State Codes and Statutes

CHAPTER 9 - MALT BEVERAGES

ARTICLE 1 - RELATIONS BETWEEN MALT BEVERAGE DISTRIBUTORS ANDMANUFACTURERS

12-9-101. Legislative findings and intent.

(a) Regulation of business relations between malt beveragedistributors and manufacturers serves a significant and legitimate publicpurpose.

(b) This act is intended to control and stabilize thedistribution of malt beverages in the state and comprises an integral part of acomprehensive legislative regulation.

(c) This act is enacted pursuant to authority of the stateunder the provisions of the twenty-first amendment to the United Statesconstitution to promote the public's interest in fair, efficient andcompetitive distribution of malt beverage products by regulation andencouragement of manufacturers and distributors to conduct their businessrelations toward these ends by:

(i) Assuring that the malt beverage distributor is free tomanage its business enterprise, including the distributor's right toindependently establish its selling prices;

(ii) Assuring the manufacturer and the public of service from adistributor who will devote reasonable efforts and resources to sales,distribution of the manufacturer's products which distributor has been grantedthe right to sell and distribute and to maintain a satisfactory sales level;and

(iii) Establishing and maintaining an orderly system ofdistribution of malt beverages to the public.

12-9-102. Definitions.

(a) As used in this act:

(i) "Brand" means any word, name, group of letters,symbol, trademark or combination thereof but not including the name of thesupplier adopted and used by a supplier on a label to identify a specific beeror malt beverage and to distinguish that product from the label of another beeror malt beverage produced or marketed by that or another manufacturer;

(ii) "Brand extension" means any brand whichincorporates all or a substantial part of the unique features of the label of apreexisting brand of the same manufacturer. A brand extension is notconsidered a new or different brand. Except for good cause a manufacturershall assign a brand extension to the wholesaler which was granted theexclusive sales territory to the brand from which the brand extension resulted;

(iii) "Designated member" means the spouse, child,grandchild, parent, brother or sister of a deceased individual who owned aninterest in a distributor's business, who is entitled to inherit the deceasedindividual's ownership interest in the distributor under the terms of thedeceased individual's will, or who has otherwise been designated in a validtestamentary instrument by the deceased individual to succeed the deceasedindividual in the distributor's business, or who is entitled to inherit suchownership interest under the laws of intestate succession of this state. Withrespect to an incapacitated individual owning an ownership interest in adistributor, "designated member" means the person appointed by acourt as the conservator of the individual's property. The term also includesthe appointed and qualified personal representative and the testamentarytrustee of a deceased individual owning an ownership interest in adistributor's business;

(iv) "Distributor" or "wholesaler" means anyperson licensed in the state to sell and distribute malt beverages at wholesaleto persons who are licensed to sell malt beverages at retail in Wyoming;

(v) "Franchise" means a contract or agreement eitherexpressed or implied, whether oral or written, for a definite or indefiniteperiod of time in which a manufacturer grants to a malt beverage distributorthe right to purchase, resell and distribute any brand or brands offered by themanufacturer;

(vi) "Franchisee" means a malt beverage distributor towhom a franchise is offered or granted;

(vii) "Franchisor" means a malt beverage manufacturerwho grants a franchise to a malt beverage distributor;

(viii) "Fraud" means:

(A) A misrepresentation in any manner, whether intentionallyfalse or arising from gross negligence, of a material fact;

(B) An intentional failure to disclose a material fact;

(ix) "Good cause" means:

(A) Insolvency of the distributor, the filing of any petitionby or against the distributor under any bankruptcy or receivership law, or thedissolution or liquidation of the wholesaler which materially affects thedistributor's ability to remain in business;

(B) Revocation or suspension of the distributor's license wherebythe distributor cannot distribute malt beverages for more than sixty (60) days;

(C) The distributor or an individual who owns more than tenpercent (10%) of the stock of a corporate distributor has been convicted of afelony. As used in this paragraph, "felony" means a felony under theUnited States Code or laws of this state;

(D) The distributor intentionally sells the supplier's productsto a retailer or retailers outside that distributor's assigned territory;

(E) There is a failure by the distributor to comply with aprovision of the agreement with a manufacturer which is both reasonable and ofmaterial significance to the business relationship between the distributor andthe manufacturer and which failure has not been cured by the distributorpursuant to the provisions of this act.

