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.