Winebow, Inc. v. Capitol-Husting Co., Inc.
Winebow, Inc. v. Capitol-Husting Co., Inc.
Opinion of the Court
*734¶ 1 This case is before the court on a certified question from the United States Court of Appeals for the Seventh Circuit. Winebow, Inc. v. Capitol-Husting Co., Inc.,
¶ 2 Our answer to this certified question will aid the Seventh Circuit in determining whether Winebow, Inc.'s (Winebow) attempt to end its business relationship with *633two wine distributors is governed by the unilateral termination limitations of the Wisconsin Fair Dealership Law (WFDL). See
¶ 3 Winebow unilaterally terminated its relationship with Capitol-Husting Co., Inc. and L'Eft Bank Wine Co. Limited (the Distributors) after becoming *735dissatisfied. It argues that the action was permissible because the parties' business relationship is not an "intoxicating liquor" dealership entitled to the protections of the WFDL. See §§ 135.02(3)(b), 135.066. On the other hand, the Distributors contend that a wine grantor-dealer relationship is a "dealership" entitled to such protections and thus Winebow cannot unilaterally terminate its relationship with the Distributors absent a showing of good cause.
¶ 4 We conclude that a wine grantor-dealer relationship is not included within the definition of a dealership in
¶ 5 Accordingly, we answer the certified question in the negative.
I
¶ 6 Winebow is engaged in the business of importing and distributing wine to downstream wholesalers. Since 2004, Winebow has used Capitol-Husting as a distributor of its wines, and in 2009 it commenced a similar relationship with L'Eft Bank.
¶ 7 After becoming dissatisfied with the Distributors, Winebow abruptly terminated its relationship with them in February of 2015. The parties did not have any express written agreement that would prevent Winebow from unilaterally terminating their relationships.
¶ 8 The Distributors responded to Winebow's termination by letter, indicating their belief that they are entitled to the protections of the WFDL. Such *736protections would prevent Winebow from terminating their relationships absent "good cause." See
¶ 9 Winebow countered by filing a declaratory judgment action in the United States District Court for the Eastern District of Wisconsin. Winebow, Inc. v. Capitol-Husting Co., Inc., No. 15-CV-225, slip op.,
¶ 10 The District Court ruled in Winebow's favor. It determined that "[w]ine is not intoxicating liquor in the context of the WFDL, and thus the [Distributors'] business relationship with Winebow is not subject to the unilateral termination limitations of Chapter 135." Id. at *4.
¶ 11 The Distributors appealed to the United States Court of Appeals for the Seventh Circuit, contending that wine dealerships are per se "intoxicating liquor" dealerships entitled to the protections of the WFDL. Winebow,
II
¶ 12 Underlying this case are proposed statutory changes to the WFDL and the governor's partial veto of some of these changes. See 1999 Wis. Act 9, §§ 2166m, 2166s. We thus provide brief background on the WFDL, the proposed changes to it, and the partial veto.
¶ 13 The WFDL provides in part that a grantor of a dealership may not terminate *634a dealership agreement without good cause.
¶ 14 A grantor who violates the WFDL may be subject to an action for "damages sustained by the dealer as a consequence of the grantor's violation, together with the actual costs of the action, including reasonable attorney fees."
¶ 15 However, the WFDL does not apply to all business relationships, but only to those defined as "dealerships." In 1999, the legislature sought to broaden the WFDL's reach to ensure that "intoxicating liquor" dealers were protected. See 1999 Wis. Act 9, §§ 2166m, 2166s.
¶ 16 It did so by making two significant changes. First, it amended the definition of a "dealership" to include distributors of "intoxicating liquors." 1999 Wis. Act 9, § 2166m. The new definition, codified at
A contract or agreement, either expressed or implied, whether oral or written, between 2 or more persons by which a wholesaler, as defined in s. 125.02(21), is granted the right to sell or distribute intoxicating liquor or use a trade name, trademark, service mark, *738logotype, advertising or other commercial symbol related to intoxicating liquor. This paragraph does not apply to dealerships described in s. 135.066(5)(a) and (b).
