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Facing Irate Consumers and Possible Bankruptcy, California Wine Store Closes Its Doors

With 11 customers suing over undelivered wines, Premier Cru claims it is transitioning to online sales only
Photo by: Tim Pinault
Customers visiting Premier Cru have found locked doors since early December.

Peter Hellman
Posted: January 4, 2016

This story was updated on Jan. 5.

After years of customer griping over late wine orders, California wine retailer Premier Cru's troubles reached its front door on Dec. 10 when it abruptly closed its sleek retail shop in Berkeley. Customers hoping to pick up wine orders that Saturday were stopped by guards. Callers to Premier Cru currently hear a recorded announcement that the firm is "transitioning to online sales only" and is keeping limited hours for wine pickups by appointment.

At least 11 disgruntled Premier Cru customers are suing the long-established firm in state and federal courts. All the plaintiffs allege that Premier Cru failed to deliver wines long after they had been promised and paid for. Collectively, the plaintiffs are suing for more than $3 million in damages. On Jan. 16, a hearing will be held in a Berkeley court to determine if the eight lawsuits filed in state court should be consolidated.

In two lawsuits, Premier Cru has failed to respond in a timely fashion and is facing court-ordered default. The cases that are being litigated are only the tip of the iceberg, according to Daniel Posner, president of the National Association of Wine Retailers and owner of Grapes the Wine Company in White Plains, N.Y. "I know lots of people who are owed large amounts of wine by Premier Cru, but they think it's a waste of money and time to go to court," he said.

Premier Cru's financial troubles are piling up. According to Alameda County tax records, the firm owes $130,000 in overdue property tax and has put its shop and an adjacent property up for sale for $6.8 million.

"Such a large number of people have been hurt by Premier Cru that there is no way they can stay in business," claims Ronald Kohut, a lawyer for Antony Beck, one of the plaintiffs who is suing both Premier Cru and its co-proprietors, John Fox and Hector Ortega. On Dec. 29, Kohut received a response to his client's complaint, but it was only in the name of Fox and Ortega. "They may have just given up on trying to defend the company and are trying to protect themselves personally."

Premier Cru made its reputation by selling top-tier wines at lower prices than competitors, but often selling them as "pre-arrivals." Premier Cru's website currently offers just 146 in-stock wines, most priced under $25, but it offers 1,367 "pre-arrival" wines. Looking for a bottle of Domaine de la Romanée-Conti Romanée-Conti 2012? Premier Cru has 16 "pre-arrival" bottles for sale at $11,999 each.

For years, the store's regular customers accepted the wait. Sometimes they gave up and applied their payments to in-stock wines. But the wait times appear to have worsened in recent years and many customers have lost patience.

Co-proprietor John Fox did not respond to requests for comment for this story. Others in the retail business speculate that several years of poor Bordeaux futures campaigns have sapped Premier Cru's cash flow, leaving it unable to fulfill orders. In a previous interview, Fox seemed to put the blame on an influx of Asian customers, many apparently buying wines speculatively and unfamiliar with Premier Cru's slow ways. "They didn't understand how we work," Fox told Wine Spectator in October.

The misunderstanding is, well, understandable. Que Ma, a plaintiff from Shenzhen, China, purchased 514 bottles of 2008 Bordeaux futures in the spring of 2009 for $152,969. The wines included 178 bottles of Château Lafite Rothschild at $529 per bottle and 45 bottles of Château Haut-Brion at $240 each. Five years later, Ma is still waiting for his wine.

Another client, Chun Yu, demanded his money back four years after placing his order. After Premier Cru "made numerous false excuses to delay repayment," according to Yu's complaint filed in California Supreme Court, he received a Fox-signed check last March 16 for $288,798, but was asked to delay cashing the check until the next month. Yu's lawsuit states that Fox cut checks to three other customers about the same time, totaling $731,535. All four checks bounced.

Bo Feng, a Chinese citizen, filed a suit against Premier Cru in federal court claiming he paid $660,555 for undelivered wine. The store owners failed to respond to the complaint within 30 days as required, and on Dec. 9, a notice of default was entered against the retailer.

"They know that they are going to lose the case, so why spend money on lawyers?" speculated Feng's lawyer Erik Babcock. "The next step is to have a hearing to prove how much my client is owed."

Customers who haven't taken the matter to court yet aren't having much luck either. Ned Valois, a retired Florida policeman, told Wine Spectator that's he's owed $3,000 for wine purchased in 2012, including older vintages of Lafite Rothschild and Château Léoville Poyferré. "The prices were ridiculously good—too good to be true, as it turns out," said Valois.

