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91_HB0152sam001
LRB9101262LDksam01
1 AMENDMENT TO HOUSE BILL 152
2 AMENDMENT NO. . Amend House Bill 152 by replacing
3 the title with the following:
4 "AN ACT in relation to liquor distribution."; and
5 by replacing everything after the enacting clause with the
6 following:
7 "Section 1. Short title. This Act may be cited as the
8 Illinois Wine and Spirits Industry Fair Dealing Act of 1999.
9 Section 5. Definitions. As used in this Act:
10 "Commission" means the Illinois Liquor Control
11 Commission.
12 "Distributorship" means a business relationship, either
13 express or implied, whether oral or written, between a
14 supplier of wine or spirits (other than (i) an Illinois
15 winery or (ii) a winery that has annual case sales in the
16 State of Illinois less than or equal to 10,000 cases per
17 year) for resale and a distributor of such products in which
18 the distributor is given the right to sell a designated
19 product or products, in a generally defined geographic area,
20 in exchange for an express or implied promise to market the
21 product or products. A registration under the Liquor Control
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1 Act of 1934 as amended is a distributorship.
2 "Supplier" means a person who is a grantor of a wine or
3 liquor distributorship in this State (other than (i) an
4 Illinois winery or (ii) a winery that has annual case sales
5 in the State of Illinois less than or equal to 10,000 cases
6 per year).
7 "Distributor" means a person who is a grantee of a wine
8 or liquor distributorship in this State.
9 "Agreement" means any contract, agreement, course of
10 dealing, or arrangement, express or implied, whether oral or
11 written, for a definite or indefinite period between a
12 supplier (other than (i) an Illinois winery or (ii) a winery
13 that has annual case sales in the State of Illinois less than
14 or equal to 10,000 cases per year, and a distributor
15 pursuant to which a distributor has been granted a
16 distributorship).
17 "Good cause" means a failure by a distributor to comply
18 with essential and reasonable requirements imposed upon the
19 distributor by the supplier or bad faith in the performance
20 of the distributorship agreement. The requirements may not
21 be unreasonably discriminating either by their terms or in
22 the methods or effects of enforcement as compared with
23 requirements imposed on other similarly situated distributors
24 by the supplier. The requirements may not be inconsistent
25 with this Act or in violation of any law or regulation.
26 "Wine and liquor" means spirituous liquor or wine
27 containing alcohol in excess of 10 percent by weight, but not
28 including beer and other malt beverages.
29 "Person" means a natural person, partnership, joint
30 venture, corporation, or other entity, and includes heirs,
31 assigns, successors, personal representatives, and guardians.
32 "Illinois winery" means a winery located in Illinois.
33 Section 10. Legislative declaration; purposes and
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1 construction.
2 (a) The General Assembly makes the following findings
3 and declarations:
4 (i) Pursuant to the 21st Amendment of the
5 Constitution of the United States, the General Assembly
6 has enacted the Liquor Control Act of 1934, which
7 establishes a three-tier system of distribution of wine
8 and spirits to the public.
9 (ii) This Act is enacted pursuant to authority of
10 the State of Illinois and under the provisions of the
11 21st Amendment to the United States Constitution to
12 promote the public's interest in fair, efficient, and
13 competitive distribution of wine and liquor products.
14 (b) This Act shall be construed and applied to promote
15 its underlying remedial purposes and policies.
16 (c) The provisions of this Act are of a public order and
17 cannot be waived. Any contract or agreement purporting to do
18 so is void and unenforceable to that extent.
19 (d) This Act shall govern all relations between
20 distributors and suppliers to the full extent consistent with
21 the constitutions of this State and of the United States.
22 Accordingly, Section 35, which clarifies existing rights and
23 obligations and establishes remedial provisions, applies to
24 all agreements between a distributor and a supplier (other
25 than agreements with an Illinois winery or a winery that has
26 annual case sales in the State of Illinois less than or equal
27 to 10,000 cases per year) whether those agreements were
28 entered into before or after the effective date of this Act.
29 Sections 15 through 30 of this Act shall govern all
30 agreements between a distributor and a supplier (other than
31 agreements with an Illinois winery or a winery that has
32 annual case sales in the State of Illinois less than or equal
33 to 10,000 cases per year), entered into after the effective
34 date of this Act, including any renewal of an agreement in
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1 existence on or before the effective date of this Act.
