Wal-Mart Stores, Inc. v. Tex. Alcoholic Beverage Comm'n
| Decision Date | 11 October 2016 |
| Docket Number | A-15-CV-134-RP |
| Parties | WAL-MART STORES, INC., et al. v. TEXAS ALCOHOLIC BEVERAGE COMMISSION, et al. |
| Court | U.S. District Court — Western District of Texas |
Before the Court are the following motions and their associated responses and replies:
The District Court referred the above-motions to the undersigned Magistrate Judge for resolution pursuant to 28 U.S.C. §636(b)(1)(A), FED. R. CIV. P. 72, and Rule 1(c) of Appendix C of the Local Rules.
The Court held a hearing on the motions on April 14, 2016. Shortly after the hearing, the TPSA moved for a stay of the proceedings pending its interlocutory appeal of the denial of its motion to intervene. The Fifth Circuit granted that motion to stay on May 4, 2016. Dkt. No. 136. On September 9, 2016, the Fifth Circuit issued its order reversing the denial of TPSA's motion to intervene, Dkt. No. 140, and Judge Pitman lifted the stay on September 13, 2016, Dkt. No. 142
Plaintiffs challenge the constitutionality of TEX. ALCO. BEV. CODE §§ 22.04, 22.05, 22.06, and 22.16, contending that the statutes violate both the Equal Protection Clause and the Dormant Commerce Clause. The statutes regulate grants of permits to make retail sales of distilled spirits by limiting the number of permits a person may own and the types of companies which may own them. Plaintiffs argue that the ban on public corporations, as well as the consanguinity consolidation provision of the statutes unconstitutionally discriminate against out-of-state companies in both effect and purpose.
Movants—Spec's Family Partners, Ltd., Texas Package Stores Association, Twin Liquors, LP, and David Jabour—object to a number of Rule 30(b)(6) deposition topics and requests for production. TPSA is an intervenor in the case, but all other Movants are non-parties to the suit. In April, Movants filed motions to quash the deposition topics, and the Court heard arguments on those motions. Immediately prior to the hearing, Wal-Mart filed a motion to compel the production of documents from both TPSA and Twin Liquors. Because the arguments against production are nearly identical to those challenging the deposition topics, the Court did not hold an additional hearing to address the document requests.
In brief, the disputed discovery topics seek five categories of communications from each of the Movants to "any Texas government body," which is defined to include the Texas legislature, any members of the Texas legislature, legislative staff members, the Attorney General, the Governor's office, and the Texas Alcoholic Beverage Commission ("TABC"). The communications Wal-Mart seeks to discover are any communications from 1994 to the present between Movants and state actors about:
In addition to these five categories of communications, Wal-Mart also seeks records of campaign contributions to any Texas legislator, and communications between Movants and just the TABC regarding TEX. ALCO. BEV. CODE § 22.05 (the "consanguinity consolidation procedure").1 Movants argue that communications on these topics are irrelevant to Plaintiffs' claims and are privileged under the First Amendment. Spec's also contends that these areas are protected from discovery by TEX. GOV'T CODE § 306.004.
The Movants make very similar arguments in support of their objections to the discovery sought by Wal-Mart, and the Court thus considers all of the arguments together.
All of the Movants contend that their communications with legislators have no relevance to the claims brought by Wal-Mart. First, they argue that any communication after the last of the challenged statutes was adopted is irrelevant, as anything past that time could not possibly be probative of the legislature's motives in adopting the laws. Next, they contend that only public, on-the-record statements of legislators are relevant to show motive, and thus "private" lobbying conversations with legislators are irrelevant.
A party may discover "any nonprivileged matter that is relevant to any party's claim or defense." FED. R. CIV. P. 26(b). Discovery outside of this scope is not permitted. Id. at (b)(2)(C)(iii). Information "need not be admissible in evidence to be discoverable." Id. at (b)(1). Further, the recent amendments to Rule 26 require that discovery be:
proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.
Id. As the Court noted at the outset of the hearing, the sheer number of attorneys who have made appearances in the case (24 by the Court's count) is a persuasive demonstration of the importance of the issues at stake here, the value of the case, and that the parties have significant resources available to them. Proportionality is thus not at issue in this discovery dispute.
The first step in resolving the relevance objection is identifying the evidence that is potentially admissible on Wal-Mart's two claims. First, Wal-Mart makes an equal protection claim. "The equal protection clause essentially requires that all persons similarly situated be treated alike." City of Cleburne v. Cleburne Living Center, Inc., 472 U.S. 432, 439 (1985). To prove an equal protection violation, the plaintiff must first demonstrate he has been "classified" in some way by the state. Mahone v. Addicks Util. Dist. Of Harris Cnty., 836 F.2d 921, 933 (5th Cir. 1988). When—as here—the plaintiff does not allege that the classification infringes on a fundamental right, the court applies a rational basis review to the classification. Hines v. Alldredge, 783 F.3d 197, 203 (5th Cir. 2015). This means that the court looks at two additional issues: (1) the purpose the classification is designed to serve, and (2) the "fit" between the classification and purpose, namely "whether the state could rationally determine that by distinguishing among persons as it has, the state couldaccomplish its legitimate purpose." Mahone, 836 F.2d at 933. Or, to put it differently, whether "there is any conceivable state of facts that could provide a rational basis for the classification." FCC v. Beach Communications, 508 U.S. 307, 313 (1993).
While an equal protection analysis must focus on whether any legitimate interest has a rational relationship to the legislation, Mahone, 836 F.2d at 934, "a hypothetical rationale, even post hoc, cannot be fantasy." St. Joseph Abbey v. Castille, 712 F.3d 215, 223 (5th Cir. 2013). Thus, in reviewing equal protection challenges to a statute, the Fifth Circuit "turn[s] to the proffered rational bases for the challenged law. Id. The court thus examines "the rationale informed by the setting and history of the challenged rule," id., which can include the "factual backdrop" of the legislation. Mahone, 836 F.2d at 937.
Wal-Mart's second claim is brought under the "dormant" Commerce Clause. That clause is a "substantive restriction on permissible state regulation of interstate commerce." Dennis v. Higgins, 498 U.S. 439, 447 (1991). Analyzing a dormant Commerce Clause claim has two parts. Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 578-79 (1986). First, a court must determine whether the challenged statute "discriminates against interstate commerce either facially, by purpose, or by effect." Allstate Ins. Co. v. Abbott, 495 F.3d 151, 160 (5th Cir. 2007). If so, the court asks whether "the state 'can demonstrate, under rigorous scrutiny, that it has no other means to advance a legitimate local interest.'" Id. Wal-Mart contends that the statutes at issue have both a discriminatory purpose and a discriminatory effect. There are four factors that courts have found relevant in determining discriminatory purpose:
(1) whether a clear pattern of discrimination emerges from the effect of the state action; (2) the historical background of the decision, which may take into account any history of discrimination by the decisionmaking body; (3) the specific sequence of events leading up the challenged decision, including departures from normal procedures; and (4) the legislative or administrative history of the state action, including contemporary statements by decisionmakers.
Id. To show discriminatory effect, a plaintiff must show that the statute "discriminates between similarly situated in-state and out-of-state interests." Id. at 163. This effect can be shown if the statute "prohibit[s] the flow of interstate [services], place[s] additional costs upon them, or distinguish[es] between in-state and out-of-state companies in the retail market." Id. (quoting Exxon Corp. v. Maryland, 437 U.S. 117, 126 (1978)).
The Movants contend that any communications they had with legislators after June 12, 1995 (the date the most recent statute was...
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