nevins, president of the Michigan trade group in a statement published in MiBiz on May 17. “Her efforts send a clear message to out-of-state retailers that have been skirting state law, putting Michigan consumers at risk and cheating the state out of much-needed tax revenue. It’s time to stop violating Michigan law or you will be caught and prosecuted to the full extent of the law.”
In the case of Castello di Amorosa, in November 2018 a Michigan investigator reviewed a common carrier report that UPS had submitted to the commission in accordance with Michigan laws concerning shipments of wine into the state in 2017. The UPS report in the court filing showed that 621 shipments were sent to Michigan addresses by Castello di Amorosa.
Based on these finding, the Michigan attorney general sent a cease-and-desist letter by certified mail with return receipt requested to Castello di Amorosa’s mailing address on or about Dec. 9, 2019. Additional copies of the letter were sent to the California Secretary of State as well as to a second address licensed by the California Department of Alcoholic Beverage Control for Castello di Amorosa.
The letters included excerpts from the UPS common carrier report for April 2017 reflecting 621 shipments of alcoholic liquor into Michigan by Castello di Amorosa. It also said that this practice is illegal without a direct shipper license, and that legal action would result if Castello di Amorosa continued its illegal activity, according to the complaint document.
To determine whether Castello di Amorosa discontinued its illegal shipments after Dec. 9, a liquor commission investigator reviewed the UPS common carrier reports for January 2020 through June 2020. The court documents state that UPS reports showed that Villa Amorosa continued to ship wine into Michigan after receiving the cease-and-desist letter.
On Oct. 13, 2020, a Michigan commission investigator placed an order on the Villa Amorosa’s website to buy and ship one 750 ml bottle of cabernet sauvignon wine, which was received about a week later by the investigator’s wife in Ferndale, Michigan, according to court documents.
Consequently, the formal complaint says that “all nonjudicial means of restraining Villa Amorosa from engaging in these violations and enforcing compliance with these Michigan laws has proven inadequate.” Therefore, the Plaintiff (the Attorney General) has requested relief that would enjoin Villa Amorosa from continuing to violate applicable provisions of the Michigan Liquor Control Code.
The lawsuit states that the Michigan Consumer Protection Act provides for penalties for each violation of that law up to $25,000, including injunctive relief and costs and that the defendant is liable for, and that it should be assessed cumulative civil penalties for each violation of that law, including violations learned of during discovery, along with reimbursement of investigative expenses incurred, as well as an award of costs and attorney fees.