(x) "Good faith" means honesty in fact in the conductof the transaction involved and the observance of reasonable commercialstandards of fair dealing in the trade;

(xi) "Manufacturer" means any person licensed tomanufacture or import malt beverages for distribution to distributors licensedin Wyoming;

(xii) "Person" means a natural person, corporation,association, partnership, trust or other business entity and, in case of abusiness entity, shall include any other entity in which it has a majorityinterest or it effectively controls, as well as the individual officers,directors, and other persons in active control of the activities of eachentity. "Person" also includes heirs, assignees, personal representativesand guardians;

(xiii) "Reasonable qualifications" means the averagestandard of the criteria used by the respective manufacturer for similarlysituated distributors that entered into or renewed an agreement with themanufacturer during a period of twenty-four (24) months prior to the proposedtransfer of the distributor's business;

(xiv) "Retaliatory action" includes, but is not limitedto, the refusal to continue an agreement, or a material reduction in thequality of service or quantity of products available to a distributor under anagreement, which is not made in good faith as defined in this act;

(xv) "Sale" includes the issuance, transfer, agreementfor transfer, exchange, pledge, hypothecation or mortgage in any manner orform, whether by transfer in trust or otherwise, of malt beverages or of anyfranchise related thereto for consideration and any option, subscription orother contract for consideration;

(xvi) "Similarly situated distributors" meansdistributors of a manufacturer that are of a generally comparable size, andoperate in markets with similar demographic characteristics, includingpopulation, size, density, distribution and economic conditions;

(xvii) "Transfer of a distributor's business" means thevoluntary sale, assignment or other transfer, including the sale or othertransfer of stock or assets by merger, consolidation or dissolution of:

(A) The business;

(B) Control of the business of the distributor; or

(xviii) "This act" means W.S. 12-9-101 through 12-9-119.

12-9-103. Application of act.

Anyperson who engages directly or indirectly in purposeful agreements or contractsin connection with the purchase of malt beverages from manufacturers or thesale of malt beverages to malt beverage distributors within this state shall besubject to the provisions of this act and shall be subject to the jurisdictionof the courts of this state for violations of this act in accordance with theprovisions of the laws of this state.

12-9-104. Unfair and prohibited acts.

(a) It shall be a violation of this act for a manufacturer ormanufacturer's officer, agent or other representative thereof:

(i) To coerce or compel, or attempt to coerce or compel, anymalt beverage distributor to order or accept delivery of any malt beverage orany other commodity which the distributor has not voluntarily ordered;

(ii) To refuse to deliver in reasonable quantities and within areasonable time after receipt of the distributor's order to any distributorhaving a franchise for the distribution and sale of malt beverages by suchmanufacturer, malt beverages covered by the franchise or contract. However,the refusal to deliver malt beverages shall not be considered a violation ofthis section if the refusal is due to failure of the distributor to pay themanufacturer pursuant to the contract, the distributor's insolvency, an act ofGod, work stoppage or delay due to a strike or labor difficulty, a bona fideshortage of materials, freight embargo or other cause over which themanufacturer, or any agent thereof, shall have no control;

(iii) To coerce or compel, or attempt to coerce or compel, a maltbeverage distributor to enter into any agreement, whether written or oral,supplementary to an existing franchise with the manufacturer or officer, agentor other representative thereof, by threatening to cancel any franchise or anycontractual agreement existing between the manufacturer and distributor. However,notice in good faith by a manufacturer to a malt beverage distributor of thedistributor's violation or breach of any terms or provisions of a franchise orcontractual agreement shall not constitute a violation of this act if thenotice is in writing, is mailed by registered or certified mail to thedistributor at his current business address, and contains the specific facts ofthe distributor's alleged violation or breach of the franchise or contractualagreement;