1999 Wis. Act 9, § 2166m.
¶ 17 This revised "dealership" definition explicitly incorporated the definition of "intoxicating liquor" found in Wis. Stat. ch. 125, which regulates alcohol beverages. Pursuant to
"Intoxicating liquor" means all ardent, spirituous, distilled or vinous liquors, liquids or compounds, whether medicated, proprietary, patented or not, and by whatever name called, containing 0.5 percent or more of alcohol by volume, which are beverages, but does not include "fermented malt beverages."
§ 125.02(8).
¶ 18 Second, the legislature created
¶ 19 Both of these changes were included in the 1999 budget bill. See 1999 Wis. Act 9. However, Governor Tommy Thompson used his partial veto power to alter the revisions passed by the legislature.
*739¶ 20 Specifically, the governor struck language proposed by the legislature from both
¶ 21 Edits to
¶ 23 This case requires us to interpret
IV
¶ 24 With the preceding context and standard of review in hand, we examine next the specific question certified by the Seventh Circuit: whether the definition of a dealership contained in
¶ 25 Winebow asserts that the "minus wine" definition of "intoxicating liquor" in
¶ 26 Statutory interpretation begins with the language of the statute.
*743State ex rel. Kalal v. Circuit Court for Dane Cty.,
¶ 27 Wisconsin Stat. § 135.066(2) defines "intoxicating liquor" as having "the meaning given in s. 125.02(8) minus wine." Winebow suggests that the language of the statute plainly and unambiguously excludes wine from the definition of "intoxicating liquor" for chapter 135.
¶ 28 We agree with Winebow. Its interpretation of
¶ 29 Wisconsin Stat. § 135.066(2) provides the sole definition of "intoxicating liquor" in ch. 135, and it excludes wine. The term "intoxicating liquor" is used eleven times in chapter 135, but defined only once. We aim for uniformity of definitions within a statutory chapter, not diversity of definitions. See Bank Mut. v. S.J. Boyer Const., Inc.,
*744¶ 30 Rather, "[s]ections of statutes relating to the same subject matter must be construed in pari materia."
¶ 31 Further, the
¶ 32 Additionally, treatises on both the WFDL and alcohol regulation uniformly support our application of the "minus wine" definition provided by
¶ 33 Similarly, a treatise on Wisconsin alcohol beverages regulation opines that "the applicable definition of intoxicating liquor in Wis. Stat. ch. 135 excludes wine, such that [ch. 135's] special WFDL provisions apply only to distilled-spirits distribution agreements." Aaron R. Gary, Alcohol Beverages Regulation in Wisconsin § 4.66 (2nd ed. 2016).
*746¶ 34 In the over eighteen years since the enactment of the "minus wine" provision, the legislature certainly could have acted to amend the law if it thought the commentators' understanding was incorrect. However, it did not override the governor's veto in 1999, and it has remained silent in the intervening years.
¶ 35 As the Seventh Circuit aptly observed in its certification, there is "no express statutory language" supporting the Distributors' position. See Winebow,
¶ 36 Instead of giving effect to ch. 135's single definition of "intoxicating liquor," the Distributors would have the court follow a path through ch. 125 to arrive at their preferred definition. The Distributors' circuitous route begins at
¶ 37 Our interpretation gives effect to the sole definition of "intoxicating liquor" located in ch. 135, one which is located in a statutory section beneath the *747heading, "Intoxicating liquor dealerships." If the court here were to decide that it is acceptable to effectuate a definition from ch. 125 that is not referenced within ch. 135, there would be no clear stopping point to such a practice.
¶ 38 In sum, we conclude that a wine grantor-dealer relationship is not included within the definition of a dealership in
¶ 39 Accordingly, we answer the certified question in the negative and remand the cause to the United States Court of Appeals for the Seventh Circuit.
