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Customers Sue California Retailer for Failure to Deliver Wines

Lawsuits allege Berkeley’s Premier Cru promised great prices for wines it didn’t have
Premier Cru, located in Berkeley, offers some of the world's most coveted wines, but customers have complained about slow arrivals.
Photo by: Tim Pinault
Premier Cru, located in Berkeley, offers some of the world's most coveted wines, but customers have complained about slow arrivals.

Peter Hellman
Posted: October 6, 2015

Premier Cru, a long-established California wine retailer, is known for offering fantastic prices on highly-desirable wines. But the firm has also developed a reputation among some collectors for being unacceptably slow in delivering those wines. Now Wine Spectator has learned that two disgruntled customers have filed lawsuits accusing Premier Cru of failing to deliver wines several years after they had been ordered and paid for. In one instance, a plaintiff claims, a bottle of Brunello di Montalcino ordered in 2003 has still not arrived.

The store’s co-proprietor, John Fox, declined to respond to the allegations in the suit, but acknowledged past misunderstandings with customers and said he is working to improve service. Referring to one of the plaintiffs' complaints, Fox told Wine Spectator, "If he's amenable to receiving wine and a refund, that's how we want to settle."

The twelve-years-and-counting Brunello was among “hundreds of bottles” purchased between 2003 and 2013 by Dr. Shirlin Wong, the owner of a chiropractor clinic in the San Francisco Bay Area. According to Wong’s lawsuit, filed in May in California Superior Court, she spent more than $230,000 on wines offered by the Berkeley-based retailer that never arrived. She has accused the company of fraud and breach of contract.

Two months before filing her lawsuit, Wong and Premier Cru inked an agreement, the suit claims, stating that the retailer agreed to "deliver as much of the ordered wine as it is able to deliver before April 13" and to "pay the customer the market replacement cost" for each bottle it failed to deliver. Premier Cru also agreed to repay Wong for any replacement bottles she bought on her own, including sales tax. Premier Cru "delivered some of the bottles to Wong, but failed to deliver many of them," according to her suit and failed to pay the replacement cost for the undelivered wines. Her tally for the balance still owed: $214,838.

Three months after Wong filed suit, Lawrence Wai-Man Hui, a Hong Kong collector, filed his own complaint against Premier Cru in a federal court in San Francisco. Between 2011 and 2014, Hui claims, he paid more than $981,000 for 1,591 bottles of wines, mainly top-tier Bordeaux, of which “far fewer than 100 bottles” ever arrived. Premier Cru “has had the benefit of almost $1 million of Hui’s money while Hui has received essentially nothing in return,” reads the complaint, which accuses the retailer of fraud and misrepresentation.

“We have a lot of old-time customers who are OK with delays,” said Fox, when asked about Hui's unfilled orders. “They know they have to wait. [Mr. Hui] is new. Some things came in, but not in the quantity he’s looking for. A lot of this has to do with him not being in this country and being very insecure about the whole thing.”

The business model of Premier Cru appears to be unusual, as wine retailers go, in that it offers a higher than normal proportion of wines as futures, and not only from recent Bordeaux vintages, which are traditionally sold that way. The wines are labeled "pre-arrivals.”

When would customers receive those wines? Premier Cru's explanation is somewhat murky. According to its website, "The term, 'pre-arrival' is applied to wines which we have purchased (typically abroad) that have not arrived yet. Depending on the particular wine, the arrival time is typically 6+ months to over two years (in the case of Bordeaux futures, for example).”

By comparison, New York retailer Sherry-Lehmann, a longtime marketer of Bordeaux futures, states on its site that each of its 2014 offerings will be delivered in 2017—the traditional gap between harvest and in-shop arrival. Hui's unfulfilled Premier Cru order of Château Pétrus 2010, for example, would normally have been delivered in 2013.

Hui's lawyer, Arthur Shartsis, says he is not authorized to reveal any information about his client. Wong's lawyer, Ryan Chang, said his client cannot comment "due to the nature and timing of the lawsuit."

For cost-conscious customers, the lure of purchasing from Premier Cru is that prices are often well-below the competition. An Oct. 4 e-mail, for example, offered, for two days only, a 40 percent discount off posted prices on a bevy of in-demand wines. Among them was Haut-Brion 2014, discounted to $186. By comparison, the ex-négociant futures price offered by the château a few months ago was $268.

In that e-mail, Premier Cru also offered sought-after Burgundies, such as Domaine Ponsot’s Clos de la Roche Vieilles Vignes 2013, discounted to $300. The wine will not arrive in the U.S. until next year, but one Swiss retailer is offering it pre-arrival for $483.

Queried about Premier Cru's pricing, proprietor Laurent Ponsot told Wine Spectator, "They don't have the wines. People come to their shop and they are answered that everything from Ponsot has just been sold out, but they propose something else on which they put a higher margin.”

Retailers who compete with Premier Cru would not comment on the suit, but said they believe the firm may be in a tight cash position after recent lackluster Bordeaux futures campaigns. "Basically, the futures campaigns in 2011 through 2013 were nonexistent," said Geoffrey Troy, proprietor of New York Wine Warehouse. "Even older excellent vintages, such as 2005, have appreciated little or not at all." Troy says three poor Bordeaux futures campaigns mean that retailers who rely on them are deprived of the "float" they receive from cash paid up-front for the wines.

Fox told Wine Spectator that from now on customers will be getting more accurate information about arrival of their orders. “We have cautioned sales people not to give off-the-top-of-the-head answers," said Fox. "We have also hired a man in Beaune, where most of our French wine is warehoused, to expedite our shipments."

Both lawsuits are pending.

Nathan Crandall
san antonio —  October 14, 2015 9:30am ET
With the recent strength of the dollar and decline in Bordeaux prices, shouldn't theese back orders have been filled?
Do producers like Ponsot have a cause for action given that Premier Cru's artificially low pricing is the first thing consumers & retail buyers see on wine-searcher & eRobertParker market valuations, thus depressing what the market will pay for their wines & thereby taking both profit and prestige from said producers?
Mitch Frank
New Orleans, LA —  October 14, 2015 11:41am ET
Hi Nathan,

Thanks for sharing your thoughts.

While the strong dollar pushed 2014 futures prices lower, that didn't help retailers much. U.S. consumers bought more futures than in recent years, but retailers tell us that it was a tough sell when there are so many better-priced older vintages of Bordeaux in stores now: http://www.winespectator.com/webfeature/show/id/51950

As for why Premier Cru hasn't filled these orders yet, it's not clear. They maintain these delays are normal. Others in the industry find it unusual.

As for producers being hurt by these low posted prices, that is something wineries grapple with regularly. In my experience, there's little they can do, aside from trying to prevent their importers and distributors from selling to offending retailers.

Thanks again,
Mitch Frank
News Editor, WineSpectator.com
Bruce Schoenfeld
Boulder, Colorado —  December 4, 2015 6:29pm ET
I have orders back to 2006 from Premier Cru that were never fulfilled. At one point, I agreed to exchange that credit for different wines -- and they never arrived. Now I'm awaiting a promised refund check. Wine Spectator readers, DO NOT BUY FROM THIS RETAILER.

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