Katie Rucke Mar. 23, 2016, 10:43am


HOUSTON—A federal judge denied a motion by Gabriel Investment Group to intervene in Wal-Mart’s suit against the Texas Alcoholic Beverage Commission. U.S. District Judge Robert Pitman reasoned the intervention was untimely in his March 15 decision against Gabriel.

As the Southeast Texas Record has previously reported, Wal-Mart claims an “irrational” law is preventing the retailer from selling liquor in Texas. The retailer said it filed the suit because Texas customers should have the convenience of shopping for spirits at its stores, like customers do in 25 other states. Wal-Mart is the largest wine and beer retailer in the state.

Attorneys for Gabriel argued it is the “sole public corporation ‘grandfathered’ from the TABC’s regulation prohibiting public corporations from holding package store permits,” according to court documents. The liquor seller contended that Wal-Mart’s challenges to the constitutionality of the grandfather clause put its livelihood, goodwill and reputation at risk and filed a motion to intervene in the litigation to protect its interests.

Gabriel argued it met the requirements outlined in Rule 24 of the Federal Rules of Civil Procedure related to intervention both by right and permissive intervention because it had an interest in the transaction that is the subjection of action and the action may impair or impede the movant’s ability to protect its interest, unless existing parties adequately represent that interest.

Wal-Mart disagreed Gabriel had a right to intervene for either reason. “Gabriel has not shown intervention as of right is warranted because Gabriel has not shown an interest that the law deems worthy of protection, but rather an economic preference.” Wal-Mart argued Gabriel failed to prove its views are inadequately represented by the defendants and didn’t interevent in a timely fashion—which is a requirement in the Fifth Circuit.

Attorneys for Gabriel said Wal-Mart would not suffer any prejudice should it be permitted

to intervene at this late date. Pitman took issue with this argument noting that the deadline for completion of discovery is April 18 and the deadline for filing dispositive motions is April 22.

While Gabriel said those deadlines “would not be impacted as Wal-Mart has sought, and been permitted to obtain, discovery from Gabriel,” Gabriel said it would seek discovery from Wal-Mart. Gabriel told the court it wouldn’t need a “tremendous” amount of information from Wal-Mart, “engaging in the discovery process may well result in delay, and will certainly require the parties already in this action to expend additional resources,” Pitman said.

Wal-Mart argued Gabriel’s involvement would require the retail giant to “alter its litigation strategy which is currently based on responses to interrogatories asking the bases for defendants’ contentions that the challenged statutes pass constitutional muster.”

Gabriel tried to reason with the court that the reason it filed a motion to intervene so late was because it previously believed its interests were going to be represented by the Texas Package Stores Association.

TPSA filed a motion to intervene in the lawsuit on Nov. 18, 2015. The court denied the motion on Dec. 22, 2015, concluding that TPSA “failed to show it had timely sought to intervene and further found permitting intervention at the date would prejudice the parties and cause undue delay.”

In his ruling, Pitman wrote Gabriel’s reliance on TPSA to represent its interests was unfounded. “TPSA was never permitted to represent those interests and Gabriel has not explained why it acted reasonably in believing it could rely on TPSA to represent its interests.”

“TPSA itself delayed some nine months before seeking leave to intervene, and Gabriel waited an additional two months after TPSA was denied leave to seek to intervene,” Pitman wrote. “The Court thus finds Gabriel did not act in a timely fashion in seeking to intervene.”

Attorneys for Gabriel and TABC didn’t respond to our requests for comment, nor did Wal-Mart.

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