Court Addresses Some Issues That Every Winery, Brewery, Importer, and Merchant Needs to Consider Before Making an Interstate Shipment

The use of the internet and email as a tool for agreeing to interstate alcohol shipments is forcing courts to consider some inevitable issues. Recently, a Massachusetts appellate court considered the problem of where and when an importer dealing over email can bring a lawsuit against another importer.  The resulting decision means a great savings in money time and effort for the winning party.

In what could be called a recurring fact pattern between importers and other importers and retailers, Rolivia, Inc., sued Emporium Nostrum, Inc., over Emporium’s alleged failure to make payment on wine Rolovia shipped from its warehouse in Massachusetts to Emporium’s business in Coral Gables, Florida.

According to the facts summarized in the opinion, the presidents of both Rolivia and Emporium met at a wine convention in Miami Beach, Florida, in September, 2011. At the fair, the two orally discussed Emporium’s purchase of wine produced by Rolivia’s clients in Italy. E-mails and telephone calls followed regarding the cost, delivery, and eventual implementation of the shipping of the wine from Rolivia’s place of business in Massachusetts, via a New Jersey transport company used by Rolivia. A quantity of wine was shipped. An invoice dated October 26, 2011 listed all but two of the brands, totaling 100 cases, described in one of the e-mails of the same date. According to a document entitled “Shipping Receipt” dated November 21, 2011, another shipment of sixty-two cases of eight brands was sent to Emporium. The record does not indicate whether either of these documents accompanied either of the two shipments of wine. Each document contained the following passage:

“This sale was made in Massachusetts and the laws of the Commonwealth of Massachusetts shall control. Buyer acknowledges that this invoice constitutes a binding contract and that the payment is due and payable as indicated on this invoice. In allowing buyer to take custody of the wine, Rolivia, Inc. has fully performed on the contract. Buyer’s performance is not complete until full payment is received by the seller. Until both parties have fully performed, title to the wine remains with Rolivia, Inc. who may reclaim and repossess the wine at any time. If the wine is [in] the custody and control of the buyer, buyer agrees to insure wine and fully indemnify  and hold harmless Rolivia, Inc. from any loss related to such wine. If legal action is required to collect payment or to repossess wine sold hereby, buyer agrees to pay all attorneys fees and associated costs.”

In the case before the Court, Rolivia produced no writing or other evidence indicating that Emporium agreed to the above terms. Asserting that much of the wine was spoiled or did not conform to the invoice descriptions, Emporium did not pay for any of it, resulting in the suit for breach of contract.

Rolivia sued Emporium in Massachusetts and Emporium objected and asked that the court dismiss the case because Emporium’s only dealings with Rolivia in Massachusetts – placing orders over email with a Massachusetts company – didn’t create enough of a contact in the state to give rise to a Massachusetts court having jurisdiction over Emporium.  You can find a copy of the opinion here.

Both the lower court and the Appellate Court agreed that Emporium really didn’t do anything to allow Rolivia to haul it into a Massachusetts Court, stating “[t]he affidavits and pleadings before the motion judge indicated that Emporium has no business address, neither owns nor rents property, pays no taxes, does not advertise, and maintains no accounts in Massachusetts. Nor has Emporium ever done business with anyone else in this Commonwealth.”

So the Appellate Court upheld the lower court decision and Rolivia will have to find a different forum to sue Emporium.  How might they have avoided this problem?

One thing that might have resolved all of this was a forum selection clause.

As the court pointed out in its opinion, nothing in this clause contains a forum selection provision – something akin to a single sentence that would read:  “The parties agree that in the event of any dispute concerning this Agreement or the products sold hereunder, suit may be brought only in a court of competent jurisdiction in the State of Massachusetts.”

That still wouldn’t solve the problem the Court noted when it said there was no evidence that Emporium received or agreed to these terms – having a buyer sign a p.o. or some other contract could solve that issue as well – maybe even an online agreement that a buyer accepts prior to placing an order.