Winebow, Inc. v. Capitol-Husting Co., Inc., et al
Filed opinion of the court by Judge Wood. Certification of State Law Question to Wisconsin State Supreme Court: Does the definition of a dealership contained in Wis. Stat. 135.02(c)(b) include wine grantor-dealer relationships? We invite the Court to reformulate this question and expand its inquiry to the extent it is necessary to resolve this case. The Clerk of this court is instructed to send the full record of the case to the state supreme court for its use in the consideration of this request. Diane P. Wood, Chief Judge; Joel M. Flaum, Circuit Judge and Frank H. Easterbrook, Circuit Judge. [6861876-1]  [16-3682]
United States Court of Appeals
For the Seventh Circuit
CAPITOL-HUSTING CO. , INC. &
L’EFT BANK WINE CO. LIMITED,
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 15-cv-225 — David E. Jones, Magistrate Judge.
ARGUED APRIL 11, 2017 — DECIDED AUGUST 16, 2017
Before WOOD, Chief Judge, and FLAUM and EASTERBROOK,
WOOD, Chief Judge. Eighteen years ago, Wisconsin
Governor Tommy Thompson vetoed portions of an
appropriations bill that imposed new regulations on alcohol
dealers and distributors. In doing so, the governor hoped to
diminish the regulatory burden on wine dealerships. In the
present case, which pits an upstream wine business against
two wholesale wine distributors, the question is whether
Governor Thompson achieved that goal. The answer turns on
the proper understanding of state law. Because there is no
guiding precedent and the issue is of great practical
importance, we respectfully certify to the Supreme Court of
Wisconsin the question whether wine dealerships are
automatically to be considered as “intoxicating liquor”
dealerships for purposes of the Wisconsin Fair Dealership
Law. See Wis. Stat. § 821.01; Cir. R. 52.
Plaintiff Winebow, Inc., imports and distributes wines to
downstream wholesalers. It wants to cut its ties with two
wholesale distributors, defendants Capitol-Husting and
L’Eft Bank Wine, to whom we refer collectively as the
Distributors. Winebow began using Capitol-Husting as a
distributor of its wines in 2004; it added L’Eft Bank in 2009.
Over the years, Winebow granted the Distributors the
exclusive right to sell and distribute Winebow products
within specified regions of Wisconsin. Evidently the
relationship suited the Distributors, who bought “substantial
amounts” of Winebow’s wine in recent years. Winebow,
however, became dissatisfied, and in February 2015 it
abruptly terminated both distributorships. No express
agreement with either counterparty stood in its way, but the
Distributors took the position that the Wisconsin Fair
Dealership Law bars Winebow from doing so—at least
without any financial penalty. Whether they are correct
depends on the language of that statute, to which we now
The Wisconsin Fair Dealership Law (“the Law”) restricts
the circumstances under which certain sellers (termed “grantors,” see Wis. Stat. § 135.02(5)) unilaterally may stop doing
business with their existing distributors (known as “dealers,”
per Wis. Stat. § 135.02(2)—we call them distributors here).
Grantors may take this step only if they have “good cause” to
do so. See Wis. Stat. § 135.03; see also Wis. Stat. § 135.02(4)
(defining “good cause”); Ziegler Co., Inc. v. Rexnord, Inc.,
433 N.W.2d 8, 12–14. (Wis. 1988) (interpreting the statutory
definition). The Law is premised on the idea that dealer-grantors have “inherently … superior economic power.” Wis. Stat.
§ 135.025(2)(b). It seeks to “prevent suppliers from behaving
opportunistically once franchisees or other dealers have sunk
substantial resources into tailoring their business around, and
promoting, a brand.” Kenosha Liquor Co. v. Heublein, Inc.,
895 F.2d 418, 419 (7th Cir. 1990). It does so by supplementing
the contractual and common law obligations that grantors
owe to their distributors. See Wis. Stat. § 135.025(2)(c) & (3). If
a grantor contravenes the law by terminating or substantially
impairing an existing relationship with a distributor, that distributor may recover damages, injunctive relief, and attorney’s fees. Wis. Stat. § 135.06.
The Law does not regulate all grantor-distributor relationships, however. Initially, it addressed only business relationships (defined as “dealerships”) in which there was a “community of interest” between the grantor and the distributor.
