Law Warehouses, N.H. Liquor Commission settle contract suit

State to pay Nashua firm $2.5 million over disputed 2013 bid

New Hampshire agreed last week to pay $2.5 million to settle charges by Law Warehouses Inc. that the State Liquor Commission unfairly awarded a $200 million contract to another company to run the state’s liquor warehousing operation.

In 2013, New Hampshire awarded the 20-year contract to Ohio-based Exel Inc., ending the family-owned Law Warehouses’ 40-year relationship with the Liquor Commission. Law first filed suit in 2013, charging that an “orchestrated” bidding process “was tainted by unlawful favoritism from the start.”

The settlement, if approved by the court, will end the complicated litigation, which included charges of bid-rigging, corruption and antitrust violations.

In a statement issued Monday, the state denies all liability of wrongdoing in the settlement, as does the Liquor Commission.

“The New Hampshire Liquor Commission maintains that the warehousing request for proposal process was conducted thoroughly and fairly,” said Liquor Commission Chairman Joseph Mollica. “Given the already lengthy and time-consuming litigation, and the likelihood of appeal following trial, the Liquor Commission believes that this is the best conclusion for all parties involved. With this settlement, the Liquor Commission can return its focus and full attention to building the NH Liquor and Wine Outlets brand and securing record profits for the State of New Hampshire.”

Associate Attorney General Richard Head signed the settlement with Brian Law, president of the Nashua warehouse firm. Law Warehouse attorney Chris Carter said that the company would be issuing a statement shortly.

Senior Assistant Attorney General Lisa M. English noted that the deal also settles two other Law Warehouse suits that are on appeal.

“The process was a fair and legal one, but anytime you look at a six-month process with a microscope, there is a risk the jury won’t be able to separate out the relevant facts,” said English.

Law filed at least three suits including a right-to-know suit against the state, which it lost, and an antitrust suit that was dismissed, leaving Exel off the hook.

In the antitrust complaint, Law charged that the process was “corrupt” and that state commissioners colluded with lobbyists for the liquor industry. The suit claimed that Exel and the state conspired “to rig the bid scoring and evaluation in Exel’s favor to ensure, and justify, the award of the contract to Exel.”

It also charged that the state extended deadlines and secretly negotiated with Exel so it could improve its bid, destroying the completive process. The state has maintained that such negotiations were common and legal.

If the settlement is approved, those allegations won’t be tested in court, but the state is still the target of lawsuit by XTL-NH, another losing bidder, which lodged similar charges of unfair bidding.   

Exel “repeatedly did not comply with the material requirements of the RFP. And NHSLC acted in bad faith by negotiating more favorable contract terms, in exchange for a lower contract price,” said XTL-NH attorney James J. Bianco Jr.

English said that the XTL-NH suit, filed in March 2013 and scheduled to be tried in October, was another reason the state could not respond in detail to Law’s specific allegations.

The $2.5 million Law settlement adds to the budgetary woes facing the state Legislature, which already has to fund $104 million for two other settlements, a federal lawsuit over inadequate mental health services in 2013 that's predicted to cost $24 million, and a settlement with hospitals over the Medicaid Enhancement Tax, which could translate into another $80 million budget hit.

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