No Joke – Jester Sues Texas ABC

Jester King Craft Brewery has sued the Texas Alcoholic Beverage Commission, claiming that standard trade practices used in most states including Texas are unconstitutional. The case could have huge implications if the plaintiffs ultimately win.

Here is the complete press release from Jester King;

Jester King Craft brewery, maker of artisan farmhouse ales in the beautiful Texas Hill Country on the outskirts of Austin, has filed suit against the Texas Alcoholic Beverage Commission (TABC). On Wednesday, attorneys representing Jester King Craft Brewery and two other co-plaintiffs filed a motion for summary judgment in federal court asking that the case be decided in our favor.

We have sued the TABC because we believe that its Code violates our rights under the 1st and 14th Amendments to the Constitution of the United States. Under the Code, we are not allowed to tell the beer drinking public where our beer is sold. We are also not permitted to use accurate terms to describe our beers. We are often forced to choose either to label them inaccurately or not to make beers that we would like to brew. Under the bizarre, antiquated naming system mandated by the TABC Code, we have to call everything we brew over 4% alcohol by weight (ABW) “Ale” or “Malt Liquor” and everything we brew at or below 4% ABW “beer”. This results in nonsensical and somewhat comical situations where we have to call pale ale at or below 4% ABW “pale beer” and lager that is over 4% ABW “ale”. The State has arrogantly and autocratically cast aside centuries of rich brewing tradition by taking it upon itself to redefine terms that reference flavor and production method as a simple shorthand for alcoholic strength.

At the same time, the State prohibits breweries from using other terms that accurately reference alcoholic strength like “strong” or “low alcohol”. That means you will not be seeing any Belgian or American Strong Ale in Texas. Further, the State restricts the contexts in which we can communicate the actual alcohol content of our beers. We are not allowed to put the alcoholic content on anything the State considers advertising, which includes our website and social media. We are simply seeking to exercise free and truthful speech about the beer we make and strongly believe that the State has no interest in keeping you from knowing the type of beer we make, how strong it is, or where it’s sold.

Our claim under the Equal Protection Clause of the 14th Amendment, maintains that breweries, like wineries, should be able to sell their products directly to the public. Right now in Texas, we cannot sell our beer at our brewery. We can only sell beer through a retailer or distributor. When people visit Jester King and ask to buy our beer, we have to tell them, “Sorry, it’s illegal.” Brewpubs are faced with an equal and opposite restriction. They can sell beer on-site, but cannot sell beer through a retailer or distributor. Texas wineries on the other hand are allowed to sell on-site and through retailers and distributors. We are suing because the State has no rational interest in maintaining special restrictions aimed at limiting the sale of beer.

Finally, the lawsuit challenges the State’s requirement that every foreign brewery wishing to sell beer in Texas obtain its own separate license. Foreign wineries and distilleries are not burdened by this requirement. They may simply sell their products in Texas through an importer that has one license for all the wine and spirits it brings into our state. The result is that small, artisan beer makers often have their beer kept out of Texas by unduly burdensome fees.

When we started Jester King, part of our plan was to help other small, artisan brewers, from both the United States and abroad, sell their products in Texas. This is something that we remain interested in doing at some point, which is where our material interest in this part of the case comes into play. Our much larger interest, however, is in allowing Texas beer drinkers to have access to the beers that helped shape our desire to build an authentic farmhouse brewery in the Texas Hill Country and that have had a direct influence on the type of beers that we have set out to brew. Many of these beers are from small overseas breweries whose products are currently being sold elsewhere in the U.S., but not in Texas because of exorbitant licensing fees. We would like to have the ability to purchase these beers in our local market and would like for all Texas beer drinkers to be able to do the same.

We have chosen to pursue these matters in federal court after witnessing the lack of progress that has resulted from previous attempts to address the inequities of the TABC Code legislatively. During the last legislative session, there were bills aimed at giving breweries and brewpubs similar rights to Texas wineries, but these bills never even made it out of committee.

We cannot say how likely we are to succeed in this lawsuit. The State has only to show a rational basis for restricting our freedom and the freedom of beer drinkers in this matter. However, as long as there is a TABC Code in Texas that discriminates against and puts undue burdens on breweries both home and abroad, we will continue to do everything in our power to fight for a more just and free system for us and for beer drinkers in our state.

