November 29

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SCOTUS Denies Cert. In Texas Alcohol Permit Rule Case Enjoining Requiring a Year’s Residency for Retail Permit

Residency can be a requirement, but setting an additional qualification mandating a set duration of residency violates the 21st Amendment.

For those of you following the ups and downs of the durational-residency-requirements-for-a-Texas-alcohol-permit saga, it looks like the 5th Circuit opinion upholding the injunction against enforcing Texas’ one-year residency requirement is going to stand.  Your constitutional rights include not having to live in the state for a year before you can get a license to sell alcohol.

A brief history:  About 25 years ago the Texas Alcoholic Beverage Commission refused an alcohol permit to some purchasers of a nightclub who wanted to serve alcohol – retailers.  The Commission denied the permit because the purchasers didn’t meet a residency requirement under Texas law that mandated three year’s worth of residency within the state before anyone could be issued a retail permit (the statute was later amended to require one year’s residency).  The purchaser’s appealed the decision arguing that the durational requirement was a protectionist provision that was constitutionally invalid, and back then, the 5th Circuit court agreed and enjoined the enforcement of the statute.  Since then, the Commission has been barred from enforcing the one-year residency requirement.

In 2014, the Texas Packaged Stores Association challenged the injunction and after the case was dismissed by the district court on jurisdictional grounds, the 5th Circuit upheld the dismissal on the merits finding that the 21st Amendment may allow a residency requirement for retailers, but it doesn’t allow for the duration requirement.  Specifically:

“Because of the 21st Amendment, states may impose a physical residency requirement on retailers and wholesalers of alcoholic beverages despite the fact that the residency requirements favor in-state over out-of-state businesses,” … “The 21st Amendment does not, however, authorize states to impose a durational-residency requirement on the owners of alcoholic beverage retailers and wholesalers.”

The Association petitioned the Supreme Court for review and SCOTUS denied cert yesterday which means the injunction barring application of the 1-year residency requirement remains in effect.

Quite frankly, there’s no surprise that Cert was denied given that the question presented by the petition, grossly misstated the 5th Circuit’s holding and relevant 8th and 5th Circuit law in a patent attempt to gin up a circuit split where none exists.  The petition said that the 5th Circuit had ruled that residency requirements weren’t lawful… but that’s not what the opinion held.  The opinion held that residency requirements were lawful but that durational standards went beyond the authority granted by the 21st amendment for residency requirements.  The petition argued that the 8th circuit had ruled in a case – Southern Wine and Spirits v. Division of Alcohol and Tobacco Control, (read our article on it here) that a three-year requirement was upheld – but that’s wrong.  In fact, in a footnote in the Southern Wine decision, the 8th Circuit explicitly rejected considering to distinguish the three-year duration issue from the residency requirement noting that the matter wasn’t considered and was not pertinent to the decision:

“Southern Wine emphasized at oral argument that even if some residency requirements may be constitutional, Missouri’s durational residency requirement of three years does not advance any legitimate purpose. See Mo.Rev.Stat. § 311.060.3. This argument was not developed in the district court or the opening brief on appeal, and it is therefore waived. … In any event, a declaration that Missouri may require officers, directors, and a super-majority of shareholders of wholesalers to demonstrate current residency, but not three-year residency, would not redress Southern Wine’s alleged injury, because Southern Wine does not claim to be a current resident within the meaning of the statute.”

There’s a simple lesson and a larger lesson here.  Simply –  SCOTUS is going to know that what you’ve said is incorrect… and will likely deny your petition on account of it.  Largely, even this brief resorted to the unfounded and telling dicta from Bacchus Imports  about the “perceived evils of an unrestricted traffic in liquor” as a justification for upholding these restrictive statutes – statutes that have no empirical foundation and which are the result of age-old prejudices regarding the treatment of alcohol – in opposition to a rational system based in scientific and progressive thought that would eliminate this archaic regime.

[stepping off my soapbox]