5. "CLASS B" LIQUOR LICENSE FOR A HOTEL
Assembly/Legislature: Provide that a municipality that has issued its quota of "Class B" licenses for the sale of intoxicating liquor may issue a "Class B" license to a hotel under the following conditions: (a) the hotel has 50 or more rooms of sleeping accommodations; and (b) the hotel has either an attached restaurant with a seating capacity of 150 or more persons or a banquet room in which banquets attended by 400 or more persons may be held. Under current law, the same conditions apply except that a hotel must have a minimum number of 100 rooms of sleeping accommodations to be eligible for the license, rather the 50-room minimum under this provision.
[Act 9 Section: 2165m]
6. INTOXICATING LIQUOR DEALERSHIPS
Senate: Create the following provisions related to the governance of relationships between wholesalers and suppliers of intoxicating liquor:
Administrative Provisions
1. Require the administrator of the Division of Hearings and Appeals (Division) in the Department of Administration (DOA) to assign a hearing examiner to preside over any hearing of a contested case that is required to be conducted by the Department of Revenue with respect to relationships between wholesalers and suppliers of intoxicating liquor.
2. Authorize the administrator of the Division to set the fees to be charged for any services rendered to DOR by a hearing examiner under (1) above. Specify that the fee shall cover the total cost of the services less any costs covered by: (a) the DOA appropriation for Hearings and Appeals operations; and (b) those costs recovered through fees charged for such purposes by DOR to holders of wholesalers' permits [see (4) below].
3. Require DOR to pay all costs of the services of a hearing examiner assigned as in (1) above, including costs of support services, according to the fees set under (2) above.
4. Authorize DOR to establish, by rule, a procedure to collect annually from holders of wholesaler's permits fees in amounts necessary to reimburse DOR for charges paid to the Division for the services of a hearing examiner, including support services.
Relationships Between Wholesalers and Suppliers of Intoxicating Liquor
Specify that the Legislature finds the following:
The Legislature finds that the 3-tier system for distributing intoxicating liquor has existed in Wisconsin for over 60 years and continues to be necessary to promote the public health, safety and welfare; that the 3-tier system was established, among other reasons, to prevent suppliers from controlling pricing and distribution in a manner that harms the interests of the citizens of Wisconsin; that a stable and healthy middle tier of the 3-tier system, the wholesaler, is integral to the 3-tier system because the middle tier prevents supplier control of pricing and distribution and provides an efficient and effective means for tax collection; that significant consolidation of market power has occurred at the supplier level; that the number of intoxicating liquor wholesalers in Wisconsin has significantly declined over the past two decades increasing the risk of supplier control of pricing and distribution; and that this legislation is necessary to promote and maintain a stable and healthy middle tier. The Legislature further finds that relationships between intoxicating liquor wholesalers and suppliers have been subject to state regulation since the enactment of the 21st Amendment to the U.S. Constitution and that the parties to those relationships expect changes to state legislation regarding those relationships.
Applicability
Provide that the following apply with respect to relationships between wholesalers and suppliers of intoxicating liquor:
1. These provisions apply to all relationships, regardless of when they were entered into, except that the provisions do not apply to a relationship in which the volume of the business done by a wholesaler with a supplier, including a supplier's affiliates, does not exceed five percent of the wholesaler's total business volume;
2. The effect of these provisions may not be varied by contract or agreement. Any contract or agreement purporting to do so is void and unenforceable to that extent only.
3. Provisions of a relationship that prevent a wholesaler, through choice of law or forum provisions, from bringing an action or filing a notice of contest in this state under these provisions are void and unenforceable to that extent only.
Definitions
Specify the following definitions with respect to wholesaler-supplier relationships:
1. "Altered product" means an existing product altered by age, by alcohol content, blend mixture, flavor or in some other way and principally identified by a trademark, trade name, logotype or other commercial symbol used to identify an existing product.
2. "Existing product" means intoxicating liquor that is distributed in the United States before or on the effective date of these provisions.
3. "Good cause" means: (a) failure by a wholesaler to comply substantially with essential and reasonable requirements imposed upon the wholesaler by the supplier, or sought to be imposed by the supplier, which requirements are not discriminatory as compared with requirements imposed on other similarly situated wholesalers either by their terms or in the manner of their enforcement; or (b) bad faith by the wholesaler in carrying out the terms of the relationship.
4. "Geographic area" means that area where a wholesaler is both authorized to sell intoxicating liquor pursuant to a relationship and has in fact sold intoxicating liquor.
5. "Goodwill" includes use of a trademark, trade name, logotype or other commercial symbol, and use of a variation of a trademark, trade name, logotype, advertisement or other commercial symbol.
