United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

FILED January 28, 2022 No. 21-50322 Lyle W. Cayce Clerk

In the Matter of Gabriel Investment Group, Incorporated and Gabriel GP, Incorporated.

Debtors,

Gabriel Investment Group, Incorporated,

Appellant,

versus

Texas Alcoholic Beverage Commission,

Appellee.

Appeal from the United States District Court for the Western District of Texas USDC No. 5:20-CV-1244

Before King, Costa, and Willett, Circuit Judges. Don R. Willett, Circuit Judge: Ever since Prohibition ended in 1933, states have enacted a byzantine patchwork of rules regulating alcohol. It took a global pandemic to ease some of them. During the early coronavirus lockdown, when on-site dining was off limits, the renowned marquee outside El Arroyo, an Austin Tex-Mex hotspot, posted this playful plea: “Now would be a good time to legalize Case: 21-50322 Document: 00516184627 Page: 2 Date Filed: 01/28/2022

No. 21-50322

drive-up margaritas.” The Texas Legislature obliged, and alcohol-to-go is now legal in the Lone Star State.1 More entrenched booze rules, however, remain on the books. For example, retail liquor store sales remain strictly regulated in Texas. One bright-line restriction is that retailers must hold a “package store permit” to sell liquor at retail. And since 1995, Texas law has banned publicly traded corporations from obtaining such a permit. As with many Texas liquor laws, however, there’s a carveout for preferred players. Under certain circumstances, a package store organized as a public corporation can hold the required permit. Today’s dispute poses a spinoff question: What happens to the permit if an exempt corporation is sold to a non-exempt corporation? For the reasons discussed below, we CERTIFY to the Supreme Court of Texas. I A Texas regulates retail alcohol sales through the Texas Alcoholic Beverage Code.2 And the Code does not treat all sales the same. Relevant here, it subjects sales of “liquor”—an “alcoholic beverage, other than a malt beverage, containing alcohol in excess of five percent by volume, unless otherwise indicated”3—to special rules. Chief among them: liquor retailers

1 See Act of May 3, 2021, ch. 6, sec. 5, § 32.155, 2021 Tex. Gen. Laws ___. 2 See Tex. Alco. Bev. Code § 1.06 (“Unless otherwise specifically provided by the terms of this code, the . . . sale . . . of alcoholic beverages shall be governed exclusively by the provisions of this code.”). 3 Id. § 1.04(5).

2 Case: 21-50322 Document: 00516184627 Page: 3 Date Filed: 01/28/2022

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must hold a “package store permit.”4 And not all retailers are allowed to hold one. Before 1995, the door for public corporations to hold package sto