AUSTIN – A ruling has been made allowing the intervention by a liquor store association in the case Wal-Mart filed regarding its right to sell liquor in Texas.
Wal-Mart filed the case against the Texas Alcoholic Commission alleging that the Commission protects permit holders and violates the U.S. Constitution. Wal-Mart is prohibited from selling liquor in Texas as the law stops publicly owned companies from distributing liquor to its customers.
The Texas Package Stores Association (TPSA), an organization of permit-holding liquor stores, or package stores as it refers to them, filed a motion to intervene in the case as it has an interest in the outcome of the case, which it didn’t believe the Commission would fulfill. It won its ruling in the U.S. Court of Appeals for the 5th Circuit after being denied this motion last year.
Tried before Judge Jennifer Walker Elrod, she made her decision that the TPSA could intervene saying that the association had an interest that could possibly be impaired by the outcome of the case.
While the TPSA is looking to protect 80 years of Texas liquor history, it is also a part of its business model that the law stays intact. No doubt the association wants to protect it members, which includes single-store operators and larger local chains, from the competition that Wal-Mart will bring. Wal-Mart has said if it wins the case, it is looking to build stand-alone liquor stores within the entrances of its current stores.
“Special interest groups are trying to maintain the status quo and rationalize an unconstitutional loophole in Texas law which harms the citizens of Texas,” Anne Hatfield, a spokeswoman for Wal-Mart, told the Southeastern Texas Record. “On behalf of our Texas customers, we are prepared to pursue the case to provide Texans their freedom of choice.”
Wal-Mart has a vested interest in selling liquor in Texas as it has more than 500 stores throughout it. It currently is allowed to sell liquor in 25 states and is fighting a law in Texas that it claims is “irrational.” Wal-Mart claims in its suit that the liquor law violated the Equal Protection Clause, Commerce Clause, and Comity Clause of the U.S. Constitution.
While the law clear states that publicly held companies can’t sell liquor, it does provide a clause for publicly owned hotels to do so. It also allows for private companies to hold five liquor permits, with a clause that family members can open independent stores and transfer the permit to a private business.
The TPSA intervened in the case with the Commission as it saw it willing to accept a procedural change in the case, while the TPSA is looking to keep the law intact. Elrod saw that the TPSA had a much narrower mission than the Commission as it was looking to protect its members’ businesses with the law.
The Texas Alcoholic Beverage Code came into effect in 1977 and allows the Commission to decide on who gets permits and licenses throughout the alcoholic beverage industry. It can grant, refuse, suspend or cancel permits and licenses as it sees fit.
The TPSA is being represented by Attorney Alan Waldrop from Terrill & Waldrop. Wal-Mart’s legal counsel includes Partner Alex Kaplan from Susman Godfrey.
When contacted, the TPSA said it is not commenting on the case at this time.