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The Pa. Liquor Control Board is liable for damages and legal fees in wine shipping fight, an appeals court ruled

June 1, 2022

The Philadelphia Inquirer
By Harold Brubaker

The Pennsylvania Liquor Control Board has taken another loss in a long-running legal fight over the direct shipment to restaurants of wines that the state monopoly declines to carry in its stores.

Commonwealth Court found the agency liable for damages, interest, and lawyers’ fees in a case brought by two wine merchants over the agency’s failure to allow direct shipment of such “special order” wines to restaurants — instead of to a state store — as a 2016 law required.

Exact amounts have yet to be determined, but attorneys’ fees could be more than $300,000, and damages could be more than $100,000, according to the opinion published Friday.

The 2016 law also required the agency to stop charging a handling fee of up to $1.75 after taxes for every 750 milliliter special-order bottle sold through the state system by June 2017. But it kept charging the fee, leading an exasperated Commonwealth Court judge to ask a PLCB attorney during oral arguments in November: “How do we get the government to stop violating the law?

In a second, related opinion also published Friday, Commonwealth Court ruled that a Lancaster County restaurant could pursue a class-action lawsuit seeking the return of millions in illegal special-order handling fees that the PLCB has been collecting from businesses and consumers for five years.

The PLCB had claimed it was not liable because it enjoys sovereign immunity, meaning the government cannot be sued without its consent. But the court, in its 3-2 ruling Friday in the case involving wine dealers, found that sovereign immunity didn’t apply here because the agency’s failure to implement direct shipping and stop collecting the fees was “dilatory and obdurate.”

“Sovereign immunity was never intended to allow a state agency to harm its citizens and deprive them of a remedy,” said John G. Papianou, a partner at Montgomery McCracken Walker & Rhoads LLP in Philadelphia, the lead attorney in both cases, in an email Tuesday. “Here, the PLCB is unlawfully collecting handling fees from businesses and consumers throughout the Commonwealth and then turning around and claiming they don’t have to give it back.”

A PLCB spokesperson said: “We are reviewing the decision and considering our next steps.”

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