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91_HB0152enr HB0152 Enrolled LRB9101262LDmb 1 AN ACT in relation to liquor distribution. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 1. Short title. This Act may be cited as the 5 Illinois Wine and Spirits Industry Fair Dealing Act of 1999. 6 Section 5. Definitions. As used in this Act: 7 "Commission" means the Illinois Liquor Control 8 Commission. 9 "Distributorship" means a business relationship, either 10 express or implied, whether oral or written, between a 11 supplier of wine or spirits (other than (i) an Illinois 12 winery or (ii) a winery that has annual case sales in the 13 State of Illinois less than or equal to 10,000 cases per 14 year) for resale and a distributor of such products in which 15 the distributor is given the right to sell a designated 16 product or products, in a generally defined geographic area, 17 in exchange for an express or implied promise to market the 18 product or products. A registration under the Liquor Control 19 Act of 1934 as amended is a distributorship. 20 "Supplier" means a person who is a grantor of a wine or 21 liquor distributorship in this State (other than (i) an 22 Illinois winery or (ii) a winery that has annual case sales 23 in the State of Illinois less than or equal to 10,000 cases 24 per year). 25 "Distributor" means a person who is a grantee of a wine 26 or liquor distributorship in this State. 27 "Agreement" means any contract, agreement, course of 28 dealing, or arrangement, express or implied, whether oral or 29 written, for a definite or indefinite period between a 30 supplier (other than (i) an Illinois winery or (ii) a winery 31 that has annual case sales in the State of Illinois less than HB0152 Enrolled -2- LRB9101262LDmb 1 or equal to 10,000 cases per year, and a distributor 2 pursuant to which a distributor has been granted a 3 distributorship). 4 "Good cause" means a failure by a distributor to comply 5 with essential and reasonable requirements imposed upon the 6 distributor by the supplier or bad faith in the performance 7 of the distributorship agreement. The requirements may not 8 be unreasonably discriminating either by their terms or in 9 the methods or effects of enforcement as compared with 10 requirements imposed on other similarly situated distributors 11 by the supplier. The requirements may not be inconsistent 12 with this Act or in 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. Legislative declaration; purposes and 21 construction. 22 (a) The General Assembly makes the following findings 23 and declarations: 24 (i) Pursuant to the 21st Amendment of the 25 Constitution of the United States, the General Assembly 26 has enacted the Liquor Control Act of 1934, which 27 establishes a three-tier system of distribution of wine 28 and spirits to the public. 29 (ii) This Act is enacted pursuant to authority of 30 the State of Illinois and under the provisions of the 31 21st Amendment to the United States Constitution to 32 promote the public's interest in fair, efficient, and 33 competitive distribution of wine and liquor products. HB0152 Enrolled -3- LRB9101262LDmb 1 (b) This Act shall be construed and applied to promote 2 its underlying remedial purposes and policies. 3 (c) The provisions of this Act are of a public order and 4 cannot be waived. Any contract or agreement purporting to do 5 so is void and unenforceable to that extent. 6 (d) This Act shall govern all relations between 7 distributors and suppliers to the full extent consistent with 8 the constitutions of this State and of the United States. 9 Accordingly, Section 35, which clarifies existing rights and 10 obligations and establishes remedial provisions, applies to 11 all agreements between a distributor and a supplier (other 12 than agreements with an Illinois winery or a winery that has 13 annual case sales in the State of Illinois less than or equal 14 to 10,000 cases per year) whether those agreements were 15 entered into before or after the effective date of this Act. 16 Sections 15 through 30 of this Act shall govern all 17 agreements between a distributor and a supplier (other than 18 agreements with an Illinois winery or a winery that has 19 annual case sales in the State of Illinois less than or equal 20 to 10,000 cases per year), entered into after the effective 21 date of this Act, including any renewal of an agreement in 22 existence on or before the effective date of this Act. 23 Renewal of an agreement with a designated term or duration 24 shall mean (i) establishment of a new term, (ii) extension of 25 the agreement on any other basis, or (iii) shipment of wine 26 or spirits to the distributor after the expiration of the 27 designated term or duration. Renewal of an agreement in 28 place on a month to month, year to year, or other periodic 29 basis shall mean (i) continuation of the distributorship into 30 the next month, year, or other period, (ii) extension of the 31 distributorship on