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Authentic Beverage v. TABC

Authentic Beverage v. TABC

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Published by: sblaskovich on Dec 20, 2011
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12/20/2011

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S
.
IN
THE
UNITED STATES
DISTRICTCOURT
FOR
THE WESTERNDISTRICT
OFTEXASAUSTINDIVISIONAUTHENTIC BEVERAGESCOMPANY, INC.,
Plaintiff,
-vs-
TEXAS
ALCOHOLIC
BEVERAGE
COMMISSION,Defendant.
ORDER
flLED
DEC
1
9
2011CLERK.
U.S.
DISTRICT
COURT
WESTERN
TRICT
OFTEXAS
BY
Case
No. A-1O-CA-710-SSBE IT
REMEMBERED
on
November
22,
2011, the
Court held
a
hearing
inthe
above-styled
cause, at
which
the
partiesappeared
by
and
through counsel,
and at
which
the Court heardargumentregarding the
parties'cross-motions
for summary
judgment
[##33,36].
Alsobefore the Court were
Plaintiff
Authentic BeveragesCompany,
Inc.'s1
responsivefilings
[##37,38].
Havingconsidered
the
parties'
arguments,andhavingreviewed the documents,
the
relevant
law,
andthe
file
as a
whole,the Court
nowenters the following opinion and order GRANTING INPART
and DENYING
IN
PARTboth
parties'motions
for summary
judgment.
Background
The
practice
of
law
is
often
dry, and
it is
the rare case
that presents
an issue
of
genuineinterest
to
the
public. This
is
just
such a case,however.Dealing
as it
does with constitutional
Although there
are
three plaintiffs
in
this
caseAuthentic
Beverages Company,
Inc.,
Jester King CraftBrewery,L.L.C., and Zax
L.L.C.the
Court will refertothem generically
as
Authentic, except where contextrequiresotherwise.Likewise,although there are several individual defendantssued
in
theirofficial capacities,
the
Court
will
refer
to all
defendants collectively
as
Texas Alcoholic Beverage Commission, or TABC.
 
.
S
challenges
to
the Texas
Alcoholic Beverage
Code,
it
is
anything but
"dry"and
thisCourt wouldnever
be
so
foolish
as
to
question
thesincerity
of
Texans'interest
in beer.
Given this obvious
public
interest,
it is
both surprising, and
unfortunate
for
proponents
of
the
AlcoholicBeverageCode,
that the
State
of
Texas does not appear tohave
taken
as
much
of
an
interest
in this case as
it
might
have.Whether the challenged
provisions
of
the Alcoholic Beverage
Codecouldhave
withstood Authentic'sFirstAmendment
challenges under
any circumstances
is
questionable,
but
under the circumstances
of
this
casemost
notably, defense
counsel's
candidadmission
in
open court thatthe
State
submittedvirtually
no
summary
judgment
evidenceregarding
some
of
Authentic's
claims2there
is
no
question the TexasAlcoholicBeverage Commission
(TABC) has
failed
to
meet
its
summary
judgment
burden
as
to
these challenges.
Thus,almostbydefault, the Court
grants
Authentic's
motion
forsummary
judgment
on
these
claims.
In a
strange
parallel, Authentic
offers littleevidence in support
of
its
EqualProtectionchallenges,
instead
attemptingimpermissiblyto
shift
its
evidentiary burden onthese
claims
to
TABC.Because
Authentic hasfailed
to
provideevidence demonstrating
a
genuine dispute
of
material fact on
its
Equal
Protection
claims, the Courtgrants
TABC's
motion
for summary
judgment
as to
these challenges.Finally,theCourtgrants
TABC's
motion for summary
judgment
on
Authentic's
CommerceClauseclaim,
becauseAuthentic hasfailed
to
demonstrate theburden imposed
oncommerce
is
2At
the risk
of
belaboring the
point, theCourt notes
TABC'ssummaryjudgment
evidence
spans approximately
ninety-fivepages,
of
which about seventy pages
are
transcripts
of
depositions
of
the threePlaintiffs' employees.
Whilethis
testimony
is
relevant
to
TABC's
argument thatPlaintiffs
lack
standing,
it
does
nothing
to
rebutthe substance
of
Plaintiffs' FirstAmendment challenges. Theremaining twenty-five
or
so
pages are dividedbetween
an
excerpt
from the
Federal Register(which
clearly haslittle
to do
with the TexasAlcoholic Beverage Code),
bill
analyses
of
limitedrelevance,and two errata sheets
documenting changes
todeposition
testimony. Notably absent
is
evidence regardingwhatsubstantial
governmentinterest
is
actuallyadvanced by thechallenged regulations, or whyany such interest couldnot
be
advanced throughmore narrowregulations.
-2-
 
..
clearlyexcessivein
relation
to
Texas's
legitimateauthority
to
regulatebusiness
and
protect
its
citizens
throughreasonablepermittingrequirements.
I.
Texas Alcoholic
BeverageCode
A
brief
description
of
the three-tier
system
of
the Texas
AlcoholicBeverage
Code,and
mention
of
some
of
the
Code's
majorprovisions,
is
helpful
to
providecontext
for
Authentic's
challenges
and
the
Court's
discussion.
A.
Prohibition
on
"TiedHouses"
Texas law
divides thealcohol industry
into
three
levelsmanufacturers,
wholesalers,and
retailersand
forbids "tiedhouses," meaning"any overlappingownership
or other
prohibitedrelationshipbetween those engaged
in
the alcoholicbeverage
industry
at
differentlevels."
TEX.
ALCO.
BEv.
CODE
ANN.
§
102.01(a);
see
also,
e.g.,
id.
§
12.01-06,
19.01.05,
25.01.
13.
That
is,an
entity engaged
in
the alcoholicbeverage industry
in
Texas generally
must
choose
a
single
levelon
which
to
operate, and
cannot
operate on either
of
theother two levels.Thus,
for
instance,amanufacturer
generally cannot
also act
asa
wholesaler
or
retailer.
B.
"Beer" and
"Ale"
or"Malt Liquor"
Texas lawalso
dividesmalt beverages
into
two types,based on
their
alcoholcontent:"beer,"which contains one
half
percent
or
more
of
alcohol
by
volume, and notmore thanfour percent
of
alcohol
by
weight; and
"ale"
or
"malt liquor,"
which containsmore than fourpercent alcohol
byweight.
Id.
§
1.04(12),(15).
TABC regulationsrequire that
all
maltbeverages
be
labeled
and
advertised
in
accordancewith thesedefinitions.
16
TEX.ADMIN. CODE
§
45.77,
45.90.
-3-

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