24 F.4th 503
5th Cir.2022Background
- Texas law requires a package store permit to sell liquor and, since 1995, bars public corporations from owning or controlling such permits.
- Section 22.16(f) (the "Grandfather Clause") exempts corporations that (1) were public on April 28, 1995, (2) held a permit or had an application pending on that date, and (3) filed a sworn affidavit by December 31, 1995.
- Gabriel Investment Group (GIG) meets the Clause: incorporated April 13, 1995; applied for a permit April 25, 1995; permit issued August 15, 1995; affidavit filed December 1995.
- GIG operated ~45 package stores; in 2019 it entered Chapter 11 and planned a sale that could transfer shares to a non-exempt (public) corporation.
- Dispute: whether GIG’s Section 22.16(f) exemption (1) survives a sale of shares to a non-exempt corporation such that permits remain valid, and (2) allows accumulation of additional package-store permits post-sale.
- The bankruptcy court ruled against GIG; the Fifth Circuit declined to resolve the novel, close Texas-law questions and certified two questions to the Supreme Court of Texas.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a package-store permit exempted under Tex. Alco. Bev. Code § 22.16(f) remains valid if the exempt corporation sells shares to a corporation that does not qualify under § 22.16(f) | GIG: § 22.16(f) states that "this section shall not apply to a corporation" satisfying the three-prong test, so the exemption applies to the corporation and its permits remain valid after a share sale | TABC: § 22.16(a) is permit-specific and forbids permits held by entities owned/controlled by public corporations, so a sale to a public corporation invalidates the permits | Fifth Circuit did not decide on the merits and CERTIFIED the question to the Supreme Court of Texas |
| If the exemption survives such a sale, whether the exempted package store can validly acquire additional package-store permits by reason of § 22.16(f) | GIG: If the exemption remains, the corporation should retain the statutory ability to acquire additional permits under the section | TABC: Even if existing permits remain, the ban in § 22.16(a) prevents acquisition of additional permits once controlled by a non-exempt public corporation | Fifth Circuit did not decide on the merits and CERTIFIED the question to the Supreme Court of Texas |
Key Cases Cited
- In re J.J.R.S., 627 S.W.3d 211 (Tex. 2021) (principle of statutory interpretation: look first to plain and common meaning)
- Leland v. Brandal, 257 S.W.3d 204 (Tex. 2008) (statute unambiguous—plain meaning controls)
- In re Ford Motor Co., 442 S.W.3d 265 (Tex. 2014) (courts may not rewrite statutes under guise of interpretation)
- Marx v. Gen. Revenue Corp., 568 U.S. 371 (2013) (force of any negative implication depends on context)
- McMillan v. Amazon.com, Inc., 983 F.3d 194 (5th Cir. 2020) (discussing federal-to-state certification practice)
- Amazon.com, Inc. v. McMillan, 625 S.W.3d 101 (Tex. 2021) (example of Texas Supreme Court promptly resolving certified question)
- Silguero v. CSL Plasma, Inc., 907 F.3d 323 (5th Cir. 2018) (certification factors analysis)
- Ritchie v. Rupe, 443 S.W.3d 856 (Tex. 2014) (courts should not upset comprehensive statutory schemes)
- Mosley v. Tex. Health & Human Servs. Comm'n, 593 S.W.3d 250 (Tex. 2019) (legislature’s express exceptions imply silence elsewhere)
- C.I.R. v. Bosch's Estate, 387 U.S. 456 (1967) (state-law determinations by state’s highest court are controlling)