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WIRTZ CORP. v. UNITED DISTILLERS & VINTNERS NORTH

October 15, 1999

WIRTZ CORPORATION D/B/A JUDGE & DOLPH, LTD., PLAINTIFF,
v.
UNITED DISTILLERS & VINTNERS NORTH AMERICA, INC., DEFENDANT.



The opinion of the court was delivered by: Scott, District Judge.

OPINION

This cause is before the Court on Plaintiff Wirtz Corporation's, d/b/a Judge & Dolph, Ltd. (J & D), motion to remand this action against Defendant United Distiller & Vintners North America, Inc. (UDVNA) to the Illinois Liquor Control Commission (ILCC). UDVNA removed this action from the ILCC to this Court on diversity grounds pursuant to 28 U.S.C. § 1441. J & D moves to remand this case on the basis that the action before the ILCC is not subject to removal. For the reasons stated below, the motion to remand is DENIED.

Plaintiff J & D, an unincorporated division of Wirtz Corporation, is a licensed wholesale distributor of adult beverage products in Illinois. UDVNA is an importer and manufacturer of distilled spirits and wines. Wirtz is a resident of Illinois. UDVNA is a resident of Connecticut. Since 1996, J & D has served as exclusive distributor in the State of Illinois of certain adult beverage products imported or manufactured by UDVNA, pursuant to certain written distributorship agreements between UDVNA and J & D.

In late 1998, J & D notified UDVNA that it intended to downsize and consolidate its two separate off-premise sales groups and that its sales personnel would henceforth sell directly competing products. On March 1, 1999, J & D effected the changes in its off-premise sales force structure. On May 19, 1999, UDVNA commenced an action in the U.S. District Court for the District of Connecticut*fn1 seeking a declaration that J & D's sales force reduction and consolidation breached the agreements and that UDVNA is entitled to appoint one or more additional distributors in Illinois in order to mitigate its damages resulting from the breach. The Connecticut action is currently pending.

On May 21, 1999, Illinois Governor Ryan signed into law the Illinois Wine and Spirits Industry Fair Dealing Act of 1999, Public Act 91-2, 815 ILCS 725/1 et seq., (the "Fair Dealing Act"), commonly known as the Wirtz Law in recognition of Wirtz's leading role in lobbying for its passage. The Fair Dealing Act applies to virtually all agreements between suppliers and distributors of wine and distilled spirits, including those that pre-date the Fair Dealing Act. In the case of pre-existing agreements, the Fair Dealing Act prohibits suppliers from terminating or failing to renew such agreements except in the exercise of good faith.

On July 8, 1999, J & D filed a petition before the ILCC alleging that UDVNA violated the Fair Dealing Act by considering the appointment of additional distributors for UDVNA products in Illinois, and seeking an order prohibiting UDVNA from adding other Illinois distributors. On July 9, 1999, J & D's counsel wrote to the ILCC's counsel requesting that the ILCC issue an order at its scheduled July 14, 1999, meeting in Springfield, Illinois, prohibiting UDVNA from appointing one or more additional distributors, and requiring UDVNA to continue supplying J & D at prices and quantities in effect prior to the filing of its petition, until the matters in dispute between the parties are determined by an order that is final and nonreviewable.

On July 13, 1999, before the ILCC had taken any action on the petition, UDVNA removed the case to this Court. Shortly thereafter, UDVNA filed in this Court a motion to dismiss, transfer or stay the action (d/e 4) based on the pendency of the Connecticut action. On August 2, 1999, J & D moved to remand the case to the ILCC and to stay consideration of UDVNA motion to dismiss, transfer, or stay (d/e 6,8).

BACKGROUND

UDVNA claims the action before the ILCC is a contract action, between diverse parties and exceeding seventy-five thousand dollars, and is removable to this Court. 28 U.S.C. § 1441 (a).*fn2 J & D claims that only actions pending in State court may be removed and that the ILCC is not a "State court" but a state agency.*fn3 Thus, the question before the Court is whether the ILCC is a "State court" from which the action may be removed.

The Seventh Circuit Court of Appeals has addressed the issue of whether a state agency is a State court for removal purposes. Floeter v. C. W Transport, Inc., 597 F.2d 1100 (7th Cir. 1979). In Floeter, employees filed an action against their employer and their local union before the Wisconsin Employment Relations Commission (WERC) alleging breach of contract and unfair representation. The district court held that the WERC was a "State court" for the purposes of the removal statute. The Seventh Circuit Court of Appeals, in affirming the district court, found that the WERC procedures were "substantially similar to those traditionally associated with the judicial process," and the "state's interest in providing a convenient and expeditious tribunal to adjudicate the rights and interests of the parties. . . [did] not outweigh the defendant's right to remove the action to federal court." Floeter, 597 F.2d at 1102.

The Floeter Court articulated a functional as opposed to a literal test for determining whether a state administrative body is a State court for purposes of remand. The Floeter Court held that "the title given a state tribunal is not determinative; it is necessary to evaluate the functions, powers, and procedures of the state tribunal and consider those factors along with the respective state and federal interests in the subject matter and in the provision of a forum." Id.,citing, Volkswagen de Puerto Rico, Inc. v. Puerto Rico Labor Relations Bd., 454 F.2d 38, 44 (1st Cir. 1972).

FUNCTION, POWERS, AND PROCEDURES OF THE ILCC

The first part of the Floeter test requires the Court to evaluate the functions, powers, and procedures of the state tribunal. ILCC's functions are governed primarily by the Liquor Control Act, 235 ILCS 5/1-1 et seq. The Liquor Control Act authorizes the ILCC to issue and revoke licenses to manufacturers, importers, distributors, and retailers and otherwise enforce the Liquor Control Act (e.g., setting standards of manufacture, inspection of premises where alcoholic liquors are manufactured, distributed, or sold).

The ILCC is further empowered under the Fair Dealing Act to enforce and administer its provisions. Sections 15 through 30 of the Fair Dealing Act govern "all agreements between a distributor and a supplier . . . entered into after the effective date of [the Act]." Fair Dealing Act, ยง 10(d). The agreements between J & D and UDVNA pre-date the Fair Dealing Act and are not governed by Sections 15 through 30. Section 35 "clarifies existing rights and obligations and establishes remedial procedures," for those parties registered under the Liquor Control Act, and applies to the agreements between J & D and UDVNA. ยง 35(a). Section 35(b) provides that "[u]nder the existing obligation to act in good faith, no registration or obligation to register under Section 6-9 [of the Liquor Control Act] may be terminated, nor may a ...


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