No. 03-16-00039-CV

In the Third Court of Appeals 

Austin, Texas 

______________________________ 

TEXAS ALCOHOLIC BEVERAGE COMMISSION, 

Appellant, 

v.

MARK ANTHONY BREWING, INC., 

Appellee. 

______________________________ 

On Appeal from the 345th Judicial District Court of Travis County, Texas 

______________________________ 

REPLY BRIEF OF APPELLANT

TEXAS ALCOHOLIC BEVERAGE COMMISSION

______________________________ 

KEN PAXTON NICHOLE BUNKER-HENDERSON 

Attorney General of Texas Chief, Administrative Law Division 

JEFFREY C. MATEER KAREN L. WATKINS 

First Assistant Attorney General Assistant Attorney General 

 State Bar No. 20927425 

BRANTLEY STARR P. O. Box 12548 

Deputy First Assistant Attorney General Austin, Texas 78711-2548 

 Karen.Watkins@oag.texas.gov 

JAMES E. DAVIS Telephone: (512) 475-4300 

Deputy Attorney General for Litigation Facsimile: (512) 320-0167 

 

ORAL ARGUMENT REQUESTED

ACCEPTED

03-16-00039-CV

14434525

THIRD COURT OF APPEALS

AUSTIN, TEXAS

12/22/2016 4:17:57 PM

JEFFREY D. KYLE

CLERK

 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 12/22/2016 4:17:57 PM JEFFREY D. KYLE Clerk
ii

TABLE OF CONTENTS

Table of Contents................................................................................................................... ii

Index of Authorities.............................................................................................................. iv

Summary of the Argument.................................................................................................... 1

Argument And Authorities ................................................................................................... 3

I. The trial court erred by allowing Mark Anthony to assert its First Amendment

challenge to section 102.01 (h) for the first time after trial ................................... 4

A. Section 102.01(h) regulates conduct, not speech......................................... 4

B. Mark Anthony’s arguments on appeal demonstrate how TABC was 

prejudiced by the trial court’s error............................................................... 6

II. The First Amendment does not protect Mark Anthony’s use of TGIF’s name 

and marks because that speech relates to illegal activity. ....................................... 7

A. The First Amendment does not protect all speech about “lawful 

products,” as Mark Anthony suggests.......................................................... 8

B. Mark Anthony’s Amended Licensing Agreement with TGIF-MN 

violates section 102.01(h) ............................................................................. 11

1. Section 102.01 (h) prohibits relationships that allow cross-tier 

control of a permittee’s “business or interests............................... 11

2. The Amended Licensing Agreement allows TGIF to direct various

 aspects of Mark Anthony’s business................................................ 15

3. Mark Anthony’s arguments that section 102.01(h) does not mean

 what it says are unavailing .................................................................. 17

III. Even if Mark Anthony’s labels had been entitled to First Amendment 

protection, Texas’ “thing of value” statutes and rules are constitutional .......... 23

A. Texas has a significant interest in maintaining its three-tier system for 

more than the protection of retailer independence................................... 24
iii

B. Prohibiting a manufacturer from using a retailer's name on its products 

directly advances Texas' interest in maintaining separation between the 

tiers.................................................................................................................. 25

C. There is a good fit between the thing-of-value statutes and rules and 

preservation of the three-tier system .......................................................... 26

IV. Even If The Proposed Labels Had Been Protected Commercial Speech, the 

Challenged Statutes And Rules Do Not Violate The First Amendment........... 28

Conclusion and Prayer......................................................................................................... 28

Certificate of Compliance.................................................................................................... 30

Certificate of Service ............................................................................................................ 31
iv

INDEX OF AUTHORITIES

CASES

44 Liquormart, Inc. v. Rhode Island, 

517 U.S. 484 n.4 (1996)........................................................................................................ 21

Cadena Comercial USA Corp. v. Tex. Alcoholic Beverage Comm’n, 

449 S.W.3d 154 (Tex. App.—Austin 2014, pet. granted)..........................................13, 21

Central Hudson Gas & Elec. v. Public Service Commission,

447 U.S. 557 (1980). .....................................................................................................2, 8, 24

Entergy Gulf States, Inc. v. Summers,

282 S.W.3d 433 (Tex. 2009) ................................................................................................ 12

Ford Motor Co. v. Texas Department of Tranportation,

264 F.3d 493 (5th) Cir. 2001) ...........................................................................................9, 10

Giboney v. Empire Storage & Ice Co., 

336 U.S. 490 (1949)........................................................................................................18, 19

In re M.M.M., 

428 S.W.3d 389 (Tex. App.—Houston [14th Dist.] 2014, pet. denied) ........................ 24

In re M.N., 

262 S.W.3d 799, 802 (Tex. 2008)........................................................................................ 12

K Mart Corp. v. Cartier, Inc., 

485 U.S. 176 (1988).............................................................................................................. 19

Neel v. Texas Liquor Control Board, 

259 S.W.2d 312 (Tex. App.—Austin 1953, writ ref’d, n.r.e.)....................................21, 22

Nootsie, Ltd. v. Williamson Cty. Appraisal Dist., 

925 S.W.2d 659 (Tex. 1996) ................................................................................................ 12
v

Pittsburgh Press Co. v. Commission on Human Relations, 

413 U.S. 376 (1973)..........................................................................................................9, 10

Retail Digital Network, LLC v. Appellsmith, 

810 F.3d 638 (9th Cir, 2016)................................................................................................. 24

Retail Digital Network, LLC v. Gorsuch, 

No. 13-56069, 2016 WL 6790810 (9th Cir. Nov. 16, 2016)............................................ 24

Stockton v. Offenbach, 

336 S.W.3d 610 (Tex. 2011) ................................................................................................ 18

TGS-NOPEC Geophysical Co. v. Combs, 

340 S.W.3d 432 (Tex. 2011) ................................................................................................ 12

TIC Energy and Chem., Inc. v. Martin, 

498 S.W.3d 68 (Tex. 2016) .................................................................................................. 12

STATUTES

Tex. Alco. Bev. Code § 1.03................................................................................................ 13

Tex. Alco. Bev. Code § 5.31(b)(1)...................................................................................... 30

Tex. Alco. Bev. Code § 5.31(b)(2)...................................................................................... 30

Tex. Alco. Bev. Code § 5.31(b)3) 30

Tex. Alco. Bev. Code § 6.03(i)............................................................................................ 21

Tex. Alco. Bev. Code § 102.01 (a)...................................................................................... 31

Tex. Alco. Bev. Code § 102.01 (b)...................................................................................... 31

Tex. Alco. Bev. Code § 102.01(h)................................................................................passim

Tex. Alco. Bev. Code § 102.07(a)....................................................................................... 31
vi

