Attachment 16bAttachment � 6 =[b
THIS DOCUMENT IS PUBLIC OAH Docket w.10-6034- 1767
STATE OF MINNESOTA
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE CITY COUNCIL OF THE
CITY OF BLOOMINGTON, MINNESOTA
In re: CITY'S PROPOSED FINDINGS OF FACT,
The Application of DRT Wine & Spirits,. LLC CONCLUSIONS OF LAW AND
d/b/a Total Wine & More, for an off -sale RECOMMENDATION
liquor license in the City of Bloomington
(the "Applicant" .
The above matter came on for hearing before Administrative Law Judge Per Wilson, on
September 10, 2014, at the City Council Chambers of the Bloomington Civic Plaza,, 1800 West
Old Shakopee Road, Bloomington, MN. The parties submitted Post -Hearing Proposed Findings
of Fact and Conclusions of Law on Se.ptember 19., 2014, and the record closed on that date.
Sandra Henkels Johnson, Bloomington City Attorney and Marianna maul, Assistant Bloomington
City Attorney, 1800 West Old Shakopee Road, Bloomington, MN appeared on behalf of the
Licensing Authority and Mark Jacobson and Debra Page, Lindquist & Vennurn LLP., 4200 IDS
Center,, 80 South 8th Street, Minneapolis,. MN 55402 appeared on behalf of the Applicant.
STATEMENT OF ISSUE
Whether or not the Applicant, based on past activities or criminal record, poses a threat to the
public interest or to the effective regulation and control of alcohol or creates or enhances the
dangers of unsuitable, unfair or illegalpractices, methods and activities in the manufacture,
sale, distribution or possession for sale or distribution of alcohol or the carri
yng on of the
business and financial arrangements incidental to the manufacture, sale, distribution, or
possession for sale or distribution of alcohol.
FINDINGS OF FACT
A. Background of Total Wine & More:
23. Total Wine & More is the operating name under which DRT Wine & Spirits, LLC
proposes to operate the store in Bloomington at 4260 West 78#" Street if a
license is issued. The proposed facility consists of 17,310 square feet of net
rentable area and includes a large party or education room, a wine sampling bar
with full sized wine glasses and a walk-in humidor. (Ex. 01.001-.012)
24. Total Wine & More began with one store in Delaware in 1991. David Trone
started in the liquor business in approximately imately 1985 with the Case Beer & Soda
and Beer World stores in Pennsylvania. (Ex. 20.00151
25. There are now 105 Total Wine & More stores operating in 16 states as of July
2014. (Stipulated Fact A.3)
26. An average Total Wine & More .More carries about 8000 different wines, about
3000 different spirits, and about 2500 different beers. Total Wine & More
reported sales of over $1.5 billion in 2013, with wine accounting for
approximately 64% of the .sales volume. (Stipulated Fact A.4 and Total Wine &
More Company Overview 2014)
27. Total- Wine & More obtains accounting, marketing, and management services
from RSSI, which owns Total Wine operating companies in Delaware, Virginia,
North Carolina,. and South Carolina. (Stipulated Fact A.5)
110
RSSI is owned by David and Robert Trone and five trusts. RSSI does not own an
interest in the applicant, DRT Wine & Spirits, LLC, but is the lead borrower in a
$250 million credit facility with five banks, as to which theApplicant is a co -
borrower and a co -guarantor of the facility, along with all the other entities
operating stores under the Total Wine name., Lenders deposit funds into one
account and RSSI divides the funds among the Total Wine entities. (Stipulated
Fact A.6)
B. Application under consideration:
7. Applicant DRT Wine & Spirits., LLC is a limited liability company registered under
Minnesota law and has two members, David Trone and Robert Trone. Both
David Trone and Robert Trone list RSSI as their employer on the license
application. (Ex. 01.001-007)
8. DRT Wine & Spirits, LLC does not own any other liquor stores in Minnesota or
elsewhere and has no pending license applications in Minnesota or other states.
(Ex. 01.001-012 and Stipulated Fact B.2)
9. Other Total Wine & More stores are owned by entities whose members or
shareholders are trusts., but there are no trusts with any membership or
other interests in DIRT Wine & Spirits,. LLC. (Stipulated Fact B.3)
10. An applicationas filed in September 2013 by Minnesota Fine Wines &
W
Spirits, LLC for a liquor license in the City of Bloomington to open a Total
Wine & More store. The applicant withdrew that application, due in part to
concerns raised by the City about the minor beneficiaries of trusts that
have an ownership interest in Minnesota Fine Wines & Spirits, LLC. (Stipulated
Fact B.4) That license also failed to list many of the prior violations of the
Applicant, most significantly, the New Jersey $1 million in sanctions and 4 license
suspensions.
11. The second license application of DIST Wine & Spirits,. LLC is complete.
(Stipulated Fact B.5)
12, There are no past -due or delinquent taxes owing on the property where
the Total Wine & More store is proposing to open. (Stipulated Fact B.
13. DIRT Wine: & Spirits, LLC has provided sufficient proof of all insurance
coverage required for issuance of an off -sale liquor license.. (Stipulated Fact B.7)
14. The store proposed by DIRT Wine & Spirits, LLC is not located within 300
feet of a school or place of worship. (Stipulated Fact B.
No corporate officer of DIRT Wine & Spirits,. LLC, or proposed general manager., is
under 21 years of age, and the grant of an off -sale liquor license to DIRT Wine &
Spirits, LLC is not barred by Bloomington Code § 13.46(.2). (Stipulated Fact B.
16. No corporate officer of DIRT Wine & Spirits, LLC, or proposed general manager, is
a manufacturer, brewer, or wholesaler as defined in Bloomington
Code §
13.01.01, and the grant of an off -sale liquor license to DRT Wine & Spirits, LLC is
not barred by Bloomington Code § 13.46(3). (Stipulated Fact B.10)
17. No corporate officer of DBT Wine & Spirits, LLC, or proposed general manager,
has been convicted within the last 5 years of any felony nor of any crime
involving the manufacture, sale, distribution, or possession of alcohol, and the
grant of an off -sale liquor license to DIRT Wine & Spirits, LLC is not barred by
Bloomington Code § 13.46(4). (Stipulated Fact B.11)
No corporate officer of DIST Wine & Spirits, LLC, or proposed general manager,
has had a liquor license revoked within the past 5 years, and the grant of an off-
sale liquor license to DRT Wine & Spirits, LLC is not barred by Bloomington Code
§ 13.46(5). (Stipulated Fact B.12)
19. No corporate officer of DRT Wine & Spirits., LLC, or proposed general manager,
had an interest in any business that has had a liquor license revoked within the
past 5 years, and the grant of an off -sale liquor license to DRT Wine & Spirits, LLC
is not barred by Bloomington Code § 13.46(6). (Stipulated Fact B.13)
20. No corporate officer of DRT Wine & Spirits, LLC, or proposed general manager,
has an interest in any other establishment in Bloomington that holds or is
applying for an off -sale liquor license, and the grant of an off -sale liquor license
to DRT Wine & Spirits, LLC is not barred by Bloomington Code § 13.46(7).
