Lynn Fitch, Attorney General of the State of Mississippi, ex rel., the State of Mississippi and Commissioner of Revenue Herb Frierson and Mississippi Department of Revenue v. Wine Express Inc., Bottle Deals Inc. and Gold Medal Wine Club

CourtMississippi Supreme Court
DecidedFebruary 27, 2020
Docket2018-SA-01259-SCT
StatusPublished

This text of Lynn Fitch, Attorney General of the State of Mississippi, ex rel., the State of Mississippi and Commissioner of Revenue Herb Frierson and Mississippi Department of Revenue v. Wine Express Inc., Bottle Deals Inc. and Gold Medal Wine Club (Lynn Fitch, Attorney General of the State of Mississippi, ex rel., the State of Mississippi and Commissioner of Revenue Herb Frierson and Mississippi Department of Revenue v. Wine Express Inc., Bottle Deals Inc. and Gold Medal Wine Club) is published on Counsel Stack Legal Research, covering Mississippi Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lynn Fitch, Attorney General of the State of Mississippi, ex rel., the State of Mississippi and Commissioner of Revenue Herb Frierson and Mississippi Department of Revenue v. Wine Express Inc., Bottle Deals Inc. and Gold Medal Wine Club, (Mich. 2020).

Opinion

IN THE SUPREME COURT OF MISSISSIPPI

NO. 2018-SA-01259-SCT

LYNN FITCH, ATTORNEY GENERAL OF THE STATE OF MISSISSIPPI, EX REL., THE STATE OF MISSISSIPPI AND COMMISSIONER OF REVENUE HERB FRIERSON AND MISSISSIPPI DEPARTMENT OF REVENUE

v.

WINE EXPRESS INC., BOTTLE DEALS INC. AND GOLD MEDAL WINE CLUB

DATE OF JUDGMENT: 09/04/2018 TRIAL JUDGE: HON. JOHN S. GRANT, III TRIAL COURT ATTORNEYS: JAMES A. BOBO DAVID J. CALDWELL JOEL W. HOWELL, III COURT FROM WHICH APPEALED: RANKIN COUNTY CHANCERY COURT ATTORNEYS FOR APPELLANTS: OFFICE OF THE ATTORNEY GENERAL BY: JAMES A. BOBO KRISSY CASEY NOBILE DAVID J. CALDWELL ATTORNEY FOR APPELLEES: JOEL W. HOWELL, III NATURE OF THE CASE: CIVIL - TORTS-OTHER THAN PERSONAL INJURY & PROPERTY DAMAGE DISPOSITION: REVERSED AND REMANDED - 02/27/2020 MOTION FOR REHEARING FILED: MANDATE ISSUED:

EN BANC.

BEAM, JUSTICE, FOR THE COURT:

¶1. The Mississippi Department of Revenue (MDOR) and the Office of the Attorney

General of the State of Mississippi filed suit against Wine Express, Inc., Gold Medal Wine

Club, and Bottle Deals, Inc., in the Chancery Court of Rankin County, Mississippi. The State sought injunctive relief, disgorgement, monetary relief, attorneys’ fees, and punitive

damages. Defendants moved for dismissal claiming that Mississippi courts lack personal

jurisdiction over Defendants. After a hearing on the matter, the trial court granted

Defendants’ motion.

¶2. The State appeals. We find that the trial court erred by finding that it lacks personal

jurisdiction over the Defendants.

FACTS AND PROCEDURAL HISTORY

¶3. In early 2017, the Alcohol Beverage Control (ABC) Division of the Mississippi

Department of Revenue and the Alcohol and Tobacco Enforcement Division of the

Mississippi Attorney General’s Office investigated the shipment of wine and other alcoholic

beverages into the state. Agents used common online search engines to search the websites

of various Internet wine retailers. The investigation revealed that most Internet retailers

make it “impossible” to place an order for alcoholic beverages once it is disclosed that the

shipment would be to a location in Mississippi. This, however, is not so for the Defendants’

websites. In December 2017, the State sued the Defendants for injunctive relief to enforce

the provisions of the “Local Option Alcoholic Beverage Control Law.” See Miss. Code Ann.

§§ 67-1-1 to -99 (Rev. 2012).