any other basis, or (iii) shipment of wine 32 or spirits to a distributor after the expiration of the month 33 or other periodic basis designated as the duration of the 34 distributorship in the agreement. Renewal of an agreement HB0152 Enrolled -4- LRB9101262LDmb 1 without a designated term or duration shall mean shipment of 2 wine or spirits to a distributor after the effective date. 3 (e) In accordance with Section 1.31 of the Statute on 4 Statutes, the provisions of this Act are severable. If any 5 provision or interpretation of this Act, or the application 6 of such interpretation or provision to any distributorship, 7 is held invalid, the application of the Act to persons or 8 circumstances other than those as to which it is held invalid 9 shall not be affected thereby. 10 Section 15. Cancellation and alteration of 11 distributorships. No supplier may cancel, fail to renew, 12 otherwise terminate, or alter on a discriminatory basis an 13 agreement unless the party intending that action has good 14 cause for the cancellation, failure to renew, termination, or 15 alteration and, in any case in which prior notification is 16 required under Section 20, the party intending to act has 17 furnished the prior notification and the affected party has 18 not eliminated the reasons specified in the notification for 19 cancellation, failure to renew, or termination within 90 days 20 after the sending of the notification. Each party shall make 21 a good faith effort to resolve disputes under this Section. 22 The burden of proving good cause is on the party who asserts 23 it. 24 Section 20. Notice of termination, cancellation, or 25 alteration. 26 (a) Except as provided in subsection (c) of this 27 Section, no supplier may cancel, fail to renew, otherwise 28 terminate, or alter an agreement unless the supplier 29 furnishes prior notification to the affected party in 30 accordance with subsection (b). 31 (b) The notification required under subsection (a) shall 32 be in writing and sent to the affected party by certified HB0152 Enrolled -5- LRB9101262LDmb 1 mail not less than 90 days before the date on which the 2 agreement will be cancelled, not renewed, otherwise 3 terminated, or altered. The notification shall contain (i) a 4 statement of intention to cancel, fail to renew, otherwise 5 terminate, or alter an agreement, (ii) a complete statement 6 of reasons therefore, including all data and documentation 7 necessary to fully apprise the distributor of the reasons for 8 the action, (iii) the date on which the action shall take 9 effect, and (iv) shall provide that the distributor has 60 10 days in which to rectify any claimed deficiency. If the 11 deficiency is rectified within 60 days, the notice shall be 12 void. 13 (c) A supplier may cancel, fail to renew, or otherwise 14 terminate an agreement without furnishing any prior 15 notification for any of the following reasons: 16 (1) Distributor's assignment for the benefit of 17 creditors, or similar disposition, of substantially all 18 of the assets of such party's business. 19 (2) Insolvency of distributor or the institution of 20 proceedings in bankruptcy by or against the distributor. 21 (3) Dissolution or liquidation of the distributor. 22 (4) Distributor's conviction of, or plea of guilty 23 or no contest to, a charge of violating a law or 24 regulation in this State that materially and adversely 25 affects the ability of either party to continue to sell 26 wine or liquor in this State, or the revocation or 27 suspension of a license or permit to sell wine or liquor 28 in this State. 29 (d) The notification required under subsection (a) shall 30 be sent not less than 10 days before the date of the 31 cancellation, nonrenewal, termination, or alteration of the 32 notice if the notice is based on (i) failure to pay any 33 account when due and upon demand by the supplier for such 34 payment, in accordance with agreed payment terms, or (ii) bad HB0152 Enrolled -6- LRB9101262LDmb 1 faith in the performance of the distributorship agreement. 2 If the notice is based on a failure to pay any account, the 3 distributor shall have 10 days in which to remedy the 4 default. If the default in payment is remedied within 10 5 days, the notice shall be void. 6 Section 25. Action for damages and injunctive relief. 7 Parties to a distributorship may bring an action in any court 8 of competent jurisdiction for damages sustained as a 9 consequence of the violation, and may also be granted 10 injunctive relief against unlawful termination, cancellation, 11 nonrenewal, or other harm. For agreements entered into or 12 renewed after the effective date of this Act, this remedy is 13 an addition to the remedies provided in Section 35. It is 14 the policy of this State to avoid unfair or wrongful 15 terminations. Notwithstanding any provisions of any 16 agreement between a supplier and a distributor, the venue for 17 any such action shall be at the location of the 18 distributorship and this Act shall apply. 