Wis. Stat. § 135.02(3)(a). A “community of interest” was defined in the statute as a “continuing financial interest between
the grantor and grantee in either the operation of the dealership business or the marketing of such goods or services.”
Wis. Stat. § 135.02(1). These are hardly crisp standards, and so
it is not surprising that courts are frequently asked to decide
whether such an interest is present. See Note, Kevin Scott
Dittmar, Foerster, Inc. v. Atlas Metal Parts: The Wisconsin Supreme Court Takes a Narrow View of the Dealer’s Financial Interest
Protected by the Wisconsin Fair Dealership Law, 1985 WIS. L. REV.
155, 156 (1985); see also Ziegler, 407 N.W.2d at 877 (“The community of interest requirement has been difficult to delimit
with any precision.”).
In 1999, the Wisconsin General Assembly sought to
broaden the Law to ensure that all “intoxicating liquor” dealerships were protected. To that end, it eliminated the need to
prove “community of interest” for those businesses. It included changes to this effect in the state’s budget bill, Act 9.
Two of those changes are central here. First, the General
Assembly amended the definition of a “dealership” so that
large-volume distributors of “intoxicating liquor” were
brought under the umbrella of the statute’s definition of a protected “dealership.” This revised definition of a “dealership”
expressly incorporates the definition of “intoxicating liquor”
in the chapter regulating alcohol sales, Wis. Stat. § 125.02(8),
which includes wine:
… all ardent, spirituous, distilled or vinous 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.”
Wis. Stat. § 125.02(8) (emphasis added).
Second, the legislature created an entirely new section in
the Law: Wis. Stat. § 135.066. This new provision expressed
the legislature’s desire for a competitive and stable wholesale
market and the need for new rules governing a party’s acquisition of an entity that has an existing intoxicating liquor dealership. These industry-specific rules were to supplement, rather than replace, the other regulations in the Law. The new
section expressly incorporated the definition of “intoxicating
liquor” from the pre-existing Wis. Stat. § 125.02(8).
Several of these changes never came into effect, because
Governor Thompson objected to the idea of treating wine
dealerships the same as other alcohol dealerships. On
October 27, 1999, he partially vetoed the appropriations bill,
striking a significant portion of the legislature’s changes to the
Law. Wisconsin grants its governors power to strike out
significant language in appropriations measures, even when
doing so alters the meaning of the statute, but they may not
add new language. See State ex rel. Wis. Senate v. Thompson,
424 N.W.2d 385, 388, 393 (Wis. 1988) (the governor may “veto
individual words, letters, and digits, … as long as what
remains after veto is a complete, entire, and workable law.”).
Governor Thompson thus had to work with the language the
lawmakers sent him. This required some legerdemain.
First, the governor struck the cross-reference to the existing regulatory definition of “intoxicating liquor” in the provision creating the new definition of a protected dealership:
[Wis. Stat. §] 135.02(3)(b) [A protected dealership is
created by] [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 … .
We will refer to this language, as altered by the governor’s
veto, as the “categorical” provision or “per se” definition of a
dealership entitled to the protections of the Law.
In addition, he vetoed significant portions of the new industry-specific sections. He struck the bulk of the definitions
and regulations in subsections (2)–(4), leaving on the books
only the following:
(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 liquor minus adjustments for returns, discounts and allowances.
(c) “Wholesaler” has the meaning given in s.
(d) “Wine” has the meaning given in 125.02(22).
(3) LIABILITY OF TRANSFEREE OF INTOXICATING LIQUOR
(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 liq-
uor 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 considered a 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.
The careful reader will spot the undeleted word “minus” in
former 2(b), and the undeleted word “wine” in former 2(d).
After the governor’s surgery, therefore, section 2(a) read
“’Intoxicating liquor’ has the same meaning given in
s. 126.02(8) minus wine.” Following the convention used by
the parties, we refer to this section as the “minus wine”
provision, Wis. Stat. § 135.066(2).
The governor left intact the legislative findings in subsection 1 and a severability provision in subsection 6. He edited
the nonapplicability provision to strike two phrases that had
excluded wine dealerships, presumably believing the language was superfluous:
(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
dealership and 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.
Wis. Stat. § 135.066(5).