2 Renewal of an agreement with a designated term or duration
3 shall mean (i) establishment of a new term, (ii) extension of
4 the agreement on any other basis, or (iii) shipment of wine
5 or spirits to the distributor after the expiration of the
6 designated term or duration. Renewal of an agreement in
7 place on a month to month, year to year, or other periodic
8 basis shall mean (i) continuation of the distributorship into
9 the next month, year, or other period, (ii) extension of the
10 distributorship on any other basis, or (iii) shipment of wine
11 or spirits to a distributor after the expiration of the month
12 or other periodic basis designated as the duration of the
13 distributorship in the agreement. Renewal of an agreement
14 without a designated term or duration shall mean shipment of
15 wine or spirits to a distributor after the effective date.
16 (e) In accordance with Section 1.31 of the Statute on
17 Statutes, the provisions of this Act are severable. If any
18 provision or interpretation of this Act, or the application
19 of such interpretation or provision to any distributorship,
20 is held invalid, the application of the Act to persons or
21 circumstances other than those as to which it is held invalid
22 shall not be affected thereby.
23 Section 15. Cancellation and alteration of
24 distributorships. No supplier may cancel, fail to renew,
25 otherwise terminate, or alter on a discriminatory basis an
26 agreement unless the party intending that action has good
27 cause for the cancellation, failure to renew, termination, or
28 alteration and, in any case in which prior notification is
29 required under Section 20, the party intending to act has
30 furnished the prior notification and the affected party has
31 not eliminated the reasons specified in the notification for
32 cancellation, failure to renew, or termination within 90 days
33 after the sending of the notification. Each party shall make
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1 a good faith effort to resolve disputes under this Section.
2 The burden of proving good cause is on the party who asserts
3 it.
4 Section 20. Notice of termination, cancellation, or
5 alteration.
6 (a) Except as provided in subsection (c) of this
7 Section, no supplier may cancel, fail to renew, otherwise
8 terminate, or alter an agreement unless the supplier
9 furnishes prior notification to the affected party in
10 accordance with subsection (b).
11 (b) The notification required under subsection (a) shall
12 be in writing and sent to the affected party by certified
13 mail not less than 90 days before the date on which the
14 agreement will be cancelled, not renewed, otherwise
15 terminated, or altered. The notification shall contain (i) a
16 statement of intention to cancel, fail to renew, otherwise
17 terminate, or alter an agreement, (ii) a complete statement
18 of reasons therefore, including all data and documentation
19 necessary to fully apprise the distributor of the reasons for
20 the action, (iii) the date on which the action shall take
21 effect, and (iv) shall provide that the distributor has 60
22 days in which to rectify any claimed deficiency. If the
23 deficiency is rectified within 60 days, the notice shall be
24 void.
25 (c) A supplier may cancel, fail to renew, or otherwise
26 terminate an agreement without furnishing any prior
27 notification for any of the following reasons:
28 (1) Distributor's assignment for the benefit of
29 creditors, or similar disposition, of substantially all
30 of the assets of such party's business.
31 (2) Insolvency of distributor or the institution of
32 proceedings in bankruptcy by or against the distributor.
33 (3) Dissolution or liquidation of the distributor.
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1 (4) Distributor's conviction of, or plea of guilty
2 or no contest to, a charge of violating a law or
3 regulation in this State that materially and adversely
4 affects the ability of either party to continue to sell
5 wine or liquor in this State, or the revocation or
6 suspension of a license or permit to sell wine or liquor
7 in this State.
8 (d) The notification required under subsection (a) shall
9 be sent not less than 10 days before the date of the
10 cancellation, non-renewal, termination, or alteration of the
11 notice if the notice is based on (i) failure to pay any
12 account when due and upon demand by the supplier for such
13 payment, in accordance with agreed payment terms, or (ii) bad
14 faith in the performance of the distributorship agreement.
15 If the notice is based on a failure to pay any account, the
16 distributor shall have 10 days in which to remedy the
17 default. If the default in payment is remedied within 10
18 days, the notice shall be void.
19 Section 25. Action for damages and injunctive relief.
20 Parties to a distributorship may bring an action in any court
21 of competent jurisdiction for damages sustained as a
22 consequence of the violation, and may also be granted
23 injunctive relief against unlawful termination, cancellation,
24 nonrenewal, or other harm. For agreements entered into or
25 renewed after the effective date of this Act, this remedy is
26 an addition to the remedies provided in Section 35. It is
27 the policy of this State to avoid unfair or wrongful
28 terminations. Notwithstanding any provisions of any
29 agreement between a supplier and a distributor, the venue for
30 any such action shall be at the location of the
31 distributorship and this Act shall apply.