Comments

  1. mikefromcu says

    Go get ’em. We didn’t have to sue, but did use the equal use argument to get the law changed in California to get the Department of Health out of our tasting rooms, an exemption the wineries had been enjoying for some time.

  2. gitchegumee says

    Welcome to the US. Ever notice that Salvator was sold in the US as “Ale”? Hope this is only the first step toward rationalization of beer laws in America.

  3. CedarCreek says

    http://jesterkingbrewery.com/blog/

    Yesterday afternoon, Judge Sam Sparks of the United States District Court for the Western District of Texas issued his final judgment on the case that Jester King Brewery and our two co-plaintiffs, Authentic Beverage Company and Zax Restaurant & Bar, filed against the Texas Alcoholic Beverage Commission. With respect to all of the First Amendment challenges to the current state law, he ruled in our favor, declaring the statutes and TABC rules in question unconstitutional and therefore invalid. Congratulations and many thanks to our attorneys, Jim Houchins of Houchins Law and Pete Kennedy of Graves Dougherty Hearon & Moody for taking on this case and for all of the hard work that they put in. Thanks also to Pete’s firm for supporting his efforts and to Jim’s associate, Rachel Fischer, for all of her hard work and diligent research.

    As of result of yesterday’s ruling, beer in Texas may now be labeled as “beer” and ale may now be labeled as “ale”, regardless of alcohol content. Breweries and distributors are also no longer prohibited from independently telling consumers where their products may be purchased, or from communicating truthful and accurate information about their alcohol content. That means Jester King will now be able to add a “Where to Buy” section to our website, as will all other breweries selling beer in Texas.

    “In a remarkable (though logically dubious) demonstration of circular reasoning” Judge Sparks writes in his ruling, “TABC attempts to defend the constitutional legitimacy of the Code through an appeal to the statutory authority of the Code itself.” Referring to the required use of the terms “beer”, “ale”, and “malt liquor”, he writes “TABC’s argument, combined with artful legislative drafting, could be used to justify any restrictions on commercial speech. For instance, Texas would likely face no (legal) obstacle if it wished to pass a law defining the word ‘milk’ to mean ‘a nocturnal flying mammal that eats insects and employs echolocation.’ Under TABC’s logic, Texas would then be authorized to prohibit use of the word ‘milk’ by producers of a certain liquid dairy product, but also to require Austin promoters to advertise the famous annual ‘Milk Festival’ on the Congress Avenue Bridge.’”

    We were disappointed, but not too surprised, that Judge Sparks ruled against our claims that Texas’s disparate treatment of breweries and brewpubs violated the Equal Protection Clause and that its treatment of foreign breweries violated both the Equal Protection Clause and the Commerce Clause. The TABC never gave any reason why Texas should be able to prohibit craft brewers from selling beer to customers on-site, while allowing wineries to do so, or why Texas should be able to favor foreign wineries over foreign breweries, and Judge Sparks did not speculate on why that might be. But the legal standards are different and more demanding for challenges brought under the Equal Protection Clause than the First Amendment, and we were unable to persuade Judge Sparks to strike down these discriminatory laws. We were encouraged, however, by Judge Sparks’s observation that “The State of Texas is lucky the burden of proof was on [the Plaintiffs] for many of its claims, or else the Alcoholic Beverage Code might have fared even worse than it has.”

    We’re pleased to have helped to bring about at least a few long overdue changes in the antiquated and often inconsistent Texas Alcoholic Beverage Code, but small brewers still face many unjust and unnecessary obstacles that need to be removed before we can stand on equal footing with Texas winemakers and brewers in other states. Measurable progress was made with yesterday’s decision, but much more is still needed. We don’t yet know what, if anything, will happen next on the legal front. That’s something that we’ll need to discuss with our attorneys. In the meantime, though, it’s not too early to start thinking about the 2013 legislative session, with the hope that this case will help to bring some momentum for further change. For the first time, Texas consumers finally have a well-organized grassroots organization that’s working to modernize the Beverage Code. We, at Jester King Craft Brewery, will continue to do everything we can to support the efforts of Open the Taps and we encourage everyone who is reading this to do the same.