(iv) To terminate, cancel, fail to renew or refuse to continuethe franchise of any distributor without good cause, as defined in this act. The nonrenewal of a franchise or selling agreement without good cause shallconstitute an unfair termination or cancellation, regardless of the specifiedtime period of the franchise or selling agreement;

(v) To discriminate, either directly or indirectly, in price,programs or terms of sale offered to franchisees, where the effect of thediscrimination may be to substantially lessen competition among distributors orto give to one (1) holder of a franchise any competitive advantage over otherholders of the same or similar franchise;

(vi) To prevent or attempt to prevent, by contract or otherwise,any malt beverage distributor from changing the capital structure of hisdistributorship or the means by or through which he finances the operation ofhis distributorship;

(vii) To require a malt beverage distributor to assent to arelease, assignment, novation, waiver or estoppel which would relieve anyperson from liability imposed by this act. However, nothing in this sectionshall be construed to limit or prohibit good faith dispute settlements enteredinto by the parties;

(viii) To restrict or inhibit, directly or indirectly, the rightof free association among manufacturers or distributors of malt beverage forany lawful purpose;

(ix) To fix or maintain the price at which a distributor mayresell malt beverages;

(x) To coerce, or attempt to coerce, any distributor to acceptdelivery of any malt beverage or other commodity ordered by a distributor ifthe order was properly canceled by the distributor in accordance with thereasonable procedures of the manufacturer;

(xi) To change a distributor's quota of a brand or brands, ifthe change is not made in good faith;

(xii) To require a distributor, by any means, to participate inor contribute to any local or national advertising fund controlled directly orindirectly by a manufacturer;

(xiii) To take any retaliatory action against a distributor thatfiles a complaint regarding an alleged violation by the manufacturer of stateor federal law or an administrative rule;

(xiv) To require or prohibit without good cause any change in themanager or successor manager of any distributor who has been approved by themanufacturer as of the effective date of this act. Should a distributor changean approved manager or successor manager, a manufacturer shall not require orprohibit the change unless the person fails to meet the reasonable standards forsimilarly situated distributors of the manufacturer;

(xv) To sell or supply any brand or brand extension of maltbeverages in this state to a licensed wholesaler other than the licensedwholesaler designated as the exclusive wholesaler for a specific territory forsuch brand or brand extension by the supplier in a written agreement, exceptthat nothing in this paragraph shall prohibit a supplier from providing maltbeverages to consumers in an area on such supplier's premises designated as ahospitality area, or from participating in consumer sampling or taste testingprograms of brands of malt beverages not sold to licensed wholesalers in thisstate, or from otherwise operating as permitted by law;

(xvi) To require for any reason that a wholesaler purchase one(1) or more brands of malt beverages in order for the wholesaler to purchaseanother brand or brands of malt beverages.

(b) It shall be a violation of this act for a distributor,partner, shareholder or officer or agent thereof to have the right to sell,transfer or assign the management or control ownership of greater than tenpercent (10%) of a distributorship without the written consent of themanufacturer, except that the consent shall not be unreasonably withheld. Nomanufacturer shall unreasonably withhold or delay its approval of anyassignment, sale or transfer of the stock of a distributor or of all or anyportion of a distributor's assets, distributor's voting stock, the voting stockof any parent corporation or the beneficial ownership or control of any otherentity owning or controlling a distributor, including the distributor's rightsand obligations under the terms of an agreement, whenever the person to besubstituted meets reasonable qualifications. For purposes of this subsection,"unreasonably withhold or delay" means a period in excess of ninety(90) days after receipt by the manufacturer of all information reasonablyrequired from the wholesaler and purchaser. Upon the death or disability ofone (1) of the officers, partners or stockholder of greater than ten percent(10%) ownership of a corporate distributorship operating the business of adistributor, no manufacturer shall deny the surviving officers, partners of thepartnership or stockholders of the distributorship, the right to become asuccessor-in-interest to the agreement between the manufacturer and thedistributorship, provided that the survivor has been active in the managementof the distributor's business and is otherwise capable of carrying on thebusiness of the distributorship. However, upon the death of a distributor, nomanufacturer shall deny approval for any transfer of ownership to a designatedmember of the family of an owner of a distributorship, provided, that thesubsequent transfer of ownership by the designated member shall thereafter besubject to the provisions of this subsection.

