BILL ANALYSIS

S.B. 911

By: Hancock

Licensing & Administrative Procedures

Committee Report (Unamended)

BACKGROUND AND PURPOSE

Third-party food delivery services have been growing in popularity, providing important new opportunities for many Texas businesses during the COVID-19 pandemic, as well as flexible work and pay for delivery drivers. However, there have been calls to alleviate frustration of restaurant owners and consumers caused by some business practices and costs. S.B. 911 seeks to address this issue by providing for the appropriate regulation of third-party food delivery services.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

S.B. 911 amends the Business & Commerce Code, Local Government Code, and Alcoholic Beverage Code to regulate third-party food delivery services and revise certain Texas Alcoholic Beverage Commission (TABC) food and beverage certificate requirements.

S.B. 911 amends the Business & Commerce Code to require a third-party food delivery service, as defined by the bill, to provide consumers with a clearly identified mechanism for the consumer to express concerns or complaints directly to the service regarding an applicable order. The bill requires a delivery service to remove a restaurant from the service not later than the 10th day after the service receives the restaurant's request to do so, unless the service has a written agreement with the restaurant that complies with the bill's provisions. The bill prohibits a delivery service from doing the following:

· arranging for the delivery or pickup of food or beverages from a restaurant in Texas, unless the delivery service has filed a certificate of formation or registration with the secretary of state;

· using a restaurant's mark or trade name in connection with the delivery service in a misleading way that suggests the restaurant sponsors or endorses the delivery service;

· adding a restaurant removed from the service at the restaurant's request unless the service has received written consent from the restaurant to add the restaurant to the service; or

· charging a restaurant a fee or requiring the restaurant to absorb a fee in connection with the service's arrangement of an order from that restaurant, unless the restaurant has agreed to pay or absorb a fee under a written agreement that complies with the bill's provisions.

S.B. 911 requires an agreement between a delivery service and a restaurant to be in writing, expressly authorize the service to arrange for delivery or pickup from that restaurant, and clearly state each fee that the restaurant will be required to pay to the service or absorb in connection with an order arranged through the service. The agreement may not include any provision that requires the restaurant to indemnify the delivery service for claims or liabilities resulting from acts or omissions of the service, an employee, or an independent contractor. The bill makes such a prohibited agreement provision void and unenforceable. 

S.B. 911 authorizes a restaurant to bring an action against a delivery service, if the restaurant is aggrieved by the service's violation of the bill's provisions and authorizes the following remedies:

· injunctive relief;

· damages equal to the restaurant's actual damages arising from the violation or equal to the delivery service's profits arising from the violation; and

· if the court finds the delivery service committed a violation knowingly or in bad faith violation:

o reasonable attorney's fees; and

o exemplary damages in a maximum amount of three times the sum of the plaintiff's actual damages and the defendant's profits arising from the violation. 

S.B. 911 amends the Local Government Code to prohibit a municipality or county from adopting or enforcing an ordinance or regulation to the extent that the ordinance or regulation affects the terms required by the bill for an agreement between a delivery service and a restaurant.

S.B. 911 amends the Alcoholic Beverage Code to define "restaurant," for purposes of that code and makes a restaurant that holds one of the following permits or licenses eligible for the issuance of a food and beverage certificate:

· a wine and malt beverage retailer's permit;

· a mixed beverage permit;

· a private club registration permit; or

· a retailer dealer's on-premise license.

EFFECTIVE DATE

January 1, 2022.