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91_HB2380
LRB9104779LDpkA
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 or bad faith in the performance
8 of the distributorship agreement. The requirements may not
9 be discriminating either by their terms or in the methods or
10 effects of enforcement as compared with requirements imposed
11 on other similarly situated distributors by the supplier.
12 The requirements may not be inconsistent with this Act or in
13 violation of any law or regulation.
14 "Wine and liquor" means spirituous liquor or wine
15 containing alcohol in excess of 10 percent by weight, but not
16 including beer and other malt beverages.
17 "Person" means a natural person, partnership, joint
18 venture, corporation, or other entity, and includes heirs,
19 assigns, successors, personal representatives, and guardians.
20 "Illinois winery" means a winery located in Illinois.
21 Section 10. Purposes and construction.
22 (a) This Act shall be construed and applied to promote
23 its underlying remedial purposes and policies.
24 (b) The provisions of this Act are of a public order and
25 therefore the rights determined by those provisions cannot be
26 waived. Any contract or agreement purporting to do so is
27 void and unenforceable to that extent.
28 (c) This Act shall govern all relations between
29 distributors and suppliers to the full extent consistent with
30 the constitutions of this State and of the United States.
31 Accordingly, Section 35, which clarifies existing rights and
32 obligations and establishes remedial provisions, applies to
33 all agreements between a distributor and a supplier (other
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1 than agreements with an Illinois winery or a winery that has
2 annual case sales in the State of Illinois less than or equal
3 to 10,000 cases per year) whether those agreements were
4 entered into before or after the effective date of this Act.
5 Sections 15 through 30 of this Act shall govern all
6 agreements between a distributor and a supplier (other than
7 agreements with an Illinois winery or a winery that has
8 annual case sales in the State of Illinois less than or equal
9 to 10,000 costs per year), entered into after the effective
10 date of this Act, including any renewal of an agreement in
11 existence on or before the effective date of this Act.
12 Renewal of an agreement with a designated term or duration
13 shall mean (i) establishment of a new term, (ii) extension of
14 the agreement on any other basis, or (iii) shipment of wine
15 or spirits to the distributor after the expiration of the
16 designated term or duration. Renewal of an agreement in
17 place on a month to month, year to year, or other periodic
18 basis shall mean (i) continuation of the distributorship into
19 the next month, year, or other period, (ii) extension of the
20 distributorship on any other basis, or (iii) shipment of wine
21 or spirits to a distributor after the expiration of the month
22 or other periodic basis designated as the duration of the
23 distributorship in the agreement. Renewal of an agreement
24 without a designated term or duration shall mean shipment of
25 wine or spirits to a distributor after the effective date.
26 (d) In accordance with Section 1.31 of the Statute on
27 Statutes, the provisions of this Act are severable. If any
28 provision or interpretation of this Act, or the application
29 of such interpretation or provision to any distributorship,
30 is held invalid, the application of the Act to persons or
31 circumstances other than those as to which it is held invalid
32 shall not be affected thereby.
33 Section 15. Cancellation and alteration of
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1 distributorships.
2 (a) No supplier may cancel, fail to renew, otherwise
3 terminate, or alter on a discriminatory basis an agreement
4 unless the party intending that action has good cause for the
5 cancellation, failure to renew, termination, or alteration
6 and, in any case in which prior notification is required
7 under Section 20, the party intending to act has furnished
8 the prior notification and the affected party has not
9 eliminated the reasons specified in the notification for
10 cancellation, failure to renew, or termination within 90 days
11 after the sending of the notification. Each party shall make
12 a good faith effort to resolve disputes under this Section.
13 The burden of proving good cause is on the party who asserts
14 it.
15 (b) The rights confined by this Act may not be waived.
16 Any effort to do so is void.
17 Section 20. Notice of termination, cancellation, or
18 alteration.
19 (a) Except as provided in subsection (c) of this
20 Section, no supplier may cancel, fail to renew, otherwise
21 terminate, or alter an agreement unless the supplier
22 furnishes prior notification to the affected party in
23 accordance with subsection (b).
24 (b) The notification required under subsection (a) shall
25 be in writing and sent to the affected party by certified
26 mail not less than 90 days before the date on which the
27 agreement will be cancelled, not renewed, otherwise
28 terminated, or altered. The notification shall contain (i) a
29 statement of intention to cancel, fail to renew, otherwise
30 terminate, or alter an agreement, (ii) a complete statement
31 of reasons therefore, including all data and documentation
32 necessary to fully apprise the distributor of the reasons for
33 the action, (iii) the date on which the action shall take
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1 effect, and (iv) shall provide that the distributor has 60
2 days in which to rectify any claimed deficiency. If the
3 deficiency is rectified within 60 days, the notice shall be
4 void.
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 assignment for the benefit of
9 creditors, or similar disposition, of substantially all
10 of the assets of such party's business.
11 (2) Insolvency of distributor or the institution of
12 proceedings in bankruptcy by or against the distributor.
13 (3) Dissolution or liquidation of the distributor.
14 (4) Distributor's conviction of, or plea of guilty
15 or no contest to, a charge of violating a law or
16 regulation in this State that materially and adversely
17 affects the ability of either party to continue to sell
18 wine or liquor in this State, or the revocation or
19 suspension of a license or permit to sell wine or liquor
20 in this State.
