Gopuff is suing the Massachusetts Alcoholic Beverages Control Commission, claiming that the commission's decision to revoke its licenses could lead it to suspend all of its retail locations in the state due to insufficient sales.
Philadelphia-based Gopuff lost its statewide alcohol express transportation permit and Newton retail alcohol license last week, after the Massachusetts Alcoholic Beverages Control Commission alleged the company’s licensees were selling alcoholic beverages to minors and driving without a permit.
The company filed a complaint in Massachusetts Superior Court's Business Litigation Session Tuesday against the ABCC and three of its commissioners, asking the court to set aside the commission's decision, remand the matter for further proceedings before the ABCC and issue a ruling stating the decision was "arbitrary, capricious and unlawful."
Andrew Napolitano, communications director for the Office of the Treasurer and Receiver General, said the ABCC has not yet been notified by the courts of the lawsuit.
Allegations against Gopuff
In 2021, the Alcoholic Beverages Control Commission began investigating Gopuff after it received a tip that its licensees GB LL Holdings MA and GB Logistics were selling and delivering alcoholic beverages to minors.
In its report published last week, the commission said that these licensees were responsible for 19 counts of selling and delivering alcoholic beverages to a person under 21, along with six counts of operating a vehicle without a permit. Many of these deliveries went to students at Boston College who used fake IDs to order the alcohol.
The commission said in its report that investigators repeatedly notified Chao Liao, manager of record, about the underage deliveries and lack of transportation permits.
The commission held a hearing on March 7, 2022 to review the violations and released its decision to revoke Gopuff’s licenses on May 18, 2023.
Gopuff’s response
In its lawsuit, Gopuff said the commission “acted arbitrarily” when it revoked the company’s licenses.
The company delivers groceries, alcohol and other essentials to customer’s homes. The company said it operates in 37 states, D.C. and the United Kingdom and has more than 325 liquor licenses in 27 states plus D.C.
Since being made aware of these violations by the commission, Gopuff said in a statement last week it began enhancing its compliance measures in collaboration with the ABCC.
“These measures included enhanced driver partner education, communication streams, operational compliance procedures, a secret shopper program, and the implementation of enhanced ID scanning technology,” per a company spokesperson.
Gopuff, which has its headquarters in Callowhill, said in its lawsuit that it testified on the steps it had taken during the March 7 hearing and continued to update the ABCC on its progress. Gopuff stated that in the months after the hearing the commission also approved the company’s request to renew its Newton retail license and statewide express transportation permit, and also approved 150 additional copies of its express transportation permit.
Gopuff alleges that the punishment from the ABCC does not match the violations. The company said in its legal filing that “the sanction imposed for a first offense of sale of alcohol to minors — and frequently, for subsequent offenses as well — is a license suspension for a matter of days.” The company also said the commission did not take into consideration the steps it took to improve its compliance program in its published decision.
Foley Hoag is representing Gopuff.
Impact on Gopuff’s business
Alcohol sales represent a significant part of Gopuff’s business, according to the lawsuit filed by the company. During 2023 year-to-date, Gopuff said 25% of its revenue for its three locations in Massachusetts that operate retail alcohol licenses was derived from orders that included alcohol. Losing those customers could lead to Gopuff closing up shop in Massachusetts completely, the company said.
Gopuff said it is concerned that its absence from the market will result in a loss of market share to competitor alcohol retailers. Those competitors include Boston-based Drizly, which was bought by Uber in 2021.
The company also noted in the lawsuit that Newton only has 18 all alcohol off-premise retail licenses. Since Gopuff’s licensee lost its license, the company is concerned that someone else will scoop it up.
“The decision should be set aside and remanded to the commission for further proceedings and enforcement proportionate to the scale and scope of the alleged violations,” Gopuff wrote in the lawsuit.
