Cadena Comercial USA Corp. D/B/A Oxxo v. Texas Alcoholic Beverage Commission

IN THE SUPREME COURT OF TEXAS
════════════
NO. 14-0819
════════════

CADENA COMERCIAL USA CORP. D/B/A OXXO, PETITIONER,

v.

TEXAS ALCOHOLIC BEVERAGE COMMISSION, RESPONDENT

═════════════════════════════════════════════
ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS
═════════════════════════════════════════════

JUSTICE WILLETT, joined by CHIEF JUSTICE HECHT, dissenting.

When this shameful transaction is published to the world it will be seen what a vile
system this brewing monopoly may become in the hands of unscrupulous persons.
Thank God the tied house contains the seeds of destruction within itself, and the
day will come—perhaps not in my time or in yours, but it will come to a certainty—
when this shameful monopoly will be tolerated no more.1

That was the losing party’s condemnation of England’s pervasive tied-house regime in

what is remembered as the “one man one drink” case. At the turn of the nineteenth century, an

Englishman named Elliott Downs Till retired in the village of Eynsford, nestled within the

farmland and woods of Kent, England. Till acquired considerable property in Eynsford and became

invested in the value of his new surroundings. But one Eynsford establishment concerned Till: a

small “public house” or beershop called “the Harrow,” owned by a brewery, which Till would later

1
“One Man One Drink—Landlord’s Novel Methods—Objected to by Brewers,” Ashburton Guardian, July
24, 1906, available at https://paperspast.natlib.govt.nz/imageserver-newspapers/AG19060724.pdf.
describe as “a place [that] encouraged drunkenness.”2 Till believed the establishment was better

suited as “a proper place of accommodation” for travelers, so he contracted with the brewery to

transform the Harrow into a country hotel called the Castle Inn.3 After completing renovations,

Till entered into a 50-year lease with the brewery, promising to keep the Castle Inn open “on the

greatest number of days and hours that the law allowed,” one of the “usual tied-house conditions.”4

He additionally pledged to “deal exclusively” with the brewery “for all porter, stout, beer, ale, or

other malt liquors, whether draught or bottle, which should be sold or consumed” at the Castle

Inn.5 But Till abhorred promiscuous drinking and wanted the Castle Inn to focus less on plying

liquor and more on welcoming hotel guests. So Till tried to limit consumption at the Inn, imposing

a semi-teetotaling “one man, one drink” policy. The brewery successfully sued, contending the

liquor limits breached the lease.

Till’s story was one that would be replicated throughout England, and ultimately America.

Tied houses, saloons owned by or under exclusive contracts with producers, saturated pre-

Prohibition America. But once the Twenty-First Amendment ended what President Hoover called

the “noble experiment,” the federal government and the states enacted sweeping legislation aimed

at eliminating tied houses.

2
“One Man One Drink,” Timaru Herald, Vol. LXXXIII, Issue 13006, June 20, 1906, available at
https://paperspast.natlib.govt.nz/newspapers/THD19060620.2.40.
3
The Castle Inn was renamed the Castle Hotel and remains open today. See http://www.castlehotelkent.com
(copy in case file).
4
“One Man One Drink—Landlord’s Novel Methods—Objected to by Brewers,” Ashburton Guardian, July
24, 1906, available at https://paperspast.natlib.govt.nz/imageserver-newspapers/AG19060724.pdf.
5
Dartford Brewery Co. Lim. v. Till and Godfrey (1907) 95 L.T. 1, 643.

2
 Texas enacted its own tied-house prohibitions in the 1930s and has amended them

repeatedly since then. The key provision in today’s case is section 102.07(a)(1) of the Alcoholic

Beverage Code, which states “no person who owns or has an interest in the business of a . . . brewer

. . . may . . . own or have a direct or indirect interest in the business of a . . . retailer.”6

The Texas Alcoholic Beverage Commission denied Cadena Comercial’s application for a

retailer’s permit because Cadena’s publicly traded parent company, FEMSA—several levels of

intermediate ownership removed from Cadena—owns a 20 percent stock interest in and can

appoint 20 percent of the board members of two holding companies—several levels of

intermediate ownership removed from FEMSA—that, in turn, own three foreign Heineken

breweries. TABC claimed that granting Cadena’s application would violate section 102.07(a)(1)

because FEMSA would have an interest in both the business of a retailer (Cadena) and the business

of a brewer (Heineken).

The court of appeals sided with TABC, holding that “interest” as used in section

102.07(a)(1) “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.”7 Applying this expansive, zero-tolerance standard, the court of appeals held the Code

is violated any time any person owns any interest—even one share of stock, apparently—in two

companies engaged in different tiers of the industry. Cross-ownership of “any financial interest”

6
TEX. ALCO. BEV. CODE § 102.07(a)(1).
7
Cadena Comercial USA Corp. v. Tex. Alcoholic Beverage Com’n, 449 S.W.3d 154, 166 (Tex. App.—Austin
2014).

3
and any “potential for influence” violates section 102.07(a)(1), said the court of appeals, 8

concluding that FEMSA has a forbidden interest overlapping the retailer (Cadena) and brewer

(Heineken) tiers.

Distilled down, the issue is simply stated: What is a prohibited “interest” under section

102.07(a)(1)? Does Texas law forbid any degree of commercial connectedness, however trifling

and attenuated, or are only certain cross-tier relationships prohibited, namely those that raise the

specter of marketplace influence or coercion?

I would reverse and hold that FEMSA, Cadena’s far-removed parent, does not have an

“interest” in the business of a brewer within the meaning of section 102.07(a)(1). Reading the

statute neither nonliterally nor hyperliterally, but contextually, as we must, it is apparent that “an

interest” cannot mean “any interest” or “an interest of any kind”—two all-encompassing

formulations used elsewhere in the Code. Texas tied-house law expressly proclaims the overriding

objective of the three-tier system: “to assure the independence of members of the three-tier

system.”9 This is the textually manifest “public policy,” enshrined into the Code itself. The

Legislature used a specific term with a specific meaning: “independence,” defined by Black’s Law

Dictionary as “[t]he state or condition of being free from dependence, subjection, or control.”10

We need not deduce when we can derive. The most textually plausible interpretation is that

“interest” connotes the ability to control, coerce, or influence business operations in another tier.

8
Id.
9
TEX. ALCO. BEV. CODE § 102.75(c).
10
Independence, BLACK’S LAW DICTIONARY (http://thelawdictionary.org/independence/).

4
 This record is devoid of any such cross-tier subjection. The corporate actors here remain

independent, incapable of flexing monopolistic tendencies. The Corporate Governance Agreement

expressly denies FEMSA “any right or control or influence or consultation right or other form of

cooperation” relating to the Heineken Holding Companies.11 There is no verboten cross-tier

coercion, or otherwise-illicit retailer-manufacturer overlap that amounts to a tied-house

violation—not unless corporate structures are discounted, company agreements are disbelieved,

and contextual statutes are disregarded.

Because the Court holds otherwise, I respectfully dissent.

I. THE HISTORY OF LIQUOR REGULATIONS LEADING TO TIED-HOUSE STATUTES

A. England’s Licensing Scheme and the American Pre-Prohibition Era

Tricking, treating, and prostitution.12 History has regarded saloons and public houses with

no small measure of disdain, deeming them places of ill repute where society’s seediest subjects

ply their trades on innocent passersby. Regardless, the industry has been around for millennia. And

so, the industry has been regulated for millennia.

11
Corporate Governance Agreement § 19.10(a).
12
“Probably when we use the word ‘saloon’ most of the public understands it as a place where there can be
unlimited excessive drinking in a place called a ‘tied-house.’ Unlimited excessive drinking because as a result of the
high cost of his wares the saloon keeper would use every trick and device to encourage sales, such as treating,
prostitution and so forth.” David Fogarty, From Saloon to Supermarket: Packaged Beer and the Reshaping of the U.S.
Brewing Industry, Vol. 12 CONTEMP. DRUG PROBS. 541, 564–65 (1985) [hereinafter Fogarty].

5
 Some of the first recorded alcohol regulations took the form of criminal penalties for

intoxication.13 In the year 1000, governments began taxing the import of liquor.14 But the real

uniformity in regulation began in the 16th and early 17th centuries during the reigns of English

monarchs Edward VI and Elizabeth I. In 1552, Edward decreed that ale makers must receive

permission to sell their wares within the empire.15 The new system was rife with corruption,

however, and led to monopolies that the justices of the peace had little authority to curb.16 In the

early 1600s, Parliament, fed up with the corruption, passed laws giving the justices power to

enforce the regulations. Incremental legislation eventually led to the Licensing Act of 1627, which

required makers and sellers of “spirits” to obtain a bona fide license from the governing authority.17

“An irrevocable monopoly was now being brought more and more into subservience to royal

authority.”18 These licenses were typically only granted to taverns and inns and were for the sole

purpose of offering refreshment to travelers.19 Retailers were brought into the licensing scheme in

13
Frederic A. Johnson and Ruth R. Kessler, The Liquor License System—Its Origin and Constitutional
Development, 15 N.Y.U. L. Q. REV. 210, 210 (1983) [hereinafter Johnson] (citing the Decrees of Hlothhere, Eadric,
and King Ine in 673, 685, 686, and 688).
14
AGNES JANE ROBERTSON, THE LAWS OF THE KINGS OF ENGLAND § 2 (1925) (citing the 4th Series of the
Laws of Aethebred).
15
Johnson, supra note 13, at 214–15 (citing WILLIAM SEARLE HOLDSWORTH, HISTORY OF ENGLISH LAW (3d
ed.) 222, 357–58.).
16
Id.