(Stipulated Fact B.14)
21. No spouse of any corporate officer of DRT Wine & Spirits, LLC or the proposed
general manager is ineligible for a liquor license in Bloomington, and the grant of
an off -sale liquor license to DRT Wine & Spirits,. LLC is not barred by Bloomington
Code § 13.46(8). (Stipulated Fact B.15)
22. DRT Wine & Spirits, LLC, and its owners David Trove and Robert Trone,
are real parties in interest in the off -sale liquor license application
under consideration, and the grant of an off -sale liquor license to DRT
Wine & Spirits, LLC is not barred by Bloomington Code § 13.46(9). (Stipulated
Fact B. 16)
C. Total Wine's record in Minnesota:
29. Roseville, Burnsville and Woodbury are the only Minnesota cities to
consider a license application for a Total Wine & More store. (Stipulated Fact
C.1.) Roseville, Burnsville and Woodbury have all approved the license
applications for Total Wine & More stores. (Stipulated Fact C.2)
30. Existing local H*quor retailers., and the Minnesota Licensed Beverage
Association ("MLBA"), a trade association and lobbying organization for
liquor retailers, have actively opposed license applications for Total Wine
& More stores in Roseville, Burnsville, Woodbury, and Bloomington. (Stipulated
Fact C.3)
31. On or about January 27, 2014, the Applicant held a private luncheon fora small
group of local community leaders' at the proposed Bloomington 'licensed
premises, (Attached invitation). If any liquor was served, the Applicant would
have been required to hire a licensed caterer and provide the City with prior
notice of the event. Minn. Stat. §340A.404, subd. 12. If food was served a
temporary food license application would have to be submitted under
Bloomington City Code §14.450 (7). The license may be waived, if after City staff
review the event was deemed a private, invitation only event. No notice of or
application for a license for the event was provided to the City.
32. The Burnsville private tasting room reservation web page at
https O-LLtota lwi ne. eve ntready.comleventreg u est lists the capacity of that room
at 120 persons. The website lists the per person fee for private wine tastings in
the room in a range from $15 to $30. It also references a Customer Loyalty
program and Private Tasting Certificates for up to 20 people. MN Rule
7515.0740 L. prohibits any statement in an off -sale liquor advertisement offering
a coupon, premium, prize or rebate as an inducement to purchase intoxicating
liquor.
27. Attorneys for Bev Mo, a national competitor of Total Wine, also filed
documents opposing Total Wine's Bloomington application, as did a local
law firm, Binsfeld and Engebretson, P.A. (Stipulated Fact CA)
B. The MLBA and a competing Roseville liquor retailer appealed the City of
Roseville's grant of a liquor license for a Total Wine & More store to the
Minnesota Court of Appeals. The Court of Appeals dismissed the appeal
with prejudice, holding that the competing retailer and the MLBA did not
have standing to bring the appeal because their only interest in the matter
was in preventing competition. (Stipulated Fact C.5)
29. The decisions by the cities of Burnsville and Woodbury to grant liquor
licenses for Total Wine & More stores were not appealed. (Stipulated Fact C.6)
30. The first Total Wine & More store in Minnesota opened in Roseville in
March 2014. (Stipulated Fact C.7) The Burnsville and Woodbury Total Wine &
More stores are both expected to open in the fall of 2014. (Stipulated Fact
C.8)
D. Total 'Mine's record in Pennsylvania. -
31. In 1989, Pennsylvania alcoholic beverage regulators filed five criminal complaints
against David Trone for liquor law violations and later arrested him. The
charges were ultimately dismissed. (Waypoint, Inc. Due Diligence Report
Regarding David Trone (Stipulated Ex. 03.0026)
32. Case Beer & Soda., an RSSI affiliate., in 1989 had its license suspended 1 day and
was fined $5000.00 in Case 88-0883 for furnishing alcohol to a minor in the
context of five prior violations in the preceding five years for illegal sales or
record keeping violations in Cases 84-1854 ($350.00),, 84-3545 ($750.00), 85-
3012 ($2000,00), 86-1958 ($500.00) and 86-3330 and 87-0545 (consolidated
$1000.00 and 1 day suspension). (Stipulated Ex. 20.0164.0.0178)
33. Case Beer & Soda in 1990 had a I day license suspension and $1000 fine in Case
88-1538 and another 1 day suspension and $2000.00 fine in Case 89-1648 for
illegal Sunday sales. (Stipulated Ex. 20.0179-0184)
34. On December 31,, 1992, the Pennsylvania Liquor Control Board ("PI -C13") issued
Case Beer & Soda a letter indicating that based upon its history of violations it
would undergo further intense review and close scrutiny and following that the
PLCB would determine whether or not the abuse of privilege by Case Beer &
Soda would merit refusal of future renewal applications. (Stipulated Ex. 20.
0203)
35. Also in 1988, JET Distributors,. an RSSI affiliate, was fined $1200 for purchasing
liquor from an unlawful distributor and selling or delivering alcoholic beverages
to licensees outside of permitted area and offered or gave inducements to
.purchase alcoholic beverages. Case 88-0129.
36. Between 1983 and 2006, David Trone's liquor operations in Pennsylvania were
fined 25 times, totaling more than $32,000, not including the 1992 monetary
sanctions of $40,000. Many of the violations involved providing inducements to
purchase alcohol, record. keeping violations, advertising violations, and
purchasing liquor from an unlawful distributor. There are no Total Wine stores in
Pennsylvania., although RSSI is incorporated there. (Letter of Wi'lliam Griffith,
June 19, 2014, Total Wine and More: Liquor Law Violations by Jurisdiction,, Tab
I., Pages 2-3)
37. In 1992, David Trone., Robert Trove and June Trove were arrested. David was
charged with 23 counts.. including 9 counts of tampering with public records,
four counts of criminal solicitation, 4 counts of operating a corrupt organization,,
2 counts of perjury and single counts of conspiracy, dealing in the proceeds of
unlawful activity, deceptive business practices and obstructing the
administration of justice. The facts serving as a basis for the criminal
charges included License Subterfuge whereby David Trone, by use of his
consulting firm, RSI, was able to 'Illegally control and operate five liquor stores
in violation of the state law limiting any one liquor licensee to one store.
(Stipulated Ex. 31.0001-,0009)
38. The tampering with public records charges alleged Trone's submission of
fraudulent licluor license applications in the names of 'straw licensees'. One
store was owned by Paul Piho, a childhood friend of David Trone, another by his
wife, a third by Thomas Esper a retired teacher who stated he knew little about
the store or the liquor business, a fourth by Trone's sister, who lived out of the
state, and another by Albert Vivio, the father of one of Trone-'s employees who
stated he did not pay anything to own the store, and had no duties there.
