Texas Appeals Court Holds House-Brand Beer Labels Not Protected Commercial Speech

A Texas appeals court has held that Mark Anthony Brewing cannot produce and label a house-brand beer for TGI Friday’s restaurants because state law prohibits “overlapping” relationships among alcohol manufacturers, distributors and retailers. Texas Alcoholic Beverage Comm’n v. Mark Anthony Brewing, Inc., No. 16-0039 (Texas Ct. App., entered October 13, 2017). The Texas Alcoholic Beverage Commission (TABC) rejected Mark Anthony Brewing’s application for approval of the beer labels, which it created as part of a licensing agreement with TGI Friday’s, on the grounds that Texas’ “tied-house” statutes prohibit such business relationships. Specifically, TABC found, the agreement violated the part of the administrative code providing that “[n]o application for a label shall be approved which indicates by any statement, design, device, or representation that the malt beverage is a special or private brand brewed or bottled for, or that includes the name, trade name, or trademark of any retailer permittee or licensee.”

Arguing that the labels were commercial free speech, Mark Anthony Brewing filed a declaratory judgment action to determine the validity and constitutionality of the state law. A district court ruled in the brewer’s favor, concluding that the labels related only to lawful activity and were protected under the First Amendment. The appeals court reversed, holding that the speech was unlawful because it allowed TGI Friday’s the oversight and control of Mark Anthony Brewing’s product, which is expressly barred by the Texas law and therefore not subject to constitutional protection.