Act of 1 CHARLES I, c. 4 § 2 (1627) (formally titled “An Act for the better Suppressing of unlicensed
17

Alehouse keepers”).
18
Johnson, supra note 13, at 216, n.83 (cleaned up).
19
Id. at 218 (“These acts were designed to prevent the inns, ale-houses or victualling houses from fostering
drunkenness and becoming centers of disorder. . . . No one might be served with intoxicants, except travellers and a
limited class of persons whose business brought them to such places.”).

6
1737.20 Under the first tied-house-type statute, the “Gin Act of 1751,” monetary penalties were

assessed against distillers found to also be selling their own product.21

As the regulatory noose tightened on consumers and producers alike, justices of the peace

began requiring proof of suitable premises before issuing licenses.22 Eventually, this forced would-

be tavern owners to seek loans to underwrite these “suitable premises”; breweries were all too

eager to fill in this financial gap, buy the property, and lease it to the license applicant. 23 The price

for this good deed? Not much. The lessee need only agree to sell their benefactor’s products—and

only those products.24 “This was the purchase of public houses. When one big firm suddenly

realized the profit that it would be possible to make by buying public houses and keeping them

under managers of their own for the sale of their own beer only the others rushed in madly.”25 And

“madly” well describes the speed with which privately owned public houses were transformed into

tied houses. As one scholar noted in 1895, under the tied-house system, “It is safe to say that not

more than twenty-five per cent of the inns and beerhouses are free from the brewers.” 26 And thus

20
Act of 10 GEO. II, c. 17 (1736–37).
21
Act of 24 GEO. II, c. 40 §11 (1751).
22
Sidney Webb and Beatrice Webb, History of Liquor Licensing in England Principally from 1700 to 1830,
88–89 (1903).
23
George Ranken Askwith, British Taverns: Their History and Laws, 68, 72-75 (1928); D.M. Knox, The
Development of the Tied House System in London, 10 OXFORD ECONOMIC PAPERS, NEW SERIES, no. 1, 1958, at 67
[hereinafter Knox].
24
See generally Knox, supra note 23, at 66 (detailing the high levels of tavern ownership by English
breweries).
25
Chancellor Won Point in War on English ‘Pubs’, THE SUN, May 30, 1915, sec. 5, at 3.
26
Edward Porritt, Five Centuries of Liquor Legislation in England, 10 POLITICAL SCIENCE QUARTERLY, No.
4, at 624 (Dec. 1895).

7
the regulatory effort designed to dispose of monopolies in the alcohol trade led to the creation of

the English tied-house system.

In America, too, the tied-house system figured prominently in the pre-Prohibition era. In

the early 1900s, beer consumption reached a then-historic high of 21 gallons per capita annually.27

More than 150,000 saloons existed in the United States to facilitate that consumption.28 Even so,

Americans exhibited an air of superiority and contempt regarding England’s tied-house system. A

1905 article in the San Francisco Call reported on and lambasted an Englishman’s “Turn[] on [the]

Purity Movement He Supported to Lease Them to Brewers.”29 The man had previously worked

with a movement that promoted the end of the tied-house system—in the author’s words, a scheme

whereby public houses “should not be owned by the large breweries, whose interests necessarily

lie in selling as much beer as possible.”30 The man later replaced tenants at one of his own public

houses with a brewery, effectively transforming those houses into tied houses. This, the article

disdainfully noted, was “a striking example of the sacrifice of principle to profit by no means rare

in the British aristocracy.”31 An article published in 1892 entitled “To Stop Beer Wars” gave one

27
Fogarty, supra note 12, at 548. Cf. Roberto A. Ferdman, Where the Biggest Beer, Wine, and Liquor
Drinkers Live in the U.S., WASH. POST (July 29, 2014), available at https://www.washingtonpost.com/
news/wonk/wp/2014/07/29/where-the-biggest-beer-wine-and-liquor-drinkers-live-in-the-u-s/ (explaining that many
states experience alcohol consumption rates as high as 40 gallons per capita) (copy in case file).
28
Fogarty, supra note 12, at 548; see also Ken Burns, Prohibition, Episode 1: A Nation of Drunkards, PBS
(2011) (describing the nature of the American alcohol trade leading up to Prohibition—and stating more than 300,000
saloons and taverns dotted the country at the turn of the 20th century).
29
Earl Makes Big Profit from Saloons He Owns, SAN FRANCISCO CALL, Jan. 15, 1905, at 20.
30
Id.
31
Id.

8
of the first glimpses into what Chicago could experience under a tied-house system.32 The article

explained that two English brewing companies had invested $6 million in new Chicago enterprises.

According to a “director” (presumably a representative of one of the companies), “In England 99

per cent of the places selling Bass or Bullard’s or Guinness beer are controlled by the brewer . . .

and we propose to stop beer wars by owning saloons.”33 The most important part, in the director’s

view, was “that all the ‘tied houses’ we secure will be our customers for all time; [they] will be

unaffected by beer wars and cannot be taken away from us by keener competition.”34

B. American Prohibition and Its Aftermath

Concerns grew and public sentiment eventually turned against saloon owners. The

temperance movements waged a focused and organized war—and would settle for nothing less

than complete abolition of liquor. One of the movement’s chief tactics was to put up members of

pro-temperance groups as candidates for office. This was particularly helpful on a national scale.

For example, in 1913, the Congress overrode President Taft’s veto of the Webb-Kenyon Act by a

vote of 246 to 95.35 The Act had prohibited the importation of alcohol into states that had already

decided to prohibit alcohol within its borders. The Temperance Movement was suddenly much

more than a religious movement out to save souls—it was a powerful political machine with a

sudden big victory in its pocket.

32
To Stop Beer Wars, THE ARIZONA REPUBLICAN, Sept. 14, 1892, at 1.
33
Id.
34
Id.
35
Daniel Okrent, “Wayne B. Wheeler: The Man Who Turned Off the Taps,” Smithsonian Magazine at 1–3.
(May 2010) [hereinafter Okrent].

9
 Emboldened by the movement’s sudden success, Wayne Wheeler, leader of the powerful

lobbyist group the Anti-Saloon League, moved to Washington for the express purpose of

convincing members of Congress to enact a prohibition amendment.36 Bankrolled by John D.

Rockefeller, Jr. and other pro-temperance industrialists, the League dominated the movement in

the early 1900s, achieving prohibition in 30 states by 1919. And in 1913 the League declared

support for a federal constitutional prohibition. Amending the Constitution is a heavy lift, requiring

a two-thirds majority vote from each house of Congress and then adoption of the amendment by

36 of the then 48 state legislatures.37 In 1914, a resolution calling for an amendment to the

Constitution passed out of the House committee and reached the floor for the first time in history.38

Most House members voted for the amendment, but supporters failed to muster the two-thirds

necessary to pass it out of the chamber.39 The close vote, however, reinvigorated the movement

and steeled its leaders’ determination to win the war by electing enough members to Congress so

that next time, the amendment would pass. And pass it did. In 1917, after the 1916 election swept

temperance members into office across the country, Texas Senator Morris Sheppard led the newly

36
Id. at 3 (citing the New York Evening News which called Wheeler “the legislative bully before whom the
Senate of the United States sits up and begs”).
37
U.S. CONST. art. V. (“The Congress, whenever two thirds of both houses shall deem it necessary, shall
propose amendments to this Constitution . . . which . . . shall be valid to all intents and purposes, as part of this
Constitution, when ratified by the legislatures of three fourths of the several states.”).
38
Similar bills had been introduced nearly every legislative session since 1876 but had never made it out of
committee. Okrent, supra note 35, at 3.
39
See 52 CONG. REC. 603, 616 (1914) (recording the votes on the constitutional amendment on December
22, 1914 as 197 “for” and 190 “against”).

10
elected Congress to the overwhelming approval of the prohibition resolution that would become

the Eighteenth Amendment.40 The necessary state ratification followed in quick succession.