(Stipulated Ex. 20.0015-.0046/ Ex. 18,0237 -.0269)
39. The criminal solicitation charges accused Trone of soliciting the "straw licensees?
to fraudulently place their names on the liquor license applications. The perjury
counts refer to Trone's prior sworn statement that he "didn't run any Beer
World anywhere". The criminal conspiracy charges alleged that Trone, along
with his wife and brother and their "straw licensees', conspired to withhold
information relating to David Trone's pecuniary interest in the Beer World
stores. (1d'.)
40. The dealing in proceeds of illegal activity charges related to the movement of
Beer World proceeds to Trone's RSSI with the intent to promote illegal activity.
(1d`. The deceptive practices charges related to the sale of stale beer. (1d.) The
RICO or corrupt organization charges describe the straw licenses and the
income derived from those criminal. acts as racketeering. (1d. )
41. In the case of Callahan v. A.E.V.,., Inc., 182 F.3d 237, 268, (3rd Cir. 1999), which
was a lawsuit filed by several competitors against David Trone, his stores and a
large distributor alleging antitrust and civil Racketeering influenced and
Corrupt Organization violations., the Third Circuit affirmed the district court
grant of summary judgment in favor of defendants on the RICO claims, but
reversed summary judgment on the antitrust claims and remanded the case.
The parties apparently settled the lawsuit. Chief Judge Becker summarized the
antitrust violations, as follows:
"Trone, his employees, and the separately incorporated stores have contracted,
combined and conspired to restrain trade in beer in Allegheny County, by
confronting wholesalers as a group and using their buying power and the threats
described above (poor product placement) to force the wholesalers to sell them
beer at a price lower than that available to other retailers." Id. at 240.
Judge Becker concluded that plaintiffs had "adduced sufficient evidence of fact
of damage on their antitrust claims." Id. at 2506
42. David Trone testified at the hearing that he fights all liquor license violations
against him and he wins every case. He described both the Pennsylvania and
New Jersey settlements as 'wins'. He testified that he drafted the 1994
settlement agreement and himself set the terms of the agreement, which at
paragraph 6, required red him,, upon the request of state authorities, to annually
permit inspection of his. personal tax returns and records associated with his
personal bank accounts, the tax returns and bank accounts of RSSI., Beer World.,
Inc. and any other Pennsylvania entity or corporation of which he owned in
excess of 50% of the outstanding common stock, as well as all contracts
between David Trone or any entity or corporation acting on his behalf, and any
person or entity licensed by the PLCB as a malt beverage distributor. (Stipulated
Ex. 24.0017 / Ex. 31.0048)
43. The Pennsylvania 1.994 settlement also 'Included payment to thestate of
$40..000, and execution of a consent decree i , mposing a number of conditions on
the future operations of David Trone's Beer World stores. The conditions
function to divest David Trone's interest in multiple liquor licenses, require that
the relationship between Trone's RSSI consulting firm and licensed liquor stores
revert to a purely consulting role, and discourage the sale of stale beer to
customers. without notice of that fact. The settlement also required Trone to
drop two lawsuits he had filed against the state. (Stipulated Ex. 31.0044-.0058)
44. The Applicant minimizes the severity of the Pennsylvania criminal charges and
describes this case as consisting of "flawed and baseless criminal charges",
describing the attorney general as "disgraced" and "corrupt". (Stipulated Ex.
31.0068-0073) In his testimony at this hearing David Trone characterized his
Pennsylvania violations on the whole as "'not earth shattering" and in general
attributed his violation history to the use, by his competitors, of "the
government to manipulate the system." He further testified that he sought
revenge against the lead plaintiff in the Callahan case, using his CPAa to land
him in jail.
AC
143. Mr. Trone testified that in discussing his business enterprises' past violations,,
he was referring only to adjudicated violations and argued that he did not see
why the Pennsylvania and other cases that were negotiated to eventual
dismissal should be relevant *in this case. He testified that he agreed to the
terms of the Pennsylvania settlement because he would rather pay the state's
expenses than pay his lawyers.
E. Total Wine's record in New Jerse.
46. There have been at least ten cases of liquor law violations in New Jersey
involving the Applicant since 1991. (Stipulated Ex. 02.0958-,1460)
47. In four cases, Total Wine and More had paid $1 million in monetary sanctions
measured by the costs of New Jersey's investigation ($250,000 per off -sale
license) and entered a plea to negotiated charges of 'failure to maintain or
produce true books' for the four separate off -sale licenses. (Stipulated Ex. 18.
.0205-.0212, 18.0213-.0220..18.0221-.0228, 18.02.29'..0236)
48. The conduct at issue was initially charged out as violations of the state's
limitation on the number of licenses held by any one entity Under NIS.A. Sec.
33:1-12.31., which states'.
"On and after the effective date of this act no person, as the same is
defined in 8.5. 33:1-1, shall., except as hereinafter provided, acquire a beneficial
interest in more than a total of two alcoholic beverage retail licenses..."
P 0%
(Testimony OT bandra Johnson/ City's Ex. 19)
According to New Jersey Assistant Attorney General Wesley Gelselman, the
evidence demonstrated that Total Wine & More made monetary
disbursements to a holding company, RSSI, which controlled the operation of
four stores, thus violating the limitation on the number of retail licenses held by
a single entity. (Testimony of Sandra Johnson)
50. Four Consent Orders were issued on July 25, 2005, whereby Total Wine & More,
entered a plea of "non volt", or no contest, to the negotiated charges of failure
to produce books of account within seven business days of demand, agreed to
implement a list of corrective actions,, and to pay $250,.000 for each of the four
licenses, over a period of years. Total Wine & More also agreed to the forfeiture
of all alcoholic beverages, cash and personalty seized from the four stores in
connection with the investigation. (Stipulated Ex. 24-0025 -.0047)
51. In return for the plea and agreement, the Director of Alcoholic Beverage Control
suspended each of the four licenses for 30 days — but the suspension was not
required to be served so long as Total Wine & More complied with the Consent
Order. The required 15 corrective actions included:
a) separation of both ownership and operation of the Cherry Hill two stores from
the E two stores -
P
b) all supplies and non-alcoholic beverages sold by the stores must be priced and
invoiced at, reasonable levels;
c) Cherry Hill., E and RSSI, must re -arrange their business dealings to avoid
shifting of profits among the entities and that any services provided by RSSI to
Cherry Hill or E be at market rates and prices;
d) Cherry Hill and EGH must comply with all applicable New Jersey laws
regarding the practice of "packing out";
e) RSSI must register to do business in New Jersey;
f) RSSI must not provide unpaid personnel to Cherry Hill or EGH;
g) RSSI must not control the day-to-day operations of either Cherry Hill or EH
and each store must make its own purchases of wine., spirits or beer from
wholesalers directly; and
h) RSSI must not guarantee the debt of either Cherry Hill or EC H. (1d.)
