State of Illinois
91st General Assembly
Legislation

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91_HB0152

 
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 1        AN  ACT  to create the Illinois Wine and Spirits Industry
 2    Fair Dealing Act.

 3        Be it enacted by the People of  the  State  of  Illinois,
 4    represented in the General Assembly:

 5        Section  1.   Short  title.  This Act may be cited as the
 6    Illinois Wine and Spirits Industry Fair Dealing Act of 1999.

 7        Section 5.  Definitions.  As used in this Act:
 8        "Commission"   means   the   Illinois   Liquor    Control
 9    Commission.
10        "Distributorship"  means  a business relationship, either
11    express or  implied,  whether  oral  or  written,  between  a
12    supplier  of  wine  or  spirits,  other  than (i) an Illinois
13    winery or (ii) a winery that has annual  case  sales  in  the
14    State  of  Illinois  less  than or equal to 10,000  cases per
15    year, for resale and a distributor of such products in  which
16    the  distributor  is  given  the  right  to sell a designated
17    product or products, in a generally defined geographic  area,
18    in  exchange  for an express or implied promise to market the
19    product or products. A registration under the Liquor  Control
20    Act of 1934 as amended is a distributorship.
21        "Supplier"  means  a person who is a grantor of a wine or
22    liquor distributorship in  this  State,  other  than  (i)  an
23    Illinois  winery  or (ii) a winery that has annual case sales
24    in the State of Illinois less than or equal to 10,000   cases
25    per year.
26        "Distributor"  means  a person who is a grantee of a wine
27    or liquor distributorship in this State.
28        "Agreement" means  any  contract,  agreement,  course  of
29    dealing,  or arrangement, express or implied, whether oral or
30    written, for  a  definite  or  indefinite  period  between  a
31    supplier,  other than (i) an Illinois winery or (ii) a winery
 
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 1    that has annual case sales in the State of Illinois less than
 2    or equal to  10,000    cases  per  year,  and  a  distributor
 3    pursuant   to   which   a  distributor  has  been  granted  a
 4    distributorship.
 5        "Good cause" means a failure by a distributor  to  comply
 6    with  essential  and reasonable requirements imposed upon the
 7    distributor by the supplier.  The  requirements  may  not  be
 8    discriminating  either  by  their  terms or in the methods or
 9    effects of enforcement as compared with requirements  imposed
10    on  other  similarly  situated  distributors by the supplier.
11    The requirements may not be inconsistent with this Act or  in
12    violation of any law or regulation.
13        "Wine   and  liquor"  means  spirituous  liquor  or  wine
14    containing alcohol in excess of 10 percent by weight, but not
15    including beer and other malt beverages.
16        "Person"  means  a  natural  person,  partnership,  joint
17    venture, corporation, or other entity,  and  includes  heirs,
18    assigns, successors, personal representatives, and guardians.
19        "Illinois winery" means a winery located in Illinois.

20        Section 10. Purposes and construction.
21        (a)  This  Act  shall be construed and applied to promote
22    its underlying remedial purposes and policies.
23        (b)  The provisions of this Act are of a public order and
24    therefore the rights determined by those provisions cannot be
25    waived.  Any contract or agreement purporting  to  do  so  is
26    void and unenforceable to that extent.
27        (c)  This   Act   shall   govern  all  relations  between
28    distributors and suppliers to the full extent consistent with
29    the constitutions of this State and  of  the  United  States.
30    Accordingly,  Sections 15 through 30 of this Act shall govern
31    all agreements between a distributor  and  a  supplier  other
32    than  agreements with an Illinois winery or a winery that has
33    annual case sales in the State of Illinois less than or equal
 
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 1    to 10,000  cases per year, whether written or  oral,  express
 2    or  implied,  entered  into  after the effective date of this
 3    Act, including any renewal of an agreement in existence on or
 4    before the effective date of this Act,  to  the  full  extent
 5    consistent  with  the  constitutions  of  this  State and the
 6    United States.  Renewal of an  agreement  with  a  designated
 7    term  or duration shall mean (i) establishment of a new term,
 8    (ii) extension of the agreement on any other basis, or  (iii)
 9    shipment  of  wine  or  spirits  to the distributor after the
10    expiration of the designated term or duration.  Renewal of an
11    agreement in place on a month to  month,  year  to  year,  or
12    other  periodic  basis  shall  mean  (i)  continuation of the
13    distributorship into the next month, year, or  other  period,
14    (ii)  extension of the distributorship on any other basis, or
15    (iii) shipment of wine or spirits to a distributor after  the
16    expiration of the month or other periodic basis designated as
17    the   duration  of  the  distributorship  in  the  agreement.
18    Renewal  of  an  agreement  without  a  designated  term   or
19    duration,  such  as  an  agreement  in  place on an "at will"
20    basis,  shall  mean  shipment  of  wine  or  spirits   to   a
21    distributor after the effective date.
22        (d)  In  accordance  with  Section 1.31 of the Statute on
23    Statutes, the provisions of this Act are severable.   If  any
24    provision  or  interpretation of this Act, or the application
25    of such interpretation or provision to  any  distributorship,
26    is  held  invalid,  the  application of the Act to persons or
27    circumstances other than those as to which it is held invalid
28    shall not be affected thereby.