But the ingenuity of the American people would eventually defeat Senator Sheppard,

Wheeler, the temperance movement, and the Eighteenth Amendment. Citizens resorted to any

means—legal or illegal—to gain access to alcohol. The gains of the 1920s eroded as organized-

crime syndicates rose in power, in part by providing illegal liquor to the masses.41 And then came

the Great Depression. By the early 1930s, the country was in disarray, and enforcement of

Prohibition laws was not the foremost priority of the federal and state governments. The mass

disobedience and rampant lawlessness spurred Rockefeller, a teetotaling member of the

temperance movement, saying:

In the attempt to bring about total abstinence through prohibition, an evil even
greater than intemperance resulted—namely, a nation-wide disrespect for the law,
with all the attendant abuses that followed in its train. That this intolerable situation
should be done away with has seemed to me even more important for the moment
than the promotion of temperance.42

40
“Prohibition Wins in Senate, 47 to 8,” N.Y. TIMES, Dec. 19, 1917. Interestingly, the secondary story
accompanying this headline story remarked on the Texas Legislature’s intention to ratify the amendment as soon as
possible. “The pending amendment to th[e] Federal Constitution will be ratified by the Legislature of Texas at a special
session, to be held in the early part of the coming year. Although the session will be called for other specific purposes
by Governor Hobby, there is no doubt that favorable action upon the amendment will be taken.” “Texas to Act at
Once,” N.Y. TIMES, Dec. 18, 1917.
41
1 Organized Crime: Federal Law Enforcement Perspective: Hearing Before the President’s Commission
on Organized Crime, State Dept. (Nov. 29, 1983) at 9–10 (statement of William French Smith, United States Attorney
General) (detailing the rise of criminal elements determined to “distribute liquor throughout the country.”).
42
John D. Rockefeller, Jr., Foreword to RAYMOND B. FOSDICK AND ALBERT L. SCOTT, TOWARD LIQUOR
CONTROL at vii–viii (1933).

11
 President Roosevelt urged passage of the Twenty-First Amendment, promising that taxes

from alcohol sales would benefit the nation.43 The amendment sailed through both houses of

Congress and was ratified by the states in a flurry reminiscent of the Amendment it repealed.

Rockefeller, while favoring repeal, believed the end of Prohibition would not be the end of

America’s “liquor problem,”44 saying, “If carefully laid plans of control are not made, the old evils

against which prohibition was invoked can easily return.”45 But he saw the writing on the wall

regarding the Twenty-First Amendment and commissioned a report on the nation’s impending

liquor regulation.46 Toward Liquor Control, written by scholars Raymond Fosdick and Albert

Scott, attempted to be the first study to get in front of the problem of how states should grapple

with Prohibition’s repeal.47 Toward Liquor Control was highly influential, leading to model

legislation for states regarding the manufacture and sale of alcoholic beverages. 48 Fosdick and

Scott suggested two post-Prohibition systems of regulation: (1) a monopoly approach (which they

strongly preferred) that managed all alcohol sales through the government, or (2) licensing the

alcohol industry under the auspices of a state regulatory board.49

43
Campaign Address on Prohibition, 1 PUB. PAPERS. 690 (August 27, 1932).
44
Harry Gene Levine, The Alcohol Problem in America: From Temperance to Alcoholism, 4 British J. of
Addiction 79, 110 (December 1984).
45
Foreword, supra note 42, at vii.
46
Id. at xiii.
47
RAYMOND B. FOSDICK AND ALBERT L. SCOTT, TOWARD LIQUOR CONTROL 1–3 (1933) [hereinafter
FOSDICK].
48
Id.
49
Id. at 24–60.

12
 As Prohibition’s repeal took hold, President Roosevelt encouraged the states to enact

sensible liquor legislation.50 Most states adopted some version of state licensure, abiding Toward

Liquor Control’s admonition to guard against tied houses by keeping the tiers of the industry

separate from one another.51 States implemented what has come to be known as the “three-tier

system,”52 licensing manufacturers, distributors, and retailers separately, and barring a firm in one

tier from owning a firm in another. Businesses must operate only within their assigned tier. Today,

17 states use the monopoly-control model, while 33 states plus the District of Columbia have a

licensing system.53

As in England, America’s tied-house legislation took aim at the monopolistic tendencies

of the brewer-retailer relationship. Connecticut’s courts recognized the design of its tied-house

laws, remarking the law codified an intention “to circumvent the concentration of tremendous

power and inordinate control in the hands of wholesalers and manufacturers, who, by reason of

economic superiority and the extension of generous business credit, might well be so

circumstanced as to throttle the retail dealer and monopolize the retail market.”54

The resulting tied-house legislation, however, was not solely the product of concerned

legislators. To the contrary, brewers drafted the initial federal tied-house legislation on which

50
Presidential Proclamation, Dec. 5, 1933.
51
See Maxwell’s Pic-Pac, Inc. v. Dehner, 739 F.3d 936, 939 (6th Cir. 2014) (noting most states chose the
recommended three-tier system in regulating the alcoholic-beverage industry).
52
Id.
53
See The Control Systems, NAT. ALCO. BEV. CONTROL ASS’N, available at http://www.nabca.org
/States/States.aspx (last visited Apr. 21, 2017).
54
Kantrowitz v. Liquor Control Comm’n, 13 Conn. Supp. 248, 253 (Conn. C.P. 1945).

13
much of the subsequent state legislation would be based. Self-interest existed on all sides. The

refrains of the temperance movement and a general desire to cure society of the evils of alcohol

may have prompted the legislation. But the brewers, too, understood that strict tied-house

prohibitions would reduce competition among brewers—no more would there be endless vying

for new real estate and saloon acquisitions because tied-houses would be prohibited. The brewers

also knew that tied-house prohibitions would allow them some degree of plausible deniability

regarding the negative public perception of saloons.55 Brewers that owned saloons in a tied-house

system were, in a sense, directly connected to and responsible for any perceived drunkenness and

debauchery. But under a tied-house-less system, brewers can sell their goods, while disclaiming

any participation in or responsibility for the happenings in the saloons. Indeed, the U.S. Brewers

Association attempted to use this precise argument regarding many brewers’ lack of ownership of

saloons. The Association disclaimed “a popular misconception” that brewers often owned all the

rights in saloons.56 To the contrary, said the Association, brewers typically only lend money to

saloon owners or take mortgages on saloon property; they don’t own the saloons themselves.

Therefore, the Association concluded, brewers largely cannot be considered responsible for

saloons.57

55
And it was important for brewers to distance themselves here because saloon owners constantly battled the
sensitivities of those in civilized circles that “saloon” was synonymous with “drunkenness.” These feelings harkened
back to the English’s scorn of activities within the public houses, which one newspaper colorfully described as,
“squalid English public house[s], where no customer is welcome unless he stands up and keeps drinking constantly as
long as he can maintain his standing posture, where the serving of anything but intoxicating drinks is sternly
discouraged, and where, in short, the British workingman is encouraged in every possible way to make himself a
sot[.]” Chancellor Won Point in War on English ‘Pubs,’ THE SUN, May 30, 1915, sec. 5, at 3.
56
Fogarty, supra note 12, at 550.
57
Id.

14
 C. The Promulgation of Liquor Regulations in Texas

The temperance movement was as prevalent in Texas as it was elsewhere in the nation.

Some sources place the Texas membership of groups such as the Sons of Temperance at 3,000 by

the late 1840s.58 Concerned citizens urged their representatives to pass laws providing for the

regulation and elimination of intoxicating beverages. In 1854, the Legislature introduced a ballot

measure that ordered the governor to hold an election in which the individual counties would vote

on the prohibition of saloons or any other entity selling liquor in quantities less than a quart.59

Though a majority of the counties voted not to issue licenses to liquor salesmen, we held the law

unconstitutional, and it was never enforced.60 Undaunted, anti-liquor groups like the United

Friends of Temperance, Bands of Hope, the Women’s Christian Temperance Union, and the

Grange, among others, flocked to Texas and waged war on Texas saloons. Collectively, these

temperance groups were called “Drys,” in reference to their desire to turn the State of Texas “dry”

from alcohol.61

Despite losing several referendum elections in which the Drys attempted to convince Texas

citizens and legislators to prohibit alcohol, their numbers grew. And with each battle, the pro-

Prohibition crowd drew support. Incremental changes came to the state’s liquor laws. Though not

58
3 GAMMEL’S LAWS OF TEXAS 1560.
59
JACQUES BAGUR, ANTEBELLUM JEFFERSON, TEXAS: EVERYDAY LIFE IN AN EAST TEXAS TOWN 558 (2012).
60
State v. Swisher, 17 Tex. 441, 448–49 (1856).
61
Austin K. Kerr, “Prohibition,” Handbook of Texas Online (2010), available through the Texas State
Historical Association at https://tshaonline.org/handbook/online/articles/vap01 (copy in case file).

