A settlement decision on the Premier Cru class action lawsuit was reached May 16, affecting approximately 4,450 Premier Cru customers who were left without the bottles of wine they paid for before the company declared bankruptcy Jan. 8.
Michael Kasolas, the Premier Cru trustee, was given responsibility for liquidating assets and determining allocations of funds after a creditor’s hearing Feb. 24. On March 29, he filed a motion to liquidate Premier Cru assets and sell more than 78,800 bottles of wine, using the assets to repay creditors.
While Kasolas stated that the majority of the wines stored with Premier Cru were owned by the estate, many Premier Cru customers, such as Michael Podolsky, said the bottles belonged to the customers who paid for their orders but never received them. Podolsky filed a class action lawsuit against Kasolas in April.
Both parties reached a settlement because resolving the dispute would “consume many months or years of litigation, at much greater expense and at significant risk of loss,” according to a court document. During this time, the document stated, the cost to continue the court battle would extinguish the trust funds, making it difficult to continue storing the bottles. The document further stated that “there might be nothing left of value to recover” when the case was finished.
“Judge Lafferty, the bankruptcy judge, suggested the parties entered judiciary mediation, and we negotiated in that context to a resolution,” said Merle Meyers, an attorney for Meyers Law Group, one of the firms representing Premier Cru customers.
The mediation occurred intermittently from May 3 to May 16, when a settlement was reached.
The lawsuit arrived after several complainants sued Premier Cru for almost $70 million in October 2015, claiming the company failed to deliver purchased wine. Shortly after, Fox Ortega Enterprises — the company which owned Premier Cru — filed for Chapter 7 bankruptcy.
The wine in Kasolas’ possession will be sold to one or more bulk buyers, with the proceeds being distributed to members of the class action suit. Customers whose orders were available for shipping or pickup by Jan. 8, 2016 will be able to redeem their purchased bottles.
The amount customers will receive varies, depending on factors such as the number of class members who request to be excluded from the class and the selling price of the bottles. The law firms representing the customers, Meyers Law Group and Chavez & Gertler LLP, are seeking 25 percent of the settlement, an award of up to $650,000 dollars to cover attorney fees and costs.
While the settlement marks closure for Premier Cru, the FBI is still investigating Premier Cru owner John Fox for an alleged Ponzi scheme. Fox filed for personal bankruptcy Feb. 8.
FBI spokesperson Prentice Danner declined to comment on the lawsuit, but added that it is still an ongoing investigation. A hearing will be held July 27 at the Oakland Bankruptcy court to approve the proposed settlement.