Tex. Alco. Bev. Code § 1.04(11)......................................................................................... 13

Tex. Gov’t Code § 311.011(a)............................................................................................. 16

Tex. Gov’t Code § 311.023(5)............................................................................................. 12

RULES

16 Tex. Admin. Code § 45.110 (c)(3)................................................................................... 4

Commission’s Rules 45.110(c)(7) ....................................................................................... 23

Commission’s Rules 45.82(a)(7).......................................................................................... 23

Commission’s Rules 45.110(c)(3) ....................................................................................... 23

Tex. R. App. P. 33.1(a)(1).................................................................................................... 24
vii

OTHER AUTHORITIES

Black’s Law Dictionary 239 (10th ed. 2014) ..................................................................... 14

DICTIONARY.COM, http://www.dictionary.com/browse/manage?s=t 

(last visited Dec. 16, 2016)......................................................................................13

No. 03-16-00039-CV

In the Third Court of Appeals

Austin, Texas

______________________________

TEXAS ALCOHOLIC BEVERAGE COMMISSION,

Appellant,

v.

MARK ANTHONY BREWING, INC.,

Appellee. 

______________________________

On Appeal from the 345th Judicial District Court of Travis County, Texas

______________________________

REPLY BRIEF OF APPELLANT

TEXAS ALCOHOLIC BEVERAGE COMMISSION

______________________________

TO THE HONORABLE JUSTICES OF THE THIRD COURT OF APPEALS:

COMES NOW Appellant Texas Alcoholic Beverage Commission, by and 

through its attorney of record, Ken Paxton, Attorney General of Texas, and the 

undersigned assistant attorney general, and replies to the Brief of Appellee Mark 

Anthony Brewing, Inc., (hereafter “MAB Brief”) in this case.

SUMMARY OF THE ARGUMENT

During the trial of this case, Mark Anthony never alleged that, if Texas Alcoholic 

Beverage Code section 102.01(h) must be read to prevent manufacturers from licensing 
2

intellectual property also used by retailers, it amounts to a prior restraint on commercial 

speech rights.

1

 Because Mark Anthony made that argument for the first time after trial, 

TABC was unaware of any need to adduce evidence of the significant governmental 

interests section 102.01(h) serves, the problems the section was intended to prevent, or 

the degree to which the statute ameliorates those problems. The trial court erred by 

tacitly concluding that the First Amendment challenges Mark Anthony had asserted 

included a challenge to section 102.01(h).

Section 102.01(h) is relevant for other reasons. It prevents a permittee in one 

tier from agreeing to allow a permittee in a different tier any degree of control over its 

business, even if the control is indirect. Because Mark Anthony’s Amended Licensing 

Agreement with TGIF-MN allows a retailer to exercise indirect control over many

aspects of Mark Anthony’s business, the Agreement violates section 102.01(h). Mark 

Anthony’s proposed use of the TGIF name and trademarks on its labels is, therefore, 

speech related to an illegal activity that the First Amendment does not protect.

However, even if the First Amendment had protected Mark Anthony’s proposed 

speech, the statutes and rules Mark Anthony timely challenged satisfy all of the 

requirements of Central Hudson Gas & Elec. v. Public Service Commission. 447 U.S. 557 

(1980). The statutes directly advance Texas’ interests in maintaining separation of the 

tiers of the alcoholic beverage industry and preventing the creation of tied houses. 

 

1 Mark Anthony also did not allege that section 102.01(h) unconstitutionally impairs its contractual 

rights. SCR 3-18. 
3

Prohibiting a manufacturer’s use of a retailer’s name on its products removes the 

manufacturer’s incentive to enter into an agreement that, at least according to Mark 

Anthony’s expert, would almost certainly involve impermissible control of a member 

of one tier by a member of another. The alternatives that Mark Anthony suggests are 

not true alternatives. One rests on the erroneous assumption that TABC would know 

about all agreements that every industry member signed. The other requires creation of 

a tied house before TABC can act. 

ARGUMENT AND AUTHORITIES

The question that lies at the heart of this case is whether, by entering into an 

agreement with the affiliate of retailer, a manufacturer can evade the barriers that 

otherwise prevent it from beginning to vertically integrate with a retailer. TABC 

respectfully submits that it cannot. Mark Anthony, a manufacturer, wants to put the 

tradename and trademarks used by a retailer, TGI FRiDAY’S on the labels for its 

product. It acquired the right to use that name and those marks by entering into an 

agreement that allows TGIF to control, albeit indirectly, various aspects of Mark 

Anthony’s business. Because Texas prohibits that type of control, the First 

Amendment does not protect Mark Anthony’s proposed speech. However, even if the 

labels had contained protected speech, the statutes and rules that Mark Anthony timely 

challenged are a good fit to further the significant interest the State of Texas has in 

preventing the creation of tied houses.
4

I. The trial court erred by allowing Mark Anthony to assert its First 

Amendment challenge to section 102.01 (h) for the first time after trial.

A. Section 102.01(h) regulates conduct, not speech.

Mark Anthony argues that it timely asserted a constitutional challenge to section 

102.01(h) because: (a) Mark Anthony sought a declaratory judgment that “any other 

statutory provisions, if they must be read to prohibit such labels, are unconstitutional 

under the First Amendment,” (emphasis added); and (b) TABC argued that the labels 

were illegal speech because they violated Rule 45.110(c)(3). MAB Brief at 67-68. 

Neither argument excuses the trial court’s error.

First, TABC does not contend that the labels are illegal speech because they 

violate Rule 45.110(c)(3).

2

 Instead, TABC contends that the labels are not entitled to 

First Amendment protection because they relate to activity that violates section 

102.01(h), i.e., a manufacturer’s agreeing to allow a retailer control over any aspect of 

the manufacturer’s business. Appellant’s Brief at 10. 

Second, Mark Anthony correctly reports that it sought a declaration of 

unconstitutionality of any statute that must be read to prohibit the proposed labels. 

However, TABC never asked the Court to read section 102.01(h) to prohibit the labels

because section 102.01(h) regulates conduct, not speech. The section provides that:

[n]o permittee may enter with a permittee of a different level or with 

another person or legal entity into a conspiracy or agreement to control 

or manage, financially or administratively, directly or indirectly, in any 

 

2

 Of course, the labels do violate Rule 45.110(c)(3) because they result from Mark Anthony’s having 

entered into a prohibited agreement with TGIF-MN. 16 Tex. Admin. Code § 45.110(c)(3).
5

form or degree, the business or interests of a permittee of a different level.

Tex. Alco. Bev. Code § 102.01(h). TABC contended that, by entering into an agreement 

that allowed TGIF indirect control over aspects of its business, Mark Anthony violated 

section 102.01(h). Because the speech on the labels related to that illegal conduct,

TABC argued that the labels were not entitled to First Amendment protection. 2 RR 

30.

