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Spec’s sues TABC

Another lawsuit to watch.

The state’s largest liquor chain — Spec’s Wine, Spirits and Finer Foods — is suing the Texas Alcohol Beverage Commission for “abusive regulatory overreach” over an enforcement action that dragged on for almost two years before falling apart in administrative proceedings last year, court documents show.

The federal lawsuit, filed in Houston in late August but only recently unsealed, alleges that the TABC “wrongfully and maliciously” attempted to “extort” money from Spec’s by threatening to effectively shut the company down or by making the family-owned business fork over more than $700 million in civil penalties.

The TABC, citing the pending litigation, declined to comment.

In a stinging rebuke of the TABC last year, a pair of administrative law judges said the agency failed to prove dozens of allegations and chastised the agency for failing to disclose evidence to their own witness (and the court). The judges also called out the agency for “stacking” charges, a tactic commonly used to pressure defendants into a settlement. In the end, the judges recommended no fines be assessed against the liquor chain.

Now Spec’s is seeking an unspecified amount of money for damages that include lost profits, more than $1 million in attorneys fees and harm to its reputation. The lawsuit includes a request to impose exemplary, or punitive, damages — which are three times the amount of actual damages.

“Acting under color of law, [the TABC] threatened and pursued groundless allegations and enforcement actions,” the lawsuit says. “[The TABC] intentionally trumped up false claims in knowing violation of the law.”

The lawsuit also alleges the agency provided false testimony during the spring proceedings, which were the administrative equivalent of a trial.

The whole story is fascinating, and more than a little gross and enraging on the part of the TABC. Follow the links in the Trib story to see how all that went down last year. They’ve done a lot to clean up their operations, but stains like that don’t come out on their own. The TABC is in for a spanking from the legal system, and it’s one they have coming. The only question is how big the number will be.

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3 Comments

  1. Marc says:

    To those of us who do administrative law, this is not news. Stacking charges is common, as is regulatory overreach by giving less than full information to litigants. When you only have to prove alllegations that can lead to a license revocation by a standard that is essentially “more likely than not”, the system is ripe for abuse by the agencies. And there is very little judicial review as well given that the agencies have broad discretion and (not) substantial evidence review, they very often get away with it unless you have extremely deep pockets, like Specs.

  2. Bill Daniels says:

    I have mixed feelings about this. Specs benefits enormously from Texas’ crony capitalist liquor laws, so the fact that they are going to sue for ill treatment by the state seems just a bit ironic.

    Hey, Texas legislators…..how about repealing most of the liquor laws, keeping only those that prohibit the sale of alcohol to minors. That would pretty much end the necessity for a TABC type agency in the first place. Funny how decades of Republican leadership, with their limited government mantra haven’t fixed this.

    It shouldn’t be of any concern to the state how liquor gets sold here, as long as the proper taxes are levied to the state, and it’s not sold to underaged people.

  3. Bill Daniels says:

    *levied and remitted