Texas brewers remain in fight over distribution rights with TABC appeal

Arianna Auber / American-Statesman. Austin beer maker Live Oak Brewing has been involved with a case about distribution rights that the state is now appealing.

Arianna Auber / American-Statesman. Austin beer maker Live Oak Brewing has been involved with a case about distribution rights that the state is now appealing.

Texas brewers and others in the beer industry have been winning court victories  — most recently, the fight for retailers to use crowlers — but one battle, it seems, is not over yet.

In August, a group of brewers successfully convinced a state district judge that a current Texas law wasn’t constitutional. The law, part of the bundle of 2013 legislation that otherwise advanced the interests of breweries in the state, prohibited them from receiving monetary compensation from distributors for the right to distribute their beers.

Austin-based Live Oak Brewing, along with the Dallas/Fort Worth-area’s Peticolas Brewing and Revolver Brewing, decided to sue the state in 2014 in the hopes of getting the valuable earnings they believed they could get from selling those rights. A judge ultimately sided with them.

The Texas Alcoholic Beverage Commission, however, has decided to appeal the decision. Now, the case goes to the Third Court of Appeals in Austin.

As before, the state will argue that the law was important in maintaining the three-tier system — Texas’ regulatory system dictating that makers of beer, wine and spirits create their products, distributors sell them to retailers, and those places, in turn, peddle them to the public. Brewers being able to sell their distribution rights, rather than give them away as the law dictated, would be a violation of the system.

That’s not the issue at stake at all, according to the lawyers who represented Live Oak, Peticolas and Revolver in the suit. Instead, they argue that the law unfairly hurts brewers’ ability to grow their businesses.

Institute for Justice senior attorney Matt Miller, the breweries’ attorney, said in a statement after news of TABC’s appeal that they believe the Texas courts will still side with the breweries in a state that has always cherished small business.

“The trial court correctly saw that this law was written by distributors to do one thing: enrich themselves at the expense of craft brewers,” Miller said. “That is unconstitutional, and we are confident the appellate court will agree.”

In August, when the court ruled in favor of Live Oak and the North Texas breweries, Miller noted that the Texas Constitution doesn’t allow the legislature to pass laws “that enrich one business at the expense of another.”

TABC’s public information officer, Chris Porter, declined to comment because of the pending legal matter. The commission is also expected to appeal the ruling of the crowler case and has until Friday to make that appeal.

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