Mark Anthony tries to transform section 102.01(h)’s prohibition on conduct into 

a restriction on speech with its expert’s testimony that every trademark licensing 

agreement “has to have” quality control provisions.3 MAB Brief at 60. Mark Anthony’s

tacit argument is that: (a) because all trademark licensing agreements will contain quality 

control provisions,4(b) TABC’s contention that section 102.01(h) prohibits this 

Licensing Agreement is the equivalent of a contention that section 102.01(h) prohibits 

all trademark licensing agreements, and, (c) therefore, section 102.01(h) amounts to an

improper restraint on speech. There are a number of problems with this argument. 

First, Mark Anthony cannot transform section 102.01(h) into a restraint on 

speech by offering expert witness testimony about licensing agreements and the 

 

3

 Although Mark Anthony characterizes all of the Amended Agreement’s control provisions as 

“quality control” measures, the Agreement allows control over more of the business than the product 

intended to bear the TGIF name and trademarks. See Section II. B. 1., below.

4

 Mark Anthony incorrectly states, on page 20 of its Brief, that “TABC’s marketing expert and its 

trademark license agreement expert” testified that quality control provisions are standard in trademark 

licensing agreements. Emphasis added. The individuals who so testified were Mark Anthony’s 

experts.
6

requirements of trademark law. Second, because TGIF-MN owned the name and 

marks that Mark Anthony proposed to use on its labels, Mark Anthony had no right to 

engage in its proposed speech before licensing the intellectual property from TGIFMN. Section 102.01(h) did not prohibit Mark Anthony from licensing intellectual 

property to put on its labels, but it did prohibit Mark Anthony from entering into an 

agreement that allowed a member of another tier to control any part of its business, 

even indirectly. 

Because Mark Anthony never alleged that section 102.01(h) was unconstitutional 

and TABC never contended that section 102.01(h) must be read to prohibit Mark 

Anthony’s labels, the trial court erred by tacitly concluding that Mark Anthony had 

timely challenged the constitutionality of section 102.01(h). 

B. Mark Anthony’s arguments on appeal demonstrate how TABC was 

prejudiced by the trial court’s error. 

Mark Anthony’s brief underscores the prejudice TABC suffered as a result of the 

trial court’s error. For example, Mark Anthony contends that TABC never adduced 

evidence of the harm section 102.01(h) was intended to prevent. MAB Brief at 18-21, 

and 70-71. Mark Anthony also observes that a state must prove that a “‘preventative 

measure’ restricting commercial speech”

5 will contribute to solving the serious 

problem it was intended to address and complains that TABC offered no such evidence. 

 

5 Again, section 102.01(h) does not even purport to regulate speech; instead, it expressly governs the 

conduct of TABC’s permittees.
7

MAB Brief at 22 (emphasis added). The Court should not blame TABC for failing to 

adduce evidence on a claim Mark Anthony did not assert. 

From the beginning of trial through closing arguments, Mark Anthony

mentioned section 102.01(h) only once: to assert that TABC’s argument that the 

Licensing Agreement violated section 102.01(h) was not before the court. See e.g., CR 

57. Nothing in the “decision tree” Mark Anthony submitted to the trial court includes 

a mention of the constitutionality of section 102.01(h); in fact, the only statutes it 

discussed were the “thing of value” statutes. Id. That litigation stance and a request 

that the trial court declare unconstitutional “any other statutory provisions, if they must 

be read to prohibit such labels” do not equate to an allegation that section 102.01(h) is 

an unconstitutional restraint on Mark Anthony’s commercial speech rights. Because 

Mark Anthony did not timely challenge the constitutionality of section 102.01(h), the 

trial court erred by considering the claim.

II. The First Amendment does not protect Mark Anthony’s use of TGIF’s

name and marks because that speech relates to illegal activity. 

Although the First Amendment does not protect commercial speech related to 

illegal activity, obviating any need for an analysis under Central Hudson, Mark Anthony 

addresses the legality of its proposed speech only at the end of its brief.6 MAB Brief at 

66-73. There, it argues only that: (1) speech concerns “lawful activity” if it is speech 

 

6 Mark Anthony includes some contentions in its Summary of the Argument that it advances nowhere 

else in the Appellees’ Brief. TABC will address those arguments in this section.
8

“regarding lawful products,” and (2) neither the United States Supreme Court’s opinion 

in Pittsburgh Press Co. v. Pittsburgh Commission on Human Relations, nor the Fifth Circuit’s 

opinion in Ford Motor Co. v. Texas Department of Transportation, apply to this case. Neither 

argument is sound. Furthermore, both fail to analyze Mark Anthony’s relationship with 

TGIF-MN and its affiliates in light of the broad prohibition on cross-tier control and 

management in section 102.01(h).

A. The First Amendment does not protect all speech about “lawful 

products,” as Mark Anthony suggests.

Mark Anthony argues that speech concerns “lawful activity” if it is speech 

“regarding lawful products.” MAB Brief at 68. From this statement, apparently the 

Court is to infer that all speech regarding “lawful products” is protected, regardless of 

the lawfulness of the activities surrounding the “lawful products.” The suggested 

inference is NOT the law.

First, as Mark Anthony acknowledges, the first step in the Central Hudson analysis 

is to determine whether the speech at issue is “related to unlawful activity.” MAB Brief

at 12 and 24 (emphasis added), citing Central Hudson Gas & Elec. Corp. v. Public Serv. 

Comm’n, 447 U.S. 557, 564 (1980). As the United States Supreme Court there 

recognized, “there can be no constitutional objection to the suppression of commercial 

messages that do not accurately inform the public about lawful activity.” Central Hudson, 

447 U.S. at 563. In other words, First Amendment protection does not extend to 

“commercial speech related to illegal activity.” Id. at 563-64.
9

Second, the two cited cases are directly on point. In Pittsburgh Press Co. v. Pittsburgh 

Commission on Human Relations, 413 U.S. 376 (1973), the United States Supreme Court 

considered whether the city of Pittsburgh’s ordinance “forbidding newspapers to carry 

‘help-wanted’ advertisements in sex-designated columns” violated the First and 

Fourteenth Amendments. Id. at 378. The Court held that it did not, noting that 

[d]iscrimination in employment is not only commercial activity, it is illegal 

commercial activity under the Ordinance. We have no doubt that a 

newspaper constitutionally could be forbidden to publish a want ad 

proposing a sale of narcotics or soliciting prostitutes. Nor would the result 

be different if the nature of the transaction were indicated by placement 

under columns captioned “Narcotics for Sale” and “Prostitutes Wanted” 

rather than stated within the four corners of the advertisement.

