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New York Bar Owners Sue Southern Glazer’s For Fraud, But Distributor Says It Will Prevail In Court

November 18, 2016

Claiming that the country’s largest spirits and wine distributor defrauded them for years, four bars in Albany, New York are suing Southern Glazer’s. The suit, filed in the State of New York Supreme Court in Albany earlier this week, alleges that a Southern Glazer’s salesman frequently issued fraudulent last-minute orders—known as “will calls”—that weren’t requested by the bars in order to meet sales targets. The plaintiffs are seeking damages in excess of $1.25 million.

The four bars—The Barrel Saloon, The Capital Bistro, Public House 42 and Pearl Street Pub—are all co-owned by Chris Pratt and Alesio Depoli.

Under the will call system, orders are generally paid to the distributor via automatic withdrawals from the bar owners’ accounts. The complaint claims that more than $40,000 was withdrawn from the owners’ accounts for spirits and wine products they never ordered or received. Meanwhile, the plaintiffs say that more than $100,000 was charged to their accounts that they didn’t pay, indicating that the Southern Glazer’s salesman was padding sales figures, then selling the products elsewhere.

Southern Glazer’s told SND that it’s “deeply concerned by the inaccurate accusations” made in the complaint, and that the company plans to “vigorously defend the lawsuit, which arises out of the alleged wrongful conduct of a single employee acting independently in violation of company policy.” The distribution giant added that the salesman has been terminated.

The co-owners say the illegal activity occurred from 2009—when they opened the first of the four bars, Pearl Street Pub—through July 2016. They’re seeking $500,000 in damages for Pearl Street and $250,000 apiece for the other three bars, along with punitive damages, court costs and attorney fees. Southern Glazer’s was formed earlier this year when two of the country’s leading distributors—Southern Wine & Spirits and Glazer’s—merged their operations across the U.S. Before that, Southern was long a leading player in New York’s middle tier, while Glazer’s wasn’t present in the market.

Attorney James Linnan, who filed the suit on behalf of Pratt and Depoli, told SND that, after discovering evidence of the fraud, the bars’ owners held talks with Southern Glazer’s aimed at resolving the matter. “We tried to find common ground. After all, there’s no way to operate in a college town (Albany is home to SUNY-Albany) without Tito’s (Southern Glazer’s is the vodka brand’s exclusive New York distributor), among other brands.” But Linnan said negotiations fell apart following the distributor’s “unacceptable” offer. Linnan added that he has direct evidence that Southern has previously engaged in illicit activity of this sort in other parts of the state.

“Southern Glazer’s sets unrealistic sales goals, which their salespeople are desperate to meet in order to receive bonuses and continue to get desirable accounts,” said Linnan. “We’ve learned that distributor itself is under tremendous pressure from their suppliers to make certain targets.”

For its part, Southern Glazer’s says it takes the lawsuit’s allegations “very seriously and our customers can rest assured that we have rigorous policies, procedures and training in place. We anticipate that we will ultimately prevail.” —Peter Zwiebach

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