Wines Til Sold Out in Legal Fight
Class-action complaint claims reseller is deceptive with pricing
San Rafael, Calif.—One of the leading wine flash resellers, Wines Til Sold Out (WTSO), is facing a class-action lawsuit claiming it defrauded customers by offering wines for discounted prices that were not based on the wines’ true value.
In a complaint filed in the U.S. District Court of New Jersey, attorneys representing customers of the website claim WTSO created wine brands with private-label companies and then offered those wines with discounts not based on any actual retail value and offered other wines with exaggerated retail prices to make the discounts appear even larger.
An attorney representing the website, however, is confident the case will end favorably for her client and said WTSO stands behind the quality and price of every wine it offers for sale.
Flash resellers typically offer wines for around 40% less than retail for a limited amount of time. Since the websites became popular in the wake of the Great Recession, WTSO has been a leader in the channel offering dozens of domestic wines per month. Wines Vines Analytics tracks flash offers for domestic wines as part of the regular Wine Industry Metrics reports and in November, WTSO made 60 offers or the third highest of all the major resellers.
The complaint names WTSO and the Ashburn Corp., both based in Pennsauken, N.J., where Roger Wilco Wine & Spirits is also located. Brothers Elliot and Joe Arking own the companies, and Elliot Arking launched the online enterprise in 2006. In a 2012 interview with Wines & Vines, the Arkings said the company had 135,000 members and total revenue of $50 million. (Read that story here.)
Complaint contends no real discount or bargain
A WTSO offer, delivered to a customer’s email account or mobile device, will list the wine as well as an original price, the best price found through a recent web search and WTSO’s offer. The complaint—filed by attorneys in New Jersey and New York on behalf of Memphis, Tenn., residents Kyle Cannon, Lewis Lyons and Dianne Lyons—mainly concerns offers that listed an original price and a discount price with the web price described as “N/A.”
Filed in March 2016, the complaint cites, as an example of what it describes as WTSO’s “scheme,” an offer for Castlebank Vineyards’ Vivian’s Vineyard 2013 Dry Creek Valley Cabernet Sauvignon. The wine is described as having an original price of $35 with a discount or “flash” price of $13.99.
The complaint argues that further research of this brand and nearly 30 others found that the wines were only available from WTSO. It further alleges that many of the brands were produced solely for WTSO through private-label companies.
Because the wines were not available anywhere else, the complaint contends the original price and discount price are a deceptive inducement to entice consumers to buy the wine. The complaint also alleges that WTSO used inflated prices for well-known brands such as Mer Soleil Chardonnay to make their discounted prices appear to be even more of a bargain.
The class-action complaint was filed by the firm Giskan Solotaroff & Anderson, a New York firm that specializes in class-action cases. The entire complaint can be found on the firm’s website.
WTSO and its attorneys had sought to get the complaint dismissed, but on Dec. 7, U.S. District Judge Renée Marie Bumb found standing for the plaintiffs to pursue claims regarding wines solely offered by WTSO. According to her ruling, she did not find sufficient grounds for the plaintiffs to pursue claims for wines offered at inflated prices because the complaint did not make it clear the plaintiffs had purchased any of these wines. The plaintiffs’ lawyers can file an amended complaint to address this issue by Jan. 27, and WTSO’s attorneys have until Feb. 10 to respond.
Company stands behind its offers
WTSO is still facing claims of fraud and could be liable for financial damages based on the initial complaint. Suzanne Schiller, an attorney with Manko, Gold, Katcher & Fox, the firm representing the company, said in a statement to Wines & Vines that while “we will not comment on specific allegations in the pending litigation, we are confident that WTSO will be successful in defending the claims in the complaint.”
Schiller went on to say that WTSO would not have been able to stay in business for more than a decade if it sold wine that did not meet the standards that its members have come to expect. “WTSO stands behind the quality and value of every wine it sells. WTSO’s website describes in detail the origin and content of each wine, and there is no claim that this information is or has been false or deceptive.”
The original complaint also had named Jonathan H. Newman, a former chair of the Pennsylvania Liquor Control Board who now also is part owner of a wine and liquor wholesale company in Pennsylvania.
Newman’s attorney, Patrick J. Loftus with the firm Duane Morris, told Wines & Vines that the complaints against Newman were dismissed before the matter reached the courtroom because his client (who was named as an individual in the complaint) is not affiliated with WTSO and had only sold the company wine as a wholesaler. “He’s not an employee, not affiliated, not involved in operations and not involved in how they price their wine.”
Well, they've now agreed to pay $12.6 million to settle. (http://wineindustryinsight.com/?p=84881)
Not exactly a clear win. And not surprising.