LB404 LB404
2023 2023
LEGISLATURE OF NEBRASKA
ONE HUNDRED EIGHTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 404
Introduced by Vargas, 7.
Read first time January 12, 2023
Committee: General Affairs
1 A BILL FOR AN ACT relating to liquor; to amend sections 53-103,
2 53-103.14, 53-103.41, 53-201, 53-202, 53-204, 53-216, 53-217,
3 53-218, 53-220, 53-221, 53-222, and 53-223, Reissue Revised Statutes
4 of Nebraska, and section 53-101, Revised Statutes Cumulative
5 Supplement, 2022; to define and redefine terms; to change provisions
6 relating to agreements between wholesalers and suppliers for the
7 distribution of beer as prescribed; to harmonize provisions; and to
8 repeal the original sections.
9 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Section 53-101, Revised Statutes Cumulative Supplement,
2 2022, is amended to read:
3 53-101 Sections 53-101 to 53-1,122 and sections 4 and 5 of this act
4 shall be known and may be cited as the Nebraska Liquor Control Act.
5 Sec. 2. Section 53-103, Reissue Revised Statutes of Nebraska, is
6 amended to read:
7 53-103 For purposes of the Nebraska Liquor Control Act, the
8 definitions found in sections 53-103.01 to 53-103.49 and sections 4 and 5
9 of this act apply.
10 Sec. 3. Section 53-103.41, Reissue Revised Statutes of Nebraska, is
11 amended to read:
12 53-103.41 Wholesaler means a person importing or causing to be
13 imported into the state or purchasing or causing to be purchased within
14 the state alcoholic liquor for sale or resale to retailers licensed under
15 the Nebraska Liquor Control Act, whether the business of the wholesaler
16 is conducted under the terms of a franchise or any other form of an
17 agreement with a manufacturer or manufacturers, or a small producer
18 contract with a small producer, or who has caused alcoholic liquor to be
19 imported into the state or purchased in the state from a manufacturer or
20 manufacturers and was licensed to conduct such a business by the
21 commission on May 1, 1970, or has been so licensed since that date.
22 Wholesaler includes a distributor, distributorship, and jobber.
23 Sec. 4. Small producer means a manufacturer of beer that produces
24 at or below the maximum limit set forth in subsection (1) of section
25 53-124.04.
26 Sec. 5. Small producer contract means a contract between a small
27 producer and a wholesaler, which:
28 (1) Is freely negotiated;
29 (2) Is in writing, regardless of the term;
30 (3) Is executed by both parties;
31 (4) Identifies the geographic territory and specific brands to be
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1 distributed by the wholesaler;
2 (5) Specifies termination and renewal provisions;
3 (6) Specifies a method of valuation in the event of a buyout; and
4 (7) Is filed with the commission within ten calendar days of
5 execution.
6 Sec. 6. Section 53-103.14, Reissue Revised Statutes of Nebraska, is
7 amended to read:
8 53-103.14 (1) Franchise or agreement, with reference to the
9 relationship between a manufacturer and wholesaler, includes one or more
10 of the following:
11 (a) (1) A commercial relationship of a definite duration or
12 continuing indefinite duration which is not required to be in writing;
13 (b) (2) A relationship by which the wholesaler is granted the right
14 to offer and sell the manufacturer's brands by the manufacturer;
15 (c) (3) A relationship by which the franchise, as an independent
16 business, constitutes a component of the manufacturer's distribution
17 system;
18 (d) (4) A relationship by which the operation of the wholesaler's
19 business is substantially associated with the manufacturer's brand,
20 advertising, or other commercial symbol designating the manufacturer; and
21 (e) (5) A relationship by which the operation of the wholesaler's
22 business is substantially reliant on the manufacturer for the continued
23 supply of beer.
24 (2) Franchise or agreement does not mean a small producer contract
25 entered into or renewed on or after January 31, 2024.
26 Sec. 7. Section 53-201, Reissue Revised Statutes of Nebraska, is
27 amended to read:
28 53-201 The purpose of sections 53-201 to 53-223 and sections 10 and
29 11 of this act is to provide fair, efficient, and competitive
30 distribution of beer by (1) regulating the termination, expiration, and
31 renewal of distribution agreements between beer suppliers and beer
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1 wholesalers, (2) promoting a distribution system in which each beer
2 wholesaler will devote reasonable efforts and resources to sales,
3 distribution, and quality control of the beer it sells, (3) promoting the
4 continued availability of good quality beer for the consumers of Nebraska
5 through orderly marketing and vigorous interbrand competition, (4)
6 preventing a beer supplier from unfairly depriving a beer wholesaler of
7 the value of the investment the wholesaler made in its business in terms
8 of money, time, effort, and skill, and (5) controlling the sale of malt
9 beverages in this state and facilitating the lawful and orderly marketing
10 of malt beverages pursuant to the police powers of this state.
