Appeals Court Questions Wal-mart, TABC over Spirits Sales in Texas

Dear Client:

We may finally be nearing the end of the case Wal-mart brought against the Texas Alcoholic Beverage Commission (TABC) in an attempt to start selling spirits in the Lone Star State. At the end of last month, the Fifth Circuit heard oral arguments from both sides.

BACKGROUND. Wal-mart can sell beer and wine in Texas, but is prohibited from owning a package store permit, and therefore from selling spirits. The retailer filed a lawsuit challenging sections of the ABC code that prevented it from doing so, claiming it is irrationally banned for being a public company.

Last year, US District Judge Robert Pitman agreed with Wal-mart, ordering the TABC to cease enforcement on three of the four challenged sections: the ban on public corporations, the five-permit limit and the consolidation exception for family members [see WSD 03-21-2018]. However, Judge Pitman granted the TABC’s motion to stay the decision until after the appeal.

The appellate court is now trying to determine whether or not the district court correctly ruled that the public corporations ban and the limit on package store permits violate the Commerce Clause and that by extending benefits to all there is no longer an Equal Protection violation.

THE HEARING. During the oral arguments on April 29, the Fifth Circuit judges grilled both sides. Based on the questioning and comments made, it’s tough to call which way the court is leaning. Below are a few key highlights from the hearing.

The TABC and intervenor Texas Package Store Association (TPSA) harped on the difference between discrimination and discriminatory intent. The Commerce Clause is concerned with effects, not motives, said the TPSA attorney, meaning that even if the Texas legislature intended for the challenged statutes to be discriminatory, it doesn’t matter if it does not result in discrimination – which the TABC and TPSA argue it does not.

But Wal-mart said the numbers show a different story, citing that 98% of all package store permits in the state are held by firms wholly-owned by Texans because of the current statutes in place.

Wal-mart claims that the statutes discriminate against who the retailer is, adding that the laws have nothing to do with regulating how spirits are sold, but to specifically keep out certain retailers “and it has worked,” said Wal-mart’s attorney. Though one judge asked, “Isn’t it a little bit funny to have a large public corporation say they’re a protected class?”

A judge also noted that they have to tread “very carefully” when the judiciary branch starts interfering with legislation.

Now we wait for the appellate court to hand down their decision. Stay tuned.

NAPA VALLEY TOURISTS SPEND MORE THAN $2 BILLION IN 2018

In 2018, 3.85 million people visited Napa Valley, spending $2.23 billion, according to a report recently released by Visit Napa Valley. Spending was up nearly 16% over 2016, the last time this report was released.  

On average, visitors spent about two days in the wine country and spent about $247 per day.

Wine is the main attraction in Napa. About 97% of tourists say they visited a winery on their trip to Napa. Moreover, out of the top six activities to do in Napa, four are centered around wine.

Napa mostly pulls in visitors from surrounding California cities. 34.4% of visitors were from California, with Texas a distant second at 7%. New York (6%), Florida (5.7%) and Illinois (4%) round out the top five.

To read the full report, click here.

WSD BRIEFS:

ROUND POND NAMES NEW WINEMAKER. John Donegon Wilson has been appointed winemaker at Round Pond Estate in Napa Valley. He will be responsible for overseeing all aspects of winemaking for Round Pond’s portfolio. He joins the winery from Vine Cliff Winery where he worked as winemaker.

STE. MICHELLE LAUNCHES 14 HANDS IN CANS. Ste. Michelle Wine Estates’ 14 Hands brand is now available in cans in four options; pinot grigio, rose, Hot to Trot red blend and a sparkling wine. The 375 ml cans retail for $6 a piece. 14 Hands cans are also being launched this summer at outdoor music festivals including KABOO music festival in Arlington, Texas, Hot Luck food and music festival in Austin, Outside Lands music festival in San Francisco and FEAST Portland.

CHOPIN IMPORTS APPOINTS NEW REGIONAL VP. Chopin Imports has named Bryan Tilbury western regional division vp, effective May 13. He will lead and oversee the strategic direction of the west region, which includes AK, AZ, CA, HI, NV, NM, WA, ID, MT, OR, UT and WY. Bryan has 15 years of industry experience under his belt, most recently working at Hope Family Wines.

EDITOR’S NOTE: UPDATE ON OUR READER APP. Good news. Our SchuPub 5.0 reader app for iPhone and Android has been fixed and updated to now include imbedded links and images, just like the email and web versions. Download the app for free and start reading WSD and all our publications in one easy place on your phone or tablet. Search app store for SchuPub or follow the link at the bottom of the newsletter.  

Until tomorrow,
Sarah

“The less you talk, the more you’re listened to.” – Abigail Van Buren

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