Id. at 388 (footnote omitted). The Court also observed that, while employment 

discrimination might be less overtly illegal than narcotics sales and prostitution, the 

same principle should be applied. Id. In other words, an advertisement of illegal 

conduct is not the type of commercial speech entitled to the protection of the First 

Amendment.

The Fifth Circuit more recently considered whether the State of Texas could 

regulate economic conduct in a way that prevented an entity from publishing 

commercial speech. In Ford Motor Co. v. Texas Department of Transportation, 264 F.3d 493 

(5th Cir. 2001), the court considered Ford’s contention that statutes prohibiting it from 

selling vehicles directly to consumers through its website violated its commercial speech 

rights. Id. at 505. The court recognized that the challenged statute did not regulate 

speech, but instead “prohibit[ed] manufacturers from retailing motor vehicles to 
10

consumers.” Id. at 506. The ban on Ford’s advertising retail sales of vehicles was, in 

the court’s view, “an accompanying result” of the prohibition on manufacturer’s 

conduct, i.e. retail sales of vehicles. Id. The court rejected the notion that a state was 

prohibited from regulating commercial conduct if, as a result, the speech of the 

regulated entity was in some manner restricted:

The [United States] Supreme Court has made clear that “[a]ny First 

Amendment interest which might be served by advertising an ordinary 

commercial proposal and which might arguably outweigh the 

governmental interest supporting the regulation is altogether absent when 

the commercial activity itself is illegal and the restriction on advertising is 

incidental to a valid limitation on economic activity. Pittsburgh Press Co. v. 

Pittsburgh Commission on Human Relations, 413 U.S. 376, 389, 93 S.Ct. 2553, 

2561, 37 L.Ed.2d 669 (1973).

Id. at 506. The court concluded that Ford’s website advertisement was part of an 

integrated course of conduct that violated Texas law and that, as a result, Ford’s speech 

did not concern a lawful activity. Consequently, its First Amendment challenge to the 

statute prohibiting it from retailing vehicles to consumers failed. Id.

Notwithstanding these authorities, Mark Anthony argues that its intended use of 

the TGI FRiDAY’s name and marks on its labels is entitled to First Amendment 

protection because “the product and selling it are perfectly lawful.” MAB Brief at 69. 

But Mark Anthony’s proposed speech cannot be viewed in isolation. It is part of a 

single and integrated course of conduct that violates Texas Alcoholic Beverage Code 

§ 102.01(h). Therefore, as was the case in Ford Motor Co., because section 102.01(h)

prohibits conduct, the section may also, as a necessary corollary, have the ancillary effect 
11

of preventing speech advertising that illegal conduct.7

B. Mark Anthony’s Amended Licensing Agreement with TGIF-MN 

violates section 102.01(h).

Because the United States Supreme Court has held that a state may prohibit 

certain conduct, as well as speech related to that prohibited conduct, Mark Anthony 

had the burden to establish that section 102.01(h) did not prohibit it from entering into 

its licensing agreement. Mark Anthony failed to carry this burden. The evidence 

actually establishes conclusively that Mark Anthony’s agreements were unlawful under 

section 102.01(h). As a result, Mark Anthony’s proposed speech is not protected by 

the First Amendment. 

1. Section 102.01 (h) prohibits relationships that allow cross-tier 

control of a permittee’s “business or interests.”

Mark Anthony argues that section 102.01 (h) could not possibly have been 

intended to prevent members of the alcoholic beverage industry from entering into 

trademark licensing agreements because all such agreements necessarily allow the 

licensor to control the quality of the product created by the licensee. MAB Brief at 64. 

The language the Legislature chose to use in section 102.01(h) demonstrates that Mark 

Anthony’s argument is simply wrong.

a. Rules of statutory construction. Proper construction of 

 

7

 Although Mark Anthony assures this Court that Central Hudson “and other First Amendment 

authorities do not allow a state to use a statute governing conduct to render legal commercial speech 

illegal,” MAB Brief at 22, it cites no such authorities. If Mark Anthony does provide the Court any 

such authorities, TABC requests an opportunity to respond.
12

section 102.01(h) is a question of law to be reviewed de novo. TIC Energy and Chem., Inc. 

v. Martin, 498 S.W.3d 68, 74 (Tex. 2016). The goal in construing any statute is to give 

effect to the Legislature’s intent in enacting it. TGS-NOPEC Geophysical Co. v. Combs, 

340 S.W.3d 432, 439 (Tex. 2011). To discern the Legislature’s intent, one begins with 

the statute’s words. Id. Undefined words are given their ordinary and commonly 

understood meanings unless it is apparent from the context of the statute that they have 

different or more precise definitions. Id. Words and phrases must be read in context 

and construed according to the rules of grammar and common usage. Tex. Gov’t Code 

§ 311.011(a). Legislative intent is found in the words used; words not included are 

presumed to have been omitted purposefully. In re M.N., 262 S.W.3d 799, 802 (Tex. 

2008). If the text of the statute is clear and unambiguous, it is determinative of 

legislative intent. Martin, 498 S.W.3d at 75.

In construing a statute, courts must presume that the Legislature intended the 

statute to comply with the Texas and United States constitutions and to favor the public 

interest over any private interest. Tex. Gov’t Code § 311.021(1) and (5). They must 

also enforce the statute as written and “refrain from rewriting [the] text lawmakers 

chose.” Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 443 (Tex. 2009). However, 

even if a statute is not ambiguous on its face, a court may consider the consequences 

of particular constructions. Tex. Gov’t Code § 311.023(5). Interpretations of the 

statute that defeat the purpose of the legislation must be rejected as long as another 

reasonable interpretation of the statute exists. Nootsie, Ltd. v. Williamson Cty. Appraisal 
13

Dist., 925 S.W.2d 659, 662 (Tex. 1996). Finally, and importantly in this case, the 

Legislature has directed that the Texas Alcoholic Beverage Code is to be liberally 

construed to protect the welfare, health, peace, temperance, and safety of the people of 

the State. Tex. Alco. Bev. Code § 1.03.

b. Application of the rules of construction to section 

102.01. Code section 102.01(h) provides:

No permittee may enter with a permittee of a different level or with 

another person or legal entity into a conspiracy or agreement to control 

or manage, financially or administratively, directly or indirectly, in any 

form or degree, the business or interests of a permittee of a different level.

Tex. Alco. Bev. Code § 102.01(h). The only Code-defined term used in section 

102.01(h) is “permittee,” which the Code provides is a “person who is the holder of a 

permit provided for in this code, or an agent, servant, or employee of that person.” 

Tex. Alco. Bev. Code § 1.04(11). Because that is the only defined term, all of the other 

words in the section have their commonly understood and ordinary meanings. 