By the Court. -Certified question answered in the negative and cause remanded to the United States Court of Appeals for the Seventh Circuit.
All subsequent references to the Wisconsin Statutes are to the 2015-16 version unless otherwise indicated.
The governor's partial veto power arises from Article V, § 10 of the Wisconsin Constitution, which sets forth, "Appropriation bills may be approved in whole or in part by the governor, and the part approved shall become law." Wis. Const. art. V, § 10 (1)(b). Pursuant to the partial veto power, the governor may strike out language in an appropriation measure, but may not add language. See State ex rel. Wisconsin Senate v. Thompson,
The partial veto power was originally a very broad power, but has been subsequently limited. Originally, the governor could "veto individual words, letters and digits, and also may reduce appropriations by striking digits, as long as what remains after veto is a complete, entire, and workable law." Wisconsin Senate,
A 1990 amendment slightly limited the power, dictating that "the governor may not create a new word by rejecting individual letters in the words of the enrolled bill."Wis. Const. art. V, § 10 (1)(c) (1990). This was the version in effect when Governor Thompson exercised the veto at issue in this case. A subsequent revision in 2008 brought Article V, § 10 to its present form, further limiting the partial veto power by stating that "the governor may not create a new word by rejecting individual letters in the words of the enrolled bill, and may not create a new sentence by combining parts of 2 or more sentences of the enrolled bill." Wis. Const. art. V, § 10 (1)(c).
The governor's veto with respect to
A contract or agreement, either expressed or implied, whether oral or written, between 2 or more persons by which a wholesaler, as defined in s. 125.02(21), is granted the right to sell or distribute intoxicating liquor, as defined in s. 125.02(8),or use a trade name, trademark, service mark, logotype, advertising or other commercial symbol related to intoxicating liquor. This paragraph does not apply to dealerships described in s. 135.066(5)(a) and (b).
Observe that the words "minus" in
(2) DEFINITIONS. In this section:
(a) "Intoxicating liquor" has the same meaning given in s. 125.02(8).
(b) "Net revenues" means the gross dollar amount received from the sale of intoxicating liquorminusadjustments for returns, discounts and allowances.
(c) "Wholesaler" has the meaning given in s. 125.02(21).
(d) "Wine"has the meaning given in 125.02(22).
(3) LIABILITY OF TRANSFEREE OF INTOXICATING LIQUOR GRANTOR.
(a) In this subsection:
1. "Goodwill" includes the use of a trademark, trade name, logotype or other commercial symbol, and the use of a variation of a trademark, trade name, logotype, advertisement or other commercial symbol.
2. "Transferee" means a person who acquires any asset or activity of a grantor's intoxicating liquor business and who uses the goodwill associated with the intoxicating liquor of the grantor.
(b) A transferee shall be bound by each of the grantor's dealerships with the grantor's wholesalers and consequently shall be considereda grantor for the purposes of, and shall comply with, the requirements of this chapter.
(4) CHANGE IN OWNERSHIP.
(a) In this subsection, "successor wholesaler" means a wholesaler who succeeds to the management, ownership or control of a wholesaler or wholesaler's business or any part of a wholesaler's business by any means including by stock purchase, sale of assets or transfer or assignment of a brand of intoxicating liquor that is the subject of a dealership agreement.
(b) A change in the management, ownership or control of a wholesaler, a wholesaler's business or any part of a wholesaler's business is not good cause for a grantor to terminate, cancel, fail to renew or substantially change the competitive circumstances of its dealership with a successor wholesaler if the successor wholesaler meets the grantor's reasonable and material qualifications for wholesaler applicants in effect at the time of the change. If the successor wholesaler meets the grantor's reasonable and material qualifications for wholesaler applicants in effect at the time of the change, the successor wholesaler shall succeed to the dealership rights of the predecessor wholesaler and the grantor shall continue to be bound by the dealership.