12-9-105. Distributor's resignation; cancellation; termination;failure to renew; refusal to continue.

(a) Notwithstanding any agreement and except as otherwiseprovided for in this act, a manufacturer shall not cause a distributor toresign from an agreement, or cancel, terminate, fail to renew or refuse tocontinue under an agreement unless the manufacturer has:

(i) Satisfied the applicable notice requirements of W.S. 12-9-108;

(ii) Acted in good faith; and

(iii) Good cause for the cancellation, termination, nonrenewal,discontinuance or forced resignation.

12-9-106. Good cause for terminating agreement; rights to cure.

(a) Notwithstanding any agreement, good cause shall exist forthe purposes of a termination, cancellation, nonrenewal or discontinuance underW.S. 12-9-105(a)(iii) when all of the following occur:

(i) There is a failure by the distributor to comply with aprovision of the agreement which is both reasonable and of materialsignificance to the business relationship between the distributor and themanufacturer;

(ii) The manufacturer first acquired knowledge of the failuredescribed in paragraph (i) of this subsection not more than two (2) years beforethe date notification was given pursuant to W.S. 12-9-105(a)(i);

(iii) The distributor was given written notice by themanufacturer of failure to comply with the agreement;

(iv) The distributor was afforded a reasonable opportunity toassert good faith efforts to comply with the agreement within the time limitsprovided for in paragraph (v) of this subsection; and

(v) The distributor has been afforded thirty (30) days in whichto submit a plan of corrective action to comply with the agreement and anadditional ninety (90) days to cure the noncompliance in accordance with theplan and has not cured the noncompliance within that time in accordance withthe plan.

(b) Good cause shall exist for the purposes of termination,cancellation, nonrenewal or discontinuance under W.S. 12-9-105(a)(iii) whenthere occurs a violation of W.S. 12-9-109(a).

12-9-107. Burden of proof.

Foreach termination, cancellation, nonrenewal or discontinuance, the manufacturershall have the burden of showing that it has acted in good faith, that thenotice requirements and rights to cure under this act have been complied withand that there was good cause for the termination, cancellation, nonrenewal ordiscontinuance.

12-9-108. Notice for terminating an agreement.

(a) Notwithstanding any agreement and except as otherwiseprovided in this act, the manufacturer shall furnish written notice of thetermination, cancellation, nonrenewal or discontinuance of an agreement to thedistributor not less than thirty (30) days before the effective date of thetermination, cancellation, nonrenewal or discontinuance. In no event shall thecontractual term of any agreement expire, without the written consent of themalt beverage distributor involved, prior to the expiration of at least thirty(30) days following the written notice. The notice shall be by certified mailand shall contain the following:

(i) A statement of intention to terminate, cancel, not renew ordiscontinue the agreement;

(ii) A statement of the reason for the termination,cancellation, nonrenewal or discontinuance; and

(iii) The date on which the termination, cancellation, nonrenewalor discontinuance takes effect.

12-9-109. Conditions and notice required.

