In suits over leaky whiskey barrels, expect claims for the barrels and the lost spirits.

BY ASHLEY BRANDT · FEBRUARY 21, 2020

Here’s a complaint that MGPI of Indiana (MGP to most of us) filed a few months ago against Barrel 53 Cooperage, an artisan barrel maker out of the Ozarks.

MGP asserts it met with and discussed contracting with Barrel 53 for the manufacture and delivery of new white oak barrels for aging whiskey and after representations from the cooperage about the quality and promises of performance for the barrels, it placed an order.

Importantly, the whiskey distiller asserts that in discussions with the whiskey barrel maker and on the cooperage’s website, the distiller was promised and told to expect:

1. That Barrel 53 would provide MGPI with reliable, artisan Whiskey Barrels.
2. That Barrel 53 would ensure that all Whiskey Barrels sold to MGPI were leak-free and of the highest quality.
3. That each Whiskey Barrel would be leak-tested with both water and air pressure using a certain rigorous air pressure and spin process (the “Leak Test”) and would pass such test before delivery to MGPI.
4. That Barrel 53 intended to provide MGPI with flawless Whiskey Barrels. 

The distiller placed an order for over 2,300 barrels. Many of the barrels received under the order performed as expected, but as the complaint alleges, some of the barrels did not. Some of the leaky barrels were caught when the barrels were filled:

On or about August 15, 2015, MGPI attempted to fill Whiskey Barrels that had been delivered by Barrel 53 on or about August 6, 2015. When MGPI attempted to fill those Whiskey Barrels, it discovered that eight of the Whiskey Barrels had latent defects that caused them to leak so badly from the heads that those Whiskey Barrels would not hold liquid. MGPI notified Barrel 53 of these facts by email on August 18, 2015, revoked acceptance of the defective Whiskey Barrels, and instructed Barrel 53 to issue a credit for eight Whiskey Barrels. 

But some of the allegedly leaky barrels were not found at the time they were filled with whiskey and:

• On information and belief, Barrel 53 delivered at least 67 Whiskey Barrels to MGPI that, after being filled and stored, leaked all of the whiskey stored in such Whiskey Barrels, with the aggregate market value of the lost whiskey being $80,565.00 and the aggregate amount paid to Barrel 53 to purchase the defective Whiskey Barrels being $23,498.00.
• On information and belief, Barrel 53 delivered at least 151 Whiskey Barrels to MGPI that, after being filled and stored, leaked more than half but less than all of the whiskey stored in each such Whiskey Barrel, with the aggregate market value of the lost whiskey being $115,131.00 and the aggregate amount paid to Barrel 53 to purchase the defective Whiskey Barrels being $33,579.00. 

The distiller sent letters demanding payment and when no response came, they sued. The gist being that the barrel maker was well aware of the requirements and needs of the distiller at the time of contracting and that the cooperage failed to meet those particular requirements – whiskey barrels suitable for the purpose of storing and aging whiskey.

The complaint also includes the purchase order showing MGP ordered 2,304 new barrels for a per unit price of $275 barrels each (this should get those buying barrels on a resale market a little wiser to the pricing charged in mark-ups by those companies pushing and selling used barrels for a premium to brewers and other distillers) and the barrel specifications that were provided to the cooperage by the distiller and do include the requirement for air and water testing and notice about the intended purpose of the barrel, and which include other elements that distilleries may find useful in drafting their own barrel specifications:

• These specifications are designed for a tight, white oak, charred barrel for the purpose of storing and aging whiskey.
• All barrels will be made from quarter sawn, white oak staves and heading.
• The average capacity will be 53 gallons.
• The average moisture content target is 12%, with a range of 10% – 14% for both staves and heading.
• Each barrel will be charred on the inside using a #4 char on the staves and a #2 char on the heads.
• The average length will be 35″ +/- 1/4″
• The bilge circumference of the barrels will average 80 1/2″ with a range of 80″ – 81″.
• The head diameter will be 20 7/8″ +/- 1/8″ . The beveled section of each head will be dipped in wax.
• Each barrel will have a 1 15/16″ tapered bung hole.
• After assembly, each barrel should be air/water tested and inspected prior to shipment.
• Each barrel will have six new hoops: head – 2, quarter – 2 and bilge – 2.
• The head hoops will be 1 3/4″ to 2″ in width and .054″ thick.
• The quarter hoops will be 1 3/4″ to 2″ width and .054″ thick.
• The bilge hoops will be 1 3/4″ to 2″ in width and .054″ thick.
• Hoop steel shall be of composition and hardness to provide proper strength and elasticity for use as hoop iron on tight, white oak whiskey barrels.
• Hoop steel – a minimum of ASTM A570, high strength, low alloy, and hot rolled. Hardness: Rockwell B78 – 84. Elongation – 22% to 28% in two inches.

The complaint was recently dismissed – presumably things were settled, but there’s no notation of that in the record. You can read a full copy of the complaint over the leaky barrels here along with the purchase order for the barrels and the specifications.

Takeaway: Endeavor to ensure the specifications and scope properly inform the barrel maker (or anyone else you’re ordering anything from for that matter) of not only your requirements, but the intended purpose and function. Beware of odd terms and conditions seeking to disclaim warranties of fitness for a particular purpose if you are ordering something made for a particular purpose.