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Public Act 91-0002
HB0152 Enrolled LRB9101262LDmb
AN ACT in relation to liquor distribution.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Illinois Wine and Spirits Industry Fair Dealing Act of 1999.
Section 5. Definitions. As used in this Act:
"Commission" means the Illinois Liquor Control
Commission.
"Distributorship" means a business relationship, either
express or implied, whether oral or written, between a
supplier of wine or spirits (other than (i) an Illinois
winery or (ii) a winery that has annual case sales in the
State of Illinois less than or equal to 10,000 cases per
year) for resale and a distributor of such products in which
the distributor is given the right to sell a designated
product or products, in a generally defined geographic area,
in exchange for an express or implied promise to market the
product or products. A registration under the Liquor Control
Act of 1934 as amended is a distributorship.
"Supplier" means a person who is a grantor of a wine or
liquor distributorship in this State (other than (i) an
Illinois winery or (ii) a winery that has annual case sales
in the State of Illinois less than or equal to 10,000 cases
per year).
"Distributor" means a person who is a grantee of a wine
or liquor distributorship in this State.
"Agreement" means any contract, agreement, course of
dealing, or arrangement, express or implied, whether oral or
written, for a definite or indefinite period between a
supplier (other than (i) an Illinois winery or (ii) a winery
that has annual case sales in the State of Illinois less than
or equal to 10,000 cases per year, and a distributor
pursuant to which a distributor has been granted a
distributorship).
"Good cause" means a failure by a distributor to comply
with essential and reasonable requirements imposed upon the
distributor by the supplier or bad faith in the performance
of the distributorship agreement. The requirements may not
be unreasonably discriminating either by their terms or in
the methods or effects of enforcement as compared with
requirements imposed on other similarly situated distributors
by the supplier. The requirements may not be inconsistent
with this Act or in violation of any law or regulation.
"Wine and liquor" means spirituous liquor or wine
containing alcohol in excess of 10 percent by weight, but not
including beer and other malt beverages.
"Person" means a natural person, partnership, joint
venture, corporation, or other entity, and includes heirs,
assigns, successors, personal representatives, and guardians.
"Illinois winery" means a winery located in Illinois.
Section 10. Legislative declaration; purposes and
construction.
(a) The General Assembly makes the following findings
and declarations:
(i) Pursuant to the 21st Amendment of the
Constitution of the United States, the General Assembly
has enacted the Liquor Control Act of 1934, which
establishes a three-tier system of distribution of wine
and spirits to the public.
(ii) This Act is enacted pursuant to authority of
the State of Illinois and under the provisions of the
21st Amendment to the United States Constitution to
promote the public's interest in fair, efficient, and
competitive distribution of wine and liquor products.
(b) This Act shall be construed and applied to promote
its underlying remedial purposes and policies.
(c) The provisions of this Act are of a public order and
cannot be waived. Any contract or agreement purporting to do
so is void and unenforceable to that extent.
(d) This Act shall govern all relations between
distributors and suppliers to the full extent consistent with
the constitutions of this State and of the United States.
Accordingly, Section 35, which clarifies existing rights and
obligations and establishes remedial provisions, applies to
all agreements between a distributor and a supplier (other
than agreements with an Illinois winery or a winery that has
annual case sales in the State of Illinois less than or equal
to 10,000 cases per year) whether those agreements were
entered into before or after the effective date of this Act.
Sections 15 through 30 of this Act shall govern all
agreements between a distributor and a supplier (other than
agreements with an Illinois winery or a winery that has
annual case sales in the State of Illinois less than or equal
to 10,000 cases per year), entered into after the effective
date of this Act, including any renewal of an agreement in
existence on or before the effective date of this Act.