In this section, the partial veto was as follows:
(5) NONAPPLICABILITY. This section does not apply to any of the following dealerships:
(a) Dealerships in which a grantor, including any affiliate, division or subsidiary of the grantor, has never produced more than 200,000 gallons of intoxicating liquor in any year.
(b) Dealerships in which the dealer's net revenues from the sale of all of the grantor's brands of intoxicating liquor, except wine,constitute less than 5% of the dealer's total net revenues from the sale of intoxicating liquor, except wine,during the dealer's most recent fiscal year preceding a grantor's cancellation or alteration of a dealershipand the dealer's net revenues from the sale of all of the grantor's brands of wine constitute less than 5% of the dealer's total net revenues from the sale of wine during the dealer's most recent fiscal year preceding a grantor's cancellation or alteration of a dealership.
"In pari materia" refers to statutes and regulations relating to the same subject matter or having a common purpose. In re Jeremiah C.,
The dissent asserts that "[t]he definition of intoxicating liquor in § 135.066 retains a function even if limited to its specific section of ch. 135." Dissent, ¶ 50. According to the dissent, "[i]t applies to the legislative findings of sub. (1), the non-applicability provisions of sub. (5), and the severability part of sub. (6).
Stated differently, to read the statute to include wine would render "minus wine" mere surplusage, a result that must be avoided. See Milwaukee Cty. v. Dep't of Indus., Labor and Human Relations Comm'n,
In his veto message, Governor Thompson was explicit regarding the reasons for his partial veto: "I am partially vetoing these provisions so that wine will be excluded from treatment under these changes to the Wisconsin Fair Dealership Law because I object to wine being treated the same as intoxicating liquor." Governor's Veto Message, Act 9, at § F.4 (Oct. 27, 1999); see State ex rel. Kalal v. Circuit Court for Dane Cty.,
Dissenting Opinion
*639¶ 40 The legislature unquestionably intended to include wine distributors as dealers under Wis. Stat. ch. 135 and then-Governor Tommy Thompson
I
¶ 41 Wisconsin Stat. ch. 135, also known as the Wisconsin Fair Dealership Law, governs grantor-dealer relationships and "shall be liberally construed and applied to promote" the purposes set forth in
*749¶ 42 The question before the court is whether the two wine distributors in this case are "[d]ealers" protected by ch. 135. The wine distributors claim dealership status, while Winebow insists ch. 135 does not apply to wine distributors at all. A textual interpretation of ch. 135 provides a clear answer: the wine distributors are "[d]ealers."
¶ 43 The analysis necessarily starts in
In this chapter:
*640(2) "Dealer" means a person who is a grantee of a dealership situated in this state.
(3) "Dealership" means any of the following:
....
(b) A contract or agreement, either expressed or implied, whether oral or written, between 2 or more persons by which a wholesaler, as defined in s. 125.02(21), is granted the right to sell or distribute intoxicating liquor or use a trade name, trademark, service mark, logotype, advertising or other commercial symbol related to intoxicating liquor. This paragraph does not apply to dealerships described in s. 135.066(5)(a) and (b).
*750(Emphasis added.) To determine whether a "[d]ealership" exists between Winebow and the two wine distributors, we need to know whether the wine distributors are "wholesaler[s]."
¶ 44 The language of
[A]ll ardent, spirituous, distilled or vinous liquors, liquids or compounds, whether medicated, proprietary, patented or not, and by whatever name called, containing 0.5 percent or more of alcohol by volume, which are beverages, but does not include "fermented malt beverages".
(Emphasis added.) Everyone agrees that vinous liquors include wine. Construing the text of these statutes leads to the inexorable conclusion that the wine distributors are wholesalers whose agreements with Winebow create dealerships protected by ch. 135.
¶ 45 The majority decries this interpretive exercise as a "practice" with "no clear stopping point."