A person “controls” something if she exercises authority over it or directs or 

regulates it. THE AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE 290 

(10th ed. 1981). She manages something if she “handle[s], direct[s], govern[s], or 

control[s it] in action or use.” Manage Definition, DICTIONARY.COM, 

http://www.dictionary.com/browse/manage?s=t (last visited Dec. 16, 2016). 

This Court has had occasion to consider the meaning of the terms “business” 

and “interest” as those terms are used in Chapter 102 of the Code. Cadena Comercial 
14

USA Corp. v. Tex. Alcoholic Beverage Comm’n, 449 S.W.3d 154, 164-171 (Tex. App.—

Austin 2014, pet. granted). The Court observed that “Chapter 102’s stated objective of 

achieving strict separation between the alcoholic beverage tiers was crystal clear,” id. at 

166, and that this goal informed the Court’s analysis. After noting that the term 

“interest” has a plethora of meanings and is used in many of the Code’s provisions, the 

Court concluded that, as used in Code section 102.07(a)(1), the term “interest” “broadly 

encompasses any commercial or economic interest that provides a stake in the financial 

performance of an entity engaged in the manufacture, distribution, or sale of alcoholic 

beverages.” Id. at 166. In addition, the Court noted that the term “‘business’ generally 

refers to ‘[a] commercial enterprise carried on for profit; a particular occupation or 

employment habitually engaged in for livelihood or gain.’” Id. at 169, citing BLACK’S 

LAW DICTIONARY 239 (10th ed. 2014). The Court thus held that, in its ordinary 

meaning and as used in the Code, the term “business” is distinct from – and broader 

than – the specific assets held by a business. Id. 

Section 102.01(h)’s plain language thus reveals an intent to prohibit a permittee 

from one tier from entering into any agreement with anyone that would allow a permittee

from a different tier to govern or regulate any aspect of the work of the first permittee

in any way, to any degree, in any form. Interpreting section 102.01(h) to have the 

broadest possible reach is consistent with both the language the Legislature chose and 

Chapter 102’s goal of maintaining separation between the tiers of the alcoholic beverage 

industry. Thus, section 102.01(h) does more than prohibit a member of the retail tier 
15

from directly or indirectly owning a controlling interest in Mark Anthony. It prohibits 

that retailer from directly or indirectly controlling or managing any aspect of Mark 

Anthony’s business – the business of manufacturing alcoholic beverages for sale – in 

any form or degree. 

2. The Amended Licensing Agreement allows TGIF to direct various aspects of 

Mark Anthony’s business.

Mark Anthony asserts that the Amended Licensing Agreement “does not give 

the [TGIF] restaurants, or even their affiliate, the owner of the TGIF brand, any control 

over Mark Anthony.” MAB Brief at 19. The terms of the Amended Licensing 

Agreement belie this assertion.

Although Mark Anthony’s original Licensing Agreement with TGIF-MN was 

amended shortly before trial to eliminate some of the provisions that TABC’s expert 

had identified as problematic, 2 RR 88-89; 3 RR 160-180, the Amended Agreement 

continues to subject significant aspects of Mark Anthony’s business to control by

TGIF-MN and, through TGIF-MN, by the Texas retail permittee. For example, the 

Agreement gives Mark Anthony the right to use the TGIF name and marks only on 

products that TGIF has approved for “type[], presentation[] and style[].” 4 RR Exh. 21 

at ¶ 2.A; see also ¶ 5.B. (“No Licensed Products . . . shall be manufactured, . . . promoted, 

marketed, sold or distributed without the approval of Friday’s . . ..”). Even after TGIF 

has previously approved a product to be packaged using the TGIF name and marks,

the Amended Agreement specifies that TGIF will test the product on an ongoing basis 
16

and may, if it finds the quality of the product has deteriorated and would harm TGIF’s 

reputation, require that the products be withdrawn from the market and destroyed. Id. 

at ¶ 5.G. These are the provisions that Mark Anthony describes as “quality control”

provisions. E.g., MAB Brief at 2, 19 and 20. 

The Amended Agreement grants TGIF more rights to control Mark Anthony’s 

business than are necessary to control the quality of the product on which TGIF’s trade 

name and marks are to be used.8 The Amended Agreement obliges Mark Anthony to 

spend a certain amount each contract period on “trade support, advertising, promotion 

and merchandising of the licensed products.” 4 RR Exh. 21 at ¶ 6.B. The Amended 

Agreement requires that Mark Anthony comply with Friday’s code of conduct and, in 

addition, to ensure that any Mark Anthony subcontractor does, as well. 4 RR Exh. 21 

at ¶ 3.F. The code of conduct, appended to the Amended Agreement as Exhibit G, 

requires that Mark Anthony and its subcontractors abide by labor laws, workplace safety 

laws, and criminal laws preventing fraud and bribery. Id. at Exhibit G. It also purports 

to require Mark Anthony and its subcontractors to modify their production and/or 

operational processes, substitute materials, and recycle or re-use materials to reduce 

waste and to refrain from using endangered varieties of wood. Id. Finally, the Amended 

Agreement requires Mark Anthony to “cooperate with Friday’s in the resolution of” 

 

8

 Section 102.01(h) clearly bars Mark Anthony from agreeing that a retailer may, even indirectly, 

control the composition or production of Mark Anthony’s beverages. Even if such controls had been 

proper, however, additional provisions of the Amended Agreement violate section 102.01(h).
17

complaints involving Mark Anthony’s products bearing the TGIF name and marks as

well as any claims of bodily injury or death or serious property damage. Id. at ¶ 15. 

These types of control are not related to quality.

Examination of the Amended Agreement reveals, beyond question, that it 

affords TGIF-MN – and, through TGIF-MN, its affiliated entity, TGI FRiDAY’s, Inc., 

a Texas retail permittee – the right to control many aspects of Mark Anthony’s business. 

As a result, the Amended Agreement violates section 102.01(h).

3. Mark Anthony’s arguments that section 102.01(h) does not mean what it says 

are unavailing.

Mark Anthony advances several arguments in an attempt to induce the Court to 

ignore both the language of section 102.01(h) and the control the Amended Agreement 

gives TGIF over Mark Anthony’s business. None are valid.