19 Section 30. Application to arbitration agreements. An 20 agreement between a supplier that is not an Illinois winery 21 or a winery that has annual case sales in the State of 22 Illinois less than or equal to 10,000 cases per year and a 23 distributor providing for binding arbitration of disputes 24 shall be valid and enforceable in accordance with the Federal 25 Arbitration Act. In the event that a dispute concerning the 26 existence of good cause for a termination, cancellation, 27 nonrenewal, or other harm is resolved through arbitration, 28 the definition of good cause and the substantive provisions 29 of this Act shall apply. 30 Section 35. Procedural provisions; good faith; role of 31 Liquor Control Commission. HB0152 Enrolled -7- LRB9101262LDmb 1 (a) This Section clarifies existing rights and 2 obligations and establishes remedial procedures applicable to 3 registrations under Section 6-9 of the Liquor Control Act of 4 1934. 5 (b) Under existing Illinois common and statutory law, 6 suppliers, other than (i) Illinois wineries or (ii) wineries 7 that have annual case sales in the State of Illinois less 8 than or equal to 10,000 cases per year, who have or should 9 have registered names of distributors under Section 6-9 of 10 the Liquor Control Act of 1934, granting or confirming 11 distributors rights to sell at wholesale in this State, have 12 an obligation to act in good faith in all aspects of the 13 registration and distributorship relationship, without 14 discrimination or coercion under threat of retaliation or 15 termination in bad faith, and in conformity with any 16 emergency or final regulations issued by the Liquor Control 17 Commission pursuant to Section 3-12 or 6-19 or other 18 applicable provision of the Liquor Control Act of 1934 or by 19 the Department of Revenue. Under the existing obligation to 20 act in good faith, no registration or obligation to register 21 under Section 6-9 may be terminated, nor may a supplier that 22 is not an Illinois winery or a winery that has annual case 23 sales in the State of Illinois less than or equal to 10,000 24 cases per year fail to renew or extend a product, name, 25 brand, registration, or an agreement with a distributor 26 except by acting in good faith in all aspects of the 27 relationship, without discrimination or coercion, and not in 28 retaliation or as a result of the distributor's exercise of 29 its right to petition the General Assembly, the Congress, or 30 any other unit or form of government for any purpose, to any 31 end, or for or against any proposition, provision, amendment, 32 bill, resolution, judgment, decision, rule, regulation, or 33 interpretation. 34 (c) In order to enforce the existing obligation of good HB0152 Enrolled -8- LRB9101262LDmb 1 faith with respect to registrations under Section 6-9, the 2 Commission shall have power to: 3 (1) Prohibit or suspend any supplier that is not an 4 Illinois winery or a winery that has annual case sales in 5 the State of Illinois less than or equal to 10,000 cases 6 per year or its successors or assigns found to have 7 flagrantly or repeatedly violated the obligation 8 described in this Section from selling any product or 9 products governed under the Liquor Control Act of 1934 10 and the Twenty-First Amendment to the United States 11 Constitution in Illinois. 12 (2) Order the supplier, if the supplier is not an 13 Illinois winery or a winery that has annual case sales in 14 the State of Illinois less than or equal to 10,000 cases 15 per year, to continue providing products to a distributor 16 at prices and quantities in effect for the 17 distributorship prior to any termination or failure to 18 renew that becomes the subject of a dispute or 19 administrative proceedings under this Section until the 20 matters in dispute are determined by an order which is 21 final and non-reviewable. 22 Orders of the Liquor Control Commission entered under 23 this Section shall be deemed orders as to which an emergency 24 exists. 25 (d) Notwithstanding Section 30 of this Act, any 26 aggrieved party under this Section may apply to the 27 Commission for a finding that another party has violated this 28 Section and request relief. 29 (e) Orders entered by the Commission under this Section 30 shall be reviewable by the Circuit Court under the terms of 31 the Administrative Review Law. In accordance with Section 32 3-110 of the Administrative Review Law, findings and 33 conclusions of the Commission shall be held to be prima facie 34 true and correct. HB0152 Enrolled -9- LRB9101262LDmb 1 (f) No court shall enter a stay, restraining order, 2 injunction, mandamus, or other order that has the effect of 3 suspending, delaying, modifying, or overturning a Commission 4 finding or determination under this Section before a full 5 hearing and final decision on the merits of the Commission 6 ruling, finding, or order. 7 Section 99. Effective date. This Act takes effect upon 8 becoming law.