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Expensive Vinegar: Jury Awards $12 Million to Collector in Bogus Wine Case (NY)

May 3, 2013

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Typically, when an auction buyer winds up with a fake item, they have little recourse under the "caveat emptor" principle.  Both the auction house and seller typically issue disclaimers that state they do not guarantee the authenticity of a particular item.
But recently, energy magnate Bill Koch scored a <a href="http://www.winespectator.com/webfeature/show/id/48298">huge trial victory </a>against fellow wine collector Eric Greenberg.  Koch claimed that 24 of the 17,000 bottles of  Greenberg's wine that he purchased in an auction were not the valuable collectibles they purported to be but instead were fake.
Koch alleged that after he purchased the wine, he learned that Greenberg had previously been told by experts that some of the bottles had been identified as counterfeit.  Despite knowing this information, Greenberg placed them into auction without disclosing their questionable identity.
Greenberg claimed he did not know any wines sold were fake and that it was the responsibility of the auction house to determine whether there were any authenticity issues. But Koch presented witnesses that said Greenberg was aware since 2002 that his cellar contained counterfeit wines, and a former house manager testified that Greenberg told him he planned to resell them.
A jury found in Koch's favor, awarding him $379,000 in compensatory damages and $1,000 per bottle.  Upon further deliberation, the jury awarded Koch $12 million in punitive damages.     Apparently, the litigation cost Koch $10 million, so it is not quite the windfall it appeared to be, but still a lot better outcome then being stuck with bogus wine.
For more information, please write to <a href="mailto:mbono@wcmlaw.com">Mike Bono</a>.
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