15
outright bans, regulations greatly reduced the role of the saloon in Texas.62 The new Constitution

of 1876 adopted local-option laws, where individual communities and counties could permit or

prohibit the sale of alcohol. Finally, in 1918, the Texas Legislature adopted the language of the

proposed national prohibition amendment. As across the nation, sweeping Prohibition legislation

was enacted, including the Dean Law, which banned the manufacture of any liquor for any

purpose.63

The year 1933 brought the end of Prohibition across the nation. In response to the repeal

of the Eighteenth Amendment, the Texas Legislature passed the Texas Liquor Control Act and

Texas voters adopted an amendment to the Texas Constitution legalizing the sale of beer.

Nevertheless, 199 of the state’s 254 counties chose to utilize the local-control option and

maintained a complete prohibition of the sale of alcohol; only 10 counties were free from any form

of regulation. After the Twenty-First Amendment repealing Prohibition took effect in December

1933, the Texas Legislature submitted another amendment to the Texas Constitution that would

completely repeal the vestiges of statewide prohibition. Texas voters approved the amendment in

1935,64 restoring the right of individual communities and counties to decide whether alcohol could

be sold within their respective borders. Also in 1935, the Legislature created the Texas Liquor

Control Board (renamed the Texas Alcoholic Beverage Commission in 1970) to administer and

62
See, e.g., Ex Parte Bell, 6 S.W. 197, 198 (Tex. App. 1887) (holding that a saloon’s owner could be denied
a liquor license when he did not provide the appropriate bond because the Legislature possessed absolute authority to
regulate saloons).
63
TEX. ALCOHOLIC BEVERAGE COMM’N, THE HISTORY OF THE TEXAS ALCOHOLIC BEVERAGE COMMISSION
1 (2005), available at https://www.tabc.state.tx.us/about_us/history/70HistoryBook.pdf (copy in case file).
64
TEX. CONST. art. XVI, § 20.

16
enforce the Liquor Control Act.65 The Act governed all alcohol-related transactions from its

inception in 1933 until 1977, when it was superseded by the Texas Alcoholic Beverage Code. 66

The State adopted the three-tier system to ensure the independence of retailers,

manufacturers, and distributors and to prevent the re-creation of tied-houses that Prohibition had

largely eliminated. The Liquor Control Board was tasked with supervising and regulating every

phase of the state’s alcoholic-beverage industry. As one court put it shortly after the Board’s

creation, the Legislature delegated to the Board “certain functions, among which are determining

in the first place to whom and when shall certain privileges be extended to persons to sell liquors,

and second, whether or not such persons so favored have breached the conditions under which the

privilege has been granted.”67 The Board’s overall mission and purpose mirrored the stated

purpose of the Liquor Control Act, which preceded our current Alcoholic Beverage Code.68

Currently, TABC’s mission includes a charge to “ensure fair competition within the alcoholic

beverage industry [and] ensure consistent, predictable, and timely enforcement of [the Code].”69

II. FACTUAL OVERVIEW

Petitioner Cadena Comercial USA Corp. (“Cadena”), a Texas corporation, organized to

own and operate convenience stores in the state under the Mexican brand “OXXO,” wants to sell

beer and wine. Cadena is a wholly owned subsidiary of Fomento Económico Mexicano, S.A.B. de

65
THE HISTORY OF THE TEXAS ALCOHOLIC BEVERAGE COMMISSION at 1–2.
66
Id. at 1.
67
Tex. Liquor Control Bd. v. Floyd, 117 S.W.2d 530, 534 (Tex. Civ. App.—Fort Worth 1938, no writ).
68
See Flowers v. Shearer, 107 S.W.2d 1049, 1054 (Tex. Civ. App.—Amarillo 1937, writ dism’d) (stating
the intent of the Act was to ensure effective laws and regulations in the traffic of liquor).
69
TEX. ALCO. BEV. CODE § 5.31(b)(3)–(4).

17
C.V. (“FEMSA”), a publicly traded company that owns Cadena through several intermediary

Mexican holding companies. FEMSA also, via various intermediary holding companies in the

United Kingdom, holds a combined twenty-percent stock interest in Heineken NV and Heineken

Holding NV (“Heineken Holding Companies”). The two publicly traded Heineken Holding

Companies, through its own series of intermediary companies, own three foreign Heineken

brewers (“Heineken Brewers”). The TABC issued non-resident permits to each of the Heineken

Brewers, allowing them to manufacture beer at foreign breweries, but none of the Heineken

Brewers has a brewery in Texas. The business structures are complicated, to put it mildly, as the

detailed chart attached to this opinion illustrates.

It is undisputed that Cadena has no direct interest in the Heineken Brewers (or in any other

entity involved in the alcoholic beverage industry). Similarly, the Heineken Brewers have no

interest in Cadena (or in any other entity within the FEMSA corporate family). When FEMSA

obtained its twenty-percent stock interest in the two Heineken Holding Companies, it entered into

a Corporate Governance Agreement that, among other things, entitles FEMSA to appoint one of

Heineken Holding, N.V.’s five directors and two of ten members of the Supervisory Board of

Heineken N.V.70 L’Arche Green, the controlling-interest holder of the Heineken Holding

Companies, was obligated to sponsor FEMSA’s choice for board members, but the Corporate

70
According to Heineken’s records, Heineken Holding, N.V. is managed by a six-member board of
directors—FEMSA’s chairman holds a non-executive position on this board. Heineken N.V. is managed by a two-
member Executive Board (the current members of this board are Heineken’s CEO and CFO). The Executive Board is
the “primary decision-making body within Heineken” and is supervised by the eleven-member “Supervisory Board.”
The Supervisory Board advises the Executive Board “on an on-going basis,” but the Executive Board makes a majority
of the decisions for the company. FEMSA holds two seats on this board—its chairman (who also sits on the Heineken
Holding, N.V. board of directors) is Vice-Chairman of the Supervisory Board, and another FEMSA executive holds
the second seat.

18
Governance Agreement specifies that FEMSA is not given “any right or control or influence or

consultation right or other form of cooperation” relating to the Heineken Holding Companies.71

Similarly, L’Arche Green and Heineken Holding reserved all rights to make decisions in its

management of the Heineken Holding Companies, “independently and at their sole discretion and

without any requirement to consult or cooperate with . . . FEMSA.”72 The Agreement also bars

Heineken from acquiring any stock in FEMSA.

FEMSA’s stores under the OXXO brand must be authorized to sell beer and wine in order

to thrive in the convenience-store market. Consequently, Cadena applied for a wine and beer

retailer’s off-premises permit from TABC. In applying the tied-house provisions, TABC

disregarded the legal separateness among the various entities in both the FEMSA and Heineken

corporate families. For example, TABC collapsed the elaborate corporate structure separating

Cadena from its parent, FEMSA, and considered them a single business enterprise. TABC then

collapsed the corporate structure separating the Heineken Brewers from their parent holding

companies, and considered them a single enterprise, also. TABC’s expert testified that corporate

separateness can be disregarded in the regulatory area, arguing “the layers of entities here ought

to be disregarded for regulatory purposes.” According to TABC, any FEMSA shareholder would

have an interest in a Heineken brewer. TABC’s licensing director testified that a tied-house

violation would exist if someone owned FEMSA stock and also stock in a TABC-permitted

retailer. Indeed, TABC interprets the Code to bar overlapping ownership of even one share of

permittees at different tiers, notwithstanding multiple layers of intervening ownership. TABC then

71
Corporate Governance Agreement § 19.10(a).
72
Id. at § 19.10(b).

19
reviewed the relationship between FEMSA and the Heineken Holding Companies and determined

there was a forbidden retailer-brewer overlap that violated five different tied-house statutes.

FEMSA refused to divest itself of its indirect shareholder’s interest in the Heineken

Brewers, and TABC’s denial proceeded to an administrative hearing. At the hearing, the parties

stipulated to the corporate relationships between Cadena, FEMSA, and the Heineken

companies.73 During the hearing, a witness—TABC’s licensing director and an expert in

alcoholic-beverage industry laws—testified that even one overlapping share of stock ownership

would violate the statutory tied-house prohibitions. TABC argued that FEMSA’s overlapping

interest in Cadena and the Heineken Brewers was sufficient to be considered a prohibited

“interest” under the Texas Alcoholic Beverage Code under any interpretation. TABC disputed

that actual control is required to implicate the pertinent tied-house restrictions, but asserted

FEMSA could control the Heineken Brewers because of its ability to appoint directors to the

Heineken Companies’ boards. It also argued the court should impute this connection to Cadena

for purposes of regulation.

Conversely, Cadena argued that the only “interest” sufficient to violate tied-house

prohibitions is one that would allow actual financial or administrative control among at least two

of the three tiers. Under Cadena’s interpretation, its permit application should have been granted

as a matter of law because FEMSA has no ability to manage or control either the Heineken

Holding Companies or the Heineken Brewers. As a result, Cadena argued, granting its application

would not violate the purpose of the tied-house statute because no company within the business

73
Cadena, 449 S.W.3d at 161.

20
structure would have managing control over more than one tier. Cadena further argued that

FEMSA’s connection with the Heineken Brewers was remote and far too attenuated to

implicate historical tied-house concerns and that this interest could not be imputed to Cadena

without piercing the corporate veils of all the entities involved.