52. The other New Jersey cases are summarized as follows:
Case 05031602., Cherry Hill Wine and Spirits, Inc., trading as Total Wine and
More. LicA. 0409-44-001 Offense: ' Tailored charges. Offense date, March 26
2005. Case closed with warning letter.
Case 98-21677, Cherry 'Hill Wine and Spirits,. Inc.,, trading as Total Wine and
More. Lic. #: 0409-44-001 Offenses: 1) E141,. Employee list incomplete or not
available PP No current license application — short long; g; 3) PULA Sale to
underarm. Offense dates May 5.,1998. Case closed May 31, 2000. Licensee paid
$7500 fine in lieu of 7 day suspension.
21on.
Case 95-20582, Cherry Hill Wine and Spirits, Inc., trading as Total Wine and
More. Lic. #,,, 0409-44-001 Offense: Sale to underage. Offense date: July 20,
1995. Case closed Jan. 8, 1997. Licensee paid $104000 fine in lieu of 7 day
suspension.
Case 91-18763., Vineyard Liquors. Lic. #: 0409-44-001 Offenses.- No federal tax
stamp or indicia of.payment and underage sale. Offense date: July 17, 1991.
Case closed April 27, 1992. Licensee pay $500 fine in lieu of 10 day suspension.
NOTIE: License application 0722-44-046-008 lists a January 1,. 1997, violation
Docket # 06028-965., prosecuted by Division of ABC, licensee paid $104000 fine.'
And there are four pending cases from February 2014 in New Jersey for
Sales Below Cost in Case Nos. 13-35785., 23-35791, 13-35786., and 13-35831.
(Stipulated Ex. 18.0159-0204)
53. Again, the Applicant minimizes the severity of these cases, arguing that no
serious violations occurred but that they negotiated settlement simply to bring
the matter to a conclusion. Trone stated that "'those licensees were turning
seven figures' each and the settlement was an acceptable cost".
(Testimony of David Trone)
F. Total Wine's record in Florida.-.
54. The Applicant has been charged with twenty-four liquor law violations in Florida,
including violations of the Three -tiered System, (Stipulated Ex. 02.680 —.0985)
55. In Complaint #2011041370, 8/26/2011, Tied House Evil, Total Wine received an
Official Notice. (1d.)
56. In Complaint #2010039271, 7/15/2010., Total Wine was investigated for receiving
beer directly from Pike Brewing without going through Florida distributor and a
warning was issued against Total Wine. (1d.)
57. In Complaint #2013009489, 3/28/2013, the Florida Alcoholic Beverages and
Tobacco enforcement division investigated allegations that Total Wine was
stocking its Melbourne, Florida store from an out-of-state warehouse
owned by Total Wine. The then manager of the store, Chris Berthelson,
provided invoices confirming the out-of-state deliveries and told investigators
that this was common to various Total Wine and More stores, especially when
stocking new stores. Berthelson shortly thereafter left the employ of Total Wine
and a new set of 'Invoices were produced. for Florida investigators. Investigators
noted record-keeping violations, and questioned whether or not Total Wine paid
the required excise taxes on the liquor shipped from out of state. The case was
closed in May 2013 with the statement, "Due to improperly formatted delivery
invoices there is confusion as to who actually sold the product from out of state.
This confusion is exacerbated by no matching reports from The Stacole
Company (wholesaler); and no clear records of taxes being paid on the alcohol
imported from Total Wine's out of state warehouse." (Stipulated Ex. 20.0234-
.0240)
58. When asked why, with all of Total Wine's resources, the Melbourne Florida store
did not have clear invoices or other documents identifying the source of that
10
initial inventory and about Mr. Berthelson's statements, Trone would only
respond that the Florida charges were "thrown in the garbage where they
belonged."
G.
Total J'ive's record in Connecticut:
59, The Applicant has been found guilty of several violations in Connecticut. The
details of several of these offenses are not available according to the Applicant's
Waypoint Report.
60. The most serious was Case #2013-618 - A violation of § 30-68m,. Retail
Permittee- Sales below cost prohibited- was found against Total Wine and More
based on evidence that it advertised and sold alcoholic beverages below cost in
the month of May 2013. Sixteen items were offered for sale in Norwalk, CT
below the state minimum. It was negotiated with Total Wine's"Offer in
Compromise," to pay a $500 fine in lieu of formal administrative hearing for
incidents occurring from 12-26-2012 to 3-14-2013. This was accepted and
imposed with Total Wine and More agreeing to corrective action. (Stipulated Ex.
18.0024 - 00042)
01
H. Total Wine's record in Texas,
61. In Case 2013 -CI -03999.. the Texas 150th Judicial District Court, a competitor.,
Gabriel 's Liquors . , brought an injunctive action barring a Total Wine store in San
Antonio, Texas from opening, alleging that Total Wine's operations violate state
ownership limitations. Gabriel alleged that RSSI was the actual owner of all Total
Wine stores and that it purchased all of its alcoholic beverages through RSS.I and
negotiated and implemented all new deal structures for new product through
RSSI. (Stipulated Ex. 18.0305 -.0320)
62. The district court judge granted a temporary restraining order based upon its
finding that plaintiff was likely to succeed on the merits in that despite Total
Wines' appearance that itis independently owned, it is in fact owned,
controlled, funded and managed by RSSI and that this violates Texas Alcoholic
Beverage Control provisions by (a) engaging In a subterfuge scheme that
surrenders control of the employees, premises and business to a person other
than the permit holder- (b) allowing a person to directly or indirectly hold an
interest in more than five package store permits; (c) conducting business
that directly or indirectly coordinates operations with another package More not
wholly owned by the same person. (Stipulated Ex. 18.0321-.0326)
63. In Plaintiff Inez Cindy Gabriel's affidavit to the court she states the following:
Gabriel's Liquors has confirmed that all 85 -plus (Total Wine) stores throughout
the United States are required to purchase all of their alcoholic beverages
through Retail Services and Systems, Inc. ("'RSSI") at RSSI"s corporate
headquarters in Potomac, Maryland. These purchasing activities include, but are
not limited to all: (1) bulk buying of alcoholic beverages; (.2) negotiations and
implementations of deal structures with new brands- and (3) presentations by
new distributors and suppliers of new products.
In addition, Gabriel's Liquor has confirmed in discussi ns, with representatives of
0 1
key supplier sources such as Diageo, Brown-Forman, E& Gallo Winery.. Pernod
Riccard, Bacardi and Remy Martin that Texas Total Wine stores are required to:
(1) purchase all of :their initial alcoholic beverages through RSSI: and (2)
negotiate and implement all new deal structures for new products through RSSI.
