Final Briefing Filed in 5th Circuit on Walmart Challenge to Texas Laws on Liquor Sales

Amicus briefs in support of Walmart were recently filed by the Pacific Legal Foundation/ Retail Litigation Center and the Institute for Justice.   Final reply briefs by the Texas Package Store Association and the state of Texas were filed this week.   The 5th Circuit has several hundred pages of briefing to wade through as it resolves issues related to the dormant Commerce Clause, Equal Protection Clause and various attempts to highlight facts/balancing tests to support each side.

Oral argument at the 5th Circuit will presumably be scheduled for some time in early 2019.   However, the pending United States Supreme Court review of the Tennessee Retailers Association case will be likely be heard before the 5th Circuit schedule is released.  Each side made reference to the pending case but do not hinge their arguments on resolution of the Supreme Court matter. The Supreme Court will hear the Tennessee Retailers case on January 16, 2019.

(earlier post)  Walmart Files its Principal and Reply Brief With 5th Circuit

Walmart filed a comprehensive 81 page brief with the 5th Circuit as its principal and cross-appeal brief as well as a reply brief to the briefs of the state, package stores and amici.

To recap the Questions Presented on appeal are: 1) Did the District Court correctly hold that Texas’s law forbidding “public corporations” from obtaining a package store permit violates the Commerce Clause? 2) Did the District Court correctly hold that Texas’s arbitrary limit on the number of package-store permits an entity may obtain violates the Equal Protection Clause? 3) Did the District Court act within its discretion when it remedied the Equal Protection violation by extending benefits to the excluded class?

On cross appeal Walmart asks the 5th Circuit to also resolve: 1) Does the public-corporation ban violate the Equal Protection Clause?  2) Does the arbitrary permit limit violate the Dormant Commerce Clause?

Walmart’s briefing spends the bulk of its arguments beating the “discriminatory” drum.  The Walmart brief mentions the word discrimination or a variation of that term over 130 times in this brief.  Walmart uses this concept of being discriminated against to advance both its Equal Protection claims and dormant Commerce Clause challenges.

Earlier,  main briefs were filed by the state of Texas and intervener Texas Package Store Association.   Amicus briefs were filed by all three tiers with briefs by NBWA, American Beverage Licensees and Presidents Forum for Distilled Spirits, Spec’s Family Partners and the Texas Wholesaler Beer Distributors Association.

After the state reply brief, oral argument will presumably be set for the first quarter of 2019.

(earlier post)  Wal-Mart’s victory in Texas Retail Case Heading to the 5th Circuit

The retailers in the Wal-Mart litigation have appealed Judge Pittman’s decision to the 5th Circuit.   Wal-Mart has cross appealed the portions of the dormant Commerce Clause claims they were unsuccessful in pursuing so both Equal Protection and dormant Commerce Clause issues will be before the 5th Circuit on appeal.   Briefing by the parties are due by the end of the summer.

(earlier post) Wal-Mart Prevails In Challenge to Texas Retail Ownership Laws

United States District Judge Robert Pitman has ruled for Wal-Mart on its challenge to Texas retail ownership laws.  The Order rules for Wal-Mart on its dormant Commerce Clause challenge to the public corporation ban and rules for Wal-Mart on its Equal Protection Challenge to the “consanguinity” exception to the five store limit.   As a result Judge Pitman has enjoined those laws as well as struck the five store limit law.

Under the dormant Commerce Clause analysis Judge Pitman held that the law banning public ownership of liquor retailing violates the dormant Commerce Clause because it was created with discriminatory intent.  Alternatively, even if there was no discriminatory intent, Judge Pitman believes the law would still not survive the more permissive Pike v. Bruce Church balancing test.   Judge Pitman said the public ownership law did not violate the dormant Commerce Clause’s for a discriminatory effect, nor did the Texas law’s five store limit nor the consanguinity exemption to the five store limit.

However, Judge Pitman did find the consanguinity exemption to violate the Equal Protection clause as it permitted unchecked consolidation through this exemption far in excess of Texas stated five permit store limit.  The court did not find any rational relationship to uphold this exemption to the five store limit law.  As a result, Judge Pitman struck the consanguinity exemption.  Moreover, he went further and struck the five store limit by extending the right to have more than five stores to everyone.

Judge Pitman did uphold the Texas law which prohibits certain beer and wine retailers from also holding a liquor package store license against both dormant Commerce Clause and Equal Protection challenges.

The Texas Package Store Associate was an intervenor and has noted that it expects to appeal this decision.

(Previous Post) District Court Rules for Texas on One Count, Keeps Two Counts Alive in Wal-Mart Litigation.

United States District Judge Robert Pitman has ruled on the Motion to Dismiss filed by Texas in the Wal-Mart litigation challenging public ownership of liquor stores.  Judge Pitman granted the motion to dismiss the Privileges and Immunities claim by Wal-Mart because it only applies to persons, not corporations.  However, Judge Pitman did keep alive the Commerce Clause and the Equal Protection claims filed by Wal-Mart.  The court noted that, at least at this stage, Wal-Mart has plead enough to survive a motion to dismiss and move to more discovery on these laws.  It is unknown whether Texas will appeal this ruling or whether this will move to discovery stage. The link to Judge Pittman’s order is here.

 

(Earlier Post) State Files Motion to Dismiss Wal-Mart Challenge to Liquor Sales Law, Wal-Mart Responds

The state of Texas has filed a motion to dismiss Wal-Mart’s lawsuit challenging public ownership of liquor stores in Texas.  In its brief the state notes that the plaintiff’s Equal Protection, Commerce Clause and Privileges and Immunities claims fail as a matter of law.  Mixing standard general police powers, court precedent (including relatively recent 5th Circuit rulings),  as well as 21st Amendment principles, the state suggests that the law clearly calls for the dismissal of this case.  The state notes recently attempted legislative activity and argues that this lawsuit “is no more than a thinly-veiled attempt to substitute Wal-Mart’s policy preference for the State’s long-standing regulatory framework governing package stores.” The state has long had the right to limit the number of outlets selling alcohol and to restrict harder alcohol from wider availability.

Wal-Mart’s response to the state’s motion to dismiss emphasized its belief that the Texas law is a non-permissible economic protectionist measure, that the Texas law discriminates against out of state businesses, and that Wal-Mart should have the right to develop facts to further its case so a motion to dismiss is premature. Wal-Mart signals an intent to rely heavily on past legislative hearings on the license limitation law in Texas and its grandfathered exceptions as part of that fact-finding effort.

The Texas legislature considered and did not pass legislation changing the law in question. The legislature is not in full-time session again until 2017.

(Earlier Post)  Wal-Mart Sues Texas Over Hard Liquor Restrictions

Wal-Mart has filed a lawsuit challenging the Texas laws restricting public ownership of liquor stores in Texas.    This lawsuit alleges that the Texas liquor store system violates the Equal Protection, Commerce Clause, and Privileges and Immunity clauses of the U.S. Constitution.   The complaint is very detailed and is beyond bare notice pleading.  There is even the statement in the complaint that “Wal-Mart Does Not Challenge the Three-Tier System in Texas…Wal-Mart supports the Texas three-tier system of manufacturers, distributors, and retailers.”

This lawsuit was filed and widespread publicity obtained on the litigation in the weeks before the Texas Legislature returns to full time session where Wal-Mart will presumably pursue a legislative solution.   In recent years, several different retail interests have filed litigation to assist their legislative arguments with varying degrees of initial success.   Equal Protection lawsuits are traditionally favorable for states, especially on state alcohol policymaking and I will post updates as they come.

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