In 1988, wine collector William Koch purchased $400K of wine under the guise that it was from Thomas Jefferson’s personal collection.  Long after learning that was not true, in 2010, he filed suit, alleging civil RICO conspiracy and common law fraud claims. The Second Circuit ruled that the statute of limitations had passed, and thus affirmed the trial court’s dismissal of the suit. The lynchpin of the Court’s decision was that the standard for both claims hinged on “inquiry notice,” as opposed to actual notice.

In November and December of 1988, Koch purchased the bottles through wine selling intermediaries. Christie’s advertised bottles from the same cache as “assumed to have been the property of Thomas Jefferson,” thus bolstering Koch’s belief that the wine was authentic.

It was the early 1990’s when Koch first read articles casting doubt on the authenticity of the Thomas Jefferson wine. The reports were enough to incite Koch to hire a group of attorneys in 1993 to investigate these rumors. He sought further legal advice in 1993 and 1995, and by 2005, Koch had seen an official report from Monticello declaring that it was doubtful the wine actually belonged to Jefferson. Despite years of warning signs, Koch did not file suit against Christie’s until March 30, 2010.

The District Court ruled that the statute of limitations for RICO cases begins to run as soon as there are warnings that should have prompted inquiry into a potential injury. A similar rule applies to New York common law fraud claims. The appellate court affirmed the trial court’s decision in respect of both claims, holding that Koch had reasonable inquiry notice at least 10 years prior to filing suit.  Finally, the Court ruled that Koch could not argue fraudulent concealment by Christie’s because Koch did not use reasonable diligence in pursuing discovery of his legal injury, a key element of this claim.

Thanks to Thalia Staikos for her contribution to this post.

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