Renewal of an agreement with a designated term or duration
shall mean (i) establishment of a new term, (ii) extension of
the agreement on any other basis, or (iii) shipment of wine
or spirits to the distributor after the expiration of the
designated term or duration. Renewal of an agreement in
place on a month to month, year to year, or other periodic
basis shall mean (i) continuation of the distributorship into
the next month, year, or other period, (ii) extension of the
distributorship on any other basis, or (iii) shipment of wine
or spirits to a distributor after the expiration of the month
or other periodic basis designated as the duration of the
distributorship in the agreement. Renewal of an agreement
without a designated term or duration shall mean shipment of
wine or spirits to a distributor after the effective date.
(e) In accordance with Section 1.31 of the Statute on
Statutes, the provisions of this Act are severable. If any
provision or interpretation of this Act, or the application
of such interpretation or provision to any distributorship,
is held invalid, the application of the Act to persons or
circumstances other than those as to which it is held invalid
shall not be affected thereby.
Section 15. Cancellation and alteration of
distributorships. No supplier may cancel, fail to renew,
otherwise terminate, or alter on a discriminatory basis an
agreement unless the party intending that action has good
cause for the cancellation, failure to renew, termination, or
alteration and, in any case in which prior notification is
required under Section 20, the party intending to act has
furnished the prior notification and the affected party has
not eliminated the reasons specified in the notification for
cancellation, failure to renew, or termination within 90 days
after the sending of the notification. Each party shall make
a good faith effort to resolve disputes under this Section.
The burden of proving good cause is on the party who asserts
it.
Section 20. Notice of termination, cancellation, or
alteration.
(a) Except as provided in subsection (c) of this
Section, no supplier may cancel, fail to renew, otherwise
terminate, or alter an agreement unless the supplier
furnishes prior notification to the affected party in
accordance with subsection (b).
(b) The notification required under subsection (a) shall
be in writing and sent to the affected party by certified
mail not less than 90 days before the date on which the
agreement will be cancelled, not renewed, otherwise
terminated, or altered. The notification shall contain (i) a
statement of intention to cancel, fail to renew, otherwise
terminate, or alter an agreement, (ii) a complete statement
of reasons therefore, including all data and documentation
necessary to fully apprise the distributor of the reasons for
the action, (iii) the date on which the action shall take
effect, and (iv) shall provide that the distributor has 60
days in which to rectify any claimed deficiency. If the
deficiency is rectified within 60 days, the notice shall be
void.
(c) A supplier may cancel, fail to renew, or otherwise
terminate an agreement without furnishing any prior
notification for any of the following reasons:
(1) Distributor's assignment for the benefit of
creditors, or similar disposition, of substantially all
of the assets of such party's business.
(2) Insolvency of distributor or the institution of
proceedings in bankruptcy by or against the distributor.
(3) Dissolution or liquidation of the distributor.
(4) Distributor's conviction of, or plea of guilty
or no contest to, a charge of violating a law or
regulation in this State that materially and adversely
affects the ability of either party to continue to sell
wine or liquor in this State, or the revocation or
suspension of a license or permit to sell wine or liquor
in this State.
(d) The notification required under subsection (a) shall
be sent not less than 10 days before the date of the
cancellation, nonrenewal, termination, or alteration of the
notice if the notice is based on (i) failure to pay any
account when due and upon demand by the supplier for such
payment, in accordance with agreed payment terms, or (ii) bad
faith in the performance of the distributorship agreement.
If the notice is based on a failure to pay any account, the
distributor shall have 10 days in which to remedy the
default. If the default in payment is remedied within 10
days, the notice shall be void.
Section 25. Action for damages and injunctive relief.
Parties to a distributorship may bring an action in any court
of competent jurisdiction for damages sustained as a
consequence of the violation, and may also be granted
injunctive relief against unlawful termination, cancellation,
nonrenewal, or other harm. For agreements entered into or
renewed after the effective date of this Act, this remedy is
an addition to the remedies provided in Section 35. It is
the policy of this State to avoid unfair or wrongful
terminations. Notwithstanding any provisions of any
agreement between a supplier and a distributor, the venue for
any such action shall be at the location of the
distributorship and this Act shall apply.
