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Judge Lowers ‘Bad Wine’ Damages to Under $1M for Fake Bordeaux

A federal judge has thrown out a $12 million punitive damages award to billionaire William Koch in his lawsuit accusing a fellow oenophile of selling him 24 bottles of fake Bordeaux, and reduced the award to just $711,622.

U.S. District Judge J. Paul Oetken in Manhattan agreed with the defendant, Silicon Valley entrepreneur Eric Greenberg, that the jury’s April 2013 award was “exorbitant,” being more than 33 times the $355,811 it awarded in compensatory damages.

Oetken also lowered those damages to $212,699, reflecting Koch’s prior settlement with Zachys Wine Auctions Inc, reducing the total award to $924,321 from nearly $12.4 million.

“The jury found that (Greenberg) had shamelessly defrauded customers with ‘garbage,’” Oetken wrote. “Yet his conduct did not cause a particularly egregious harm: he was dealing in luxury goods marketed to a sophisticated and wealthy subset of the population. The harm was strictly economic, and the victims were far from vulnerable consumers. These facts merit a relatively low award of punitive damages.”

Oetken said punitive damages equal to two times compensatory damages would punish Greenberg and deter other fraudsters.

In letting the verdict stand, the judge said Greenberg did not meet his “heavy burden” of showing that reasonable jurors could not have ruled against him.

Greenberg had maintained that he thought the wines were authentic. The trial lasted three weeks.

Oetken also denied Koch’s requests to recoup $7.9 million of attorney’s fees, and restrict Greenberg’s future wine sales.

John Hueston, a lawyer for Koch, did not immediately respond to requests for comment. Koch is the brother of conservative political activists Charles and David Koch.

“This is obviously a very dramatic turnaround,” said Arthur Shartsis, a lawyer for Greenberg, in a phone interview. “Though we maintain that Eric did not defraud anybody, the thrust of the judge’s decision is correct on compensatory damages, although high on punitive damages.”

In his lawsuit, Koch accused Greenberg of knowingly selling him counterfeit wine at an October 2005 Zachys auction, including Chateau Lafite from 1811, Chateau Latour from 1864 and 1865, and a magnum of Chateau Petrus from 1921.

Koch has also filed other lawsuits claiming he was deceived into buying fake wine.

In October 2012, a federal appeals court in New York dismissed his lawsuit against Christie’s auction house over bottles that allegedly belonged to Thomas Jefferson, the U.S. president, which had been offered by German dealer Hardy Rodenstock.

Koch, 73, is the founder of the Oxbow Energy group, and won the America’s Cup yachting race in 1992. Forbes magazine this month estimated his net worth at $3.9 billion.

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