UPDATE: Empire Merchants – Breakthru Update

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: http://inudocs.buffalotrace.com/OrdergrantingMTD.pdf

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 others in our industry.”

The Chicago Tribune added that in an email statement from Randy Mastro, an attorney for Empire that the company is “disappointed that the court decided to dismiss the federal lawsuit based on technical legal grounds.”

“At its core, Empire Merchants’ lawsuit is about a massive bootlegging scheme in which Reliable Churchill was a central participant,” Mastro said. “Since the lawsuit’s filing, six of Reliable Churchill’s co-conspirators have come forward to corroborate under oath its role in this bootlegging scheme.”

Empire is weighing its options for appeal at the federal level and also will continue pursuing the matter in state court, he said.

By: Oren Cytrynbaum