The State vs. Cuvée Coffee

Sounds catchy, doesn't it? It’s actually not far from the current suit styling used by the TABC’s lawyers (Texas Alcohol and Beverage Commission) when suit was filed against Cuvée Coffee out of Austin, Texas and its founder Mike McKim over their use of ‘crowlers’, as well as their defiance of TABC’s interpretation of the alcohol and beverage code.

Monday Cuvée’s attorney, Angel Tomasino received the Administrative Law Judge’s ruling recommendation, which was made November 17 and will be sent to the TABC’s Executive Director for review. Judge John Beeler advised in court documents that “Because TABC failed to establish Cuvée committed any violation of the Code, the ALJ recommends no action be taken against it.”

Despite this good news, both McKim and Tomasino indicated that the TABC’s attorneys have stated that exceptions to the ruling will be filed.

Before we discuss yesterday's ruling, a little background is necessary to give context to those not familiar with the suit, Cuvée’s role and what a ‘crowler’ even is. Let's start with the latter.

A crowler is essentially an on-demand device which is able to seam lids to cans one beer at a time as needed, making it a combination of a can and and a growler. The main sticking point?  Is the TABC looks at this as packaging beer the way a brewery does, a license for which Cuvée and other craft beer retailers do not have.

Last fall, the TABC chose to enforce its interpretation by forbidding any retailer who did not manufacture its own beer to immediately stop the crowler’s use. Cuvée refused to back down, disagreeing with the Commission’s interpretation of the code. McKim and Cuvée continued to use their crowler machine in defiance in order to force a judicial court ruling.

The TABC, working with State law enforcement, showed up a Cuvée and confiscated the machine. The State then brought action against McKim and Cuvée for not heeding their order to stop the crowler use. “I remember the Commission’s agents showed up at the shop, but they weren't alone” said McKim “They brought DPS [Department of Public Safety] officers with them.”

The section of the code the Commission is hanging its hat on is section § 62.0l(a)(3):

(a) The holder of a manufacturer’s license may:

(3) bottle and can beer and pack it into containers for resale in this state, regardless of whether the beer is manufactured or brewed in this state or in another state and imported into Texas

Why is this such a sticking point when retailers can fill growlers? How is a crowler different? Since it resembles the canning of 12-16 ounce beers, the TABC looks at the seaming of the lid as permanent, where as a growler top is not. Crowlers are then akin to canning according to the Commission, so why then are growlers not akin to bottling? In addition, the TABC believes the potential for bacteria and the like can infect the cans at retail outlets, thus showing their concern for public safety. Interesting, since growlers have as much chance for infection as a crowler does, if not properly rinsed as both are filled the same way. The TABC also sees the hand labeling of crowlers as bypassing the State’s label approval process and may not reflect that a brewery received label approval, because crowlers are filled from kegs.

These ironies were not lost on Administrative Law Judge John Beeler who reviewed the case. Listening to testimony from both sides, he then made his ruling recommendation, commenting in court documents that the “TABC witnesses agreed that beer could be sold to customers in just about anything except crowlers. The sale of beer in buckets, even mayonnaise jars, or even tennis ball cans, for off premise consumption is permitted.”

Beeler’s comments in the ruling went on to address the issue of retailers possibly reselling beer via crowlers without a manufacturers license “In fact, the evidence clearly established that crowlers could not be used as a canning process for sending beer into the stream of commerce. To can beer for anything other than immediate consumption by the purchaser requires that the beer have a substantial shelf life. In contrast, crowlers have a shelf life of no more than a day, just like growlers, which TABC has determined are permissible.”

Essentially, the "Administrative Court didn’t agree on each of the TABC's objections to crowlers”, said McKim who went on to say that “the TABC’s interpretation of the code, effectively making a crowler no different than packaging from a brewery, was inaccurate.”

Judge Beeler also addressed the TABC’s concern over the handwritten labels, saying “The labels Cuvée placed on the crowlers were handwritten and only provided information to the consumer as a reminder of which type of beer had been purchased.”

So where to now? Tomasino advised that “ The TABC’s Executive Director, Sherry Cook, will receive the ruling proposal from the judge. She can then sit on it as long as she wants, deciding whether to file exceptions to the ruling, at which point the judge is likely to deny the TABC again. The Executive Director then sends her recommendation to the commissioners of the TABC to make the final decision based on the Executive Director’s recommendation.” This isn't necessarily bad, but it is not good for those wanting to use crowlers, as the Executive Director has no time limit for sending her recommendation to the commissioners. This could take mere months or up to a year.

Whether this is ultimately still denied by the TABC or not, a message is clearly being sent to the TABC and legislators, a message that even the courts are seeing that the State’s liquor laws are antiquated and need updating to reflect the atmosphere of today's beverage industry. This was evident with two lawsuits brought against the TABC since 2011 in which courts ruled in favor of the breweries involved. If ultimately denied, Cuvée still has the possibility of this being decided in the State appellate courts, where the appeal of their suit against the TABC currently resides.