His efforts to get a refund have gone nowhere. According to Valois, on Dec. 30 he received an email from Premier Cru staff member Tony Gray that read, "I can certainly understand your frustration. It is my understanding that neither accounting nor ownership are in contact with customers at this time regarding refund matters. I know I'm not much help, but at this time I would say you need to do what you need to do." Gray did not respond to requests for comment.

What recourse do unhappy Premier Cru customers have, aside from expensive litigation? "Consumers can file complaints with us," said Rachele Huennekens, spokesperson for the California Attorney General. She would not disclose if the wine dealer is being investigated.

The best hope for recovery by customers who paid by credit card is to contact their card issuer. Based on online forum discussions, some Premier Cru customers have negotiated refunds from American Express, even on orders charged years ago. A spokesman for the company told Wine Spectator that it will help dissatisfied customers "file a dispute claim to determine their eligibility for a refund."

Even if Premier Cru declares or is forced into bankruptcy, its owners could be required to personally pay damages if courts find they acted negligently or criminally. But disgruntled customers could face a lengthy wait for compensation, only to find that scant cash is left in the pot.

"The real crime here in my eyes," said Kohut, "is that a large body of people have trusted Premier Cru with a lot of money which was used for inappropriate purposes, and these people are likely to be left hanging."

Adam Makowski
Boston, MA —  January 5, 2016 3:01pm ET
Peter,

Thank you very much for posting this informative article. I too, am a victim of this merchant.

In your article, when you say...."A spokesman for the company told Wine Spectator that it will help dissatisfied customers "file a dispute claim to determine their eligibility for a refund.""..........

Is this a quote of a spokesman from American Express, or a spokesman of Premier Cru?

Any additional insight that you could provide would be most greatly appreciated. Thank you.
Mitch Frank
New Orleans, LA —  January 5, 2016 5:19pm ET
Hi Adam,

Thanks for your comment - I am sorry to hear you've had problems too.

The spokesman we're quoting is from American Express. Several card members have reported that they've been able to dispute charges to Premier Cru and get their money back.

I hope that helps.
All best,
Mitch Frank
News Editor, WineSpectator.com
Troy Peterson
Burbank, CA —  January 6, 2016 3:13pm ET
I too had outstanding orders with PC and had grown tired of the repeated claims that my wine was just waiting to get on the next boat from Europe. This summer I finally threatened the owners with a massive online campaign if my wines didnt show up in short order. Magically all my wines were delivered. These are obviously folks who will have to answer to the judicial system and will,hopefully, end up in a cell with Rudy K where they will rot to death.
Rick Campos
Westlake Village —  January 6, 2016 7:55pm ET
First, let me thank Wine Spectator for posting this article. I will always support Wine Spectator and their events for keeping the public informed on these type of issues.

Does anyone know if a class action lawsuit has been filed in California? If so, please provide the information on who to contact.

Thank you.
C Savino
Nj  —  January 9, 2016 12:17pm ET
Latest news is chapter 7 bankruptcy, if you don't have your wine yet, most likely will never see it.
Phil Hayes
San Diego —  January 11, 2016 2:52am ET
I am surprised that this story has not received more coverage from the press and Wine Spectator in particular.

I have learned more about wine futures and your lack of protection in purchasing in the last month and it is truly buyer beware. Premier Cru has been in business for 30+ years. I am also a customer with an order of undelivered wine for 2+ years. Up until then, in 5 previous orders no problems - sometimes longer than expected, but they always came through.

I was struck by the article's author saying --

"The best hope for recovery by customers who paid by credit card is to contact their card issuer. Based on online forum discussions, some Premier Cru customers have negotiated refunds from American Express, even on orders charged years ago. A spokesman for the company told Wine Spectator that it will help dissatisfied customers "file a dispute claim to determine their eligibility for a refund.""

This was not my experience with AE the first time I called - prior to reading this article. They quoted a standard 60 day timeframe to contest a purchase. After that you were SOL. The rep stood firm only offering the advice to contact local police.

After reading the article, I called them - again the rep stood firm. I asked to speak to a supervisor. My order was small - 3 bottles of 2010 Pegau CDP purchased for $250 with tax. The supervisor offered me $150 credit to my card because of my longevity and business with AE.

I look at how many times I purchased futures with no issue - until now. And, how unprotected I was at the same time.

I have to believe this happens a lot more often than we know. However, I rarely see articles on this topic. I think an article on the pitfalls of futures purchasing and how to avoid them would be useful.

1) Know who you are buying from - read Google and Yelp reviews - if I had bothered to read these I would not have purchased.

2) Know the 60 day rule - it also helped that I had used my AE card.

3) If in doubt of their ability to deliver, call them and only purchase if the wine is in stock.

4) If the price seems too good - it probably is.

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