At the administrative hearing, the judge denied Cadena’s application based on the statutory

grounds cited by TABC, finding: (1) Cadena “has a real interest in the business or premises of

the holder of a manufacturer’s or distributor’s license”; (2) “[f]or licensing purposes, as a

subsidiary of FEMSA, [ Cadena] is a manufacturer”; (3) “for licensing purposes, as a subsidiary

of FEMSA, [Cadena] has an interest in the business of a brewer”; and (4) issuing “the requested

permit would violate Sections 102.01(c), (h), 102.07(a)(1), and 102.11(1) of the Code.”74 Cadena

appealed to the trial court, which affirmed the administrative order denying Cadena’s permit.75

The court of appeals noted it could affirm on any of the grounds cited in the administrative

order, but focused specifically on section 102.07(a)(1), which provides that “no person who owns

or has an interest in the business of a . . . brewer . . . may . . . own or have a direct or indirect

interest in the business . . . of a retailer.”76 In analyzing this section of the Code, the court defined

several terms and phrases within the statute, including, “person,” “brewer,” “retailer,” “owns or

has an interest in the business,” and “own or have a direct or indirect interest in the business.”77

The Code provides a definition for “person,” so the court then held that all parties—FEMSA,

74
Order Den. Orig. App. for Permit, Nov. 1, 2012.
75
Pursuant to TEX. GOV’T CODE § 2001.174 (Texas Administrative Procedure Act) and TEX. ALCO. BEV.
CODE §§ 61.31 and 11.67.
76
TEX. ALCO. BEV. CODE § 102.07(a)(1).
77
Cadena, 449 S.W.3d at 163.

21
Cadena, and the Heineken Brewers—were “persons” under the statute.78 The court also held the

Heineken Brewers fell into the category of “brewer,” just as Cadena would qualify as a “retailer”

if its permit were granted.79 Thus, the court’s main point of analysis became, “whether FEMSA

owns or has an interest in the business of the Heineken Brewers and also owns or has a direct or

indirect interest in the business of Cadena.”80

According to the court of appeals, the issue was “the extent to which section 102.07(a)(1)

implies a requirement that a disqualifying ‘interest’ carry with it some degree of cross-tier control

and whether implying such a requirement is essential to avoid rendering the statute

unconstitutionally vague.”81 Observing the Code failed to define the terms “own,” “interest,”

and “business,” the court of appeals attempted to “apply [the terms’] common meaning to the

extent consistent with the context in which they are used and the statute’s objective.”82

The court of appeals, like TABC, contracted the entities’ corporate separateness, then

expanded the definition of “interest,” concluding it “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.”83 The court rejected Cadena’s

argument for a control-focused test, stating it lacked a “foundation in the statutory text” and held

78
Id.; see also TEX. ALCO. BEV. CODE § 104.01(6).
79
Cadena, 449 S.W.3d at 163–64.
80
Id. at 164 (cleaned up).
81
Id.
82
Id.
83
Id. at 166.

22
 FEMSA’s financial and economic interests in both the Heineken Brewers and Cadena qualified

as “interests” for the purposes of section 102.07(a)(1).84

The court then turned to the term “business,” deciding its use in section 102.07(a)(1) was

intended to be broad and include any “commercial enterprise carried on for profit.”85 Under these

sweeping definitions of “interest” and “business,” the court held that section 102.07(a)(1)’s

“plain language applie[d] to FEMSA’s own relationships, not relationships . . . imputed to

FEMSA.”86 The court then addressed Cadena’s veil-piercing arguments, but held even if the

principles of corporate law applied “in some regulatory contexts . . . those principles are not

implicated by the broad language the legislature employed in section 102.07(a)(1).”87 Because

it determined TABC granting Cadena’s permit would result in FEMSA having an interest in

the business of a brewer and a direct or indirect interest in the business of a retailer, the court

affirmed the order denying Cadena’s permit.88

III. ANALYSIS

no person who owns or has an interest in the business of a . . . brewer . . . may . . .
own or have a direct or indirect interest in the business . . . of a retailer89

The parties agree that the Heineken Brewers are “brewer[s],” and that Cadena would be a

“retailer” if granted a permit. They disagree, however, over (1) whether FEMSA is a “person,” and

84
Id. at 167–69.
85
Id. at 169.
86
Id. at 169–70.
87
Id. at 169.
88
Id. at 172.
89
TEX. ALCO. BEV. CODE § 102.07(a)(1).

23
even if so, (2) what “the business of a . . . brewer” encompasses, and (3) whether FEMSA has an

“interest” in the business of a brewer. For purposes of this dispute, I assume without deciding that

FEMSA is a “person” and that “brewer” covers the Heineken Holding Companies that own the

Heineken Brewers. The interpretive focus is thus narrow: What is a prohibited “interest” under

section 102.07(a), and does FEMSA have such an “interest” in the Heineken Brewers’ business?

The parties’ arguments are straightforward. Cadena insists the word “interest” connotes a

sense of control—i.e., FEMSA must exert control over the Brewers’ business. TABC rejects a

control-based test and endorses the court of appeals’ view that “interest” in section 102.07(a)

“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.”90

Two significant points merit mention at the outset. First, TABC reaffirmed both at oral

argument and in a post-argument letter to the Court that the Code recognizes “no de minimis

exception,” a Latinized locution of the single-share theory—that even one overlapping share of

stock constitutes a tied-house violation. There is no practical difference between “no de minimis

exception” and the “single-share theory.” The terms are functionally indistinguishable. Second,

the Corporate Governance Agreement makes clear that FEMSA lacks the ability to control or

manage, either directly or indirectly, any aspect of any Heineken entity.

As explained below, a contextual reading of section 102.07(a)(1) forecloses TABC’s

crabbed “one share” interpretation, which by including all excludes all. This hyperliteral

90
Cadena, 449 S.W.3d at 166.

24
construction is not fair-reading textualism, which is not allergic to interpretive aids like context.

In short, the court of appeals rejected a test it says lacks a textual basis in favor of one lacking a

contextual basis, a zero-tolerance test divorced from the reality of existing permittees who, as

TABC concedes, hold billions of dollars in cross-tier holdings. The State of Texas, for example,

through its public universities, is a retail permittee that sells alcohol at certain sporting events and

mixed beverages at other university events. It also owns billions of dollars in cross-tier

investments. Had TABC treated the State’s application as it treated Cadena’s, it would have

rejected it. In other words, the State of Texas (as regulator) says the State of Texas (as regulated),

is operating illegally and thus at risk of forfeiting its permit.91

A rational, fair-reading test cannot arbitrarily depend on who is being tested—strict for

some, loose for others. Laws must be applied consistently, giving fair notice to what conduct is

prescribed and proscribed. The Court’s interpretation vests TABC with enormous power—

rewriting statutes, collapsing separate corporate entities without an evidence-based veil-piercing

inquiry, selectively applying standardless criteria in a manner that treats similarly situated

applicants dissimilarly, thus picking winners and losers in the marketplace. Virtually all applicants

are implicated by such a sweeping reading of “interest,” a reading that bans any indirect interest

of any degree—except when it doesn’t. Such an arbitrary and selective permitting regime cannot

be squared with Texas law, particularly the Legislature’s explicitly stated public purpose of

ensuring “independence,” i.e., the absence of outsized cross-tier influence or coercion.92

91
See, e.g., TEX. ALCO. BEV. CODE § 102.01(j) (setting the penalty for a tied-house violation at suspension
or cancellation of a permit and ineligibility to reapply for one year).
92
Id. § 102.75(c).

25
 The most reasonable interpretation is this: A forbidden “interest” under section 102.07(a)

connotes control, coercion, or influence over business activities in another tier, participation that

imperils the Legislature’s codified objective of no vertical strong-arming. No such interest is

present here.

A. Judges Must Read Statutes Neither Literally Nor Liberally, But Commonsensibly,
Discerning Words’ Accepted Contextual Meaning

First things first. In statutory-interpretation cases, we are to begin (and almost always end)

with the Legislature’s chosen text, the surest index of lawmakers’ collective will.93 Interpreting

statutes is the bread and butter of modern appellate judging, and this Court has stated its view

simply: The truest manifestation of what lawmakers intended is what they enacted. 94 As an

interpretive method, textualism has a singular objective: ascertaining words’ accepted contextual

meaning when they were enacted. No concern with abstract (and thus manipulable) purposes. No

concern with wished-for (and thus preference-imposing) consequences. Just an unremitting focus

on giving words their contextual meaning—not literal and not liberal, but commonsensible.