29        Section   15.     Cancellation    and    alteration    of
30    distributorships.
31        (a)  No  supplier  or  distributor  may  cancel,  fail to
32    renew, or otherwise terminate an agreement unless  the  party
33    intending  that  action  has good cause for the cancellation,
 
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 1    failure to renew, or termination, has made good faith efforts
 2    to resolve disagreements, and, in any  case  in  which  prior
 3    notification   is   required  under  Section  20,  the  party
 4    intending to act has furnished the prior notification and the
 5    affected party has not eliminated the  reasons  specified  in
 6    the  notification  for  cancellation,  failure  to  renew, or
 7    termination  within  90  days  after  the  sending   of   the
 8    notification.    The  burden  of proving good cause is on the
 9    party who asserts it.
10        (b)  No supplier may, without good cause, fail  to  renew
11    an  agreement  on  terms then equally available to all of its
12    distributors or alter the terms of an  agreement  from  those
13    terms then equally available to all of its distributors.
14        (c)  No   supplier   shall  present  an  agreement  to  a
15    distributor  that  attempts  to  waive  compliance  with  any
16    provision of this Act or that requires the supplier to  waive
17    compliance with any provision of this Act.
18        (d)  No  distributor  shall  present  an  agreement  to a
19    supplier that attempts to waive compliance with any provision
20    of this  Act  or  that  requires  the  distributor  to  waive
21    compliance with any provision of this Act.

22        Section 20.  Termination and notice of cancellation.
23        (a)  Except   as  provided  in  subsection  (c)  of  this
24    Section, no supplier  or  distributor  may  cancel,  fail  to
25    renew,   or  otherwise  terminate  an  agreement  unless  the
26    supplier or distributor furnishes prior notification  to  the
27    affected party in accordance with subsection (b).
28        (b)  The notification required under subsection (a) shall
29    be  in  writing  and  sent to the affected party by certified
30    mail not less than 90 days  before  the  date  on  which  the
31    agreement  will  be  cancelled,  not  renewed,  or  otherwise
32    terminated.   The  notification shall contain (i) a statement
33    of intention to cancel, fail to renew, or otherwise terminate
 
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 1    an agreement, (ii) a complete statement of reasons therefore,
 2    including all  data  and  documentation  necessary  to  fully
 3    apprise  the  distributor  of the reasons for the action, and
 4    (iii) the date on which the action shall take effect.
 5        (c)  A supplier may cancel, fail to renew,  or  otherwise
 6    terminate   an   agreement   without   furnishing  any  prior
 7    notification for any of the following reasons:
 8             (1)  Distributor's failure to pay any  account  when
 9        due  and upon demand by the supplier for such payment, in
10        accordance with agreed payment terms.
11             (2)  Distributor's assignment  for  the  benefit  of
12        creditors,  or  similar disposition, of substantially all
13        of the assets of such party's business.
14             (3)  Insolvency of distributor or the institution of
15        proceedings in bankruptcy by or against the distributor.
16             (4)  Dissolution or liquidation of the distributor.
17             (5)  Distributor's conviction of, or plea of  guilty
18        or  no  contest  to,  a  charge  of  violating  a  law or
19        regulation in this State that  materially  and  adversely
20        affects  the  ability of either party to continue to sell
21        wine or liquor  in  this  State,  or  the  revocation  or
22        suspension  of a license or permit to sell wine or liquor
23        in this State.
24             (6)  Any attempted transfer of  business  assets  of
25        the  distributor, voting stock of the distributor, voting
26        stock of any parent corporation of  the  distributor,  or
27        any  change in the beneficial ownership or control of any
28        entity without obtaining the prior  consent  or  approval
29        unless  the  supplier  neither approves, consents to, nor
30        objects to the transfer within 60  days  after  receiving
31        all  requested information from the distributor regarding
32        the proposed purchase, in which event the supplier  shall
33        be deemed to have consented to the proposed transaction.
34             (7)  Fraudulent  conduct  by  the distributor in its
 
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 1        dealings with the supplier.

 2        Section 25.  Action for damages  and  injunctive  relief.
 3    If  a  distributor or supplier that is not an Illinois winery
 4    or a winery that has  annual  case  sales  in  the  State  of
 5    Illinois  less  than  or  equal  to  10,000    cases per year
 6    violates Section  15  or  20  of  this  Act,  a  supplier  or
 7    distributor  may  bring an action against such distributor or
 8    supplier in any court of competent jurisdiction  for  damages
 9    sustained  by the supplier or distributor as a consequence of
10    the violation, and the distributor or supplier  may  also  be
11    granted   injunctive  relief  against  unlawful  termination,
12    cancellation, nonrenewal, or other harm.  It is the policy of
13    this  State  to  avoid  unfair  or   wrongful   terminations.
14    Therefore, in establishing the right to injunctive relief, it
15    shall   not  be  necessary  to  establish  the  existence  of
16    irreparable  harm   or   an   inadequate   remedy   at   law.
17    Notwithstanding  the  provisions  of  any agreement between a
18    supplier and a distributor, the provisions  of  the  Code  of
19    Civil  Procedure  and  Title  28  of the U.S. Code concerning
20    venue for any such action shall be applicable  and  this  Act
21    shall apply.