¶4. Pursuant to this statutory scheme, Mississippi operates under a three-tier system in

which the State acts as the wholesaler for alcoholic beverages, meaning Mississippi directly

controls the distribution and sale of alcoholic beverages. Miss. Code Ann. § 67-1-41 (Rev.

2012). Each manufacturer ships its alcoholic beverages to a centralized warehouse in

2 Gluckstadt, Mississippi, which is owned by the State. From there, the alcohol is held in

bailment by the State until ordered by privately held and permitted retailer package stores.

Miss. Code Ann. § 67-1-51 (Supp. 2019) (issuance of permits). Once ordered, alcohol is

then shipped by the State to individual package stores for resale to consumers who must

purchase the alcohol while on the package store premises. Package store retailers may not

ship or deliver alcohol to consumers. Miss. Code Ann. § 67-1-83(1) (Rev. 2012) (“It shall

also be unlawful for the holder of any package retailer’s permit to sell any alcoholic

beverages except by delivery in person to the purchasers at the place of business of the

permittee.”).

¶5. Mississippi law further provides as follows:

It shall be unlawful for any person to manufacture, distill, brew, sell, possess, import into this state, export from the state, transport, distribute, warehouse, store, solicit, take order for, bottle, rectify, blend, treat, mix or process any alcoholic beverage except as authorized in this chapter. However, nothing contained herein shall prevent importers, wineries and distillers of alcoholic beverages from storing such alcoholic beverages in private bonded warehouses located within the State of Mississippi for the ultimate use and benefit of the Department of Revenue as provided in § 67-1-41.

Miss. Code Ann. § 67-1-9(1) (Supp. 2019).

No alcoholic beverage intended for sale or resale shall be imported, shipped or brought into this state for delivery to any person other than as provided in this chapter, or as otherwise provided by law for native wines.

Miss. Code Ann. § 67-1-41(3) (Rev. 2012).

¶6. Section 67-1-51, as noted above, sets forth the various permits that must be obtained

from the State in order to engage in the possession, sale, and distribution of alcoholic

beverages to adults. The Defendants do not possess any of the permits required by state law.

3 ¶7. In February 2018, the State filed an amended complaint for injunctive relief,

disgorgement, monetary relief, attorneys’ fees and punitive damages.1 The State alleged that

through the Defendants’ interactive, commercial websites, they sold and directed the

shipment of thousands of bottles of alcohol into Mississippi. The State alleged that the

damages are the unpaid sales taxes and excise taxes due in relation to the taxable illegal

transaction and the unrealized wholesale markup.

¶8. The Defendants separately filed motions to dismiss based on a lack of personal

jurisdiction under Mississippi Rule of Civil Procedure 12(b)(2), but the grounds for dismissal

in each motion were the same. The Defendants stated that they are incorporated in New

York or California with no physical presence or place of business in Mississippi. Further,

all the purchases made by the buyers were made online. In each transaction, the Defendants

received, processed, finalized, and completed the sales orders in their places of business in

New York or California. And the Defendants contend that alcohol purchases by consumers

in Mississippi were made F.O.B. (Free on Board), and title to the goods passed to the buyers

at the time and place that the goods left the Defendants’ respective premises located outside

the state of Mississippi.2

1 The State filed a motion to file a second amended complaint on July 30, 2018; but that motion was noticed for hearing on the same date that the court concluded it did not have personal jurisdiction. Therefore, it did not issue a ruling on the motion to amend. 2 Gold Medal’s sales contracts provide in pertinent part as follows:

Title to, and ownership of, all wine passes from seller to buyer in the State of California, and buyer takes all responsibility for shipping the wine from California to his or her home state. . . . . The buyer is solely responsible for the shipment of wine and other goods purchased and for determining the

4 ¶9. The State opposed the motions, arguing that the Defendants are operators of

unlicensed virtual liquor stores in Mississippi. The State argued that the Defendants had

intentionally decided to direct activities in Mississippi and to allow orders to be placed

through their highly interactive websites.

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Lynn Fitch, Attorney General of the State of Mississippi, ex rel., the State of Mississippi and Commissioner of Revenue Herb Frierson and Mississippi Department of Revenue v. Wine Express Inc., Bottle Deals Inc. and Gold Medal Wine Club, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lynn-fitch-attorney-general-of-the-state-of-mississippi-ex-rel-the-miss-2020.