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91_SB0015
LRB9101212LDmb
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.