U.S. District Judge Sam Sparks of Austin recently declared portions of the Texas Alcoholic Beverage Code (TABC) unconstitutional as they apply to the advertisement and labeling of beer inside the state.
Sparks issued a Dec. 19, 2011, order granting in part and denying in part both parties’ motions for summary judgment in Authentic Beverages Co. Inc. v. Texas Alcoholic Beverage Commission . In the order Sparks wrote, “The practice of law is often dry, and it is the rare case that presents an issue of genuine interest to the public. Dealing as it does with constitutional challenges to the Texas Alcoholic Beverage Code, it is anything but ‘dry’ — and this Court would never be so foolish as to question the sincerity of Texans’ interest in beer.”
An Austin brewery filed its complaint in the case last year, challenging several state laws and alleging they violate the right to commercial speech, which the First Amendment protects. Authentic Beverages alleges the laws mandate that craft brewers — artisans who produce beer in small quantities — label their beverages based on alcohol content rather than the beers’ traditional names, causing confusion for consumers. Authentic Beverages further alleges the laws prohibit small breweries from advertising where people can buy their products.
Sparks agreed with Authentic’s First Amendment challenges to the Texas Alcoholic Beverage Code, writing, “Although the Code is free to define ‘beer’ and ‘ale’ as it sees fit, Texas may not compel malt beverage producers to use those terms, and only those terms, in advertising and labeling. Accordingly, all statutes and regulations that compel such speech, including Texas Administrative Code, Title 16, Sections 45.77 and 45.90, are declared unconstitutional.”
Sparks also ruled that the TABC failed to submit evidence that those laws advanced government interests. “Regrettably, TABC has almost wholly failed to submit such evidence, and has often failed even to respond to Authentic’s arguments. Whether this failure reflects a tactical error, laziness, an implicit concession that the Code cannot withstand constitutional scrutiny, an erroneous assumption that TABC is entitled to special treatment, or a mere oversight, the Court cannot say,” Sparks wrote in granting summary judgment to Authentic on its First Amendment challenges.
Among other things, Sparks granted the TABC summary judgment on Authentic’s equal protection claim, deciding the laws that regulate the licensing of breweries in Texas do not treat craft brewers differently than other producers of alcohol.
In concluding his order, Sparks wrote, “The Court is shocked and dismayed at the Texas Attorney General’s halfhearted conduct in this case. The very purpose of having the Attorney General’s Office defend suits like this, is so the State of Texas can vigorously defend its duly enacted legislative mandates. Here, however, when TABC responded to Authentic’s challenges at all, it responded with little in the way of argument, and even less in the way of relevant evidence. The State of Texas is lucky the burden of proof was on Authentic for many of its claims, or else the Alcoholic Beverage Code might have fared even worse than it has.” [See the Sparks order.]
Pete Kennedy, a partner in Austin’s Graves Dougherty Hearon & Moody who represents Authentic, says, “We’re pleased with the result. A lot of beers are being popped across the state in honor of Judge Sparks’ decision.”
Jerry Strickland, a spokesman for the AG’s office, writes in an email: “The Assistant Attorney General who represented the State in this case is an experienced lawyer and stellar litigator with a history of successes in courtrooms across Texas, including serving as lead trial counsel when this office successfully defended the constitutionality of the Open Meetings Act in federal court. Just as he zealously defended the Open Meetings Act, the AAG vigorously defended the law in this case — but this time around the court apparently disagreed with the State’s legal arguments.”
TABC spokeswoman Carolyn Beck says, “TABC does not plan to appeal the ruling, so the next step is to develop new rules to replace the ones that were overturned by the judge and found unconstitutional.”