H. B. 2789
(By Delegate Seacrist)
[Introduced March 27, 1997; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact sections six, twenty-eight, thirty
and thirty-one, article eight, chapter sixty of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended, all relating to wine sales; eliminating the two
cases of wine per month exemption; registration of labels;
requiring all wine and fortified wine suppliers and
manufacturers to enter into a sales agreement with West
Virginia distributors; and adding additional unlawful acts.
Be it enacted by the Legislature of West Virginia:
That sections six, twenty-eight, thirty and thirty-one,
article eight, chapter sixty of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended and
reenacted, all to read as follows:
ARTICLE 8. SALE OF WINES.
§60-8-6. License or registration required for sale or shipment
of wine.
(a) Except as to the commissioner
and except as provided in
subsection (b) of this section, no person may offer for sale or
sell wine in this state or offer wine for shipment into this
state, except to a distributor who is duly licensed under this
article. Every person, whether resident or nonresident in this
state, who is engaged in or desires to engage in the sale or
shipment of wine to a distributor for resale under this article
shall, prior to engaging in such activities, register with the
commissioner. If any
such person violates the provisions of this
article, he shall not be permitted to sell, ship or deliver any
wine to a distributor or to the commissioner, or otherwise engage
in the wine business in this state for a period of one year from
the date a notice is mailed to
such the person by the
commissioner of the fact that
such the person has violated the
provisions of this article. During
such a one-year period, it
shall be unlawful for any distributor within this state to buy or
receive wine from
such the person or to have any dealings with
such the person with respect thereto. Hearings and appeals on
such the notices may be had in the same manner as in the case of
revocations of licenses under this article.
(b) Notwithstanding the provisions of this chapter or any other law to the contrary, an adult resident or a duly licensed
retailer or distributor of alcoholic beverages in a state or
nation which affords adults and duly licensed retailers and
distributors of this state an equal reciprocal shipping privilege
may ship, for personal use and not for resale, not more than two
cases of wine per month, not to exceed eighteen liters of wine
in any month to any adult resident in this state. Delivery of a
shipment pursuant to this section shall not be deemed to
constitute a sale in this state. The shipping container of any
wine sent into or out of this state under this subsection shall
be clearly labeled to indicate that the package cannot be
delivered to any person under the age of twenty-one or to an
intoxicated person. No adult resident or duly licensed retailer
or distributor may advertise the availability of wines by
shipment to residents of this state.
PART III. WINE DISTRIBUTION.
§60-8-28. Registration of labels.
Every distributor and farm winery offering wine for sale under
this article shall register with the tax commissioner each label
offered for sale in the state and shall pay a fee of three
dollars for the registration of such label. No wine may be sold
under this article unless its label has been registered. Every
manufacturer, supplier, winery or importer offering wine for sale
to a distributor under this article shall register with the department of tax and revenue each label offered for sale within
the state and shall pay a flat fee of five dollars for the
registration of the label inclusive for each distributor
representing the wine. Only one registration shall be required
irrespective of the number of various sizes or vintage changes.
Label registration shall consist of the sole submittal of the
B.A.T.F. form number 1649: Provided, That a product which does
not require B.A.T.F. form 1649 can be registered with an
unattached label.
§60-8-30. Exclusive franchise agreements prohibited
.
It shall be illegal for any manufacturer to enter into any
exclusive franchise agreement with any distributor whereby any
such distributor is given the exclusive right within this state
or in any given territory within this state to distribute the
product or products of such manufacturer which are to be sold or
distributed pursuant to the provisions of this article:
Provided, That it shall be unlawful by any supplier or
manufacturer to transfer or deliver to a distributor or in-state
West Virginia suppliers any wine or fortified wine without first
having entered into any equitable sales agreement with such
distributor, which sales agreement shall be in writing, shall be
identical as to terms and conditions with all other sales
agreements between such suppliers and manufacturers and its other distributors or in-state West Virginia supplier in this
state and which shall contain a provision in substance or effect
as follows:
The sales agreement will only designate a distributor's
primary area of responsibility. Nothing contained herein
provides for exclusive franchised areas, as these franchised
areas are expressly prohibited by section thirty, article eight
of chapter sixty. The supplier or manufacturer recognized that
the distributor or in-state West Virginia supplier is free to
manage his or her business in a manner the distributor or
in-state West Virginia supplier deems best and that this
prerogative rests in the distributor or in-state West Virginia
supplier the exclusive right to establish his or her selling
prices, to select the brands of wine or fortified wines he or she
wishes to handle, and to determine the efforts and resources
which the distributor or in-state West Virginia supplier will
exert to develop and promote the sale of the supplier's or
manufacturer's products handled by the distributor or in-state
West Virginia supplier.
Whenever the manufacturing, bottling production or import
rights for the sale of wine or fortified wine at wholesale of any
supplier or manufacturer is acquired by another supplier or
manufacturer, the distributor or in-state West Virginia supplier
of the selling manufacturer or supplier shall be entitled to continue distributing the selling manufacturers or suppliers wine
or fortified wine products as authorized in the distributors or
in-state West Virginia supplier existing sales agreement, and the
acquiring supplier or manufacturer shall market all the selling
suppliers or manufacturers wine or fortified wine products
through the distributor or in-state West Virginia suppliers as
though the acquiring manufacturer or supplier had made the sale
agreement.
It is unlawful for any supplier, manufacturer, distributor or
in-state West Virginia supplier or any officer, agent or
representative of any supplier, manufacturer, distributor or
in-state West Virginia supplier to cancel, terminate or rescind
without due regard for the equities of such supplier,
manufacturer, distributor or in-state West Virginia supplier, and
without just cause, any sales agreement. The cancellation,
termination or rescission of any such sales agreement may not
become effective for at least ninety days after written notice of
such cancellation, termination or rescission has been served on
the affected party by certified mail, return receipt request:
Provided, That the ninety-day period and the notice of
cancellation, termination or rescission is agreed to in writing
by both the supplier or manufacturer and the distributor or
in-state West Virginia supplier involved.
Whenever a supplier, manufacturer, distributor or in-state West Virginia supplier cancels, terminates or rescinds the sales
agreement, the supplier or manufacturer must purchase back at
laid-in cost which includes freight and taxes all wine or
fortified wine inventory currently held at the distributor's or
in-state West Virginia supplier's warehouse. In addition, the
supplier or manufacturer must purchase back point-of-sale
material purchased by the distributor or in-state West Virginia
supplier.
§60-8-31. Other unlawful acts.
It is unlawful:
(a) For a distributor to discriminate in price, sales
agreements, terms or services offered to retailers or to any
licensee under article seven of this chapter. "Discriminate" as
used in this section means the granting of more favorable prices,
agreements, terms or services to one person than to another.
(b) For a distributor, his
or her agents, servants or
employees to transport or deliver wine to any retail licensee or
to any licensee under article seven of this chapter on Sunday or
any general election day.
(c) For a distributor to sell wines authorized by this article
to licensees under article seven of this chapter at a price which
is greater than the price at which such wines are sold and
distributed to retailers under this article.
(d) For a retailer not to pass on to the consumer fifty percent of all promotional post-offs from the distributor during
a promotional period.
(e) For a supplier/manufacturer to sell to a distributor at
any other FOB price that is higher than any other FOB established
elsewhere in the United States.
NOTE: This bill requires all wine and fortified wine
suppliers and manufacturers to enter into a sales agreement with
West Virginia distributors to sell their products in West
Virginia. The sales agreements provide for an area of primary
responsibility. The bill eliminates the two cases of wine
exemption, adds requirements for labeling and adds additional
unlawful acts.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.