Sherry-Lehmann's Racketeering Lawsuit Against NYT Reporter, Ex-CEO Dismissed by Federal Judge

A federal judge on Tuesday dismissed a lawsuit filed by the once-iconic wine seller Sherry-Lehmann that accused a New York Times reporter and its former chief executive of orchestrating a smear campaign leading to its 2023 collapse. The ruling marks another legal setback for the defunct company amid its ongoing financial and operational turmoil.

The Court's Decision

U.S. District Judge Andrew Carter in Manhattan ruled that Sherry-Lehmann could not proceed with its racketeering claim. According to the decision, the lawsuit failed to adequately allege that reporter James Stewart and former CEO Michael Aaron shared a "common purpose" in their actions, a key requirement for such a claim.

The lawsuit had alleged that Stewart was pursuing a Pulitzer Prize by creating false narratives of wrongdoing, while Aaron was attempting to evade his guarantee on the company's rent obligations. Judge Carter also dismissed a related state law claim that Aaron had breached his separation agreement. In a concurrent development, the judge granted a request from Sherry-Lehmann’s own lawyers to withdraw from the case, citing non-payment for their services.

Background and Allegations

Sherry-Lehmann, co-founded in 1934, was a landmark in New York's fine wine market for decades. However, its business unraveled amid numerous allegations, which were the subject of media reports. These included:

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• Failure to deliver wine that customers had paid for, including high-value wine futures.
• Non-payment to distributors.
• Allegedly selling wine from customers' private storage to other buyers.

In its lawsuit, the company claimed these reports constituted a coordinated smear campaign. Michael Fischman, a lawyer for Aaron, stated his client was pleased with the dismissal and was "deeply saddened by what has happened to a business that meant so much to his family, its employees, and generations of customers."

The Company's Collapse

The dismissal of the lawsuit is the latest event in the company's downfall. In March 2023, the New York State Liquor Authority forced the closure of Sherry-Lehmann's Park Avenue store after its liquor license expired.

Subsequently, the store's landlord filed an eviction lawsuit over unpaid rent and won a $5.8 million default judgment. The landlord is also pursuing legal action against former CEOs Michael Aaron and his successor, Chris Adams, to enforce their alleged personal guarantees on the lease.