22        Section  30.   Application to arbitration agreements.  An
23    agreement between a supplier that is not an  Illinois  winery
24    or  a  winery  that  has  annual  case  sales in the State of
25    Illinois less than or equal to 10,000  cases per year  and  a
26    distributor  providing  for  binding  arbitration of disputes
27    shall be valid and enforceable in accordance with the Federal
28    Arbitration Act.  In the event that a dispute concerning  the
29    existence  of  good  cause  for  a termination, cancellation,
30    nonrenewal, or other harm is  resolved  through  arbitration,
31    the  definition  of good cause and the substantive provisions
32    of this Act shall apply.
 
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 1        Section 35.  Procedural provisions; good faith;  role  of
 2    Liquor Control Commission.
 3        (a)  This   Section   clarifies   existing   rights   and
 4    obligations and establishes remedial procedures applicable to
 5    registrations  under Section 6-9 of the Liquor Control Act of
 6    1934.
 7        (b)  Under existing Illinois common  and  statutory  law,
 8    suppliers,  other than (i) Illinois wineries or (ii) wineries
 9    that have annual case sales in the  State  of  Illinois  less
10    than  or  equal to 10,000  cases per year, who have or should
11    have registered names of distributors under  Section  6-9  of
12    the  Liquor  Control Act, granting or confirming distributors
13    rights to sell at wholesale in this State, have an obligation
14    to act in good faith.  Under the existing obligation  to  act
15    in  good  faith,  no  registration  or obligation to register
16    under Section 6-9 may be terminated, nor may a supplier  that
17    is  not  an  Illinois winery or a winery that has annual case
18    sales in the State of Illinois less than or equal  to  10,000
19    cases  per  year  fail  to  renew  or extend a product, name,
20    brand, registration, or an agreement with a distributor as  a
21    result of the distributor's exercise of its right to petition
22    the General Assembly, the Congress, or any other unit or form
23    of  government for any purpose, to any end, or for or against
24    any  proposition,  provision,  amendment,  bill,  resolution,
25    judgment, decision, rule, regulation, or interpretation.
26        (c)  In order to enforce the existing obligation of  good
27    faith  with  respect  to registrations under Section 6-9, the
28    Commission shall have power to:
29             (1)  Prohibit or suspend any supplier that is not an
30        Illinois winery or a winery that has annual case sales in
31        the State of Illinois less than or equal to 10,000  cases
32        per year or its  successors  or  assigns  found  to  have
33        flagrantly   or   repeatedly   violated   the  obligation
34        described in this Section from  selling  any  product  or
 
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 1        products  governed  under  the Liquor Control Act of 1934
 2        and the  Twenty-First  Amendment  to  the  United  States
 3        Constitution in Illinois.
 4             (2)  Order  the  supplier, if the supplier is not an
 5        Illinois winery or a winery that has annual case sales in
 6        the State of Illinois less than or equal to 10,000  cases
 7        per year, to continue providing products to a distributor
 8        at   prices   and   quantities   in   effect   for    the
 9        distributorship  prior  to  any termination or failure to
10        renew  that  becomes  the  subject  of   a   dispute   or
11        administrative  proceedings  under this Section until the
12        matters in dispute are determined by an  order  which  is
13        final and non-reviewable.
14        Orders  of  the  Liquor  Control Commission entered under
15    this Section shall be deemed orders as to which an  emergency
16    exists.
17        (d)  Any  aggrieved party under this Section may apply to
18    the Commission for a finding that another party has  violated
19    this Section and request relief.
20        (e)  Orders  entered by the Commission under this Section
21    shall be reviewable by the Circuit Court under the  terms  of
22    the  Administrative  Review  Law.  In accordance with Section
23    3-110  of  the  Administrative  Review  Law,   findings   and
24    conclusions of the Commission shall be held to be prima facie
25    true and correct.
26        (f)  The administrative remedies provided in this Section
27    must  be  exhausted  before  resort may be had to judicial or
28    arbitral review by any arbitrator or the Circuit Court or any
29    other court, state or federal, foreign or domestic.  No court
30    shall enter a stay, restraining order, injunction,  mandamus,
31    or  other  order that has the effect of suspending, delaying,
32    modifying,   or   overturning   a   Commission   finding   or
33    determination under this Section before a  full  hearing  and
34    final  decision  on  the  merits  of  the  Commission ruling,
 
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 1    finding, or order.

 2        Section 99.  Effective date.  This Act takes effect  upon
 3    becoming law.

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