(Stipulated Ex. 19.0305-.0320)
64. The Texas. ABC found that the allegation #5 of the Gabriel protest w lid
as a valid
issue, as follows: "RSSI is same ownership as Total Wine Spirits, Beer and More,
Applicant and North Texas L.LC. With the practice of sweeping accounts from
each entity, profit and losses are being controlled by RSSI. Investment is being
controlled by RSSI. The interest paid for RSSI Concentration Bank Account is
transferred to Fine Wines and Spirits, LLC by journal entry as a percentage.
Investments are in same bank account for RSSI. Repayment of San Antonio
startup expenses are made from RSSI Concentration Bank Account and Bank
Credit facility same as a deficit/negative daily balance. RSSI is a different entity
than Fine Wine and Spirits LLC". (Stipulated Ex. 18.0330-.0388)
65. On August 1, 2013, Total Wine withdrew its liquor license application. In
October 2013, a new application was filed with supplemental 'Information
detailing the relationship. between RSSI and Total Wine. New protests to that
license were lodged with the Texas ABC. Ultimately.. after RSSI was added to the
ownership for the San Antonio Total Wine store, the Texas ABC found no License
Subterfuge and the injunction expired in November 2013. (Stipulated Ex.
18#0327 - .0329)
66, In Texas Case No. 3277498 —Total Wine was found to have engaged in deceptive
marketing practices. A warning issued 11/30/2012. (Stipulated Ex. 18.0330-
.0388)
67. In Case Nos. 303194-303199 --Total Wine was found to have sold alcoholic
beverages to a permittee on the delinquent list. A penalty of a 3 day suspension
and $900 civil penalty was recommended by the Texas ABC,. Ultimately only a
Warning issued. (1d.)
i. !V
Public Testi
684 Jay Nelson, the owner and operator of the Burnsville Haskell's Wine & Spirits
store, testified that he is not afraid of competition,. but that the same rules
should apply to all licensees. He questioned Total Wine's acquisition of the Red
Hawk Liquor store in Burnsville, without any assets or inventory changing hands
and Total Wine's similar acquisition of a store in Roseville. It did not seem right
to him that only Total Wine could compete for those licenses in cities where
there is a limit on the number of off -sale liquor licenses granted.
69. Mr. Nelson also recounted that his store had been recently "crawl ingwith
employees of Total Wine" documenting Haskell's pricing structure of certain
products. One man, who identified himself as a marketing manager for Total
Wine, was asked by Nelson to stop taking notes of Haskell's prices and when
Learing the store told Nelson., "I'm sorry". Nelson responded, "Pardon me".
The Total Wine marketing manager then said, "I'm sorry we will put you out of
business."
70. Nelson expressed concern that Total Wine was making a calculated effort to
undercut the prices of the competition with intent to drive out all
competition,
71. Nelson stated that he met with four of Burnsville's five council members and
each one of them expressed concerns about Total Wine initiating litigation
against the City should they deny Total Wine it's license application.
72. Gelmar Bechara also testified that he recently purchased a liquor store. He
alleged that, he believed that a single violation would have prohibited him from
operating in Bloomington and that ten violations would have resulted in a
certain denial.
73. David Hautman, the operator of Seven Eighths Liquor testified that he
has been in the business since 1976. He expressed concern about Total Wine
pricing product below cost on the most popular products, this does not allow
other stores to cover their expenses. He stated that the Applicant knows that
and plans to take up as much business as it can this company (Total Wine), is
intending to drive out other businesses and will also litigate to change current
liquor laws that do not accommodate Total Wine's business strategy.
74. Edward Cooper, the Vice President of Total Wine's Public Relations and
Community Relations, testified that Total Wine frequently allows local groups to
use its "wine education center" for the hosting of charitable fund raisers.
75. Doug Dunker, the Bloomington licensing Examiner, testified that Total Wine's
listing of its charitable events held on their licensed premises as 'castings' for a
dollar value may not qualify under the state statutes prohibiting the opening of
liquor product on the premises of an off -sal e liquor license under the
educational exception.
76. Frank Ball, a retired police officer and past director of the Minnesota Alcohol,
Gambling Enforcement Division, testified on behalf of the Minnesota Licensed
Beverage Association (""MLBA") about the history of the current alcohol
regulations and his concern that liquor laws continue to run from person and
premises and to prohibit all sales practices aimed at increasing alcohol
consumption. The problem, he said, with the Tied Houses was that it was
contracted to sell exclusively one manufacturer's product and their only goal was
increasing sales.
77. Mr. Ball also expressed concern about Total Wine" s practice of selling liquor
below cost in violation of Minnesota Statutes §3250.04,. which states,
Any retailer ... engaged in business within this state, who sells, offers for sale or
advertises for sale, any commodity, article, goods, wares, or merchandise at less
than the cost thereof to such vendor, or gives, offers to give or advertises the
intent to give away any commodity, article, goods, wares, or merchandise for the
purpose or wit injuring a competitor or destroying competition,
-h the effect of in* '
shall be guilty of unfair discrimination; and, upon conviction, subject to the
penalty therefor provided in section 325C.071. (a misdemeanor) Any retailer. .
who sells goods in any part of this state at prices lower than those exacted by
the person elsewhere in the state for like qualities and grades and where the
effect of such lower prices may be substantially to lessen competition or tend to
create a monopoly in any line of business, or to injure, destroy, or prevent
competition with the person selling at such lower prices, shall be guilty of unfair
competition and subject to the penalties of section 325D.071; provided, that
nothing shall prevent differentials in prices in different localities which make
only due allowances for differences in "cost of doing business" or "overhead
expense" and in costs of delivery for such goods to different localities.; nor
differences in prices in an endeavor made in good faith to meet the legal prices
of a competitor selling the same commodity, articles, goods, wares or
merchandise in the same locality or trade area. The inhibition against sales
below cost or locality discrimination shall embrace any scheme of special
rebates, collateral contracts,, or any device of any nature whereby such
discrimination in substance or fact, effected in violation of the spirit and intent of
sections 325D.01- 07�
78. William Griffith, an attorney for the MLBA, testified and expressed concern
about Total Wine-spatternand practice of serious liquor law violations and that
initially Total Wine had failed to disclose these violations to the cities where they
sought licenses and that it was only after his associate, Jacob Steen, found the
New Jersey violations did the Applicant agree to supplement its license
applications. He disagreed with Mr. Trove's characterization of the New
Jersey monetary sanctions as "'.costs" because they are listed on New Jersey state
records as "fines". Mr. Griffith stated that $1 million in fines is significant and
must have: had a significant basisl
79. Mr. Griffith also expressed concern about the closed manner in which Total Wine
obtained its licenses in Roseville and Burnsville. It was able to acquire just the
name of the business entity and the right to be first in fine in. a closed system of
licensure. It remains, he said, a mystery what happened to the former stores'
inventories,
80. Mr. Griffith reiterated Mr. Ball's statement that Total Wine's practice of selling
liquor below cost violates the law and that it is motivated by a desire to limit the
ability of other vendors to compete in this marketplace.
