Summary of Judge's Ruling in Authentic Beverage Company Inc. v. TABC

Updated April 23, 2012

Authentic Beverage Company Inc. v. TABC Summary Judgment

In 2010, beer distributor Authentic Beverage Co. filed a federal lawsuit against TABC alleging violations of rights under the 1st and 14th Amendments and the Commerce Clause.

In October 2011, attorneys for the plaintiffs and the Office of the Attorney General on behalf of TABC filed cross-motions for summary judgment. Judge Sam Sparks issued a ruling on December 19, 2011, in favor of the plaintiffs on the first amendment free speech issues and in favor of the state on the 14th amendment equal protection and commerce clause issues.

The judge's ruling means that:

• A member of the manufacturing or wholesale tier may advertise retail locations where their products may be purchased. (TABC still has the right to prevent undue collusion between manufacturers/wholesalers and retailers and ensure there is no financial remuneration, incentive, inducement or compensation between manufacturers/wholesalers and retailers.)
• A member of the manufacturing or wholesale tier may now refer to alcohol content in advertisements of their products. In addition, manufacturers and wholesalers are no longer prohibited by state law from using words that describe product strength on the label or in advertisement (e.g., "strong," "full strength," etc.).
• Brewers will no longer have to use the terms "beer" and "ale" on their labels based on the alcohol content of their products. Instead, they can use these terms as they are commonly used in the industry, i.e., to describe the process used to make the product. Specifically, Judge Sparks said that "nothing prevents Texas or TABC from passing appropriate regulations requiring producers to include accurate statements about the alcohol content of their products in labeling or advertising; absent a constitutionally sound justification, however, Texas may not dictate the exact words producers must use to do so."

In January 2012, TABC issued a marketing practice bulletin to inform the industry of interim guidelines, pending new rules to replace the ones that were overturned by the court. Since January, TABC has engaged the public in the rulemaking process. At the agency's March 27th Commission meeting, the Commission voted on a set of proposed rules that abide by the judge's ruling. Specifically, the interim guidelines and the proposed rules allow manufacturers to designate high or low alcohol content on a malt beverage label using alcohol by volume or by using the terms "beer," "ale," or "malt liquor" as defined in the Alcoholic Beverage Code. The rules will be posted for public comment and are scheduled to be adopted at the Commission meeting in May 2012.