Attorney General's News Release

April 1, 1999

Judge rules that Internet beer distributor violated Missouri law; issues injunction against further sales to Missourians

Jefferson City, MO — In one of the nation's first legal rulings on Internet transactions, a St. Louis judge on Wednesday found a Internet distributor of specialty beer in violation of state law for selling liquor to a minor and operating without a Missouri liquor license. Missouri Attorney General Jay Nixon filed the suit against the North Carolina-based Internet company in 1997.

In his order, St. Louis City Circuit Judge Philip D. Heagney banned Beer Nuts Ltd. from further liquor sales in Missouri until the company, which distributes microbrewery beer, obtains a Missouri license. The case has been widely watched because it is one of the nation's first to deal with court jurisdiction over Internet transactions.

"The Internet is an important and wonderful tool, but it should not be used to usurp fundamental state laws, such as those enacted to prevent liquor sales to minors," Nixon said. "It is important that all businesses operating in Missouri, including those operating over the Internet, follow state laws."

Beer Nuts, of Greensboro, argued that the Missouri court had no jurisdiction over its sales. The judge prohibited the company from selling alcohol directly or indirectly to Missouri consumers and from selling memberships in any beer-of-the-month programs to Missourians unless and until the business complies with applicable state statutes that govern the selling of liquor in the state.

Beer Nuts operates a site on the Internet under the name Hog's Head Beer Cellars. In the lawsuit Nixon said the business violated state consumer laws by marketing and selling beer to a minor and violated state liquor control laws by selling liquor without a Missouri license.

"(T)he Court concludes that Beer Nuts' conduct of offering for sale and selling beer directly to consumers in Missouri offends the public policy behind the Liquor Control Law with regard to keeping alcoholic beverages out of the hands of minors," Judge Heagney wrote. "The Court further concludes that Beer Nuts' business operations present a risk of substantial injury to Missouri consumers because they provide inadequate safeguards to prevent the sale of beer to persons under age 21."

The judge also ruled that the steps taken by Beer Nuts to warn potential buyers they must be over 21 and that any order was a representation that the buyer or recipient was over 21 would not satisfy the requirements that a licensed retailer in Missouri would have to comply with under state law.

Nixon filed the lawsuit following an investigation in which a 17-year-old successfully joined the Hog's Head beer-of-the-month club. Nixon said that at no time did Hog's Head require the minor to prove that she was 21 or older.

The order was delivered to a St. Louis address with no instruction to restrict delivery to someone 21 or older. The package containing the beer was left on the doorstep with no one signing for it, Nixon said.

In addition to prohibiting Beer Nuts from selling alcohol to Missourians until it complies with state laws, the judge also ordered the business to pay a civil penalty of $1,000 to the state and to pay all court costs.

The Beer Nuts case is one of several Internet cases filed by Nixon:

• Last September, a Pennsylvania man and his Internet casino business pleaded guilty to criminal counts of promoting gambling on their website after a state grand jury brought the charges against them at Nixon's request.
• In January, the Eighth U.S. Circuit Court of Appeals ruled in Missouri's favor in an ongoing case involving an Internet gambling site operated by the Coeur d'Alene tribe of Idaho, sending the case back to the federal district court. Nixon says the tribe violated Missouri law by representing that it is legal for Missourians to participate in gambling on the Internet.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818