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
Facing Irate Consumers and Possible Bankruptcy, California Wine Store Closes Its Doors
Customers visiting Premier Cru have found locked doors since early December. (Tim Pinault)
Jan 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."

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