JDSUPRA by Arent Fox 7/27/2021
In a lawsuit filed on June 29, 2021, in Texas state court, a major national retailer alleges that a Texas law restricting its retail locations from selling liquor to consumers violates the Texas Constitution. The retailer is asking the court for a declaratory judgment that Section 22.16 of the Texas Alcoholic Beverage Code is unconstitutional and for an injunction against the enforcement of the statute.
The Statute at Issue
Section 22.16 of the Texas Alcoholic Beverage Code prohibits public corporations from obtaining permits that allow for the retail sale of liquor in Texas (called “package store” permits) unless the corporation was grandfathered in prior to April 1995. The Texas legislature enacted the public corporation ban one year after a federal court struck down other provisions of the state Code that imposed in-state residency requirements for alcoholic beverage retailers, but legislators argued at the time that the public corporation ban was necessary to “promote accountability” within the retail liquor market, and “to have real human beings who are easily identifiable, who are close to the business, and who ultimately bear personal responsibility for the actions of the package store.”
In its petition to the court, the retailer (a public corporation) argues that Section 22.16 violates the Due Course of Law Clause and the Local and Special Laws Clause of the Texas Constitution. Among other things, the retailer argues that the effect of the public corporation ban is unreasonable and unduly burdensome and that it is meant solely to benefit existing package-store permittees by insulating them from competition. Moreover, it argues that the state arbitrarily excludes some public corporations from the liquor store market, while making exceptions for publicly traded hotel corporations and public corporations that held package store permits prior to 1995 (which were almost exclusively Texas-resident corporations).
More:
https://www.jdsupra.com/legalnews/major-retailer-locks-horns-with-texas-1348245/