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Wal-Mart Stores, Inc. v. Texas Alcoholic Beverage Commission

United States District Court, W.D. Texas, Austin Division

April 10, 2017




         Before the Court are The Texas Package Stores Association's Challenge to Objections and Motion to Compel Production (Dkt. No. 179); Wal-Mart's Response (Dkt. No. 184) and TPSA's Reply (Dkt. No. 190). The District Court referred the above-motions to the undersigned Magistrate Judge for resolution pursuant to 28 U.S.C. §636(b)(1)(A), Fed.R.Civ.P. 72, and Rule 1(c) of Appendix C of the Local Rules. The Court held a hearing on the motions on February 7, 2017.


         In this suit Wal-Mart and three of its subsidiaries are challenging the constitutionality Texas statutes regulating the retail sale of liquor, contending that the statutes violate the Equal Protection and Dormant Commerce Clauses of the U.S. Constitution. The statutes regulate grants of permits to make retail sales of distilled spirits by limiting the number of permits a person may own and the types of companies which may own them. Plaintiffs argue that the ban on public corporations, as well as the consanguinity consolidation provision of the statutes unconstitutionally discriminate against out-of-state companies in both effect and purpose.

         The Texas Package Stores Association (TPSA), an intervenor in this case, brings this motion to challenge objections made by Wal-Mart to TPSA's requests for production, and to compel Wal-Mart to produce responsive documents. There are five categories of requests in TPSA's motion: (1) Requests for Production (RFP's) 1-13, which ask for communications to Texas governmental entities, including the Texas Legislature, TABC, and the Governor; (2) RFP's 14-15, which request communications with other public corporations regarding this litigation; (3) RFP's 16-33, which request documents “relating to” select statements made by Wal-Mart's expert; (4) RFP's 34-36, which request documents relating to Wal-Mart's proposed business plans in Texas; and (5) RFP's 41-43, which request documents relating to Wal-Mart's claims about the statutes at issue. For each of these requests, TPSA asks the Court to overrule Wal-Mart's objections.

         II. ANALYSIS

         There was quite a bit of confusion at the hearing about precisely what relief TPSA is requesting in this motion. TPSA states that it is merely requesting the Court to overrule objections made by Wal-Mart to each of the requests for production. In fact, TPSA noted that this motion is solely about objections. It explained that after the Court overrules Wal-Mart's objections to the requests, Wal-Mart will be under “compulsion” to produce responsive documents, and any disagreements about the actual production could be addressed at that time. In TPSA's words, it is concerned that Wal-Mart is “holding a bombshell” because of one or more of the objections, and requested that the Court simply overrule all of the objections en masse.

         The cause of the confusion is not one-sided, however. Much of the confusion comes from Wal-Mart's overabundance of caution in responding under the new discovery rules, which now require that when a party makes an objection, it also state whether it is withholding any documents subject to that objection. In every one of its responses to TPSA's requests, Wal-Mart has leveled one or more objection, and in each instance it states that it is withholding documents pursuant to that objection. TPSA was therefore concerned that there are identified, responsive documents sitting on Wal-Mart's counsel's desk that have not been produced, any of which may be a “bombshell.” The Court attempted to get clarity on this point in an exchange with Wal-Mart's counsel, Mr. Kelso:

THE COURT: With regard to the statements in your responses, Mr. Kelso, that-uh-documents are being withheld based on the objections, are there identified documents, like you were describing theoretically of the stack A and stack B, or is it simply a theoretical-there's probably documents out there that could theoretically be responsive to a request for anything related to predatory pricing, we are not looking for them, and-there's probably documents out there that are responsive-so that is what's being withheld?
MR. KELSO: My understanding is that it is purely theoretical. It's a requirement of the new versions of the rules to say-to include a statement if you are withholding documents based on an objection.
THE COURT: But there is not an identified document that you are withholding?
MR. KELSO: That is my understanding. Not based on the objections.
MR. KELSO: And Judge, I'll say on this point, we will stand in front of Judge Pitman or you or whoever if there is some critical document that's responsive to these requests that hit upon our search terms, if we propose that we decide to ...

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