CANarchy Craft Brewery Collective, LLC v. Tex. Alcoholic Beverage Comm'n
| Decision Date | 22 January 2021 |
| Docket Number | 1:20-CV-55-RP |
| Citation | 514 F.Supp.3d 911 |
| Court | U.S. District Court — Western District of Texas |
| Parties | CANARCHY CRAFT BREWERY COLLECTIVE, LLC, Plaintiff, v. TEXAS ALCOHOLIC BEVERAGE COMMISSION, Kevin J. Lili, Ida Clement Steen, Jason E. Boatright, Michael S. Adkins, Deborah Gray Marino, Defendants. |
Ann Stehling, Bill Cobb, Cobb & Counsel, PLLC, Austin, TX, for Plaintiff.
Sarah C. Wolfe, Karen L. Watkins, Office of the Attorney General of Texas, Austin, TX, for Defendants Texas Alcoholic Beverage Commission, Kevin J. Lilly, Ida Clement Steen, Jason E. Boatright.
Karen L. Watkins, Office of the Texas Attorney General, Austin, TX, for Defendants Michael S. Adkins, Deborah Gray Marino.
Before the Court are cross-motions for summary judgment filed by Defendants the Texas Alcoholic Beverage Commission ("TABC"), Kevin J. Lilly, in his official capacity as Chairman of the TABC, and TABC Commissioners Jason E. Boatright, M. Scott Adkins, Deborah Gray Marino, and Hasan K. Mack,1 in their official capacities as Commissioners (together "TABC Defendants"), (Dkt. 21), and Plaintiff CANarchy Craft Brewery Collective, LLC ("CANarchy"), (Dkt. 22). Having considered the parties' arguments, the evidence, and the relevant law, the Court will grant CANarchy's motion and grant in part and deny in part TABC Defendants' motion.
CANarchy is challenging TABC's interpretation of Texas Alcoholic Beverage Code ("the Code") §§ 12.052(a) and 62.122(a), which were amended by the Texas legislature on September 1, 2019 to authorize beer-to-go sales by Texas brewers with production below 225,000 barrels a year. (State Pet., Dkt. 1-4, at 4). § 12.052(a) states in relevant part:
[T]he holder of a brewer's permit whose annual production of ale, together with the annual production of beer by the holder of a manufacturer's license at all premises wholly or partly owned, directly or indirectly, by the permit holder or an affiliate or subsidiary of the permit holder , does not exceed a total of 225,000 barrels may sell ale produced on the brewer's premises under the permit to ultimate consumers on the brewer's premises ....
§ 12.052(a) (emphasis added). § 62.122(a) is identical to § 12.052(a), except that section 62.122(a) applies to a "brewer's license" holder that produces "malt beverages," whereas section 12.052(a) applies to a "brewer's permit" holder that produces "ale" and a "manufacturer's license" holder that produces "beer."
In 2013, the Texas legislature first enacted §§ 12.052(a) and 62.122(a) when it allowed brewers to sell beer to consumers for on-site consumption and to self-distribute barrels of beer directly to retailers. (Defs.' Mot. Summ. J., Dkt. 21, at 6); Act of May 20, 2013, 83rd Leg., R.S., ch. 535, § 2, sec. 1(5), 2013 Tex. Sess. Law Serv. Ch. 535. The provisions only allowed brewers to sell beer for on-site consumption if they produced fewer than 225,000 barrels of beer annually. (Id. ). In 2017, the legislature amended §§ 12.052(a) and 62.122(a) to require that, when calculating the amount of beer it produced, a brewer also include beer produced at "all premises wholly or partly owned, directly or indirectly, by the permit holder or an affiliate or subsidiary of the permit holder." (Defs.' Mot. Summ. J., Dkt. 21, at 6); Act of June 15, 2017, 85th Leg., R.S., ch. 1129, §§ 2 and 3. In 2019, the Legislature amended §§ 12.052(a) and 62.122(a) to also allow breweries to sell beer-to-go if they fell under the 225,000-barrel threshold. (Defs.' Mot. Summ. J., Dkt. 21, at 6).
