July 6, 2017 – Golf professionals (Golf Pros) that oversee public golf courses in Madison hit a nice approach in their lawsuit against the city, which declined to renew their contracts, winning an argument that the city is subject to the Wisconsin Fair Dealership Law (WFDL).

The circuit court dismissed the case on summary judgment, and an appeals court affirmed. But in Benson v. City of Madison, 2017 WI 65 (June 22, 2017), the Wisconsin Supreme Court reversed (5-2), concluding the relationships constitute “dealerships.”

 “We conclude that the WFDL applies to the city; that the relationships between the Golf Pros and the City are ‘dealerships’ under the WFDL; that the Golf Pros’ lawsuit is not time-barred; and that the city is not immune from the lawsuit,” wrote Justice Annette Ziegler for the majority, which remanded to the circuit court for further proceedings.

Justice Daniel Kelly wrote a concurrence to clarify one point. Justices Abrahamson and Ann Walsh Bradley dissented, concluding the WFDL does not apply to cities.

Wisconsin Fair Dealership Law

The Wisconsin Fair Dealership Law (WFDL) governs “dealerships,” contracts between two or more “persons” granting “the right to sell or distribute goods or services … in which there is a community of interest in the business of offering, selling or distributing goods or services at wholesale, retail, by lease, agreement or otherwise.”

Under Wis. Stat section 135.04, a “grantor” must provide at least 90 days prior written notice that the grantor is not renewing the dealership contract. The law also requires 60 days for a “dealer” to rectify a claimed deficiency in performance.

For many years, the city entered into contracts with Golf Pros for the operation of four city-owned golf courses. In 2012, the city decided to internalize clubhouse operations and informed the Golf Pros that contracts would not be renewed. The city did not provide 90 days written notice, nor did it allow 60 days for the Golf Pros to rectify a deficiency.

Indeed, the complaint noted that the city never claimed a deficiency on the part of the Golf Pros in making the decision to internalize operations without their assistance.

Cities are “Persons”; Relationships are Dealerships

Though the WFDL applies to “persons,” the majority noted that the WFDL’s definition of “persons” expressly includes “corporations,” and cities are municipal corporations subject to laws that govern “corporations,” unless expressly excluded.

The WFDL expressly excludes certain parties from its reach, Justice Ziegler explained, including insurance companies. Thus, the legislature could have excluded municipal corporations but did not. “In sum, we conclude that the City is a ‘person’ under the WFDL, and that the WFDL therefore applies to it,” Ziegler wrote.

The city also argued that the WFDL does not apply because the contractual relationship between the city and the Golf Pros are not “dealerships.” The supreme court disagreed.

The majority noted that the contracts grant the Golf Pros, as independent contractors, “the right to sell or distribute goods or services.”

“Producing a golf course and opening it up to the public for use in exchange for money is undoubtedly a service,” Justice Ziegler wrote. “The City granted the Golf Pros the right to sell this City service to the public.”

Golfers paid greens fees through Golf Pros, which used equipment provided by the city to process payments for greens fees, season passes, and other fees and charges. In addition, the Golf Pros rented out golf clubs and golf carts.

“In some of these instances the Golf Pros set the relevant prices; in others the City set the relevant prices,” Ziegler noted. “But in each case the City instituted the service, authorized the Golf Pros to sell that service, and took some or all of the income generated by the service.” Thus, the city granted the right to sell goods and services.

Community of Interest

The majority noted that for WFDL to apply, the city had to grant the Golf Pros the right to sell goods and services “in which there is a community of interest,” which is “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.”

The Golf Pros and the city had a “continuing financial interest” in the public golf course venture, the majority noted. The Golf Pros put money in for marketing and were required to hire and train employees, and sell beverages, food, and merchandise. Both parties had cost and profit sharing arrangements under the contracts.

“Given the above, it is more than fair to say that the City’s power to terminate, cancel, or not renew the relationship[s] [was] a substantial threat to the economic health of the [Golf Pros],” Justice Ziegler wrote for the majority.

Statute of Limitations and Immunity

The majority rejected the city’s claim that the Golf Pros were time-barred from asserting the claims. The majority noted that the Golf Pros received notice when informed that contracts would not be renewed, not before then. And the majority ruled that a notice of claim statute extended the one-year limitations period by 120 days.

Finally, the city found the rough on its immunity argument, and could not find the ball. The supreme court noted that immunity only applies to tort claims.

Concurrence

Justice Daniel Kelly joined the majority opinion but wrote separately to clarify that dealerships require the grantor to confer the grantee with rights to sell goods or services belonging to the grantor. “Our opinion correctly concludes they did – we said the contracts were selling access to the City’s golf courses. That is certainly a service, and a particularly welcome one at that,” wrote Justice Kelly, suggesting he likes to golf.

“Our analysis of this dealership element should have stopped there.” The majority went on to address golf club and cart rentals, but the Golf Pros own those.

Dissenters

Justice Shirley Abrahamson dissented, joined by Justice Ann Walsh Bradley. They noted the case as one of first impression and concluded that WFDL does not apply to the City of Madison because the city is not a “person,” as defined under the WFDL.

“[T]he Legislature’s instructions to the court in deciding whether a statute governs a municipality make clear that the Fair Dealership Law should not be interpreted as applying to a city,” wrote Abrahamson, pointing to Wis. Stat. section 62.11(5).

That statute gives cities the power to manage and control city property, and can only be limited express language. Thus, Justice Abrahamson said the WFDL, without express language, cannot interfere with the city’s power to manage the golf courses.

“The majority opinion’s ruling that the City of Madison is a ‘person’ in the [WFDL] does not follow or provide clear interpretive rules and has, I think, widespread ramifications for all municipalities in this state and the many contracts on diverse topics to which they are parties,” Justice Abrahamson wrote.