Jury selection started this week in Manhattan federal court in a case commenced by billionaire William Koch, brother of conservative fundraisers David and Charles Koch, seeking damages for his purchase of over $300,000 in counterfeit wine at auction. The suit, commenced in 2007, named both Zachys, the New York-based auction house who conducted the sale, and internet billionaire Eric Greenberg, the seller of some of the wines in question.
At issue are two dozen bottles Koch purchased at Zachys’ auctions of select wines from Greenberg’s collection in 2004 and 2005. Believing that the wines had at one time been owned by President Thomas Jefferson, Koch paid up to $30,000 per bottle.
Though Zachys settled out of the case before trial, Koch has maintained the suit against Greenberg, alleging that he knew or should have known at the time of the auction that the wines were fakes. According to Koch, as early as 2002, Greenberg had been notified of the questionable origin of a portion of his wine collection by Sotheby’s, who identified certain bottles as inauthentic and refused to sell them.
The inauthenticity of Greenberg’s wines was later confirmed by his own experts in an analysis conducted in preparation for his own lawsuit against the dealer who he claims sold him the counterfeit bottles. In fact, it was the same expert who, years later and hired by Koch, identified one of Greenberg’s fakes – a bottle of Château Latour 1928 – in Koch’s collection.
In his defense, Greenberg counters that he is not responsible for Koch’s purchase of the fakes as Greenberg was not personally mentioned in the Zachys’ sales catalogue, nor did he select or inspect the wines to be sold at auction. What about that bottle of Latour 1928? It was mistakenly included in the group of wines for auction, he claims.
The case raises interesting questions about the age-old phrase “buyer beware.” While the Zachys’ sale catalogue notes that “prospective bidders are invited to inspect the property before bidding,” Koch argues that it is unreasonable and cost-prohibitive for a buyer to have to hire an expert to inspect hundreds or even thousands of bottles prior to purchase. The court made a preliminary ruling last year that the typical “as is condition” defense does not shield Greenberg from liability because Greenberg had “peculiar knowledge”- that part of his collection had been determined counterfeit - unavailable to bidders.