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1
IN THE UNITED STATES DISTRICT COURTFOR THE WESTERN DISTRICT OF TEXASAUSTIN DIVISIONAUTHENTIC BEVERAGES COMPANY, §INC.,
et al.
§Plaintiffs, §§v. § CIVIL ACTION NO. 1:10-CV-710-SS§TEXAS ALCOHOLIC BEVERAGE §COMMISSION,
et al.
§Defendants. §
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
 
COME NOW DEFENDANTS and, pursuant to Rule 56 make this Motion for SummaryJudgment, and would show as follows:HistoryFollowing the repeal of Prohibition, in 1935 the 44
th
Texas Legislature created the TexasLiquor Control Board to regulate the manufacture, distribution, storage, and sale of alcoholicbeverages in the State of Texas. The B
oard‟s initial responsibilities were to promote temperance,
protect the public interest, encourage observance of the Liquor Control Act, collect alcoholicbeverage taxes and discourage certain socially undesirable activities such as bootlegging,underage drinking, and organized crime.
1
The Texas statutes (now called the Texas AlcoholicBeverage Code) created a three-tier system that separates ownership and operations betweenmanufacturers, wholesalers, and retailers.
 Dickerson v. Bailey
, 336 F.3d 388, 397 (5
th
Cir. 2003).The vertical integration of the manufacture, distribution, and sale of alcoholic beverages is, withrare exceptions, prohibited.
 Id 
. “This tripartite funtional division of firms that partic
ipate in thealcoholic beverage industry is designed to aid Texas in the regulation and control of alcohol
1
1992 Staff Report of Sunset Advisory Committee (SAC A-134:4/92) p.3; and see H.B. 77, 44
th
 
Case 1:10-cv-00710-SS Document 34 Filed 10/20/11 Page 1 of 24
 
2
consumption, and prevents companies with monopolistic tendencies
2
from dominating all levelsof the alcoh0olic beverage community
.”
 Id 
. (quotation marks and citation omitted). The three-
tier system, itself, is “unquestionably legitimate.”
 North Dakota v. United States
, 110 S.Ct 1986,1993 (1990). The administrative rules created by the Texas Alcoholic Beverage Commission arecontained in Title 16 of the Texas Administrative Code, Chapters 31-50 (nonconsecutively).The PlaintiffsThe plaintiffs are three in-state businesses representing each of the three tiers of theliquor control system: Zax is a retailer, Authentic is a distributor, and Jester King is amanufacturer that brews less than 75,000 barrels a year, and thus can operate as a manufacturerand distributor of its products under T
EX
.
 
A
LCOHOLIC
B
EV
.
 
C
ODE
§ 62.12.The ContestThe Plaintiffs, collectively, seek a ruling from this Court (via 42 U.S.C. §1983) that:
the following statutory and regulatory provisions be struck as violative of theircollective (commercial) right to free speech under the First Amendment:
The statutory definitions of “ale” and “beer” (
T
EX
.
 
A
LCOHOLIC
B
EV
.
 
C
ODE
§ 1.04(12) and (15));The section 108.01(4) prohibition of particular advertising by a manufacturer or
distributor that “refers to the alcohol content of the product.”
 T
he TABC regulatory definitions of “beer” and “malt liquor” (TABC Administrativ
eRules § 45.71 (1) and (10));T
he administrative labeling rules regarding the distinction between “beer” and “ale”
(TABC Administrative Rules § 45.77 (a) and (c));
2
Quoting an Austin Court of Appeals case from 1953, the 5
th
Circuit in
S.A. Discount Liquor, Inc. V. Texas Alcoholic Beverage Commission
, 709 F.2d 291, 293 n.4 (1983) stated, “We neednot dwell upon the evils of the „tied house.‟ It is obvious that one result of such control could be
the creation of a monopoly for certain brands of liquor as well as dictating prices.
”
 
Case 1:10-cv-00710-SS Document 34 Filed 10/20/11 Page 2 of 24
 
3
The administrative labeling rules prohibiting use of specific terms regarding alcoholiccontent (TABC Administrative Rules § 45.79 (f) and 45.82(f));The application of T
EX
.
 
A
LCOHOLIC
B
EV
.
 
C
ODE
§ 102.07 that would prohibit amanufacturer from publicising where its products are being sold by a retailer.-
 
the following statutory and regulatory provisions be struck as violative of theCommerce Clause:
The statutory definitions of “ale” and “beer” (
T
EX
.
 
A
LCOHOLIC
B
EV
.
 
C
ODE
§ 1.04(12) and (15));T
he TABC regulatory definitions of “beer” and “malt liquor” (TABC Administrativ
eRules § 45.71 (1) and (10));T
he administrative labeling rules regarding the distinction between “beer” and “ale”
(TABC Administrative Rules § 45.77 (a) and (c));
“[T]he designation under Title 3 of the Code, of foreign breweries as the first
American source of supply for their products, rather than the U.S. importers of theirproducts, in conflict with federal regulation which treats the U.S. importer of anya
lcoholic beverage as the first American source of supply.”
 -
 
the following statutory and regulatory provisions be struck as violative of theSupremacy Clause:
TABC Administrative Rules § 45.71 (1) and (10); TABC Administrative Rules §45.77 (a) and (c)); and T
EX
.
 
A
LCOHOLIC
B
EV
.
 
C
ODE
§1.04 (12) and (15) all allegedly
“contravene applicable federal law
;
“[T]he designation under Title 3 of the Code, of foreign breweries as the first
American source of supply for their products, rather than the U.S. importers of theirproducts, in conflict with federal regulation which treats the U.S. importer of any
alcoholic beverage as the first American source of supply.”
 -
 
a number of disparities between the statutes governing the activities of wineries,small manufacturers, and brewpubs within the three tier system demonstrate aviolation of their collective right to Equal Protection under the law, including:
T
EX
.
 
A
LCOHOLIC
B
EV
.
 
C
ODE
§108/09 (regarding winery advertising)T
EX
.
 
A
LCOHOLIC
B
EV
.
 
C
ODE
§16.01(5) (regarding winery sales to consumers)T
EX
.
 
A
LCOHOLIC
B
EV
.
 
C
ODE
§74.01(2) (regarding sales to consumers at brewpub)T
EX
.
 
A
LCOHOLIC
B
EV
.
 
C
ODE
§12.05 and 62.12 (regarding small manufacturersales to retailers)\ 
Case 1:10-cv-00710-SS Document 34 Filed 10/20/11 Page 3 of 24
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