## Facts

- Walgreen Co. manufactured and sold private-label drugs and other goods through company-owned and independently owned retail stores nationwide.
- Independently owned Wisconsin pharmacies operated under Walgreen’s standard written Retailer’s Agreement.
- The agreements governed, among other terms, use of Walgreen’s trade name and trademarks, minimum annual purchase requirements, and Walgreen’s ability to open a company-owned store near an independent retailer.
- The agreements included a clause allowing Walgreen to terminate on 30 days’ written notice if Walgreen decided to discontinue all similar agreements.
- On April 14, 1980, Walgreen decided it was earning an inadequate return from the independent-retailer program and chose to discontinue all operations associated with those agreements.
- Walgreen gave notice and terminated the Wisconsin Retailer’s Agreements effective October 1, 1980.
- The agreements were nonexclusive; the pharmacies could obtain comparable products from other suppliers, and Walgreen provided information to help them find alternative sources.
- Plaintiffs (independent pharmacies) sued for damages and injunctive relief under the Wisconsin Fair Dealership Law (WFDL), alleging termination without statutory “good cause.”

## Issues

1. Whether the Retailer’s Agreement relationships constituted “dealerships” under the WFDL and whether Walgreen was a covered “grantor.”
2. Whether the WFDL’s “good cause” requirement restricts a grantor’s statewide, across-the-board termination of all dealers as part of a market or program withdrawal.
3. Whether the WFDL applies to dealership relationships formed before the statute’s effective date (April 5, 1974) when termination occurred after that date.

## Decision

- The court held the WFDL applied to the post-effective-date relationships because the arrangements met the statutory dealership concept and Walgreen functioned as a grantor.
- The court held a grantor may not terminate all Wisconsin dealership relationships without “good cause” as defined by the WFDL.
- The court concluded Walgreen’s asserted reason—insufficient rate of return from the dealer network—did not constitute “good cause” absent dealer misconduct or substantial failure to comply with essential, reasonable dealership requirements.
- The court ruled that contractual termination rights (including a clause permitting termination when discontinuing all similar agreements) could not override statutory WFDL protections.
- The court granted partial summary judgment for plaintiffs on WFDL liability for covered (post-April 5, 1974) dealerships terminated without good cause.
- The court granted partial summary judgment for Walgreen as to dealerships established before April 5, 1974, holding the WFDL could not be applied retroactively to those preexisting arrangements.

## Legal Principles

- A continuing commercial relationship involving use of a grantor’s trade name or trademark and ongoing contractual obligations can constitute a “dealership” under the WFDL, making the supplier a covered “grantor.”
- Under the WFDL, termination of a dealership requires “good cause,” generally tied to the dealer’s substantial noncompliance with essential and reasonable requirements or other dealer-related deficiencies.
- A grantor cannot avoid the WFDL by terminating all Wisconsin dealers as part of discontinuing a dealer program; statewide, across-the-board termination still must satisfy the statute’s good-cause standard.
- Contract provisions allowing unilateral termination do not supersede WFDL statutory restrictions on dealership termination.
- Absent clear legislative direction, the WFDL does not apply retroactively to dealership relationships formed before the statute’s effective date.

## Conclusion

The court treated Walgreen’s independent-pharmacy program as a protected dealership arrangement under the WFDL and held that ending all Wisconsin retailer agreements for profitability reasons lacked statutory good cause, while also limiting relief by excluding dealerships formed before the WFDL’s effective date from the statute’s coverage.


Collins Drugs, Inc. v. Walgreen Co., 539 F. Supp. 1357 (W.D. Wis. 1982)