PLCB must refund ‘tens of millions of dollars’ it charged for shipping fees, court says

July 9, 2024
The Philadelphia Inquirer

Types : In the News

The PLCB’s $1.75-a-bottle handling fee, in place for five years, is the subject of four years of litigation. When will customers see a refund? Not too soon, one plaintiff said.

Tens of millions of dollars in refunds are due to many bars in Pennsylvania, as well as individual oenophiles and liquor enthusiasts, after the state Supreme Court affirmed a Commonwealth Court decision against the Pennsylvania Liquor Control Board over its special-order system, which handles bottles not available in Fine Wine & Good Spirits stores.

In 2016, state law required the PLCB to implement a system to allow wineries and merchants to ship products directly to customers by June 2017. The system did not go online until June 2022.

Meanwhile over the five years, the PLCB collected a $1.75 fee for each 750-ml bottle, which customers were forced to pick up at a PLCB store or warehouse; many customers are high-end restaurants and bottle shops that offer wine that consumers can’t readily find in Pennsylvania.

The PLCB is likely to have to repay “in the tens of millions of dollars,” said John G. Papianou, a partner at Montgomery McCracken Walker & Rhoads in Philadelphia and the lead attorney in the case.

“We respect the Supreme Court’s decision and interpretation of the applicable statutes,” PLCB spokesperson Shawn Kelly said in a statement. “However, because the Supreme Court has remanded the matter for further proceedings and the litigation remains ongoing, we will not be offering any further comment at this time.”

Using PLCB data, calculated last week that the agency could be forced to return between $40 million and $80 million in collected fees, plus damages.

Among the plaintiffs are MFW Wine Co., a wine brokerage in suburban Philadelphia, and Log Cabin, a restaurant in Leola, Lancaster County.

The litigation began in 2020 after the pandemic briefly shuttered the state stores and heightened the demand for direct shipping. “The restaurants were stuck,” Papianou said. “That’s when MFW reached out to me and said, ‘They were supposed to implement a procedure for direct delivery, and never did.’”

When Papianou sued to recover the handling fees, the PLCB filed a petition claiming sovereign immunity. Papianou said the PLCB’s response was, in short: “You might be right, but you can’t sue us for money damages because we’re the king and you can’t sue the king for money damages.”

“And we said, ‘No. You can’t steal from people and keep the money that you stole,’” Papianou said.