A federal judge has called two key laws regulating liquor sales in Texas arbitrary and irrational. One possible result of his ruling? A string of standalone Walmart liquor stores across the state and maybe even package stores from other publicly held chains like Kroger and Target.
U.S. District Judge Robert Pitman declared the two laws unconstitutional in a lawsuit brought by Walmart in 2016. The retailer argued that the laws, which prohibited publicly traded companies from getting package store licenses and from opening more than five stores even if they could, violated the U.S. Constitution.
The judge agreed in a 50-page ruling, saying the laws violated the commerce clause of the Constitution, that they discriminated against one group in favor of another for no good reason and that they didn’t promote the public good. This has long been the argument of those who say that Texas liquor regulations, many written at the end of Prohibition, need to be updated for the 21st century.
Pittman was especially vehement in striking down what Austin attorney Lou Bright has called the “just us kinfolks” exception. It’s the state law that allows privately held companies to own as many package stores as they want, as long as the licenses for the stores are held by different members of the same family. It benefits the state's biggest chains — Houston's Spec's, with more than 160 stores; Austin's Twin Liquors, with some 70 stores; and Dallas' Goody Goody, with about 20 stores.
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“In sum, [this] exception creates an unusual and entirely arbitrary classification,” Pittman wrote. “There is no reason to believe that the exception bears any relation to the promotion of family business or small business or serves any other legitimate state interest. It thus fails rational basis review.”
The Texas Package Store Association, which joined the lawsuit as a defendant, said it would appeal. No word yet about what the state will do — Texas Alcoholic Beverage Commission spokesman Chris Porter said his agency, which enforces the state’s booze laws, is conferring with the Attorney General’s Office and will make a decision later. A spokeswoman for the attorney general said she didn’t know if anyone was available to comment.
The package store group was livid with the ruling. In a statement, executive director Lance Lively said, “The Texas Legislature put a system in place to ensure safe access to alcoholic beverages in Texas, and that system has worked for over 80 years. We will appeal the trial court’s decision and continue to fight for family-owned liquor store owners against the world’s largest corporate entities that seek to inflate their profits by upending sensible state laws that protect both consumers and small businesses.”
Dallas consumers are still a long way from shopping at a Walmart liquor store. A spokeswoman said the retailer was gratified by the judge’s ruling but didn’t say anything about plans to open stores. In addition, the 5th U.S. Circuit Court of Appeals in New Orleans, which is conservative about such things, will hear the appeal. Still, this is one of the few court decisions in years that didn’t uphold the status quo and Texas’ liquor laws.