Tag Archives: Walmart liquor stores

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 stores could be coming to Texas

walmart liquor storeFederal court ruling in Walmart liquor stores case: Two key Texas three-tier laws are arbitrary and irrational

Walmart is one step closer to opening liquor stores in Texas – a development that could help loosen the three-tier system’s stranglehold on wine sales in the U.S.

A federal court judge in Austin ruled this week that two state laws that forbid publicly-held companies from getting a liquor license are unconstitutional. The ruling will be appealed by the trade group for the state’s liquor stores; the state isn’t sure yet what it’s going to do. If the judge’s ruling is upheld, we could have a Walmart-owned liquor store built next to a Walmart, a Kroger liquor store next to a Kroger, and so forth.

The two laws are crucial to how the three-tier system works in Texas, restricting what we can buy, where we can buy it, and when we can buy it. Three-tier, of course, is the framework that regulates alcohol sales in the U.S., adapted by each state for its own use.

One of the overturned Texas laws is the legendary “just us kinfolks exception,” which allows privately-owned companies to own as many package stores as they want – as long as the licenses for the stores are held by different members of the same family. For everytoine else, the limit was five stores total. Nifty, huh? It directly benefits the state’s biggest — and family-owned — chains – Houston’s Spec’s, with more than 160 stores; Austin’s Twin Liquors, with some 70 stores; and Dallas’ Goody Goody, with about 20 stores.

Since the laws are unique to Texas, striking them down doesn’t establish a precedent elsewhere. What does matter to the rest of the country is the tone of U.S. District Judge Robert Pitman’s 50-page decision. Pittman invoked every argument that those who want to liberalize three-tier have used for more than a decade: that laws like these violate the commerce clause of the Constitution, that the laws discriminate against one group in favor of another for no good reason, and that they don’t promote the public good.

“In sum, the [kinfolk] exception creates an unusual and entirely arbitrary classification,” wrote Pittman. “There is no reason to believe that the exception bears any relation to the promotion of family business or small business or serves any other legitimate state interest. It thus fails rational basis review.”

Which, of course, is what those with a vested interest in keeping three-tier claim. The package store trade group, in announcing it would appeal, said just that: “We will appeal the trial court’s decision and continue to fight for family-owned liquor store owners against the world’s largest corporate entities that seek to inflate their profits by upending sensible state laws that protect both consumers and small businesses.”

We’re still a long way from shopping at a Walmart liquor store. But that the decision emphasized the irrationality of specific laws that make up the three-tier system in Texas speaks well for others trying – and succeeding – to overturn similarly restrictive legislation in their states.