Wal-Mart sues state over 'irrational' ban prohibiting public corporations from selling liquor

Wal-Mart Stores filed suit against the Texas Alcoholic Beverage Commission on Thursday, asserting an “irrational” law is keeping the mega-retailer from selling distilled spirits in the Lone Star State.

Wal-Mart and its subsidiaries, Sam’s East and Quality Licensing, filed their suit, which also names TABC Commissioners Jose Cuevas Jr., Steven Weinberg and Clement Steen as defendants, in the U.S. District Court for the Western District of Texas, Austin Division.

“Our Texas customers want added convenience when shopping for adult beverages. However, the current law prohibits publicly-owned businesses such as Walmart from offering spirits to its customers. This is counter to Texas’ belief in free enterprise and fair competition, limits our customer’s choice and keeps the price of sprits artificially high, all of which harm Texas consumers," said Lorenzo Lopez, spokesperson for Walmart.

“Walmart believes the law needs to be changed to provide a fair and level playing field so we can offer our customers a full assortment of adult beverages as part of a convenient and comfortable shopping experience.”

According to the complaint for declaratory and injunctive relief, Wal-Mart, a publicly traded corporation, is the largest retailer of wine and beer in Texas. Each of its Walmart and Sam’s Club stores that sell wine and beer do so only after first obtaining a permit from the TABC.

“Wal-Mart would like to also sell distilled spirits at its Walmart and Sam’s Club locations in Texas for off-premises consumption. However, it is forbidden from doing so because Texas law irrationally forbids any publicly traded corporation from owning or holding the permit needed to do that,” the suit states

“Wal-Mart is therefore irrationally banned from competing with privately owned companies that are, unlike publicly traded corporations, allowed to obtain package store permits.”

In its suit, Wal-Mart says what’s worse is that Texas law irrationally excludes publicly traded hotel corporations from the prohibition against publicly traded corporations, and any publicly traded hotel with a hotel store may sell distilled spirits and hold package store permits irrespective of the public corporation ban.

The mega-retailer, which is the largest private employer in the U.S. and Texas, is licensed to sell liquor in 25 other states.

“As it does with its sale of wine and beer in Texas, and its sale of distilled spirits in other states, Wal-Mart would like to obtain permits and licenses from the TABC for the retail sale of distilled spirits in Texas,” the suit states. “It is unable to do so, however, because the Code and various TABC regulations prohibit Wal-Mart from obtaining the necessary permits.”

Wal-Mart alleges the state is discriminating against it and other public corporations by arbitrarily distinguishing between “private” corporations and “public” in the sale of distilled spirits.

“These arbitrary and irrational distinctions create separate classes of retailers with no rational difference or purpose. One class of retailers—public corporations—are denied an opportunity to compete in the distilled spirits market, while another class of retailers—private corporations and publicly traded hotel corporations—are allowed to compete without similar restriction,” the suit states.

“No other state in the nation allows private corporations to engage in the retail sale of spirits but prohibits some but not all publicly traded companies from doing so.”

Wal-Mart further contends the law limiting permits violates the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution and is seeking an injunction against the enforcement of the Texas law.

The company is represented in part by attorneys Neal Manne, Alex Kaplan and Chanler Langham of the Houston law firm Susman Godfrey.

Case No. 1:15-cv-00134-RP