*751Majority op., ¶ 37. While our judicial duty of declaring what a statute says would be easier if each statutory chapter confined its subject matter to that particular chapter, legislative enactments are rarely so linear. On the scale of interpretive complexity, our task falls on the easy end. Inexplicably, the majority maintains the key definition from Wis. Stat. ch. 125 is not referenced within ch. 135, see majority op., ¶ 37; this is of course inaccurate because
II
¶ 46 Although the text clearly leads to the conclusion that ch. 135 applies to wine grantor-dealer relationships, the Seventh Circuit certified the question because
*752¶ 47 First, the definition of intoxicating liquor in
¶ 48 Second, in order to give effect to all the words used within ch. 135,
¶ 49 Third, it is
¶ 50 The majority concludes that
*642¶ 51 The effect of confining the
*754Because wine was struck from the "intoxicating liquor" definition in § 135.066(2)(a), the non-applicability provision in sub. (5) does not apply to wine dealerships. Finally, sub. (6) makes the provisions of § 135.066 severable; under
¶ 52 The majority emphasizes the history of these statutes before enactment by including the full text proposed by the legislature, the strikethroughs made by the Governor's veto pen, and the Governor's letter explaining the basis for his substantial edits. Placing the focus on these non-textual considerations improperly influenced the majority's statutory construction. "It is always perilous to derive the meaning of an adopted provision from another provision deleted in the drafting process." District of Columbia v. Heller,
*755¶ 53 The majority underscores the legislature's ability to amend the law if it in fact disagreed with certain treatises' take on the effect of the Governor's partial vetoes to remove wine wholesalers from the fair dealership law. This court has explained that legislative acquiescence is a slim reed upon which to support a judicial construction of a statute because "[n]umerous variables, unrelated to conscious endorsement of a statutory interpretation, may explain or cause legislative inaction." Wenke v. Gehl Co.,
*643III
¶ 54 Applying a textual analysis of the language in ch. 135 leads to but one conclusion: wine distributors are wholesalers as that term is defined in
¶ 55 I am authorized to state that Justices SHIRLEY S. ABRAHAMSON and DANIEL KELLY join this dissent.
Then-Governor Tommy Thompson will subsequently be referred to as "Governor."
Wisconsin Stat. ch. 135 comprises eleven subsections. Wisconsin Stat. § 135.01 gives the title of chapter 135. Section 135.02 furnishes the definitions that apply throughout the entirety of ch. 135. Section 135.025 details the purposes of the chapter, requires liberal application to meet those purposes, and prohibits parties from contracting away ch. 135's protections. Section 135.03 explains that dealerships may not be altered or terminated without a showing of good cause. Section 135.04 imposes rules and notice deadlines for termination or changes in a dealership. Section 135.045 governs the repurchase of inventory upon termination of a dealership by the grantor. Section 135.05 discusses the applicability of arbitration agreements in ch. 135. Section 135.06 affords dealers the right to recover attorney fees and obtain injunctive relief in actions against grantors for violating ch. 135. Section 135.065 deems any violation of the chapter by a grantor an irreparable injury for purposes of seeking a temporary injunction. Section 135.066 contains legislative findings specific to intoxicating liquor dealers, defines "[i]ntoxicating liquor," renders this section inapplicable to two types of dealerships, and makes the provisions in this section severable. Section 135.07 declares ch. 135 inapplicable to motor vehicle dealers, insurance businesses, and door-to-door sales of goods or services.
Wisconsin Stat. ch. 125 specifically governs the sale of alcohol beverages in the State of Wisconsin and addresses the importance of the three-tier system of "production, distribution, and sale." See
Wisconsin Stat. § 135.066(2)(a) provides: " 'Intoxicating liquor' has the meaning given in s. 125.02(8) minus wine."
Reference
- Full Case Name
- WINEBOW, INC., Plaintiff-Appellee, v. CAPITOL-HUSTING CO., INC. and L'Eft Bank Wine Co. Limited, Defendants-Appellants.
- Cited By
- 17 cases
- Status
- Published