Governor Thompson paired his action with a written
statement that discussed the legislature’s changes to the Law
and his alterations to the legislature’s work. In that veto message, he said that he was “partially vetoing these provisions
so that wine will be excluded from treatment … because I object to wine being treated the same as intoxicating liquor.” His
changes to the bill became law because the General Assembly
failed to override his partial veto. The law has aged over the
last 18 years; legislators have not made any adjustments to
the “intoxicating liquor” provisions since 1999.
Winebow brought a declaratory judgment action in the
district court seeking confirmation that the statutory restrictions on dealership terminations do not apply to wine
dealerships, in keeping with Governor Thompson’s intent.
The defendants counterclaimed that their distributorships
were protected under both the “community of interest” definition and by the per se “intoxicating liquor” definition in
Wis. Stat. § 135.02(3)(b). They later abandoned their first argument. At this point their position turns on the question
whether the term “intoxicating liquor” includes wine. The
district court concluded that it does not. It granted Winebow’s
motion for judgment on the pleadings, based on its conclusion
that wine dealerships do not fall within the “intoxicating liquor” dealerships protected by the Law.
The sole question before us is whether an “intoxicating liquor” dealership, as defined by Wis. Stat. § 135.02(3)(b), includes one that involves wine. If it does not, then Winebow is
free to cease doing business with Capitol-Husting and L’Eft
Bank Wine without further ado. If wine dealerships are covered, however, then Winebow cannot unilaterally terminate
its relationship with the Distributors without a showing of
good cause. Because this is an appeal from the grant of a judgment on the pleadings and concerns the interpretation of a
statute, our review is de novo. See Laborers Local 236, AFL-CIO
v. Walker, 749 F.3d 628, 632 (7th Cir. 2014); Boyd v. Illinois State
Police, 384 F.3d 888, 896 (7th Cir. 2004).
The Distributors naturally prefer the greater protection
that the “good cause” standard confers, and so they argue that
wine dealerships are included in the per se dealership definition in Wis. Stat. § 135.02(3)(b). In the alternative, they argue
that the statute is ambiguous but that the term “intoxicating
liquor” should be construed as including wine, either as a
matter of policy or as a consequence of the supposed “plain
meaning” of the phrase. Winebow counters that the “minus
wine” provision pulls any wine dealership out of the per se
definition. The state courts have yet to speak to this issue.
Because our jurisdiction is based on diversity of citizenship, 28 U.S.C. § 1332(a)(1), we must interpret the law as we
think Wisconsin’s courts would. Laborers Local 236, 749 F.3d at
634. For questions of statutory interpretation, Wisconsin
courts (like most) begin with the text of the law. Tammi v. Porsche Cars N. Am., Inc., 768 N.W.2d 783, 790 (Wis. 2009). This
ensures that the judiciary gives proper deference “to the policy choices enacted into law by the legislature.” State ex rel.
Kalal v. Circuit Court for Dane Cnty., 681 N.W.2d 110, 124
(Wis. 2004). “[M]eaning should be given to every word,
clause and sentence[,] and a construction which would make
part of a statute superfluous should be avoided whenever
possible.” Ziegler, 433 N.W.2d at 12. If the meaning of the law
is clear from the text, then the analysis ends. Id. Only when
“reasonable persons could disagree as to [the statute’s] meaning” is it ambiguous. State v. Delaney, 658 N.W.2d 416, 420
We have done our best to decipher what this law means,
based on the text that remained after the governor took his
red pencil to it. Unfortunately, we are forced to conclude that
the plain language does not tell us whether wine dealerships
fall within the category of “intoxicating liquor” dealerships created by Wis. Stat. § 135.02(3)(b).
A number of considerations favor Winebow’s position.
First and most significant is the presence of the “minus wine”
definition of “intoxicating liquor” in Wis. Stat. § 135.066(2).
What could that mean other than to exclude wine
distributorships from the Law’s termination provisions?
Further supporting Winebow is the fact that this section
contains the Law’s only definition of “intoxicating liquor.”
Logically, the “minus wine” provision would serve no
function if it did not set the definition throughout the Law.
And the definition is practically the only thing left in
Wis. Stat. § 135.066, other than some legislative findings, the
non-applicability section, and a severability provision, none
of which is affected by the “minus wine” language. The
Distributors’ cramped reading of the minus-wine language
thus risks making that language meaningless—something
Wisconsin courts disfavor in interpreting statutes. Landis v.