First, Mark Anthony argues that the Legislature could not possibly have intended 

to prevent members of the alcoholic beverage industry from entering into trademark 

licensing agreements because the Legislature presumably knew that the law of 

trademarks requires the licensor to exercise quality control over the product to which 

the trademark is applied or risk being found to have abandoned its trademark. MAB 

Brief at 64-66. The problem with this argument is that, if the Legislature is presumed 

to have known trademark law when it enacted section 102.01 in 1977, its choice to 

prohibit any agreement that would allow a permittee of one tier to control or manage, 

directly or indirectly and in any form or degree, the business or interests of a permittee 
18

of another tier would have to stand. The Legislature, presumably knowing about the 

possibility for abandonment of a mark or name, did not draft 102.01(h) to prohibit all 

agreements that give a retailer any form or degree of control over a manufacturer’s 

business EXCEPT for trademark licensing agreements. As a result, section 102.01(h)

should be construed to implement the Legislature’s purposeful choice to make no 

exception to the control prohibition. Because a court is not “free to rewrite a statute 

to reach a result it might consider more desirable in the name of statutory construction,”

Stockton v. Offenbach, 336 S.W.3d 610, 619 (Tex. 2011), the trial court should not have 

accepted Mark Anthony’s invitation to engraft an exemption onto section 102.01(h).

Another problem with this argument is that it attempts to use the speech rights 

acquired by executing the Amended Agreement to legitimize execution of the 

Agreement, which is prohibited by the Code. The United States Supreme Court 

rejected a similar argument in Giboney v. Empire Storage & Ice Co., 336 U.S. 490 (1949). 

There, in response to picketers’ contention that being enjoined from carrying placards 

outside Empire’s place of business unconstitutionally infringed their free speech rights, 

the Court stated that

. . . it has never been deemed an abridgement of freedom of speech or 

press to make a course of conduct illegal merely because the conduct was 

in part initiated, evidenced, or carried out by means of language, either 

spoken, written or printed. Such an expansive interpretation of the 

constitutional guaranties of speech and press would make it practically 

impossible ever to enforce laws against agreements in restraint of trade[,] 

as well as many other agreements and conspiracies deemed injurious to 

society.
19

Id. at 502 (citations omitted).

It is evident that Mark Anthony is putting the cart before the horse. Before Mark 

Anthony entered into the Agreement, it had no right to “speak” by putting the TGIF 

trade name and trademarks on its labels. See, e.g., K Mart Corp. v. Cartier, Inc., 485 U.S. 

176, 185 (1988) (“Trademark law, like contract law, confers private rights, which are 

themselves rights of exclusion.”). Mark Anthony’s willingness to enter into the 

Agreement is an acknowledgement of this fact. Consequently, section 102.01(h)

outlawed conduct – a manufacturer’s entry into a licensing agreement that afforded a 

retailer the right to control or manage aspects of the manufacturer’s business – at a time 

when Mark Anthony had no right to engage in the speech it now contends is entitled 

to First Amendment protection. Like the Court in Giboney, this Court should reject 

Mark Anthony’s invitation to use the First Amendment to shield otherwise illegal 

conduct with speech. 

Second, Mark Anthony contends that TABC cannot point to any statutory 

language that makes it illegal for a manufacturer of alcoholic beverages to enter into an 

agreement like the Amended Agreement. MAB Brief at 21. As noted in the previous 

section of this Reply Brief, TABC has repeatedly stated that the Amended Agreement 

violates section 102.01(h); it is a necessary corollary that any agreement with similar 
20

provisions would violate section 102.01(h), as well.

9

 Mark Anthony correctly points out 

that section 102.01(h) cannot prevent it from entering into a trademark licensing 

agreement in another jurisdiction and selling its products there. It does not follow, 

however, that Mark Anthony may sell, in Texas, the fruit of conduct that Texas has 

prohibited. 

Third, Mark Anthony argues that there are other, less restrictive means of 

preventing the “hypothetical possible harm.” MAB Brief at 21-22. This argument is 

based on the unfounded assumptions that: (1) section 102.01(h) regulates speech, not 

conduct; and (2) Mark Anthony’s proposed speech is legal. As to the first assumption, 

it is clear from both section 102.01(h)’s language and the sequence of Mark Anthony’s 

actions that section 102.01(h) regulates conduct. Furthermore, as the entirety of Section 

II. of this Reply Brief demonstrates, Mark Anthony’s proposed speech is illegal and not 

entitled to First Amendment protection. 

Although Mark Anthony argues that maintenance of Texas’ three-tier system for 

regulating the alcoholic beverage industry is not an end in itself, MAB Brief at 30, it 

acknowledges that the United States Supreme Court has deemed such systems 

“unquestionably legitimate.” Id. What Mark Anthony fails to acknowledge is that states 

that have three-tier systems have a significant interest in maintaining them. 

 

9

 TABC has never argued that all trademark licensing agreements are prohibited by section 102.01(h). 

It has argued only that, because the Agreement in this case allows TGIF control over Mark Anthony’s 

business, it violates section 102.01(h). 
21

44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 493 n.4 (1996). As this Court observed 

in Cadena, the Code is “crystal clear” that the Legislature intends there to be strict 

separation of the three tiers of the alcoholic beverage industry. 449 S.W.3d at 166. 

Indeed, the Legislature has stated unequivocally that it is the public policy of this State:

to maintain and enforce the three-tier system (strict separation between 

the manufacturing, wholesaling, and retailing levels of the industry) and 

thereby to prevent the creation or maintenance of a ‘tied house’ as 

described and prohibited in section 102.01 of this code.”

 

Tex. Alco. Bev. Code § 6.03(i)(emphasis added). In Chapter 102, the Legislature 

specifically authorized TABC to conduct investigations and request information 

“necessary to enforce this section and to provide strict adherence to a general policy of 

prohibiting the tied house and related practices.” Tex. Alco. Bev. Code § 102.01(b). As 

used in section 102.01, the term “tied house” means: 

any overlapping ownership or other prohibited relationship between those 

engaged in the alcoholic beverage industry at different levels, that is, 

between a manufacturer and a wholesaler or retailer, or between a 

wholesaler and a retailer, as the words ‘wholesaler,’ ‘retailer,’ and 

‘manufacturer’ are ordinarily used and understood . . ..

Tex. Alco. Bev. Code § 102.01 (a). It is clear that, in the sixty-three years that have 

passed since this Court issued its decision in Neel v. Texas Liquor Control Board, 259 

S.W.2d 312 (Tex. App.—Austin 1953, writ ref’d, n.r.e.), the Legislature has felt the need 

to expand the definition of the term “tied house.” 

Mark Anthony’s reliance on Neel’s definition of the term “tied houses” and its 

expert’s testimony that the goal of the three-tier system is to protect the independence 
22

of retailers is unavailing in the face of the Legislature’s prohibitions on other types of 

cross-tier relationships. As this Court recognized, “the [L]egislature seems to have 

viewed even the potential for a lesser degree of influence [by a member of one tier over 

a member of another]” to be incompatible with the notion of separation of the tiers. 