And by commonsensible, I mean communal, what the enacting community understood their

words to mean. This is the second point: “Words must be given the meaning they had when the

text was adopted.”95 On this important principle, we recently quoted Justice Frankfurter: “Words

93
See Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex. 1999) (“[I]t is a fair
assumption that the Legislature tries to say what it means, and therefore the words it chooses should be the surest
guide to legislative intent.”).
94
Tex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 454 (Tex. 2012) (citing Alex Sheshunoff Mgmt. Servs., L.P.
v. Johnson, 209 S.W.3d 644, 651 (Tex. 2006)).
95
ANTONIN SCALIA & BRYAN A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 78 (2012)
[hereinafter READING LAW].

26
must be read with the gloss of the experience of those who framed them.”96 Our cases agree. When

interpreting language, both statutory and constitutional, we aim to determine original public

meaning, what the words meant to those who wrote and ratified them.97

Third, text cannot be divorced from context. It is said that text without context is pretext.

This is a straightforward, well-defined interpretive principle, one we have asserted frequently and

applied assiduously. The law, after all, begins with language, and one cardinal rule of language—

not just legal language but all language—is this: “Language cannot be interpreted apart from

context.”98 For judges to play their lexicographic role in the legislative project, we must be

attentive not just to words standing alone, but to structure and historical architecture. On this fateful

point, our precedent is clear: A judge scrupulously concerned with giving legal texts their honest

meaning must always consider “the surrounding statutory landscape” and welcome, not resist,

interpretive context like linguistic usages and sound interpretive conventions that help illuminate

meaning.99 Yes, this case is about the legal interpretation of one word, “interest,” but that task

requires us to understand the meaning of surrounding words and how they are put together.

The interpretive process recognizes that lawmaker-drafters, not judge-interpreters, enact

language. Judges’ interpretive role is to discern, not dictate, how the Legislature uses language.

96
Union Pac. R.R. Co. v. Nami, 498 S.W.3d 890, 904 (Tex. 2016) (quoting United States v. Rabinowitz, 339
U.S. 56, 70 (1950) (Frankfurter, J., dissenting)).
97
Taylor v. Firemen’s & Policemen’s Civil Serv. Comm’n of City of Lubbock, 616 S.W.2d 187, 189 (Tex.
1981) (citing Manry v. Robison, 56 S.W.2d 438, 447 (Tex. 1932)).
98
TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 441 (Tex. 2011).
99
Presidio Ind. Sch. Dist. v. Scott, 309 S.W.3d 927, 929–30 (Tex. 2010) (“Before parsing the language of
§ 21.307(a), a brief survey of the surrounding statutory landscape provides a helpful context for that section’s use of
the term ‘party’ . . . .”).

27
The Legislature authors policy and its baked-in political bargains, and the judiciary, to avoid

aggrandizing its confined-but-consequential role, must examine all the enacted text, not mere

snippets. Yes, a statute’s words reign supreme, but when seeking statutory meaning, ascetic literal

parsing can sometimes cloak rather than clarify. Even when construing an ostensibly clear statute

that seems intuitively obvious, we may consider related legislation plus other contextual cues to

glean the text’s semantic import—not extra-statutory materials like legislative history, but the full

range of intra-statutory aids: grammatical conventions, dictionaries, specialized legal or technical

usage, colloquial nuances, and so forth.100 Textualism is not literalism, and courts ought not adopt

wooden constructions foreclosed by statutory context, as the Court has done here. 101 The import

of language, plain or not, must be drawn from its linguistic context, a self-evident rule rooted in

common sense,102 Texas statutory law,103 and caselaw from both this Court104 and the United States

Supreme Court.105

100
See, e.g., Molinet v. Kimbrell, 356 S.W.3d 407, 414–15 (Tex. 2011) (rejecting often-unreliable extrinsic
aids like legislative history when divining statutory context); Tex. Lottery Com’n v. First State Bank of DeQueen, 325
S.W.3d 628, 635–37 (Tex. 2010) (same); Taylor, 616 S.W.2d at 189–90 (looking to text-based semantic cues but not
external aides).
101
See Ojo v. Farmers Grp., Inc., 356 S.W.3d 421, 451 (Tex. 2011) (Willett, J., concurring) (“Modern
textualism is not allergic to context.”).
102
Some words are auto-antonyms that can mean diametrically opposite things depending on the context. For
example, the word “cleave” can mean “to adhere” or “to divide.” Cleave, WEBSTER’S THIRD NEW INT’L DICTIONARY
421 (2002). In my view, the Court’s decision today “cleaves” to a myopic approach that “cleaves” literal meaning
from plain meaning.
103
TEX. GOV’T CODE § 311.011(a).
104
See, e.g., Tooke v. City of Mexia, 197 S.W.3d 325, 329 (Tex. 2006) (recognizing that the meaning of words
“cannot be ascertained apart from the context in which they occur”).
105
See Deal v. United States, 508 U.S. 129, 131–132 (1993).

28
 B. “One Share” Is One Dimensional—“An Interest” Should Not Mean Any Interest,
However Attenuated, But Only an Interest That Threatens Cross-Tier Control or Influence

“Literalness may strangle meaning.”106

When divining what enacted law means, the judge-interpreter’s aim is not a myopic

reading, but a sound one. Reading clinically does not mean reading under a microscope. Today’s

case concerns “interest,” but that term (and its meaning) is found within a larger enactment.

Accordingly, we must resist hyperliteralism—“a sterile literalism which loses sight of the forest

for the trees”107—in favor of “literal meaning in context.”108

Sometimes the Legislature helpfully defines the terms it uses, 109 imbuing even ordinary

words with technical (and usually conclusive) meaning.110 The Alcoholic Beverage Code, for

example, has a general definitional provision, defining 28 terms, everything from “minibar” to

“wine cooler.”111

106
Utah Junk Co. v. Porter, 328 U.S. 39, 44 (1946).
107
New York Trust Co. v. Commissioner, 68 F.2d 19, 20 (2d Cir. 1933) (Judge Learned Hand writing for the
court).
108
READING LAW, supra note 95 at 40.
109
In re Ford Motor Co., 442 S.W.3d 265, 271 (Tex. 2014).
110
See Hernandez v. Ebrom, 289 S.W.3d 316, 318 (Tex. 2009) (“If the Legislature provides definitions for
words it uses in statutes, then we use those definitions in our task.”); City of Rockwall v. Hughes, 246 S.W.3d 621,
625 (Tex. 2008) (“We use definitions prescribed by the Legislature and any technical or particular meaning the words
have acquired.”).
111
TEX. ALCO. BEV. CODE § 1.04 (21), (24).

29
 1. The Legislature’s Codified Purpose (to Ensure “Independence”) and TABC’s Own
Internal Guidance Buttress the Determination That “An Interest” Connotes Something
More Than De Minimis

Unfortunately, the Code nowhere defines “interest.” When a statute is silent, judges often

seek guidance in reputable dictionary definitions, particularly legal dictionaries from the enacting

era, since semantic usage and nuances can shift over time. Not all dictionaries are created equal,

however; some are richer and more explanatory. Unfortunately, the definition of “interest” in the

1910 edition of Black’s Law Dictionary, available at the time Texas originally adopted its tied-

house laws, isn’t helpful in divining the common, preferred usage.112 Neither are the early-1900s

definitions of “interest” in the Chambers and Oxford dictionaries, which provide little aid in

narrowing the possible definitions relevant here.113 Unsurprisingly, the word “interest” can mean

various things, depending on context. Using a more modern dictionary, “interest” is defined as

“the power of influencing,” or “persons effectively controlling an enterprise or dominating a field

of activity,” or “the dominating group of owners in a field of business, industry, or finance.”114

112
As to property interests, Black’s defined “interest” as “[t]he most general term that can be employed to
denote a property in lands or chattels.” Interest, BLACK’S LAW DICTIONARY 647 (2d ed. 1910). It acknowledged that
“interest” was “frequently used in connection with the terms ‘estate,’ ‘right,’ and ‘title,’” but it cautioned that “[t]he
terms ‘interest’ and ‘title’ are not synonymous.” Id. Black’s also defined “interest” in the context of the law of
evidence. Regarding “a statute that no witness shall be excluded by interest in the event of the suit,” Black’s defined
“interest” to mean “concern, advantage, good, share, portion, part, or participation.” Id. (cleaned up). Thus, “interest”
under those definitions could mean anything from a mere concern or advantage to participation, a right, a share, or
title.
113
Interest, CHAMBERS’S TWENTIETH CENTURY DICTIONARY 477 (1903) (including only compound interest
and vested interests in land as definitions for the term); Interest, THE CONCISE OXFORD DICTIONARY 427 (7th ed.
1919) (limiting its definitions to interests in property or land, compound interest, a pecuniary stake, and “the pursuit
of one’s welfare”).
114
Interest, WEBSTER’S THIRD NEW INT’L DICTIONARY 1178 (2002).