Section 30. Application to arbitration agreements. An
agreement between a supplier that is not an Illinois winery
or a winery that has annual case sales in the State of
Illinois less than or equal to 10,000 cases per year and a
distributor providing for binding arbitration of disputes
shall be valid and enforceable in accordance with the Federal
Arbitration Act. In the event that a dispute concerning the
existence of good cause for a termination, cancellation,
nonrenewal, or other harm is resolved through arbitration,
the definition of good cause and the substantive provisions
of this Act shall apply.
Section 35. Procedural provisions; good faith; role of
Liquor Control Commission.
(a) This Section clarifies existing rights and
obligations and establishes remedial procedures applicable to
registrations under Section 6-9 of the Liquor Control Act of
1934.
(b) Under existing Illinois common and statutory law,
suppliers, other than (i) Illinois wineries or (ii) wineries
that have annual case sales in the State of Illinois less
than or equal to 10,000 cases per year, who have or should
have registered names of distributors under Section 6-9 of
the Liquor Control Act of 1934, granting or confirming
distributors rights to sell at wholesale in this State, have
an obligation to act in good faith in all aspects of the
registration and distributorship relationship, without
discrimination or coercion under threat of retaliation or
termination in bad faith, and in conformity with any
emergency or final regulations issued by the Liquor Control
Commission pursuant to Section 3-12 or 6-19 or other
applicable provision of the Liquor Control Act of 1934 or by
the Department of Revenue. Under the existing obligation to
act in good faith, no registration or obligation to register
under Section 6-9 may be terminated, nor may a supplier that
is not an Illinois winery or a winery that has annual case
sales in the State of Illinois less than or equal to 10,000
cases per year fail to renew or extend a product, name,
brand, registration, or an agreement with a distributor
except by acting in good faith in all aspects of the
relationship, without discrimination or coercion, and not in
retaliation or as a result of the distributor's exercise of
its right to petition the General Assembly, the Congress, or
any other unit or form of government for any purpose, to any
end, or for or against any proposition, provision, amendment,
bill, resolution, judgment, decision, rule, regulation, or
interpretation.
(c) In order to enforce the existing obligation of good
faith with respect to registrations under Section 6-9, the
Commission shall have power to:
(1) Prohibit or suspend any supplier that is not an
Illinois winery or a winery that has annual case sales in
the State of Illinois less than or equal to 10,000 cases
per year or its successors or assigns found to have
flagrantly or repeatedly violated the obligation
described in this Section from selling any product or
products governed under the Liquor Control Act of 1934
and the Twenty-First Amendment to the United States
Constitution in Illinois.
(2) Order the supplier, if the supplier is not an
Illinois winery or a winery that has annual case sales in
the State of Illinois less than or equal to 10,000 cases
per year, to continue providing products to a distributor
at prices and quantities in effect for the
distributorship prior to any termination or failure to
renew that becomes the subject of a dispute or
administrative proceedings under this Section until the
matters in dispute are determined by an order which is
final and non-reviewable.
Orders of the Liquor Control Commission entered under
this Section shall be deemed orders as to which an emergency
exists.
(d) Notwithstanding Section 30 of this Act, any
aggrieved party under this Section may apply to the
Commission for a finding that another party has violated this
Section and request relief.
(e) Orders entered by the Commission under this Section
shall be reviewable by the Circuit Court under the terms of
the Administrative Review Law. In accordance with Section
3-110 of the Administrative Review Law, findings and
conclusions of the Commission shall be held to be prima facie
true and correct.
(f) No court shall enter a stay, restraining order,
injunction, mandamus, or other order that has the effect of
suspending, delaying, modifying, or overturning a Commission
finding or determination under this Section before a full
hearing and final decision on the merits of the Commission
ruling, finding, or order.
Section 99. Effective date. This Act takes effect upon
becoming law.
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