81. Finally, Mr. Griffith alleged that Total Wine does not take due care to. abide by
the law.
82. Steve Burwell, the owner and operator of Roseville"s Fairview Wine & Spirits,
expressed concern that Total Wine was able to I* obtain
i licenses in a closed system that
were specifically reserved for them. He alleges that Total. Vine's characterization of its
business as a "destination location" is calculated to minimize the ability of Total Wine
to run others out of the business. The first businesses to be run out are small, local
businesses. He testified that his six pack beer sales have plummeted.
83. Dustin Harkins, a Bloomington home owner and sommelier, questioned why Total Wine
would build out a full liquor store before it ever had a Bloomington license. He was
concerned about the casual attitude of David Trone, calling Total Wine a 'Toys, R Us for
adults'. Harkins said l* 4 serious, highly regulated business.
liquor is a sei i He. also disputed
Trone's allegation that the local Ii'q,uor stores are using the government as a foil to stop
us so that the local liquor stores can retain their dirty stores.
84. Jennifer Scholler,.is an owner of a Minneapolis liquor store and a IVILBA executive board
member. Her family has owned a store for 55 years. She stated that she had seen
merchandisers (wholesalers) perform duties in the Total Wine stores that they do not in
local liquor stores, such as stocking the shelves.. There's unfair competition, we don't
sell below cost and we call out violations. These guys are scary bullies. Total Wine
needs to 'do its homework' and learn and follow the rules. She also said that Total Wine
should not conduct wine tastings on the premises; that violates the law.
85. Ted Farrell,, the president of Haskells Wine & Spirits, an 80 year-old business, with 20
years in Bloomington, stated "We welcome competition; it makes us better". "Talk
about fines, in 80 years we haven't had over $,2,,000 in fines. If you were required to $1
million. — something bad happened." Even $50,000 per year is an amazing fine or
reimbursement he said. As to the Florida instance- the paper work issue, there is
something there questionable., he said. A one million dollar payment for Haskells
would wipe us out he testified. He characterized. Trone's attitude as "Go ahead and
fine me and I will find a way to take care of 'It".
86. Rachel Engebretson, stated she is a Bloomington business owner and represents MGM
Liquor (Palace Wine and Spirits). She stated that Minnesota standard for license
suitability should include analysis of the violations Total Wine attempts to sweep
under the rug. These violations were not disclosed in hundreds of license applications.
She stated that Total Wine should have exercised more diligence in submitting its
ts
license applications than simply cutting and pasting from prior applications when they
are selling a controlled substance; they should better track their violation history and it
is surprising that Total Wine was so sloppy in their license applications given their
resources. Liquor is not, she stated, a free market commodity; it is highly regulated.
Engebretson cited the many social problems and costs associated with cheap alcohol.
The $687 per capita cost to Minnesota residents, she stated, is too high.
I Total Wine's Testimonv and Closing Statement-,
87. Total Wine's counsels Mark Jacobson, argued that the City of Bloomington
should issue this license because not one other city has found Total Wine's past
business practices and moral character a problem; the City would be the first.
88. He further argued that despite the settlement in New Jersey, the Total Wine
stores continue to operate there,
89. David Trone testified that generally his competitors "manipulate the
government" to attempt to keep Total Wine from their areas, that he believed
the opposition in Minnesota was of "unprecedented proportions"; however,
when asked if he believed that the MLBA or others had manipulated the City of
Bloomington, he answered, "No" and when asked if he believed the City of
Bloomington had delayed the process, he similarly responded, "No".
90. When asked in the context of the Applicant's violation history what cautions would
Total Wine take in Minnesota, David Trone responded that he has a big learning curve in
every state he does business, "a salsa jar too big, a mini bottle sold for a penny too
low", "I was guilty, mea culpa".
91. David Trone testified that Total Wine has the best inventory tracking system
in
the liquor business. It tracks inventory in "real time' with 15 second updates that
0
include the location of the product in the store; however Total Wine has no
centralized system of tracking its violation history with new license applications simply
being cut and pasted from prior license applications,
92. David Trone testified that Total Wine fights "tooth and nail forever" and that he
spent $1 million in Texas "needlessly" to fight the Gabriel allegations and that he
has spent approximately $2 million to obtain his Minnesota licenses. He
attributed the cost and length of the Gabriel contest to the fact that the plaintiff was
related to a county judge,
93. David Trone characterized the Applicant's past liquor law violations as "not
earth shattering 11 and commented about the 23 count grand jury indictment ire
Pennsylvania that a grand Jury could indict a "'ham sandwich".
CONCLUSIONS OF LAW
1. Minnesota law,, Minn. Stat. §§ 14.50, 14.55., 340A.401, and 340A.503, subd. 2(1)
provides the Administrative Law Judge and Bloomington City Council the authority to conduct
this proceeding and to consider whether the Applicant's liquor license application should be
approved, The role of the Administrative Law Judge is to make findings and conclusions, and
recommendations on that subject.
2. The City gave the Applicant proper and timely notice of the hearing in this
matter, and the City has complied with all of the lag's substantive and procedural
requirements,
3. Minnesota law gives municipalities the authority to issue or deny off -sale liquor
license applications subject to certain statutory limitations at Minn. Stat. §340A.402, MN Rule
7515.0410 and Bloomington City Code §13.46.
4. The City of Bloomington is a municipal corporation organized under state law.
5. The primary issue in this case relates to the Applicant's suitability for licensure
under Bloomington City Code §13.46 (1) standard for "good moral character and repute", as set
forth in MN Rule 7515.0410 (B),, which states:
The applicant shall have good moral character and reputation. An applicant does not
have good moral character and reputation if, based on past activities or criminal record,
the applicant poses a threat to the public interest or to the effective regulation and
control of alcohol or creates or enhances the danders of unsuitable, unfair, or illegal
practices, methods and activities in the manufacture, sale, distribution, or possession
for sale or distribution of alcohol or the carrying on of the business and financial
arrangements incidental to the manufacture, sale, distribution, or possession for sale or
distribution of alcohol.
6. The burden of proof is upon the Applicant to demonstrate that it possesses the
requisite qualifications for licensure and to rebut the allegations that it is not of good moral
character by a preponderance of the evidence. Application of City of White Bear Lake, 247
N-W.2d 901 (Minn. 1976).
7. There is no liberty or property right to a liquor license. Country iq V cors, Inc. v.
City of Minneapolis, 2,64 N.W.2d 821 (Minn. 1978).
8, Unlike land use denials, the denial of a liquor license need not be based on
"clearly expressed restrictions". Chanhassen Estates Resident Assn v. City of Chanhassen, 342
N.W.2d 335,340 (Minn. 1984).