449 S.W.3d at 166. Consequently, construing section 102.01(h) to permit the creation

of a cross-tier relationship that allows a member of one tier to control the business of 

a member of another tier thwarts the legislative goal and, essentially, rewrites the statute.

An example of the harm that could flow from Mark Anthony’s proposed 

construction of section 102.01(h) is helpful. If the section does not prohibit a member 

of the manufacturing tier from licensing the trade name of a member of the retail tier, 

allowing the retailer (or its nominally separate affiliate) to control the quality of the 

manufacturer’s product, then the statute also cannot prohibit a retailer from licensing 

the trade name of a manufacturer to use on the retailer’s establishment. Permitting 

such relationships to be formed has at least a significant potential for a return to 

circumstances that existed before Prohibition: (1) manufacturers would have retail 

establishments “tied” to them by the latter’s use of the manufacturer’s name, and 

patrons of that establishment would expect to be able to consume that manufacturer’s 

products; (2) other manufacturers would be less likely to sell to the retailer advertising 

the tradename of their competitor and, instead, would want their own “tied” retailers, 

causing a proliferation of retail establishments; and (3) the manufacturer-tied retailers 

would compete with one another in ways that, while promoting alcohol sales, would 
23

have little regard for the effects of such competition on society. This result cannot 

possibly have been what the Legislature intended, as it is exactly the type of tied house 

that even Mark Anthony agrees the three-tier system was designed to prevent. MAB 

Brief 27-29.

The language of section 102.01(h), while broad, is specifically targeted to the 

Legislature’s objective: maintaining strict separation between the tiers of the alcoholic 

beverage industry. The trial court erred by construing the section in a way that allows 

members of one tier to enter into licensing agreements with members of other tiers (or 

their affiliates) allowing for cross-tier control. Because the trial court’s error has the 

potential to rend the three-tier system asunder, that court’s judgment should be 

reversed, and judgment should be rendered that Mark Anthony take nothing on its 

claims that Texas Alcoholic Beverage Code sections 102.07 and 102.15 and the 

Commission’s rules 45.73(e), 45.82(a)(7), 45.110(c)(3), and 45.110(c)(7) violate its 

commercial speech under the First Amendment.

III. Even if Mark Anthony’s labels had been entitled to First Amendment 

protection, Texas’ “thing of value” statutes and rules are constitutional.

The parties agree that statutes or rules may only regulate commercial speech 

constitutionally if they “directly advance” a significant governmental interest and are 

not more restrictive than necessary to serve that interest. TABC’s Brief of Appellant at 

22; MAB Brief at 10, 12.

Mark Anthony now suggests that this Court should analyze the constitutionality 
24

of the statutes and rules it challenged under heightened scrutiny. MAB Brief at 13. 

Mark Anthony did not make this argument in the trial court. SCR 3-18. Because the 

United States Supreme Court issued its decision in Sorrell v. IMS Health, Inc.,

10 in 2011

and the trial of this case took place in March 2013, Mark Anthony’s failure to apprise 

the trial court of a belief that Sorrell’s heightened standard applied to this case amounted 

to a waiver of that contention. Tex. R. App. P. 33.1(a)(1); In re M.M.M., 428 S.W.3d 

389, 397 (Tex. App.—Houston [14th Dist.] 2014, pet. denied). Mark Anthony tried its 

entire case on the premise that Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n, 

447 U.S. 557 (1980), was the controlling authority. Therefore, Central Hudson is the 

standard against which the trial court’s decisions should be measured.11

A. Texas has a significant interest in maintaining its three-tier system

for more than the protection of retailer independence.

TABC has always argued that maintaining the integrity of Texas’ three-tier 

system of alcoholic beverage regulation, including the strict separation of the tiers, is 

the governmental interest served by the statutes and rules that Mark Anthony 

challenged. 2 RR 30-31. Although the trial court did not specifically find that 

maintaining the integrity of the three-tier system was a substantial governmental 

interest, she acknowledged that TABC had asserted an interest in “preserving or 

 

10 564 U.S. 552 (2011).

11

 Mark Anthony also waived any argument that Retail Digital Network, LLC v. Appelsmith, 810 F.3d 

638 (9th Cir. 2016), applies to this case. Furthermore, the Ninth Circuit granted a motion to rehear 

that case en banc. Retail Digital Network, LLC v. Gorsuch, No. 13-56069, 2016 WL 6790810 (9th Cir. 

Nov. 16, 2016).
25

strengthening the ‘three-tier system.’” CR 101, Finding 19. 

B. Prohibiting a manufacturer from using a retailer’s name on its 

products directly advances Texas’ interest in maintaining 

separation between the tiers.

The trial court erred as a matter of law by finding that “[a]ny effect of a malt 

beverage retailer name ban on the ‘three-tier system’ is indirect, attenuated, and 

speculative,” CR 101, Finding 20, because the evidence conclusively established that 

Mark Anthony and TGIF created an improper cross-tier relationship, directly breaching 

the wall between those who manufacture and those who retail malt beverages so that 

Mark Anthony would have the right to put TGIF’s name and marks on its malt beverage 

products. Mark Anthony consistently asserted that the “quality control” provisions of 

the Amended Agreement were a necessary predicate to Mark Anthony’s proposed 

speech because, without them, TGIF-MN would risk being deemed to have abandoned 

its trade name and trademarks. MAB Brief at 66. Yet, section 102.01(h) specifically 

prohibits the creation of a cross-tier relationship involving any provision that allows a 

member of one tier to manage or control, even indirectly, any aspect of the business of 

a member of another tier. Enforcing the “thing of value” statutes and rules removes 

any motivation a member of one tier might have to enter into such prohibited 

agreements with members of other tiers or their affiliates. As a result, construing 

sections 102.07(a) and 102.15(a) to ban a manufacturer’s use of a retailer’s name on the 

labels for the manufacturer’s products directly furthers Texas’ interest in maintaining 

the integrity of its three-tier system. 
26

C. There is a good fit between the thing-of-value statutes and rules and 

preservation of the three-tier system.

Mark Anthony asserts that banning a manufacturer from using a retailer’s name 

on its product labels is “not narrowly tailored to advance any substantial governmental 

interest,” MAB Brief at 44, because there are alternative methods of addressing Texas’ 

interests in preventing the creation of tied houses that do not restrict speech. MAB 

Brief at 21-22. It asserts, first, that TABC can ask that parties to a licensing agreement 

remove problematic terms from that agreement. Id. at 22. Second, it contends that, if 

the parties to the licensing agreement refuse to remove any improper terms voluntarily, 

TABC can “try to prove a violation.” Id. Neither of these avenues is a true alternative 

to prohibiting the creation of a tied house.