(a) Notwithstanding W.S. 12-9-105 and 12-9-106, a manufacturermay immediately terminate, cancel, fail to renew, or discontinue an agreementif any of the following occur:

(i) Insolvency of the distributor, the filing of any petitionby or against the distributor under any bankruptcy or receivership law, or thedissolution or liquidation of the wholesaler which materially affects thedistributor's ability to remain in business;

(ii) Revocation of the distributor's license whereby thedistributor cannot distribute malt beverages for more than sixty (60) days;

(iii) The distributor or an individual who owns more than tenpercent (10%) of the stock of a corporate distributor has been convicted of afelony. As used in this paragraph, "felony" means a felony under theUnited States Code or laws of this state. However, an existing stockholdershall have the right to purchase the stock of the offending stockholder, and,if the sale is completed within the thirty (30) day period, the provisions ofthis paragraph shall not apply. Any such purchase shall be subject to W.S.12-9-104(a)(viii);

(iv) The distributor intentionally sells the supplier's productsto a retailer or retailers outside that distributor's assigned territory;

(v) The distributor commits fraud as defined by W.S.12-9-102(a)(viii) in his dealings with the manufacturer.

12-9-110. Discontinuance of production or distribution.

NotwithstandingW.S. 12-9-105, 12-9-108 and 12-9-109, a manufacturer may terminate, cancel, notrenew or discontinue an agreement upon not less than thirty (30) days priorwritten notice if the supplier discontinues production or discontinuesdistribution throughout this state of all the brands sold by the manufacturerto the distributor. Nothing in this act shall prohibit a manufacturer, uponnot less than thirty (30) days notice, to completely discontinue thedistribution throughout this state of any particular brand or package of maltbeverage. This section does not prohibit a manufacturer from conducting testmarketing of a new brand of malt beverage or from conducting the test marketingof a brand of malt beverage which is not currently being sold in this state,provided that the manufacturer has notified the commission in writing of itsplans to test market. The notice shall describe the market area in which the testshall be conducted, the name or names of the distributors who will be sellingthe malt beverage, the name or names of the brand of malt beverage beingtested, and the period of time during which the testing will take place. Amarket testing period shall not exceed eighteen (18) months.

12-9-111. Effort required by distributor.

Thedistributor shall devote such efforts and resources to sales and distributionof all the manufacturer's products which the distributor has been granted theright to sell and distribute as reasonably required by the agreement betweenthe manufacturer and distributor.

12-9-112. Waiver prohibited.

Adistributor shall not waive any of the rights granted in any provision of thisact. Nothing in this act shall be construed to limit or prohibit good faithdispute settlements voluntarily entered into by the parties.

12-9-113. Agreement subject to act.

Theprovisions of this act shall apply to all agreements between a manufacturer anddistributor entered into on or after the effective date of this act.

12-9-114. Agreements binding on successor.

Asuccessor to a manufacturer that continues in business as a manufacturer shallbe bound by all terms and conditions of each agreement of the manufacturer ineffect on the date of succession.

12-9-115. Reasonable compensation.

(a) In the event that a distributor is terminated by amanufacturer in bad faith or for other than good cause, the distributor shallbe entitled to additional compensation from the manufacturer for:

(i) The fair market value of any and all assets, includingancillary business assets of the distributor used in distributing themanufacturer's products;

(ii) The good will of the business.

(b) The total compensation to be paid by the manufacturer tothe distributor shall be reduced by any sum received by the distributor fromsale of assets of the business used in distribution of the manufacturer'sproducts as well as by whatever value such assets may have to the distributorthat are unrelated to the manufacturer's products.

(c) As used in this section, "fair market value"means the highest dollar amount at which a seller would be willing to sell anda buyer willing to buy when each possesses all information relevant to thetransaction.

(d) In the event the manufacturer and the malt beveragedistributor are unable to mutually agree on the reasonable compensation to bepaid for the value of the distributor's business, as defined herein, the mattermay by agreement of the parties be submitted to arbitration. If so submitted,the following shall apply:

(i) Arbitration shall proceed only if all parties agree inadvance and submit the dispute to arbitration, and the decision of thearbitrators shall be final and binding if so agreed upon by the parties in advanceof the arbitrator's proceedings;

(ii) The dispute shall be submitted to a panel of three (3)arbitrators, one (1) of which shall be selected by the supplier within thirty(30) days after the parties have agreed to arbitrate, one (1) of which shall beselected by the wholesaler within thirty (30) days after the parties haveagreed to arbitrate, and one (1) of which shall be selected from a list of five(5) candidates supplied by the American Arbitration Association at the requestof the parties within ten (10) days after the parties have agreed to submit thedispute to arbitration;

