Texas: Top Court Won’t Consider Reviving Texas Alcohol Permit Rule
Source: Law360
By Kali Hays
November 28, 2016
A Texas trade group for alcohol retailers on Monday lost its chance to have the U.S. Supreme Court consider reviving a long-dormant state law requiring a retailer to have a year of state residency before receiving an alcohol sales permit, when the court declined to review the case.
Texas Package Stores Association Inc. argued in an August petition for writ of certiorari that a permanent injunction against a Texas residency rule for new businesses seeking alcohol permits should be lifted, because some level of residency or state citizenship purportedly facilitates cooperation with law enforcement and encourages accountability to the community. But the Supreme Court was not swayed and refused to take up the case, according to a Monday order list.
The rule was initially struck down by a Texas court that determined such a durational residency requirement was a protectionist provision and constitutionally invalid, according to court records.
Although the Fifth Circuit subsequently agreed that the 21st amendment of the U.S. Constitution does not authorize states to impose durational residency requirements for alcohol permits, it also found that TPSA had standing to pursue litigation aimed at nixing the injunction.
The suit dates back more than 25 years, when two men, Richard Wilson and Steve Cooper, were unable to buy a Texas nightclub because they would have endangered the club’s mixed-beverage permit due to the residency requirement in the Texas Alcoholic Beverage Code.
The pair went on to sue the Texas Alcoholic Beverage Commission, and a court eventually permanently enjoined the commission from enforcing the residency provision.
TPSA, which had intervened as a defendant in the original litigation, in 2014 asked the court for relief from the decision. The Texas Alcoholic Beverage Commission didn’t join in the motion, and neither of the original plaintiffs filed a response.
In their stead, two out-of-state corporations, Fine Wine & Spirits of North Texas LLC and Southern Wine and Spirits of Texas Inc., intervened as plaintiffs and argued the residency laws are discriminatory and unconstitutional.
As for the Fifth Circuit’s subsequent affirmation of the injunction on the residency rule, TPSA told the high court that the finding is out of line with the “weight of circuit authority” on the issue.
In its cert petition, the trade group argued most circuits interpret a 2005 Supreme Court ruling in Granholm v. Heald, a case regarding the legality of direct-to-consumer wine sales by wineries, to establish a bright line that treats alcohol producers differently than alcohol wholesalers and retailers. The appellate panel’s ruling “threatens numerous state laws” that the high court had sought to protect in the 2005 decision, TPSA said.
The group also argued that the underlying ruling is at odds with a 2013 decision by the Eighth Circuit in Southern Wine & Spirits of America Inc. v. Division of Alcohol & Tobacco Control, which allows states to impose a residency or physical presence requirement on wholesalers and retailers so long as they don’t discriminate against out-of-state products.
Counsel for the parties could not be reached on Monday for comment.
TPSA is represented by Randall Pulman, Leslie Hyman and Etan Tepperman of Pulman Cappuccio Pullen Benson & Jones LLP, and David Frederick and Geoffrey Klineberg of Kellog Huber Hansen Todd Evans & Figel PLLC.
Fine Wine is represented by James C. Ho, Prerak Shah and Bradley G. Hubbard of Gibson Dunn, and Frederick William Sultan IV of Gardere Wynne Sewell LLP.
Southern Wine is represented by Marie R. Yeates, Christopher V. Popov and James L. Leader of Vinson & Elkins LLP.
The case is Texas Package Stores Association Inc. v. Fine Wine & Spirits of North Texas LLC et al., case number 16-242, in the Supreme Court of the United States.