Tag Archives: Walmart lawsuit

Federal appeals court slaps down Texas Walmart liquor stores

Texas Walmart liquor storeDoes the appeal court’s Texas Walmart liquor store ruling diss the Supreme Court?

Remember the Supreme Court’s June Tennessee decision about out-of-state retailers?

That’s the one that was supposed to free us from the shackles of the antiquated, Prohibition-era three-tier system of liquor regulation. If so, the U.S. Fifth Circuit of Appeals wasn’t paying attention. It ruled last week that a Texas law that forbids public companies like Walmart from owning liquor stores may not be unconstitutional.

In other words, Tennessee can’t discriminate against out-of-state retailers, but Texas may be able to discriminate against publicly-owned retailers.

Arghhhhhhhhhhhhhhhh.

“We could be right back at the Supreme Court,” says Taylor Rex Robertson, an attorney with Haynes and Boone in Dallas. “The appeals court may have taken the easy way out.”

In this, Robertson says, the appeals court didn’t exactly rule that the Texas law is constitutional. Instead, it disagreed with the way the trial court judge analyzed the case and applied the law. Rather than make a decision, the appeals court sent the case back to the trial judge to do what needs to be done to analyze the case correctly. Call this a technicality, but one of the technicalities that oils the gears of the legal system.

And why not a technicality, since this is three-tier? If anything, the almost totally unexpected decision in the Texas Walmart liquor store case proves just how resilient three-tier is. Because it was a shock; the trial court had called the Texas law “irrational.”

Controversy, controversy, controversy

Still, it’s not like these kinds of contradictory decisions are unusual. In 2005, the Supreme Court ruling that allowed wineries to ship directly to consumers was supposed to end three-tier’s stranglehold. Until it didn’t.

Or, as a friend of mine put it: “Precedent? There’s no such thing as precedent when it comes to three-tier.”

Legally, the two decisions weren’t about exactly the same thing, even if an out-of-state retailer and a publicly-held retailer may seem to be pretty much alike to those of us who buy wine. But in the convoluted and tortured system that was set up to keep Al Capone out the liquor business after Prohibition, they’re vastly different. (Which, without boring you with legal-ese, is sort of why the appeals court did what it did.)

Hence, the Supreme Court ruled that barring out-of-state retailers wouldn’t necessarily promote the health and safety of Tennessee residents, which is the litmus test for a law’s constitutionality. The Supremes said an out-of-state retailer could just as effectively promote the health and safety as a local retailer. But in the Texas Walmart liquor store case, the appeals court said that there is no evidence that publicly-held retailers couldn’t promote the health and safety of Texas residents as effectively as privately-held companies could.

In other words, a Total Wine employee in Tennessee would card underage shoppers, fill out the state’s booze-related paperwork, and buy only from approved wholesalers more effectively than a Walmart employee in Texas would.

Arghhhhhhhhhhhhhhhh.

No, I don’t know what’s going to happen next. The only certainty, says Robertson, is that the Texas Walmart liquor store saga isn’t gon away anytime soon. What I do know is that whatever glimmer of hope we had that it would be easier to buy wine in the near future has glimmered away.

Drawing courtesy of Peter Hudspith via Flickr using a Creative Commons license

walmart liquor store

Wine sales in Texas after the Walmart lawsuit

Walmart lawsuit

Oh no! These shelves will be empty! Poor, poor pitiful us.

We’ll still be able to buy quality wine in Texas after the Walmart lawsuit, no matter what the panic mongers are telling us

Yes, it’s doom and gloom here in Texas after last month’s ruling that ended the unconstitutional monopoly that the state’s liquor store owners have enjoyed for more than 40 years. How will we ever be able to buy something besides Barefoot ever again?

“So while these new rulings, if enacted in Texas, might free up the market and lower prices they could ultimately harm the overall quality of the Texas wine market by lessening the overall total wine selection.”

Which, of course, we will. The naysayers, prominently quoted in the Wine-searcher.com piece quoted above, make it sound like allowing Walmart to open liquor stores is the beginning of the end: “Some of the most-legislated markets – such as New York and Texas – also have the most vibrant wine markets because these laws have forced owners to specialise and have steered fine-wine buyers to wine-focused independents and chains.”

Excuse me while I reach for my hyperbole eraser.

Nothing will change in Texas if and when Walmart, Kroger, and any other national chain opens standalone liquor stores. Yes, I’ll be able to buy a fifth of bourbon when I go to the grocery store, but that’s about it. I’m not even sure prices will go down; has anyone noticed the foolishness behind supermarket wine pricing?

Some independent retailers, shorn of the monopoly that has protected them since the state’s retail lobby “convinced” the Legislature to pass unconstitutional legislation in the early 1970s, might go out of business. But it’s difficult to feel sorry for any business that stays afloat because a law was designed to stop it from failing.

Know three things about Texas wine sales after the Walmart lawsuit:

• Supermarkets sell spirits in Florida and California; I haven’t heard anyone complain they can’t buy a quality bottle of wine in either state. Right, Kermit Lynch?

• Some small Texas retailers don’t need the monopoly – they have thrived selling quality wine and offering quality service, knowing those are more effective weapons than an unconstitutional law. Pogo’s in Dallas, the not-related Wine Merchants in Austin and Houston, and Put a Cork in It in Fort Worth don’t need the Legislature to protect them.

• The independent pet store was supposed to go out of business in the early 2000s, thanks to national chain retailers like Walmart and PetsMart and more pet products in grocery stores. Sound familiar? But there may be more independent pet stores in the U.S. today than there were then.

So no, I’m not worried about Walmart or Kroger or Target or whatever opening a liquor store and destroying my chance to buy quality wine. And anyone who reads the blog knows that if there was a reason to worry, I’d be the first one to write about it.

The other thing to know? If and when three-tier reform hits your state, you’ll read and hear the same dire warnings. And there won’t be any reason to believe them, either.