11 Sec. 8. Section 53-202, Reissue Revised Statutes of Nebraska, is
12 amended to read:
13 53-202 For purposes of sections 53-201 to 53-223 and sections 10 and
14 11 of this act, the definitions found in sections 53-203 to 53-215 and
15 sections 10 and 11 of this act shall be used.
16 Sec. 9. Section 53-204, Reissue Revised Statutes of Nebraska, is
17 amended to read:
18 53-204 (1) Agreement shall mean any agreement between a wholesaler
19 and a supplier, whether oral or written, by which a wholesaler is granted
20 the right to purchase and sell a brand or brands of beer sold by a
21 supplier.
22 (2) Agreement shall not include a small producer contract entered
23 into or renewed after January 31, 2024.
24 Sec. 10. Small producer has the same meaning as in section 4 of
25 this act.
26 Sec. 11. Small producer contract has the same meaning as section 5
27 of this act.
28 Sec. 12. Section 53-216, Reissue Revised Statutes of Nebraska, is
29 amended to read:
30 53-216 A supplier shall not:
31 (1) Fail to provide each wholesaler of the supplier's brand or
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1 brands with a written agreement which contains the entire agreement with
2 the wholesaler and designates a specific, exclusive sales territory. Any
3 agreement which is in existence on April 18, 1989, shall be renewed in a
4 manner consistent with sections 53-201 to 53-223 and sections 10 and 11
5 of this act, and the provisions of such sections may be incorporated by
6 reference in the agreement. Nothing in such sections shall prevent a
7 supplier from making a one-time appointment, for a period not to exceed
8 ninety days, of a wholesaler to temporarily service a sales territory not
9 designated to another wholesaler until such time as a wholesaler is
10 appointed by the supplier. The wholesaler who is designated to service
11 the sales territory during the period of temporary service shall not be
12 in violation of such sections and, with respect to the temporary sales
13 territory, shall not have any of the rights provided under sections
14 53-218 and 53-220. The temporary service period may be extended beyond
15 ninety days by the Nebraska Liquor Control Commission if justifiable
16 circumstances exist as determined by the commission;
17 (2) Fix, maintain, establish, or unduly influence the price at which
18 a wholesaler shall be required to sell any beer;
19 (3) Enter into an additional agreement with any other wholesaler for
20 or to sell to any other wholesaler the same brand or brands of beer in
21 the same sales territory or any portion thereof or to sell directly to
22 any retailer in this state;
23 (4) Coerce or attempt to coerce any wholesaler to accept delivery of
24 any beer or other commodity which has not been ordered by the wholesaler,
25 except that a supplier may impose reasonable inventory requirements upon
26 a wholesaler if the requirements are made in good faith and are generally
27 applied to other similarly situated Nebraska wholesalers having an
28 agreement with the supplier;
29 (5) Coerce or attempt to coerce any wholesaler to accept delivery of
30 any beer or other commodity ordered by a wholesaler if the order was
31 canceled by the wholesaler in accordance with acceptable procedures;
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1 (6) Coerce or attempt to coerce any wholesaler to do any illegal act
2 or to violate any law, rule, or regulation by threatening to amend,
3 modify, cancel, terminate, or refuse to renew any agreement existing
4 between the supplier and wholesaler;
5 (7) Require a wholesaler to assent to any condition, stipulation, or
6 provision limiting the wholesaler's right to sell the brand or brands of
7 beer or other products of any other supplier unless the acquisition of
8 the brand or brands or products of another supplier would materially
9 impair or adversely affect the wholesaler's quality of service, sales, or
10 ability to compete effectively in representing the brand or brands of the
11 supplier presently being sold by the wholesaler. The supplier shall have
12 the burden of proving that such acquisition of such other brand or brands
13 or products would have such effect;
14 (8) Require a wholesaler to purchase one or more brands of beer or
15 other products in order for the wholesaler to purchase another brand or
16 brands of beer for any reason. A wholesaler that has agreed to distribute
17 a brand or brands before April 18, 1989, shall continue to distribute the
18 brand or brands in conformance with sections 53-201 to 53-223 and
19 sections 10 and 11 of this act;
20 (9) Require a wholesaler to submit audited profit and loss
21 statements, audited balance sheets, or audited financial records as a
22 condition of renewal or continuation of an agreement. A supplier may