6. "Intoxicating liquors" means all ardent, spirituous, distilled liquors, liquids or compounds, whether medicated, proprietary, patented or not, and by whatever name called, containing 0.5% or more of alcohol by volume, which are beverages, but does not include "fermented malt beverages" and "wines."
7. "New product" means intoxicating liquor that is not an altered product and that is first distributed in the United States after the effective date of these provisions.
8. "Relationship" means a written or oral contract or agreement, either express or implied, between a supplier and a wholesaler that grants the wholesaler the right to purchase intoxicating liquor from the supplier for resale in this state.
9. "Supplier" means any person, other than a wholesaler, who sells intoxicating liquor to a wholesaler.
10. "Transferee" means a person who acquires any asset or activity of a supplier's business and who uses the goodwill associated with the supplier's goods.
Change of Relationship
Specify that a supplier may not do any of the following:
1. Terminate, cancel, fail to renew or substantially change a relationship without good cause. The supplier bears the burden of proving good cause and that the change is not substantial.
2. Substantially change the competitive circumstances of a wholesaler's business without good cause. The supplier bears the burden of proving good cause and that the change is not substantial.
3. Appoint more than one wholesaler to resell an existing product in a geographic area in which there was only one wholesaler reselling that existing product in that geographic area in the 12 months preceding the effective date of these provisions.
4. Refuse to sell an altered product or a new product to a wholesaler who has entered into a relationship with the supplier, except in the case of a supplier who has relationships with more than one wholesaler in the same geographic area, as described below.
Specify that a supplier who has relationships with more than one wholesaler in the same geographic area shall offer an altered product only to a wholesaler who previously resold the existing product principally identified by the same trademark, trade name, logotype or other commercial symbol used to identify the altered product.
Specify that a change in the ownership or management of a wholesaler or of a wholesaler's business is not good cause if the changed ownership or management meets the supplier's reasonable and material qualifications for wholesaler applicants in effect at the time of the change.
Notice of Termination or Change in Relationship
With certain exceptions described below, require a supplier to provide a wholesaler at least 90 days' prior written notice of termination, cancellation, nonrenewal or substantial alteration in the relationship or substantial change in the competitive circumstances of the wholesaler's business. Specify that: (a) the notice shall be given by certified mail or personal service to the wholesaler and to the Secretary of the Department of Revenue; (b) the notice shall state all of the supplier's reasons for terminating, canceling, not renewing or substantially altering the relationship, or substantially changing the competitive circumstances of the wholesaler's business; (c) the wholesaler shall have 60 days after receiving the notice in which to correct any claimed deficiency; and (d) if the wholesaler corrects the deficiency within 60 days after receiving the notice, the notice is void.
Provide that if the reason for the deficiency is nonpayment of sums owed, the wholesaler shall have only 10 days to correct the deficiency.
Specify that no notice is required for a termination, cancellation, nonrenewal or substantial change of a relationship caused by an assignment for the benefit of creditors or bankruptcy.
Provide that, within the time period for remedying any claimed deficiency, the wholesaler may file a written request with the Division of Hearings and Appeals for a hearing and serve the supplier and the Secretary of DOR by certified mail or in person, with a notice of the contested action. Specify that the service of notice stays any action proposed by the supplier in the notice of termination or change in relationship as described above. However, if a motion is made by the supplier to allow the action to proceed, then the Division shall conduct a hearing limited to whether or not to let the action go forward within 20 days.
Require the Division to conduct a contested case hearing on the matter within 180 days after the filing of a notice of contest and to determine whether the supplier has met the requirements for altering a relationship and providing notice of termination or change in a relationship. Specify that if the Division determines, after a hearing, that the supplier has failed to comply with these provisions, the relationship between the supplier and the wholesaler is still in effect, and the failure of the supplier to comply with the terms of the relationship is grounds for revocation, nonrenewal or failure to grant, by DOR, of that supplier's out-of-state shipper's permit.
In addition, provide that if the Division determines that a transferee has failed to comply with these provisions, the transferee shall comply with the terms of the relationship between the supplier and the wholesaler or DOR will have grounds for revocation, non-renewal, or failure to grant the transferee's out-of-state shippers permit.
Provide that, if the wholesaler prevails, it shall be awarded its actual costs incurred in the hearing, including reasonable attorney fees. Specify that the losing party at the hearing must pay to the Division the costs of the hearing as determined under the administrative provisions described above.
Specify that any person aggrieved by a decision of the Division may seek judicial review, under the provisions in the statutes on administrative procedure and review, in the circuit court in the county in which the wholesaler's premises is located.