(iii) Within ten (10) days after receipt of the list suppliedpursuant to paragraph (ii) of this subsection, the wholesaler and the suppliereach may disqualify up to two (2) candidates from the list. The AmericanArbitration Association shall select the third arbitrator from the candidatesnot disqualified by the parties;

(iv) The arbitration shall proceed in accordance with the rulesof the American Arbitration Association within thirty (30) days after theselection of the arbitration panel has been completed;

(v) The cost of the arbitration shall be borne equally by theparties. The award of a majority of the arbitrators shall be final and bindingon the parties if so agreed upon in advance by the parties. The arbitratorsshall not be permitted to award punitive damages and are bound to apply theterms and provisions of the agreement not in conflict with this act.

12-9-116. Remedies.

(a) During the thirty (30) day period provided in W.S.12-9-108, either party, in appropriate circumstances, may bring an action inthe appropriate court of this state pending a final determination of theproceedings on the merits.

(b) In any action brought under this act, the court shall haveauthority to grant temporary, preliminary and final injunctive relief.

(c) In addition to temporary, preliminary or final injunctiverelief, any manufacturer or distributor who shall be aggrieved or injured inhis business or property by reason of anything forbidden in this act may bringan action in the appropriate court of this state and may recover the damagessustained and the costs of the action, including a reasonable attorney's fee.

(d) In addition to any other remedy or relief to which a personis entitled, a distributor or manufacturer aggrieved by a violation of this actmay bring an action to obtain a declaratory judgment that an act, action orpractice violates this act and to enjoin a manufacturer or distributor who hasviolated, is violating or is otherwise likely to violate this act.

(e) In an action for money damages, if a judge or jury findsthat the defendant acted maliciously, the judge or jury may award punitivedamages as permitted by Wyoming law.

(f) The remedies provided in this section shall be in additionto any other remedies provided by law or in equity.

12-9-117. Contracts and the validity thereof.

Nomanufacturer shall effect any sale to a distributor in Wyoming except pursuantto a written contract between the manufacturer and the distributor.

12-9-118. Repurchase of inventory upon termination.

(a) Whenever any malt beverage distributor enters into afranchise agreement with a manufacturer in which the distributor agrees tomaintain an inventory of malt beverages and the franchise is subsequentlyterminated, the manufacturer shall repurchase the inventory as provided in thisact. If the distributor has any outstanding debts to the manufacturer, then therepurchase amount may be credited to the distributor's account.

(b) The manufacturer shall repurchase that inventory previouslypurchased from him and held by the distributor on the date of termination ofthe contract. The manufacturer shall pay one hundred percent (100%) of thedistributor's laid-in cost, payable when the product is returned to themanufacturer free and clear of all liens, claims and charges created orpermitted by the distributor.

(c) Upon payment of the repurchase amount to the distributor,the title and right of possession to the repurchased inventory shall betransferred to the manufacturer.

(d) A distributor shall not keep any inventory except with theconsent of the manufacturer and the distributor's agreement that such productwill be maintained and sold in accordance with the manufacturer's producthandling standards.

(e) If any manufacturer shall fail or refuse to repurchase anyinventory covered under the provisions of this act within sixty (60) days aftertermination of a distributor's contract, he shall be civilly liable for onehundred percent (100%) of the current wholesale price of the inventory plus anyfreight charges paid by the distributor, the distributor's reasonableattorney's fees, court costs and interest on the current wholesale pricecomputed at the legal interest rate.

12-9-119. Indemnification.

Amanufacturer shall fully indemnify and hold harmless its distributor againstany losses, including, but not limited to, court costs and reasonableattorney's fees or damages arising out of complaints, claims or lawsuits,including, but not limited to, strict liability, negligence, misrepresentationor express or implied warranty if the complaint, claim or lawsuit relates to aproduct liability claim pertaining to the manufacturing of a malt beverageproduct.