9. No citizen has in inherent or vested right to sell intoxicating liquors. Bourban Boo
&
s'af'e Corp. v. City of St. Paul, 466 N-W.2d 438, 440 (Minn. App. 1991) citing Sates v. City of
Minneapolis, 120 W.2d 871 875 (Minn. 1963).
.104 A prospective licensee must do more than overcome the disqualifiers in state
and local, law, it must demonstrate suitability for licensure; a license can be denied whenever its
grant would appear contrary to the public interest. Polman v. City of Royalton, 249 N-W.2d
466,467 (Minn. 1977).
A city may deny a license based upon projected ill-effects of the licensee cens, . ee on the
public.good. Country Liquors,.supro at 825. See also, Linn v. City of Newport, unpublished, 2013
WL 1707682 (Minn. App., Apr. 22, 2013).
12. A license denial can be based :on any credible evidence of the Applicant's
careless disregard of the laws regulating the sale of alcohol, including cases that were
negotiated short of a criminal conviction or a sustained violation on the original charges.
Godfather, Inc. v. City of Bloominqton. 375 N.W.2d 68 (Minn, App. 1985),. review denied (Dec.
1.311985).
13. Generally, courts will only intervene in a municipal licensing decision when
there is a demonstrated abuse of discretion and will grant relief fro
m unreasonable, arbitrary,
capricious, or fraudulent acts. A decision is arbitrary and capricious if it is an exercise of will
rather than judgment, is based on Whim, or is devoid of articulated reasons. Wadja v. City of
Minneapolis,, 246 N.W.2d 455, 457 (Minn. 1976).
14. The City has authority to deny a liquor license by virtue of its police power, and
as such, any denial will be upheld under a rational -basis scrutiny where it has for its object the
public health., safety, morality or welfare and where it is reasonably related to the attainment
of those objectives. Kayo Oil Co. v. City of Hopkins, 397 N.W.2d 612, 614-15(Minn. App. 1986).
15. Minnesota liquor laws give municipalities, which feel most directly the impacts
of alcohol abuse, wide discretion to grant or deny a liquor license and it is not arbitrary or
capricious for there to be different standards for license issuance between individual cities even
within the same metropolitan area. The fact that other suburban communities have granted
the Applicant a license does not imply that a denial by Bloomington would be without rational
basis. See, Southern Wine and Spirits of America, Inc. v. Division of Alcohol and Tobacco Control,
et oL, 731 F.3d 199 (80 Cir. 2.013.).
16. Applicant in this case has not articulated any viable equal protection claim
should this license be denied; the City of Bloomington has high standards for license issuance
and the Applicant belongs to no protected class group.
17. Retail Services and Systems, Inc. (.RSSI") is inextricably intertwined with the
Applicant. It is owned by David and Robert Trone, along with five trusts held for the benefit of
their children. It is listed by David. and Robert Trone as their employer. In RSSI"s own plead . ings
in the matter of Retail Services and Systems, Inc. v. Total Wine & Spirits, Case:12. 3 -0004%
case;12.
filed January 11.. 2012, in the U.S. District Court for the District of Connecticut., RSSI alleged that
"RSSI owns and operates at least 76 wine and alcohol retail stores throughout the United States
under the TOTAL WINE Marks. It employs more than 21,000 individuals, all dedicated to
providing the best selection of wine, spirits, beer and related products.... RSSI has operated the
Total Wine stores since 1991. RSSI also owns and operated the www.totalwine.com website."
18. The business history of RSSI and all other business entities owned and operated
by David Trone or Robert Trone are relevant to the issue of suitability for licensure. Any failures
by the Applicant, including RSSI, to exercise meaningful control of its other liquor businesses is
relevant to the Issue of whether or not this Applicant's business will be detrimental to the
public good.
19. The Bloomington City Code requires detailed information about the persons
other than the Applicant with an interest in the business, or any element thereof, to facilitate
the City's ability to pierce the corporate veil to reveal disqualified or ineligible applicants under
a different corporate name or guise, and expose to the City the background of the real parties
in interest for the license for the purpose of determining suitability for licensure, as well as to
facilitate the future ability to 'impose meaningful sanctions on the real parties in interest., and to
compile an accurate violation history to impose progressive sanctions.
20. Credible evidence was presented that the Applicant engaged in License
Subterfuge calculated to avoid Pennsylvania laws limiting the number of licenses any one
licensee may hold by use of David Trone's 'consulting firm' RSSI and through the use of at least
five 'Straw man' licensees in 1992. This evidence was not rebutted by the Applicant by a
preponderance of the evidence.
21. Credible evidence was presented that the Applicant again engaged in License
Subterfuge calculated to avoid New Jersey's laws limiting the number of license any one
licensee may hold again by use of David Trone's "Consulting firm' RSSI in 2002. This evidence
was not rebutted by the Applicant by a preponderance of the evidence.
22. Credible evidence was presented that the Applicant attempted to engage in
License Subterfuge in violation of the Texas laws in 2013. The civil lawsuit contesting the
issuance , ssuance of a San Antonio license was resolved when Total Wine withdrew its initial application
and resubmitted an application including RSSI as an applicant. This evidence was not rebutted
by the Applicant by a preponderance of the evidence.
23. Credible evidence was presented that the Applicant, despite its state of the art
inventory tracking technology, was not able to provide clearly formatted delivery invoices and
clear records of taxes being paid on the liquor ""imported from Total Wines out of state
warehouse" to its Melbourne, Florida store in 2013. This evidence was not rebutted by the
Applicant by a preponderance of the evidence.
24. Credible evidence was presented that the Applicant advertised and sold alcoholic
beverages below cost in Connecticut during theperiod of December 26, 2012 — March 141., 20131
in violation of state laws prohlbiti,ng sales below cost. The Applicant testified that this was due
to a printing error. An "offer in compromise" was negotiated in that case that included
corrective action and a fine.
25. Credible evidence was presented that the Applicant had four new violations of
sales below cost in New Jersey stemming from February 2014 which resulted in warniniz letters.
This evidence was not rebutted by the Applicant by a preponderance of the evidence.
26. Credible evidence was presented that the Applicant has violated a variety of
states' Three -tiered System laws by having wholesalers perform stocking duties on its licensed
premises. (Testimony of Jennifer Scholler). Violations in Pennsylvania from 1987 — 2006,
include "unlawful allowances or rebates" (86-1958,, 86-3330/ 87-0545.1 88-0126, 88-1294 88-
1538). In Texas, the Applicant was charged with six counts of selling al coholic beverages to a
retailer on the delinquent list in 2012. Tied -House violations included "offered and/orgave
things of value as inducement to purchase alcohol" (98-0912, 98-1333, 98-1035, 98-100
98-1368, 98-1365).