30
 In 2013, the Legislature expressly—and helpfully—declared the public policy aim of the

three-tier system.115 When legislators articulate an explicit purpose in the very words of the statute,

the Court need not—and should not—speculate.116 As two eminent legal lexicographers put it,

“words are given meaning by their context, and context includes the purpose of the text.”117 Here,

the Legislature codified its objective rather plainly: “It is the public policy and in the interest of

this state to assure the independence of members of the three-tier system.”118 Maintaining cross-

tier independence, then, is the manifest object of Texas tied-house laws. Lawmakers defined their

purpose precisely, concretely, and succinctly—not to supplant text, but to give it meaning.

By contrast, it makes no interpretive difference that the Code provides, as statutes

commonly do, that it should be “liberally construed,” here to protect “the welfare, health, peace,

temperance, and safety of the people of the state.”119 On this point—whether the legislative branch

can command the judicial branch to put a liberal (or nonliberal) gloss on language—I answer no.120

Yes, the Code’s overall aim is legislatively (if nebulously) prescribed: to promote “welfare, health,

peace, temperance, and safety,”121 akin to the Constitution’s goal “to form a more perfect Union,

115
See TEX. ALCO. BEV. CODE § 102.75(c).
116
See, e.g., Hebner v. Reddy, 498 S.W.3d 37, 40 (Tex. 2016) (“The Texas Medical Liability Act aims to
‘identify and eliminate frivolous healthcare liability claims expeditiously, while preserving those of potential merit.’”)
(quoting Samlowski v. Wooten, 332 S.W.3d 404, 410 (Tex. 2011)).
117
READING LAW, supra note 95, at 56.
118
TEX. ALCO. BEV. CODE § 102.75(c).
119
Id. § 1.03.
120
READING LAW, supra note 95, at 233 (“We think not.”).
121
TEX. ALCO. BEV. CODE § 1.03.

31
establish Justice, insure domestic Tranquility . . . .”122 But diaphanous, good-government precatory

provisions ought not expand text beyond its contextual meaning, lest all gauzy phrases become

judicial license to impose wished-for outcomes. The judicial goal must remain fixed—ascertaining

fair meaning—“the meaning that causes it to make sense.”123 Legislators can certainly supply text-

specific definitions, and a purpose or preamble provision can clarify textual ambiguity, as section

102.75(c) does here, proclaiming cross-tier “independence” (read: no undue

control/coercion/influence) as the goal of the three-tier system.124 But lawmakers, by commanding

“liberal construction,” cannot “instruct judges to put a thumb on the scale in this fashion.” 125 In

our system of separated powers, interpreting laws is a quintessential judicial function.

What, then, did legislators mean by “independence”? As with “interest,” the Code itself is

silent. But the contemporaneous edition of Black’s Law Dictionary offers on-point guidance,

defining “independence” as “[t]he state or condition of being free from dependence, subjection, or

control.”126 Similarly, “independent” is described as “not subject to the control or influence of

another.”127 The Court contends independence can only be achieved by strict and total separation,

but the Code says no such thing, and the Texas alcoholic-trade landscape, replete with TABC-

permitted cross-tier investments, punctuates the point. Rather, as the definitions of “interest” and

122
U.S. CONST. pmbl.
123
READING LAW, supra note 95, at 236.
124
TEX. ALCO. BEV. CODE § 102.75(c).
125
READING LAW, supra note 95, at 233.
126
Independence, BLACK’S LAW DICTIONARY (http://thelawdictionary.org/independence/).
127
Independent, BLACK’S LAW DICTIONARY (http://thelawdictionary.org/independent/).

32
“independence” underscore, the Code’s tied-house restrictions aim to rein in cross-tier coercion

and subjection.

TABC’s own regulations actually make this point, stating that under section 102.07(a)(1),

a “direct or indirect interest in the business of a retailer” means an interest held by the manufacturer

sufficient to “place retailer independence at risk.”128 Likewise, TABC’s Application Guide for

Retailers centers on control, stating that applicants “cannot control, in any fashion, the interests of

a licensee/permittee at a different level.”129 TABC’s license application form for new businesses,

when discussing the prohibition of cross-tier interests, explains that applicants “cannot control in

any fashion the interests of a licensee/permittee at a different level.”130

Courts have long understood the fundamental purpose of Texas tied-house laws to be

prohibiting “vertical integration” in the alcohol industry, to prevent anyone from “controlling” or

“dominating” business operations in multiple tiers.131 This is not an outlier view but rather a

128
16 TEX. ADMIN. CODE § 45.110(c).
129
Texas Alcoholic Beverage Commission, Application Guide for Retailers at 42, Dec. 2009 (emphasis
added).
130
Texas Alcoholic Beverage Commission, Form L-B, at 2, June 2012 (emphasis added).
131
See, e.g., Neel v. Tex. Liquor Control Bd., 259 S.W.2d 312, 316–17 (Tex. Civ. App—Austin 1953, writ
ref’d n.r.e.) (holding the Texas tied-house statutes were enacted in an attempt “to prevent a recurrence of the evils that
were prevalent before prohibition when the large liquor interests controlled . . . the productive and distributive
channels of the industry”) (emphasis added); S.A. Discount Liquor, Inc. v. Tex. Alcoholic Beverage Comm’n, 709 F.2d
291, 293 (5th Cir. 1983) (explaining the purpose of the statute as “preventing companies with monopolistic tendencies
from dominating all levels of the alcoholic beverage community”); Dickerson v. Bailey, 87 F. Supp. 2d 691, 703 (S.D.
Tex. 2000) (“A ‘tied house’ arrangement, common during Prohibition, involved manufacturers who controlled the
distribution and sale of their products in a vertical monopoly . . . .”) (emphasis added), aff’d, 336 F.3d 388 (5th Cir.
2003).

33
familiar one shared by courts132 and state regulators133 throughout the nation. The term “interest”

in section 102.07 must be construed in light of the legislatively declared purpose of Texas tied-

house laws: “to assure the independence of members of the three-tier system.”134 And

“independence” connotes the absence of control, just as “interest” connotes the presence of

control—or at least influence sufficient to portend forbidden cross-tier coercion.

2. The Code’s Varying Use of “Interest”—Sometimes Narrow, Sometimes Broad—
Supports an Interpretation That, As Used Here, the Term Means a Degree of Influence
That Imperils Cross-Tier Independence

Courts must analyze statutes in their entirety—not cherry-picking individual words or

phrases to discern meaning. The Court adopts the court of appeals’ definition of “interest” as

“encompass[ing] any commercial or economic interest that provides a stake in the financial

132
See, e.g., Foremost Sales Promotions, Inc. v. Director, Bureau of Alcohol, Tobacco & Firearms, 860 F.2d
229, 237 (7th Cir. 1988) (explaining the intention of the federal tied-house provision is “to prevent supplier control
over retail outlets”); Nat’l Distrib. Co. v. U.S. Treasury Dep’t, 626 F.2d 997, 1008 (D.C. Cir. 1980) (same) (“the
[federal] tied house provision was designed to prevent control by alcoholic beverage producers and wholesalers over
retail outlets.”) (emphasis added); Mayhue’s Super Liquor Store, Inc. v. Meiklejohn, 426 F.2d 142, 147–48 (5th Cir.
1970) (describing Florida’s “Tied House Evil Act” as being designed “to prevent monopoly or control by
manufacturers or distributors of the retail outlets of intoxicating liquors”) (emphasis added); Ted Sharpenter, Inc. v.
Ill. Liquor Control Comm’n, 518 N.E.2d 128, 130–31 (Ill. 1987) (describing the tied house as a system that “allowed
the distributor to exercise almost complete control over the retailers”) (emphasis added); Tom Boy, Inc. v. Quinn, 431
S.W.2d 221, 226 (Mo. 1968) (holding the purpose of the statute is to prevent “financial control of the retailer by the
wholesaler.”) (emphasis added); Pickerill v. Schott, 55 So. 2d 716, 718 (Fla. 1951) (holding the purpose of Florida’s
“Tied House Evil Act” “was to prevent monopoly or control by manufacturers or distributors of the retail outlets”)
(emphasis added).
133
See, e.g., In the Matter of GameWorks, Ken. Dep’t of Alcoholic Beverage Control (Sept. 24, 1999)
(allowing a retailers’ license to be issued to a subsidiary because its parent company, with ties to a distiller, could not
control or influence the business dealings of the subsidiary); Licenses—Interpretation of Term “Financial Interest”
in Provision of Alcoholic Beverage Law That Prohibits Manufacturers and Wholesalers From Having Financial
Interest in Retailers, 84 Op. Md. Att’y Gen. 21, 23 (Apr. 9, 1999) (explaining the definition of a tied house is a retailer
“that is controlled by a manufacturer, wholesaler, or other [distributor]”) (emphasis added); In the Matter of
GameWorks, Liquor Control Comm’n, MICH. DEP’T OF CONSUMER & INDUS., (Dec. 17, 1997) (concluding that MICH.
COMP. LAWS § 436.31 (The Michigan Liquor Control Act) did not prohibit a subsidiary from obtaining a retailers’
license because the parent company could not “attain control” of the subsidiary or its management board.) (emphasis
added); Ark. Alcohol Beverage Control Rules and Regulations § 2.28(1) (construing ARK. CODE ANN. § 3-3-212 (The
Arkansas Alcoholic Control Act) to prohibit an interest that “may tend to influence [a] licensee.”).
134
TEX. ALCO. BEV. CODE § 102.75(c).

