Jester King v. TABC Plaintiff Motion for Summary Judgement

IN THE UNITED STATES DISTRICT COURTFOR THE WESTERN DISTRICT OF TEXASAUSTIN DIVISIONAUTHENTIC BEVERAGES COMPANY, §INC., JESTER KING CRAFT BREWERY, §L.L.C., and ZAX, L.L.C. §Plaintiffs, §§v. § CIVIL ACTION NO. 1:10-CV-710-SS§TEXAS ALCOHOLIC BEVERAGE §COMMISSION, et al., Defendants, §

PLAINTIFFS’MOTION FOR SUMMARY JUDGMENT

TO THE HONORABLE COURT:

I.I

NTRODUCTION AND

S

UMMARY

.

Jester King Craft Brewery is a craftbrewery located in Austin, Texas. Ex. 1 ¶ 2.Authentic Beverages Company, Inc., is a licensed distributor of alcoholic beverages. Ex. 2 ¶ 2.Zax, L.L.C., operates a restaurant licensed to serve alcoholic beverages. Ex. 3 ¶ 2. The TexasAlcoholic Beverage Commissionand its commissioners arecharged with administering andenforcing Texas laws governing alcoholic beverages.Plaintiffs bring this lawsuit under 42 U.S.C. § 1983 to challenge the constitutionality of certain laws and regulations regulating the advertising, labeling, and sale of malt beverages inTexas. Specifically, Plaintiffs challenge the Texasstatutes and regulationsthat:1.Prohibitbreweries and distributorsfromtelling customers where their productscan be bought;2.Mandate the use ofinaccuratestatutory definitions of “beer,” “ale” and “maltliquor” to describe malt beverages;3.Prohibitadvertising the alcoholic contentof brewery products and usingwords inadvertising and labeling that suggest alcoholic strength;

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4.Prohibit breweries from selling their products at the point of production whileallowing wineries and brewpubs to do so;5.Prohibit brewpubs from selling their products to distributorsand retailers whileallowing wineries and microbreweries to do so; and6.Treat foreign breweries as the first American source of supplyof malt beverageswhile treating importers as the first American source of supply of wine anddistilled spirits.

1

II.T

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HALLENGED

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DVERTISING AND

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ABELING

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AWS

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Plaintiffs’first three challenges involve the advertising and labeling of alcoholic beverages, which is commercial speech protected by the First Amendment.

Rubin v. Coors Brewing Co.

, 514 U.S. 476, 481(1995);

44 Liquormart, Inc. v. Rhode Island

, 517 U.S. 484, 495-96(1996). In

Rubin

, the Supreme Court heldunconstitutional a federal law prohibiting beer labels from displaying alcoholic content, rejecting the argument that the ban was necessaryto prevent “strength wars” among brewers. 514U.S. at 483-91. In

44 Liquormart

, the Court struck down a state law banning the advertisement of retail liquor prices except at the pointof sale. 517U.S. at 516.To withstand First Amendmentscrutiny, a government regulation of commercial speechmust meet the four-part test of

Central Hudson Gas & Electric Corp. v. Public Serv. Comm’n of N.Y.

, 447 U.S. 557 (1980):At the outset, we must determine whether the expression is protected by the FirstAmendment. For commercial speech to come within that provision, it at least mustconcern lawful activity and not be misleading. Next, we ask whether the assertedgovernmental interest is substantial. If both inquiries yield positive answers, we mustdetermine whether the regulation directly advances the governmental interest asserted,and whether it is not more extensive than is necessary to serve that interest.447 U.S.at 566. The burden is on the government to meet the

Central Hudson

test.

44

1

Because the issues raised are largely questions of law, no separate summary of facts is being filed per Local Rule7(b), but the Plaintiffs rely on the declarations, deposition excerpts and other products of discovery contained in theattached Appendix of Exhibits.

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Liquormart

,

Inc.

, 517 U.S. at 516;

Thompson v. Western States Medical Center

, 535 U.S. 357,373 (2002) (“It is well established that the party seeking to uphold a restriction oncommercialspeech carries the burden of justifying it.”) (internal quotationsomitted).

See

.The speech at issue here concerns lawful activity: Jester King, Authentic and Zax all possess the requisite TABC licenses under Texas law to manufacture, distribute, and sellalcoholic beverages. Ex. 1 ¶ 2;Ex. 2;Ex. 3. Plaintiffswish only to communicate truthful,nonmisleadinginformation (1) about where their beer can be bought; (2) describing their beer;and (3) disclosing the alcohol content of their beers. Their speech therefore meets the first partof

Central Hudson

.

Rubin

, 514 U.S. at 483. The challenged Texas regulations fail theremainderof the

Central Hudson

test.

A.The Texas Laws that Prohibit Breweries and Distributors From Naming theRetail Locations Where Their Beer is Soldare Unconstitutional.1.Texas law gags breweries and distributors, but not wineries.

Believe it or not, the TABC says Texas law prohibits Jester King and Authentic fromtelling people where their beercan be bought. The Texas Alcoholic Beverage Code prohibits brewers and wholesalers from “furnish[ing], giv[ing], or lend[ing] any money, service, or thingof value to a retailer.” T

EX

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LCO

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ODE

§ 102.07(2). The TABC has adopted rules under this statuteprohibiting“unlawful inducements,” including “providing or purchasing, in whole or in part, any type of advertisement benefitting any specific retailer.” 16T

EX

.A

DMIN

.C

ODE

§45.110(c)(3). The TABC interprets the Code and its rule to cover anyform of advertising by a supplier or wholesaler which draws attention to or promotesa specific retailer or group of retailers. It includes any form of advertising which lists aretailer’s trade name, logo, trademarks, etc.Ex. 4. The TABC construes Texas law as prohibiting

any

“form of communication that amanufacturer of malt beverages could make to identify to a consumer or potential consumer of

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