On July 1, 2019, we blogged about the Supreme Court’s ruling striking down various Tennessee regulations whose purpose and effect was to limit the ability of non-Tennessee actors to compete in the retail market for alcoholic beverages. Tennessee Wine & Spirits Retailers Ass’n v. Thomas, 139 S.Ct. 2449 (2019). Last month, the Fifth Circuit addressed a somewhat different restriction imposed by the State of Texas. Wal-Mart Stores, Inc. v. Texas Alcoholic Beverage Com’n, 935 F.3d 362 (5th Cir. 2019).
Under Texas law, a publicly traded corporation cannot obtain a license to sell alcohol at retail. The ban applies as much to Texas corporations as it does to foreign corporations. Conversely, out-of-state businesses may obtain a permit so long as they are not publicly traded.
Wal-Mart wanted to sell alcohol at retail in Texas. In 2018, it obtained an injunction against the Texas statute based on the dormant commerce clause, the same legal theory under which the Tennessee case was decided. Last month, the Fifth Circuit reversed and remanded for reconsideration.
The statute is facially neutral, so the Fifth Circuit assessed whether it had a purpose or effect to discriminate against out-of-state actors. The basic formula for assessing a purpose claim is set forth in Village of Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U.S. 252 (1977).
One Arlington factor is whether the state has a history of discriminating against out-of-state actors. Here, the Fifth Circuit held that such a pattern was clear. Commencing in 1935, Texas...