21 (d) The notification required under subsection (a) shall
22 be sent not less than 10 days before the date of the
23 cancellation, non-renewal, termination, or alteration of the
24 notice if the notice is based on (i) failure to pay any
25 account when due and upon demand by the supplier for such
26 payment, in accordance with agreed payment terms, or (ii) bad
27 faith in the performance of the distributorship agreement.
28 If the notice is based on a failure to pay any account, the
29 distributor shall have 10 days in which to remedy the
30 default. If the default in payment is remedied within 10
31 days, the notice shall be void.
32 Section 25. Action for damages and injunctive relief.
33 Parties to a distributorship may bring an action in any court
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1 of competent jurisdiction for damages sustained as a
2 consequence of the violation, and may also be granted
3 injunctive relief against unlawful termination, cancellation,
4 nonrenewal, or other harm. For agreements entered into or
5 renewed after the effective date of this Act, this remedy is
6 an addition to the remedies provided in Section 35. It is
7 the policy of this State to avoid unfair or wrongful
8 terminations. Therefore, in establishing the right to
9 injunctive relief, it shall not be necessary to establish the
10 existence of irreparable harm or an inadequate remedy at law.
11 Notwithstanding any provisions of any agreement between a
12 supplier and a distributor, the venue for any such action
13 shall be at the location of the distributorship and this Act
14 shall apply.
15 Section 30. Application to arbitration agreements. An
16 agreement between a supplier that is not an Illinois winery
17 or a winery that has annual case sales in the State of
18 Illinois less than or equal to 10,000 cases per year and a
19 distributor providing for binding arbitration of disputes
20 shall be valid and enforceable in accordance with the Federal
21 Arbitration Act. In the event that a dispute concerning the
22 existence of good cause for a termination, cancellation,
23 nonrenewal, or other harm is resolved through arbitration,
24 the definition of good cause and the substantive provisions
25 of this Act shall apply.
26 Section 35. Procedural provisions; good faith; role of
27 Liquor Control Commission.
28 (a) This Section clarifies existing rights and
29 obligations and establishes remedial procedures applicable to
30 registrations under Section 6-9 of the Liquor Control Act of
31 1934.
32 (b) Under existing Illinois common and statutory law,
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1 suppliers, other than (i) Illinois wineries or (ii) wineries
2 that have annual case sales in the State of Illinois less
3 than or equal to 10,000 cases per year, who have or should
4 have registered names of distributors under Section 6-9 of
5 the Liquor Control Act of 1934, granting or confirming
6 distributors rights to sell at wholesale in this State, have
7 an obligation to act in good faith in all aspects of the
8 registration and distributorship relationship, without
9 discrimination or coercion under threat of retaliation or
10 termination in bad faith, and in conformity with any
11 emergency or final regulations issued by the Liquor Control
12 Commission pursuant to Section 3-12 or 6-19 or other
13 applicable provision of the Liquor Control Act of 1934 or by
14 the Department of Revenue. Under the existing obligation to
15 act 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
21 except by acting in good faith in all aspects of the
22 relationship, without discrimination or coercion, and not in
23 retaliation or as a result of the distributor's exercise of
24 its right to petition the General Assembly, the Congress, or
25 any other unit or form of government for any purpose, to any
26 end, or for or against any proposition, provision, amendment,
27 bill, resolution, judgment, decision, rule, regulation, or
28 interpretation.
29 (c) In order to enforce the existing obligation of good
30 faith with respect to registrations under Section 6-9, the
31 Commission shall have power to:
32 (1) Prohibit or suspend any supplier that is not an
33 Illinois winery or a winery that has annual case sales in
34 the State of Illinois less than or equal to 10,000 cases
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1 per year or its successors or assigns found to have
2 flagrantly or repeatedly violated the obligation
3 described in this Section from selling any product or
4 products governed under the Liquor Control Act of 1934
5 and the Twenty-First Amendment to the United States
6 Constitution in Illinois.
7 (2) Order the supplier, if the supplier is not an
8 Illinois winery or a winery that has annual case sales in
9 the State of Illinois less than or equal to 10,000 cases
10 per year, to continue providing products to a distributor
11 at prices and quantities in effect for the
12 distributorship prior to any termination or failure to
13 renew that becomes the subject of a dispute or
14 administrative proceedings under this Section until the
15 matters in dispute are determined by an order which is
16 final and non-reviewable.
17 Orders of the Liquor Control Commission entered under
18 this Section shall be deemed orders as to which an emergency
19 exists.
20 (d) Notwithstanding Section 30 of this Act, any
21 aggrieved party under this Section may apply to the
22 Commission for a finding that another party has violated this
23 Section and request relief.
24 (e) Orders entered by the Commission under this Section
25 shall be reviewable by the Circuit Court under the terms of
26 the Administrative Review Law. In accordance with Section
27 3-110 of the Administrative Review Law, findings and
28 conclusions of the Commission shall be held to be prima facie
29 true and correct.
30 (f) No court shall enter a stay, restraining order,
31 injunction, mandamus, or other order that has the effect of
32 suspending, delaying, modifying, or overturning a Commission
33 finding or determination under this Section before a full
34 hearing and final decision on the merits of the Commission
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1 ruling, finding, or order.
2 Section 99. Effective date. This Act takes effect upon
3 becoming law.