As to the first alleged alternative, Mark Anthony contends that its removal of 

problematic provisions from its own Licensing Agreement indicates that voluntary 

compliance with regulators’ requests is a viable alternative to a prohibition on creating 

prohibited relationships. Id. at 22. Yet, TABC was only aware of the terms of the 

Amended Agreement because Mark Anthony had sued to invalidate the rules and 

statutes TABC is charged with enforcing. Industry members are currently not required 

to provide TABC copies of their agreements with third parties. Consequently, TABC 

does not know whether any permittee has already entered into an agreement that 

violates section 102.01(h). In addition, as shown in section II., above, the Amended 

Agreement continues to include provisions that allow TGIF to control aspects of Mark 
27

Anthony’s business. As a matter of law, the trial court erred by concluding that a 

request for voluntary compliance was a viable alternative to the retailer-name ban.

Ignoring evidence showing concerted operations by Mark Anthony and TGIF 

almost immediately after execution of the Licensing Agreement, Mark Anthony asserts 

there is no evidence that the retailer-name ban is tailored to address a serious problem. 

MAB Brief at 45-46. To support this contention, Mark Anthony first inaccurately 

characterizes the testimony of TABC’s assistant chief in charge of special investigations 

as indicating that TABC might not currently be investigating improper cross-tier 

relationships. Id. at 46. Chief Jones actually testified that, as of the date of trial, TABC 

had 15-20 allegations of improper cross-tier relationships to investigate, but man-power 

only to work five of those cases. 3 RR 14-16. Dismissing evidence of its own 

improperly collaborative work with TGIF, Mark Anthony states that its general counsel 

terminated that practice “as soon as he discovered it.” MAB Brief at 47. Mark 

Anthony’s general counsel putting a stop to collaborative marketing efforts is: (1) no 

evidence that such conduct will not resume after the conclusion of this litigation, and 

(2) no evidence that other manufacturers and retailers who would enter into licensing 

agreements if this lawsuit succeeds would not engage in such collaborative marketing 

efforts, further eroding the walls that Texas has erected between members of different 

tiers of the alcoholic beverage industry. 
28

IV. Even If The Proposed Labels Had Been Protected Commercial Speech, 

the Challenged Statutes And Rules Do Not Violate The First Amendment.

The retailer-name ban liminates the incentive for a manufacturer to enter into a 

licensing agreement with a retailer or one of its affiliates. Because, according to Mark 

Anthony’s expert, such agreements necessarily include provisions authorizing the 

retailer or its affiliate to control aspects of the manufacturer’s business – and because 

the terms of the Amended Agreement in this case demonstrate that such agreements 

afford the retailer and/or its affiliate quite extensive control over aspects of the 

manufacturer’s business – the retailer-name ban directly and materially advances Texas’ 

policy of maintaining strict separation between the tiers of the alcoholic beverage 

industry and preventing the creation of tied houses. The evidence reveals that, rather 

than furthering that policy, the alternatives Mark Anthony suggested would foster the 

creation of tied houses, leaving it to TABC to ferret out and prove the existence of 

those improper relationships after they have been in operation for some time. 

Therefore, even if Mark Anthony’s proposed speech had related to legal activity, the 

statutes and rules that prevented approval of that proposed speech pass the Central 

Hudson test. 

CONCLUSION AND PRAYER

A manufacturer of alcoholic beverages may not obtain the right to use a retailer’s 

name and trademarks on the labels for its products by agreeing that the retailer may 

control its business, even indirectly or to a limited extent. Because entering into such 
29

an agreement is prohibited by Texas law, the First Amendment does not protect 

commercial speech only possible because of that prohibited agreement. As a result, the 

trial court erred as a matter of law in requiring TABC to prove that the statutes and 

rules that TABC challenged met the standard set out in Central Hudson and by 

invalidating Code sections 102.07(a), 102.15(a) and 102.01(h), as well as Rules 45.73(e), 

45.82(a)(7), 45.110(c)(3), and 45.110(c)(7). 

For all of the reasons asserted above and in its original Brief of Appellant, the 

Texas Alcoholic Beverage Commission respectfully requests that this honorable Court 

reverse the trial court’s October 27, 2015 judgment and render judgment that Mark 

Anthony Brewing, Inc., take nothing; in the alternative only, Appellant respectfully 

requests that this honorable Court reform the trial court’s judgment to eliminate the 

declaration that 102.01(h) violates the First Amendment; and for such other and further 

relief to which it has shown itself to be entitled.

Respectfully submitted,

KEN PAXTON

Attorney General of Texas

JEFFREY C. MATEER

First Assistant Attorney General

BRANTLEY STARR

Deputy First Assistant Attorney General

JAMES E. DAVIS

Deputy Attorney General for Civil Litigation
30

NICHOLE BUNKER-HENDERSON

Chief, Administrative Law Division

 /s/ Karen L. Watkins

KAREN L. WATKINS

State Bar No. 29027425

Assistant Attorney General

Administrative Law Division

OFFICE OF THE ATTORNEY GENERAL

P. O. Box 12548, MC-018

Austin, Texas 78711-2548

Tel: (512) 475-4208

Fax: (512) 320-0167

karen.watkins@oag.texas.gov

Counsel for Appellant Texas Alcoholic Beverage Commission 

CERTIFICATE OF COMPLIANCE

I certify that the Appellant’s Reply Brief submitted complies with Texas Rules of 

Appellate Procedure 9.4(i)(2) because this document contains 7,283 words. Word is 

the word processing software that was used to prepare this filing and to calculate the 

document’s word count.

 /s/ Karen L. Watkins

Karen L. Watkins

Counsel for Appellant Texas Alcoholic Beverage Commission
31

CERTIFICATE OF SERVICE

I, the undersigned counsel for Appellant, do certify that, on December 22, 2016, 

a true and correct copy of this Reply Brief of Appellant Texas Alcoholic Beverage 

Commission was served on the following counsel for Appellee Mark Anthony Brewing, 

Inc., by electronic mail and/or e-service:

P.M. Schenkkan

Mary A. Keeney

Graves, Dougherty, Hearon & Moody, P.C.

401 Congress Avenue, Suite 2200

Austin, Texas 78701-3744

(512) 480-5673 Telephone

(512) 480-5873 Facsimile

pschenkkan@gdhm.com

mkeeney@gdhm.com

Jack Martin

Lou Bright

3345 Bee Caves Road, Suite 105

Austin, Texas 78746

(512) 473-0300 Telephone

(903) 386-2714 Facsimile

jmartin@jmartinlaw.com

lou-bright@outlook.com

ATTORNEYS FOR APPELLEE

MARK ANTHONY BREWING,INC.

 /s/ Karen L. Watkins

Karen L. Watkins

Counsel for Appellant Texas Alcoholic Beverage Commission