27. Credible evidence was presented that the Applicant in its Roseville store has sold
liquor below cost and that the Burnsville store has advertisedproduct below cost. The
Applicant, through its attorney, argued that in order for sales below cost toconstitute a
violation of Minnesota Statute §3250.04., must be done with the purpose or the effect of
injuring a competitor or destroying competition. (Testimony of Jay Nelson, David Hautman, and
Steve Burwell.)
28. Credible evidence was presented that the Applicant intends to, or predicts that it
will, by its sale of products below cost, put the competition out of business. (Testimony of Jay
Nelson),,
29. While a City has authority to impose conditions on a liquor license prior to its
40
issuance Bergmann v. City of Melrose, 420 N-W.2d 663, 665-66 (Minn. App. .1988) and Anton**s
Inc.., v. City of Minneapolis, 375 N.W.2d 504.* 508 (Minn. App. 1985) it has very limited authority
to impose conditions after a license's 'issuance. In Re On Sale Liquor License, Class B. 763
N.W.2d 359 (Minn. App. 2009). Moreover, when asked, David Trone, could identify no
proactive measures to be initiated at the Bloomington store, should a license be granted, that
would adequately avoid future law violations in the operation of that enterprise.
30. The evidence in this case raises reasonable concerns about the Applicant's
willingness or ability to comply with the legal I requirement that intoxicating liquor retailers
purchase all of their liquor from a licensed Minnesota wholesaler from a stock maintained in
Minnesota warehouse in compliance with MN Rule 7515.0520 in combination with Minn. Stat.
§340A.305. These concerns have their basis in the. Melbourne Florida case,, including the
statements of now former Total Wine manager Chris Berthelson (Finding #57), the Florida Pike
Brewing case in 2010 (Finding #56)., the Gobriel's" Liquor pleadings, affidavit and injunctive
order (Finding #63), the Texas sales to a permittee on the delinquent list in 2012 (Finding #67)
and, the 1988 Pennsylvania purchase from an unlawful distributor (Finding #35) exacerbated by
the sheer volume of the proposed stare's inventory.
31. The evidence in this case raises reasonable concerns about the Applicant I S
willingness or ability to comply with the legal restrictions on negotiating volume discounts with
wi
wholesalers, set forth nMii
nn. Stat. §340A.312, that limit the quantities of wine or spirits
eligible for a volume discount.. This concern has its basis in the case of Callahan v. A.E.V., supro
(Finding #41),. the Gabriel affidavit (Finding #63) and David Trones testimony that he
aggressively negotiates volume discounts for all of his stores, which is exacerbated by the
Applicant's numerous record keeping violations (Findings #32, 35, 47, 52 and 86).
32. The evidence in this case raises reasonable concerns about the Applicant's
willingness or ability to comply with the state and local lawsprohibiting retailers from
suggesting, requesting, demanding, or accepting any gratuity or reward or promise thereof
from any representative of a manufacturer or wholesaler of alcoholic beverages, including in-
store servicing or stocking. MN Rule 7515.0620. This concern is premised upon the testimony
of Jennifer Scholler and the Florida 2011 Tied House Evil Official Notice (Finding #55).
33, The evidence in this case raises reasonable concerns about the Applicant's
willingness or ability to comply with Minn. Stat. §3250.04 prohibiting the retail sale of,product
below cost. This concern is premised upon the 2013 Connecticut case, the four New Jersey
2014 cases for Illegal Sales Below Cost (Finding #52), and the Texas 2012 Deceptive Marking
Practices case (Finding #66).
34. The evidence in this case raises reasonable concerns about the Applicant's
willingness or ability to comply with state laws restricting the service of alcoholic beverages
within the premises of an off -sale liquor store. Minn. Stat. §§340A.419, 340A.5100 340A.418,
340A.4041 and 340A.414. These concerns are premisedupon the testimony of Edward Cooper
relating. to the use of the room that is variously referred to on the Total Wine Burnsville and
Roseville websites as the "Conference Room", "Education Center" and "Room for Your Private
Beer & Wine Tasting Party", the websites' description of the functions allowed for use of the
room (including alumni gatherings, birthday parties, bridal showers, company outings.,.), with
complementary wine tastings for seated meetings of 14 or more attendees. The use of the
room, as advertised, goes beyond charitable auctions. (Attached Total Wine websiteprintouts).
Moreover, the Applicant has on at least one occasion hosted an event at theproposed store
location in which food was served, but no temporary food license application was submitted to
the City and no notice of the event was provided to the City. The City has expressed. serious
concerns about its ability to adequately police, the use of this room in compliance with law.
35. The evidence in this case raises reasonable concerns about the Applicant's
'education center' usage policy being in compliance with state and local laws. (1d.)
36. The evidence in this case raises reasonable concerns about the Applicant's
overall willingness to comply with laws that interfere with its business model in light of the
pervasive past pattern and practice of law violations, the fact that the owners of the Applicant
were complicit in the most serious of the violations, and that David Trone appeared by his
testimony to exhibit a careless disregard for the law. This disrespect for law is premised on the
following, 1) Trone's description of his violations as not 'earth shattering" (Finding #44); 2)
that these enforcement actions resulted in ""NO CHANGE" (ca pitalized to reflect emphatic tone
of David Trone testimony) to his Pennsylvania and New Jersey business practices (Finding: #44);
3) Trone"s. description of his revenge against the lead plaintiff in the Callahan case., (1d.); 4) His
statements that the government is being used by his competitors to manipulate the system
against him., rather than to take responsibility for his prior wrongdoings (Finding #89); and 5)
His description of the outcome of the Melbourne Florida cases as ""being thrown in the garbage
where they belong" (Finding #58).. Mr. Trone's testimony further reflected a predisposition
towards lawlessness,. by his statements about the insignificance of the $1 million monetary
sanction in New Jersey, which was satisfied just four years prior to his submissionof the initial
license application in Bloomington (Finding #53), the 23 count indictment in Pennsylvania being
the result of the grand jury being capable of indicting a 'ham sand wich'(Finding #93), and his
statements about the insignificance of all of his past violations in light of his ability to satisfy any
fine.
37. The sale of liquor is very different from the sale of groceries, it is a highly
regulated business with strict controls separating the three tiers of the distribution chai•
n,. and
other controls limiting one entity's domination of the market for what is undeniably a highly
addictive substance. A license may be denied whenever its grant is deemed contrary to the
public interest. The standard of "good moral character and repute' requires at its essence the
vendor's absolute commitment to understand and strictly comply with the laws applicable to
the sale, distribution, or possession for sale or distribution, of alcohol or the carrying on of the
business and financial arrangements incidental to the sale, distribution, orpossession for sale
or distribution, of alcohol.
Dated.
-
By
Respectfully submitted,
CITY OF BLOOMINGTON
Sandra H. Johnson (#120649)
sLohnson@BloominiztonMN.gov
1800 West Old Shakopee Road
Bloomington, MN 55431
(952) 563-4895
ATTORNEY FOR CITY OF BLOOMINGTON, MN