Physicians Ins. Co. of Wis., Inc., 628 N.W.2d 893, 898
(Wis. 2001); Ziegler, 433 N.W.2d at 12. Wisconsin courts also
tend to assume consistent interpretations of the same term.
When a word or phrase appears repeatedly in a statute, it is
“a reasonable deduction” that the legislature intended it to
have the same meaning throughout. Coutts v. Wis. Ret. Bd.,
562 N.W.2d 917, 923 (Wis. 1994). This rule of thumb favors
Winebow’s argument that a wine dealership is not a statutory
“intoxicating liquor” dealership.
But there is another side to the coin—one that favors the
Distributors. Just as the “minus wine” provision is not
expressly limited to Wis. Stat. § 135.066, it also does
not expressly extend to the entire chapter. Worse, the
“minus wine” definition is not in the “Definitions” section of
the Law. See Wis. Stat. § 135.02. That definitional section
expressly states that it applies throughout Chapter 135.
Wisconsin courts take into account the “structure of the
statute in which the operative language appears” when
interpreting language, seeking to place a term “in the
context in which it is used; not in isolation but as part of a
whole … .” Kalal, 681 N.W.2d at 124. That approach seems to
boost the Distributors’ position.
But to win, the Distributors must do more than pour the
“minus wine” definition into Wis. Stat. § 135.066. They also
must show that “intoxicating liquor,” as that phrase is used in
the per se definition, includes wine. This is a challenging task
because the governor eliminated the cross-reference that had
defined that term; thus, there is no express statutory language
on their side. Wisconsin courts generally apply the “common,
ordinary, and accepted meaning” of undefined terms,
Masri v. State Labor & Indus. Review Comm’n, 850 N.W.2d 298,
307–08 (Wis. 2014). Relying on that practice, the Distributors
urge that wine is commonly regarded as an “intoxicating
liquor.” Their brief points to four instances where some
variation of the phrase “beer, wine and other liquor”
(emphasis added) appears somewhere. (It is a random
collection of sources, to be sure: a newspaper article from
2011; the text on a health and baby products website; and an
article in the Everyday Jewish Living section of the Orthodox
Union website.) The word “other,” the Distributors argue,
shows that beer and wine are commonly regarded as types of
We are not inclined to assign dispositive weight on such
an eclectic basis to a colloquial phrase. One could as easily
point out that the phrase “beer, wine, and liquor”—which
suggests three distinct items—also appears commonly in the
world at large. See, e.g., Roberto A. Ferdman, Where the Biggest
Beer, Wine, and Liquor Drinkers Live in the U.S., Wonkblog,
WASHINGTON POST, July 29, 2014, https://www.washingtonpost.com/news/wonk/wp/2014/07/29/where-the-biggestbeer-wine-and-liquor-drinkers-live-in-the-u-s/?utm_term=
.39bb6407d67c (visited August 15, 2017) (showing average
consumption per person, per state, of beer, of wine, and of
spirits). Dictionary definitions are similarly inconclusive. See,
e.g., Liquor, Merriam-Webster Dictionary (“a usually distilled
rather than fermented alcoholic beverage”) (emphasis
added); see also Kalal, 681 N.W.2d at 125 (“Many words have
multiple dictionary definitions; the applicable definition depends upon the context in which the word is used.”).
If we conclude that the term “intoxicating liquor” is ambiguous, Wisconsin law orders us to look at the “legislative
history, scope, context, and subject matter” of the law to ascertain the meaning. State v. Washara Cnty. Bd. of Adjustment,
679 N.W.2d 514, 521 (Wis. 2004). But even these sources fail to
clear the haze. Wisconsin lawmakers unquestionably wanted
to include them in the per se category. Governor Thompson
did not, and exercised his amendatory veto to try to effectuate
a distinction between wine dealerships and the others, as he
explained in his veto message. Wisconsin treats such messages as “part of the legislative history and … evidence of legislative intent.” Landwehr v. Landwehr, 715 N.W.2d 180, 189
(Wis. 2006); accord In re Paternity of Jeremy D.L., 503 N.W.2d
275, 277 & n.6 (Wis. 1993) (characterizing the governor’s veto
message as “legislative history” and stating that it “is evidence of a statute’s meaning”). Whether the governor succeeded in doing so is the question before us.