32 Section 30. Application to arbitration agreements. An
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1 agreement between a supplier that is not an Illinois winery
2 or a winery that has annual case sales in the State of
3 Illinois less than or equal to 10,000 cases per year and a
4 distributor providing for binding arbitration of disputes
5 shall be valid and enforceable in accordance with the Federal
6 Arbitration Act. In the event that a dispute concerning the
7 existence of good cause for a termination, cancellation,
8 nonrenewal, or other harm is resolved through arbitration,
9 the definition of good cause and the substantive provisions
10 of this Act shall apply.
11 Section 35. Procedural provisions; good faith; role of
12 Liquor Control Commission.
13 (a) This Section clarifies existing rights and
14 obligations and establishes remedial procedures applicable to
15 registrations under Section 6-9 of the Liquor Control Act of
16 1934.
17 (b) Under existing Illinois common and statutory law,
18 suppliers, other than (i) Illinois wineries or (ii) wineries
19 that have annual case sales in the State of Illinois less
20 than or equal to 10,000 cases per year, who have or should
21 have registered names of distributors under Section 6-9 of
22 the Liquor Control Act of 1934, granting or confirming
23 distributors rights to sell at wholesale in this State, have
24 an obligation to act in good faith in all aspects of the
25 registration and distributorship relationship, without
26 discrimination or coercion under threat of retaliation or
27 termination in bad faith, and in conformity with any
28 emergency or final regulations issued by the Liquor Control
29 Commission pursuant to Section 3-12 or 6-19 or other
30 applicable provision of the Liquor Control Act of 1934 or by
31 the Department of Revenue. Under the existing obligation to
32 act in good faith, no registration or obligation to register
33 under Section 6-9 may be terminated, nor may a supplier that
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1 is not an Illinois winery or a winery that has annual case
2 sales in the State of Illinois less than or equal to 10,000
3 cases per year fail to renew or extend a product, name,
4 brand, registration, or an agreement with a distributor
5 except by acting in good faith in all aspects of the
6 relationship, without discrimination or coercion, and not in
7 retaliation or as a result of the distributor's exercise of
8 its right to petition the General Assembly, the Congress, or
9 any other unit or form of government for any purpose, to any
10 end, or for or against any proposition, provision, amendment,
11 bill, resolution, judgment, decision, rule, regulation, or
12 interpretation.
13 (c) In order to enforce the existing obligation of good
14 faith with respect to registrations under Section 6-9, the
15 Commission shall have power to:
16 (1) Prohibit or suspend any supplier that is not an
17 Illinois winery or a winery that has annual case sales in
18 the State of Illinois less than or equal to 10,000 cases
19 per year or its successors or assigns found to have
20 flagrantly or repeatedly violated the obligation
21 described in this Section from selling any product or
22 products governed under the Liquor Control Act of 1934
23 and the Twenty-First Amendment to the United States
24 Constitution in Illinois.
25 (2) Order the supplier, if the supplier is not an
26 Illinois winery or a winery that has annual case sales in
27 the State of Illinois less than or equal to 10,000 cases
28 per year, to continue providing products to a distributor
29 at prices and quantities in effect for the
30 distributorship prior to any termination or failure to
31 renew that becomes the subject of a dispute or
32 administrative proceedings under this Section until the
33 matters in dispute are determined by an order which is
34 final and non-reviewable.
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1 Orders of the Liquor Control Commission entered under
2 this Section shall be deemed orders as to which an emergency
3 exists.
4 (d) Notwithstanding Section 30 of this Act, any
5 aggrieved party under this Section may apply to the
6 Commission for a finding that another party has violated this
7 Section and request relief.
8 (e) Orders entered by the Commission under this Section
9 shall be reviewable by the Circuit Court under the terms of
10 the Administrative Review Law. In accordance with Section
11 3-110 of the Administrative Review Law, findings and
12 conclusions of the Commission shall be held to be prima facie
13 true and correct.
14 (f) No court shall enter a stay, restraining order,
15 injunction, mandamus, or other order that has the effect of
16 suspending, delaying, modifying, or overturning a Commission
17 finding or determination under this Section before a full
18 hearing and final decision on the merits of the Commission
19 ruling, finding, or order.
20 Section 99. Effective date. This Act takes effect upon
21 becoming law.".