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Liquor wars: It's all about Law vs. the state

New Hampshire Union Leader

April 05. 2014 12:10AM

CONCORD - A trial date has been set for November in the case of Law Warehouses versus the New Hampshire Liquor Commission, as the Nashua-based logistics firm continues its challenge to the bidding process that cost the company a $200 million liquor warehousing contract.

The state is seeking a summary judgment and maintains the court does not have jurisdiction in the case because of "sovereign immunity," a legal doctrine protecting the state from civil suit or criminal prosecution, with few exceptions.

If the judge does accept the case, and Law prevails, any award should be limited to $475,000 because of a statutory cap on damages in lawsuits against the state, according to the motion for summary judgment filed by the Attorney General Joe Foster.

"Despite this, the plaintiff persists in presenting this action as a case valued in the tens of millions of dollars," the state maintains.

Law's attorneys, seeking a jury trial, responded on March 25. In a lengthy filing, they make claims of misconduct by NHLC officials before, during and after the bidding process that led to a contract with Exel, whose new warehouse opened in November in Bow.

In addition to previously stated claims of prejudice against Law and favoritism toward Exel, attorneys for the Nashua company now claim their client fell victim to an ill-fated conspiracy in which the major beer distributors in the state, represented by lobbyist Clark Corson of the New Hampshire Wholesale Beverage Association, colluded with NHLC officials in what they hoped would be a plan to "control the storage and distribution of all beer, wine and liquor in New Hampshire."

Law maintains that "Corson's group intended to develop a unified warehousing and distribution system, under which beer, wine and liquor would be stored together at an automated, 350,000-square-foot warehouse, and would be loaded and delivered together to state liquor stores . the group expected to be awarded the long-term warehouse contact and displace Law Warehouses."

Idea strongly opposed

The scheme was supposed to be launched by a two-year pilot program to allow the sale of beer at highway liquor stores, even if it had to be sold from refrigerated trucks staffed by beer distributor employees. The idea met stiff opposition from the state's grocery stores, which stood to lose a lot of money if state liquor stores started selling beer.

That was in 2009. The House Finance Committee was leaning toward supporting the two-year pilot project and even included a projected $2.8 million in additional revenue from beer sales in the state budget. The committee also proposed companion legislation to allow beer sales at liquor stores.

Corson hired Robert Clegg, a former state representative, state senator and congressional candidate, to lobby for the idea.

"However, when Clegg informed Corson the project was ready to proceed, Corson replied that Clegg had 'moved too fast.' Corson did not present the project to the Finance Committee," the lawsuit states.

Fast-forward to 2012, and the grocery stores turned the tables on the liquor commission by proposing a bill to allow liquor sales in grocery stores. A furor erupted over allegations the liquor commission had illegally hired Corson to lobby against the idea.

State law prohibits state agencies from using state money to lobby the Legislature. The liquor commission argued that Corson was hired not to lobby but to prepare a feasibility study on the sale of beer from state liquor stores.

Law maintains that the 2012 study by Corson used to substantiate that claim was essentially a rehash of the 2009 study on selling beer at state liquor stores. "In other words, the 2012 study was completely unnecessary, and was simply a cover-up of illegal payments to a lobbyist," the motion alleges.

Question of credibility

In August of 2012, a Special House Committee convened to investigate allegations of corruption within the liquor commission. The attorney general also investigated the charge of illegal lobbying. In the end, despite some harsh words by the Legislature, the attorney general determined there was no wrongdoing. Everything remained status quo - no beer at state liquor stores; no liquor at grocery stores.

Law's attorneys are rehashing all that history in their lawsuit not because they expect to revive those controversies, but by way of impeaching the credibility of the state's chief witnesses and proving the state acted in bad faith.

If the case goes to trial, much of the evidence will come down to the testimony of former liquor commissioner Mark Bodi and enforcement chief Eddie Edwards in support of Law's claims. The state has characterized the two as disgruntled ex-employees, and produced testimony by six others involved in the RFP process to contradict them.

"Even if the testimony of Bodi and Edwards were taken as true, it is not enough to show there is an issue of material fact regarding the intentions of the six relevant employees," the state said in its motion. "All six acted in good faith in the exercise of their statutory and regulatory duties."

Lawyers for the state are going to be busy defending the liquor commission decision for months to come. They filed a motion on Friday for summary judgment in a separate case brought by second-place bidder, XTL-NH, in Merrimack County Superior

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