In light of all this, we cannot decide with any confidence
whether the “minus wine” provision defines “intoxicating
liquor” as used throughout the Fair Dealership Law and, if it
does not, whether an “intoxicating liquor” dealership, per
Wis. Stat. § 135.02(3)(b), includes wine dealerships. We also
reject the invitation to read the statute as if it included wine,
based on broader policy concerns, because such a move
would conflict with the commitment of Wisconsin’s courts to
rest the meaning of a statute on its text, not on a vague notion
of legislative intent. See Kalal, 681 N.W.2d at 126.
Rather than attempt the necessary disambiguation
ourselves, we believe that the better course is to ask the
Wisconsin Supreme Court for guidance. Although neither
party asked us to certify this question of statutory scope to the
Wisconsin Supreme Court, we may exercise our discretion to
do so sua sponte under Circuit Rules. Cir. R. 52(a). We raised
this possibility during oral argument.
We have the authority to certify to a state’s highest court
questions of state law that will control the outcome of a
pending case, provided that the state court is permitted to
entertain such questions. Cir. R. 52. Wisconsin allows such
questions. Wis. Stat. § 821.01. State law empowers the
Wisconsin Supreme Court to choose to answer questions we
certify to it, so long as the question is legal in nature, may be
determinative of the case pending, and there is no controlling
precedent from the state supreme or appellate courts.
Wis. Stat. § 821.01. These guidelines mirror those that our
court uses to determine when it is appropriate to exercise our
discretion to certify a question. See Lyon Fin. Servs., Inc. v.
Ill. Paper & Copier Co., 732 F.3d 755, 766 (7th Cir. 2014) (listing
considerations used for determining whether certification is
This case fits the bill. First, it presents a legal question—
the proper interpretation of this statute—on which there is no
guiding precedent. Neither Wisconsin’s highest court nor a
state appellate court has determined whether the per se
“intoxicating liquor” dealership definition in Wis. Stat.
§ 135.02(3)(b) includes wine dealerships. Moreover, the
district court in our case is the only federal court that has
weighed in. All this makes the question suitable for
certification. See Nat’l Cycle, Inc. v. Savoy Reinsurance Co. Ltd.,
938 F.2d 61, 64 (7th Cir. 1991) (“Certification eliminates the
need to expend judicial resources predicting how another
court will decide a question. Once we have invested the time
and effort to make the prediction, the costs have been sunk.”).
The Wisconsin Supreme Court’s answer about the scope of
the law will be outcome determinative because Winebow’s
suit for declaratory judgment concerns only the scope of the
Another reason why this case is a good candidate for
certification is the likelihood of future litigation under the
Law and the public policy considerations implicated. The
scope of the Law has been the subject of numerous cases,
many of which the Wisconsin Supreme Court itself has
resolved. E.g. Benson v. City of Madison, 897 N.W.2d 16
(Wis. 2017); Moe v. Benelli U.S.A. Corp., 743 N.W.2d 691 (Wis.
2007); Ziegler, 407 N.W.2d 873. We see no reason to think that
this litigation will diminish. And because these dealership
cases often involve out-of-state sellers and in-state
distributors, and the amount in controversy often exceeds
$75,000, it is also likely that the federal courts will continue to
need the state supreme court’s guidance. E.g. Girl Scouts of
Manitou Council, Inc. v. Girl Scouts of U.S. of Am., Inc., 646 F.3d
983 (7th Cir. 2011); Eisencorp, Inc. v. Rocky Mountain Radar, Inc.,
398 F.3d 962 (7th Cir. 2005). Finally, the scope of the Fair
Dealership Law implicates an important state public policy
that is the proper concern of the Wisconsin Supreme Court,
not the federal judiciary. See Doe v. Am. Nat. Red Cross,
976 F.2d 372, 374 (7th Cir. 1992).
We respectfully ask the Wisconsin Supreme Court to answer the following question:
Does the definition of a dealership contained in
Wis. Stat. § 135.02(3)(b) include wine grantordealer relationships?
We invite the Court to reformulate this question and expand
its inquiry to the extent it is necessary to resolve this case. The
Clerk of this court is instructed to send the full record of the
case to the state supreme court for its use in the consideration
of this request.
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