23 require profit and loss statements, balance sheets, or financial records
24 which are certified by the wholesaler or an officer thereof;
25 (10) Coerce, compel, or require a wholesaler to provide or divulge
26 specific information regarding the wholesaler's individual accounts or
27 customers or his or her exclusive relationship with them or coerce,
28 compel, or require a wholesaler to provide specific information
29 concerning competitive brands;
30 (11) Use the threat of losing or withholding its credit as a means
31 of compelling a wholesaler to standards of performance in any area of
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1 business except that area directly relating to credit;
2 (12) Withhold delivery of beer ordered by a wholesaler or change a
3 wholesaler's quota of a brand or brands if the withholding or change is
4 not made in good faith;
5 (13) Require a wholesaler by any means directly to participate in or
6 contribute to any local or national advertising fund controlled, directly
7 or indirectly, by a supplier;
8 (14) Willfully discriminate, directly or indirectly, in price,
9 programs, or terms of sale offered to franchisees if the effect of such
10 discrimination may be to substantially lessen competition or to give to
11 one holder of a franchise any economic, business, or competitive
12 advantage not offered to all holders of the same or similar franchise.
13 This subdivision shall not govern dock prices;
14 (15) Take any action against a wholesaler who files a complaint
15 regarding an alleged violation by the supplier of a federal, state, or
16 local law, rule, or regulation in retaliation for such complaint;
17 (16) Restrict or inhibit, directly or indirectly, the right of free
18 association among wholesalers for any lawful purpose;
19 (17) Require or prohibit, without just cause, any change in the
20 manager or successor manager of any wholesaler who has been approved by
21 the supplier as of or subsequent to April 18, 1989. If a wholesaler
22 changes an approved manager or successor manager, a supplier shall not
23 require or prohibit the change unless the person selected by the
24 wholesaler fails to meet the reasonable qualifications for managers of
25 Nebraska wholesalers of the supplier, which reasonable qualifications
26 previously have been consistently applied to similarly situated Nebraska
27 wholesalers by the supplier. The supplier shall have the burden of
28 proving that such person fails to meet such reasonable qualifications and
29 that the qualifications have been consistently applied to similarly
30 situated Nebraska wholesalers;
31 (18) Upon written notice of intent to transfer the wholesaler's
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1 business, interfere with, prevent, or unreasonably delay for a period of
2 sixty days or more the transfer of the wholesaler's business if the
3 proposed transferee is a designated member; or
4 (19) Upon written notice of intent to transfer the wholesaler's
5 business other than to a designated member, withhold consent to or
6 approval of, or unreasonably delay for a period of sixty days or more
7 after receipt of all material information reasonably requested of the
8 wholesaler a response to a request by the wholesaler for, any transfer of
9 a wholesaler's business if the proposed transferee meets the reasonable
10 qualifications required by the supplier for similarly situated Nebraska
11 wholesalers. The supplier shall have the burden of proving that the
12 proposed transferee fails to meet such reasonable qualifications and that
13 the qualifications have been consistently applied to similarly situated
14 Nebraska wholesalers.
15 Sec. 13. Section 53-217, Reissue Revised Statutes of Nebraska, is
16 amended to read:
17 53-217 A wholesaler shall not:
18 (1) Fail to devote such efforts as are required in the agreement
19 between the supplier and wholesaler within the supplier's designated
20 sales territory relating to the sale and distribution of the supplier's
21 brand or brands of beer which the wholesaler has been granted the right
22 to sell or distribute;
23 (2) Sell or deliver beer to a retail licensee located outside the
24 sales territory designated to the wholesaler by the supplier of a
25 particular brand or brands of beer, except that during a period of
26 temporary service interruption impacting a particular sales territory, a
27 wholesaler who normally services the impacted sales territory shall file
28 with the Nebraska Liquor Control Commission and give to the affected
29 supplier written notice designating the specific wholesaler or
30 wholesalers, not disapproved by the supplier, who will service the sales
31 territory during the period of temporary service interruption and the