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91_HB0152enr
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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
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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.
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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
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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
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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
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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.
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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
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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.
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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.
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