A T.G.I. Friday's franchisee has agreed to pay $500,000 to settle New Jersey state regulators' claims that it sold cheap liquor masquerading as high-end brands.
Briad Restaurant Group, of Livingston, will not contest allegations that it violated Division of Alcoholic Beverage Control rules, acting Attorney General John Hoffman said Wednesday in announcing the settlement.
"Briad's restaurants were scamming customers by serving them a cheap substitute for what they ordered," said Hoffman. "This fine should send a clear message to every bar and restaurant throughout New Jersey that customers should get what they pay for every time without exception."
As part of a statewide investigation dubbed "Operation Swill," ABC and Division of Criminal Justice investigators raided 13 T.G.I. Friday's franchises owned by Briad and seized about 250 bottles of alcohol.
Eight of those establishments — located in West Orange, East Windsor, Old Bridge, Piscataway, Freehold, Marlboro, Hazlet and Linden — were charged with violating ABC regulations and are included in the settlement.
Briad agreed to employ an ABC-appointed monitor through June 30, 2014. The monitor will have the full cooperation of Briad's restaurants and its employees as well as access to all books, records, compensation programs and any other information the monitor deems appropriate. The compliance officer will then report his findings to the ABC. In addition, Briad will make internal changes that include updating employee training and inventory software.
Additionally, a five-day suspension for each establishment will be held in abeyance until June 30, 2014. Those suspensions will be dismissed if there are no further drink-substituting charges.
In May, investigators raided 29 bars and restaurants as part of Operation Swill. The investigation had revealed that those 29 establishments were allegedly engaging in a practice of filling premium brand bottles with nonpremium brands in an effort to deceive the customer and increase their profits, the ABC says. The customer paid for the premium brand but was instead poured the nonpremium brand. Approximately 1,000 bottles were confiscated during the enforcement action.
Those 29 bars and restaurants were targeted because of information supplied by confidential informants and consumer complaints. Undercover investigators visited 63 establishments in January and February and covertly took approximately 150 samples. Drinks were ordered by the undercover investigators as "neat," with no ice, water or other mixer, and then tested in a lab.
Class Action in the Offing
On May 24, two days after the state's raids, two Monmouth County residents filed a putative class-action suit in Mercer County Superior Court against Briad Restaurant Group.
The plaintiffs, Kristi Pasieka and Nicole Ruglio, are seeking to represent an estimated class of more than 5,000 people who, between May 22, 2012, and May 22, 2013, ordered and were charged for premium liquors at any one of the raided T.G.I. Friday's.
The suit, Pasieka v. Briad Restaurant Group, MER-L-1151-13, alleges that the franchisee runs its establishments according to a uniform set of procedures and policies, including a "concerted and deliberate policy … to inflate its profits from liquor sales by charging customers premium prices for allegedly premium liquor and then substituting a cheaper, cut-rate brand for the premium liquor brand ordered by the customer."
The lawsuit says that since investigators found the same practice occurring at multiple franchise locations on more than one occasion, and after several rounds of tests, the brand switches were not the work of a rogue bartender or bar manager, "but rather was a common course of conduct and uniform policy implemented by the Briad Group" and consistently followed at all of the raided locations.
Both named plaintiffs claim they were scammed at the T.G.I. Friday's in Hamilton. Pasieka says she bought a purported Grey Goose vodka in March 2013, while Ruglio claims she purchased what she thought was Cuervo Gold Tequila on one visit and Kettle One Vodka on another.
They allege the uniform policy or common course of conduct constituted an unconscionable commercial practice under the Consumer Fraud Act and that they each suffered an ascertainable loss, as required by the statute: the difference between the premium price they paid and the lesser value of the cut-rate liquor they were served.
The suit, assigned to Judge Darlene Pereksta, seeks reimbursement, treble damages and legal fees.
The plaintiffs' lawyer, Stephen DeNittis, of DeNittis Osefchen in Marlton, was away from his office Wednesday and could not be reached for comment.
He told the Law Journal after the suit was filed that an estimate of a 5,000-member class was a "conservative" number and added that he would be open to extending the class period if he obtains information indicating the practice went on longer than one year.
T.G.I. Friday's issued a statement through a public relations agency. "We are satisfied that this settlement brings the issue to a close," the statement says. "Briad has recommitted to ensuring that all of its restaurants operate in accordance with our extensive bar and beverage practices and the high standards and values of the T.G.I. Friday's brand."
Briad issued a separate statement through another PR firm: "Throughout the investigative process, we fully cooperated with the New Jersey ABC. We will continue to cooperate with New Jersey ABC moving forward. In addition to the settlement, we have also made operational adjustments, initiated new training programs and redoubled our efforts to ensure that all of our restaurants adhere to Friday's extensive bar and beverage standards. We believe these actions will result in even higher customer satisfaction and a strengthened level of trust."