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Empire’s Lawsuit Against Breakthru Dismissed

March 17, 2017

U.S. District Judge Allyne Ross has dismissed Empire Merchants’ lawsuit against fellow wholesaler Breakthru Beverage. The lawsuit, which sent shockwaves through the drinks industry, alleged that Breakthru subsidiary Reliable Churchill conspired with retailers to illegally ship alcohol from Maryland to New York, depriving Empire of sales and harming its business in the process. Empire claimed it might have lost as much as $100 million due to the alleged smuggling scheme.

According to Empire’s complaint, Maryland retailers aligned with Reliable Churchill illicitly shipped liquor to New York retailers (where liquor taxes are some five times as high as Maryland’s) to sell in New York. The complaint states that New York retailers would purchase the liquor in large cash sums—as much as $20,000 at a time—and that the Maryland retailers would then launder the cash through their bank accounts, from which they would then pay the Maryland wholesalers.

Judge Ross dismissed Empire’s claim with prejudice, stating that Empire failed to show that alleged actions by Breakthru-Reliable and other defendants were the “proximate cause” of its injury, and therefore are not liable under RICO racketeering laws. Also, “Lacking any facts to support the inference of an agreement between the alleged co-conspirators, Empire’s claim cannot withstand defendants’ motion to dismiss,” the judge wrote.

Ross also dismissed Empire’s claims of mail fraud, wire fraud, money laundering, financial institution fraud and a violation of the Travel Act, writing, “even assuming that Empire has adequately pled these predicate acts, none of them proximately caused the plaintiff’s injury.”

A joint statement from Rocky Wirtz, co-chairman of Breakthru, and Danny Wirtz, the company’s vice chairman, read, “Today, we were thrilled that the US District Court dismissed all claims by Empire Merchants against Breakthru Beverage and members of our ownership and executive team. We were confident from day one that we would prevail and are gratified that the Court ruled in our favor. We look forward to putting this behind us and embracing the opportunities to bring value to our suppliers and customers and to continue to be a leader in this industry. “

Empire didn’t immediately respond to a request for comment. —Daniel Marsteller

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