CANarchy owns and operates breweries in seven states, including two breweries in Texas: Oskar Blues in Austin and Deep Ellum in Dallas.2 (State Pet., Dkt. 1-4, at 1; Defs.' Mot. Summ. J., Dkt. 21, at 4). CANarchy leases the premises on which all of its breweries produce their beer, with the exception of one brewery in Michigan.3 (State Pet., Dkt. 1-4, at 2). After §§ 12.052(a) and 62.122(a) were amended, Oskar Blues and Deep Ellum breweries began selling beer-to-go from their premises in Austin and Dallas. (Id. at 1). On September 11, 2019, TABC ordered both of the breweries to "cease and desist" selling beer-to-go, stating: (Id. at 4). TABC based this assessment on the total sum of CANarchy breweries' production in the seven states in which it has breweries, which totaled more than 480,000 barrels of beer in 2019. (Defs.' Mot. Summ. J., Dkt. 21, at 4).
CANarchy asserts two causes of action against TABC Defendants. CANarchy seeks a declaratory judgment that TABC's application of §§ 12.052(a) and 62.122(a) to include beverages produced outside of Texas in the 225,000-barrel production threshold violates the dormant Commerce Clause. (State Pet., Dkt. 1-4, at 9). CANarchy also seeks a declaratory judgment that the 225,000-barrel production threshold in §§ 12.052(a) and 62.122(a) distinguishes between beverages produced on premises owned by the brewer versus produced in a business on leased land, in contrast with TABC's interpretation and application. (Id. at 4–5).
TABC Defendants seek summary judgment in their favor on both causes of action. (Defs.' Mot. Summ. J., Dkt. 21). CANarchy, meanwhile, seeks only partial summary judgment regarding its statutory construction claim. (Pl.'s Mot. Summ. J, Dkt. 22).
Summary judgment is appropriate when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; Celotex Corp. v. Catrett , 477 U.S. 317, 323–25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "A fact is material if its resolution in favor of one party might affect the outcome of the lawsuit under governing law." Sossamon v. Lone Star State of Tex. , 560 F.3d 316, 326 (5th Cir. 2009) (quotations and footnote omitted). When reviewing a summary judgment motion, "[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson , 477 U.S. at 255, 106 S.Ct. 2505. Further, a court may not make credibility determinations or weigh the evidence in ruling on a motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).
If the moving party does not bear the ultimate burden of proof, after it has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita Elec. Indus. Co. v. Zenith Radio , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). When the movant bears the burden of proof, she must establish all the essential elements of her claim that warrant judgment in her favor. See Chaplin v. NationsCredit Corp. , 307 F.3d 368, 372 (5th Cir. 2002). In such cases, the burden then shifts to the nonmoving party to establish the existence of a genuine issue for trial. Austin v. Kroger Tex., L.P. , 864 F.3d 326, 335 (5th Cir. 2017).
Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Turner v. Baylor Richardson Med. Ctr. , 476 F.3d 337, 343 (5th Cir. 2007). Furthermore, the nonmovant is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Adams v. Travelers Indem. Co. of Conn. , 465 F.3d 156, 164 (5th Cir. 2006). Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Id. After the nonmovant has been given the opportunity to raise a genuine factual issue, if no reasonable juror could find for the nonmovant, summary judgment will be granted. Miss. River Basin All. v. Westphal , 230 F.3d 170, 175 (5th Cir. 2000). Cross-motions for summary judgment "must be considered separately, as each movant bears the burden of establishing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law." Shaw Constructors v. ICF Kaiser Eng'rs, Inc. , 395 F.3d 533, 538–39 (5th Cir. 2004).
§§ 12.052(a) and 62.122(a) state that the 225,000-barrel threshold limit is calculated according to production "at all premises wholly or partly owned, directly or indirectly, by the permit holder or an affiliate or subsidiary of the permit holder." TEX. ALCO. BEV. CODE §§ 12.052(a), 62.122(a). CANarchy seeks a declaratory judgment that TABC's application of §§ 12.052(a) and 62.122(a) violates the dormant Commerce Clause. (State Pet., Dkt. 1-4, at 9). CANarchy also seeks a declaratory judgment that the 225,000-barrel production threshold in §§ 12.052(a) and 62.122(a) distinguishes between beverages produced on premises owned by the brewer versus produced in a business on leased land, in contrast with TABC's interpretation and application. (Id. at 4–5).
TABC Defendants seek summary judgment in their favor on both causes of action. (Defs.' Mot. Summ. J., Dkt. 21). CANarchy, meanwhile, seeks only partial summary judgment on its statutory construction claim. (Pl.'s Mot. Summ. J, Dkt. 22). CANarchy maintains that there are material fact issues precluding summary judgment regarding its dormant Commerce Clause claim. (Pl.'s Resp., Dkt. 23).
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