34
performance of [a brewer].”135 But this considers the provision in a vacuum rather than in context,

and adopts in practice TABC’s “no de minimis exception” standard—a standard so broad as to be

no standard at all. In doing so, the Court disregards the entirety of the text, separately defining

discrete words and then cobbling together those separate definitions. The provision must be

defined as a contextual whole, however, not merely as a sum of its stand-alone parts.136

The tied-house provisions focus intently on prohibiting certain relationships (and allowing

others), using the word “interest” many times,137 and usually preceding “interest” with a modifier:

 any interest138
 a real interest139
 a financial interest140
 a pecuniary interest141
 an ownership interest142
 an interest of any kind143

Section 102.07 is structured differently. Again, here’s the relevant text:

135
Ante at ___ (citing Cadena, 449 S.W.3d at 166).
136
See In re Office of the Attorney General, 456 S.W.3d 153, 155 (Tex. 2015); see also READING LAW, supra
note 95, at 167–69.
137
See TEX. ALCO. BEV. CODE §§ 5.05(b), 11.10, 11.70(a), 22.04(a), 22.04(b)(1)–(2), 22.04(c), 22.06(a),
24.05(a), 28.16(2), 32.21(2), 37.04, 37.07(1), 50.003, 51.06, 61.02(b), 61.43(a)(6), 61.45(a)(1)–(2), 61.45(b)(1)–(2),
61.71(15), 61.71(27)–(28), 61.74(a)(10), 74.01(d), 102.01(c), 102.01(j), 102.04(a), 102.04(b)(1), 102.06, 102.07(a),
102.07(c), 102.11(2), 109.59(c).
138
See id. §§ 102.10(b), 102.11(1), 102.18(b).
139
See id. § 61.44(b)(1).
140
See id. §§ 11.47, 11.61(b)(17), 28.03(8), 54.03(5), 61.44(a), 61.71(a)(28), 102.06.
141
See id. § 5.05(a)(3).
142
See id. §§ 6.05, 22.16(b)(2), 102.01(c).
143
See id. §§ 11.48(a)–(b), 28.03(8), 61.71(a)(21), 61.71(a)(26), 102.03(b).

35
 (a) . . . no person who owns or has an interest in the business of a . . . brewer . . .
may . . . (1) own or have a direct or indirect interest in the business of a . . .
retailer.144

It bars a person who has “an interest” in the business of a brewer from having “a direct or indirect

interest” in the business of a retailer. The latter phrase, with its “direct or indirect” modifier,

indicates that “interestedness” with a retailer invites a broader examination than with a brewer.

The Code bars someone with an interest in a brewer from having not merely an “interest” in a

retailer but something more expansive, “a direct or indirect interest.” This looser “direct or

indirect” formulation casts a wider net, expanding the scope of “interest” to thwart the classic tied-

house arrangement of brewers controlling retailers.

The Court goes another route, holding that “interest” standing alone and unmodified

necessarily includes every modifier sprinkled throughout the Code and “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.”145 All interests. Of any

type. In any degree.

I disagree. This reading is far too broad, because “interest” here (1) is not modified by

“direct or indirect,” and (2) is modified by the phrase “in the business of a brewer,” thus it cannot

mean any interest of any kind in a brewer, but logically only a direct interest in a brewer’s business.

Neither Cadena nor its parent FEMSA has any such prohibited interest in the Heineken

Brewers. Neither has legal or equitable title to the Heineken Brewers’ business or stock in the

Heineken Brewers, or any other direct way to exert cross-tier influence or control. Moreover, the

144
Id. § 102.07(a)(1) (emphases added).
145
Ante at ___.

36
Corporate Governance Agreement makes clear that FEMSA lacks any ability to control or manage,

either directly or indirectly, the business of the two Heineken Holding Companies, which in turn

own the Heineken Brewers. As noted above, the Agreement states explicitly that FEMSA has no

“right or control or influence or consultation right or other form of cooperation” relating to the

Heineken Holding Companies.146 Similarly, Heineken Holding reserved all rights to make

decisions “independently and at their sole discretion and without any requirement to consult or

cooperate with . . . FEMSA.”147 The Code’s tied-house provisions aim to promote

“independence,”148 and FEMSA lacks any ability to direct Heineken Brewers.

The Legislature’s overarching concern with “independence”—minimizing cross-tier

control and coercion—permeates the Code, which bars relationships that exert undue influence.

Section 102.07 itself contains several prohibitions to restrict how a manufacturer might strong-arm

a retailer. For example, a manufacturer cannot be a retailer’s guarantor, pay for a retailer’s

advertising, give a retailer aggressive discounts, etc.149 Similarly, section 102.01 restricts various

cross-tier incursions. For example, permittees in one tier are prohibited from serving as officers in

another tier.150 Additionally, permittees may not own fixtures or equipment, provide credit

security, extend loans, agree to manage, or enter into profit-sharing arrangements with a permittee

146
Corporate Governance Agreement § 19.10(a).
147
Id. at § 19.10(b). Now, if this arrangement were the opposite directionally, and Heineken Holding owned
FEMSA stock, or if a Heineken Holding representative served on FEMSA’s board, that could be a tied-house violation
under provisions that cover stockholders of permittees. TEX. ALCO. BEV. CODE § 102.03(b). But the converse,
governed by section 102.07(a), is not true.
148
TEX. ALCO. BEV. CODE § 102.75(c).
149
Id. § 102.07(a).
150
Id. § 102.01(d).

37
in another tier.151 Such activities are forbidden because they imperil independence and induce

monopolistic industry practices, and lawmakers want to blunt manufacturer

control/coercion/influence/subjection over retailers. But all potential connections are not

prohibited; there is no absolute bar on even the most picayune cross-tier affiliations.152

The Legislature uses the terms “any interest” and “an interest of any kind” elsewhere in the

Code.153 But not here. If “an interest” captures everything on its own, then why is the broadening

“direct or indirect” needed in section 102.07(a)(1)? Why are other scope-expanding modifiers used

elsewhere in the Code? The Code forbids a brewer from having a “direct or indirect interest” in a

retailer, but does not forbid a retailer from having any interest whatsoever in a brewer. Many

relationships forbidden by the Code affirmatively encompass “affiliate[s],”154 “subsidiar[ies],”155

and majority stockholders.156 The Legislature included no such language in section 102.07(a)(1).

151
Id. § 102.01(e)–(i).
152
Another point merits mention: Section 101.01(a) defines a tied house as any overlapping ownership or
other prohibited relationship “between those engaged in the alcoholic beverage industry at different levels.” Id. §
101.01(a) (emphases added). Some of those prohibited relationships are statutorily defined, as in section 102.07(a),
barring a brewer from having a direct or indirect interest in the business of a retailer. This provision, read alongside
other Code provisions including section 101.01 above, speaks to the relationship between permittees. It makes no
mention of other corporate entities, or of affiliates and stockholders, as other tied-house restrictions do. In my view,
it encompasses active industry participants, not parent companies, affiliates, stockholders, holding companies, or
board members. FEMSA, the nonpermitted parent company of a prospective retailer and an indirect minority
stockholder with a minority board position on two nonpermitted holding companies, is not “engaged in the alcoholic
beverage industry.” The Heineken Brewers are manufacturers, not FEMSA and not Cadena. In other words, FEMSA
is not engaged in the Heineken’s Brewers’ business of brewing beer. And the Heineken Brewers have zero interest,
direct or indirect, in Cadena’s retailer application.
153
See id. § 11.48.
154
See id. §§ 11.48(a)–(b), 37.07, 74.01(d), 101.41(a), 101.43(a), 102.03(b), 102.11–13, 102.14(a), 102.15(a),
102.18(a)(3), 102.22(a), 102.31(b), 108.01(a), 108.05–.06, 109.08.
155
See id. §§ 11.48(a)–(b), 74.01(d), 101.41(a), 101.43(a), 102.03(b), 102.11–13, 102.14(a), 102.15(a),
102.31(b), 108.01(a), 108.05–.06.
156
See id. §§ 11.13(d), 11.45–.46, 11.61(a), 22.05–.06, 61.71(c), 61.74(b).

38
 “Interest” must, then, mean something less than any interest, as TABC maintains. The

Court holds the definition of “tied house” in section 102.01(a) is applicable here, because the

definition includes “any overlapping ownership.”157 But this reading is too broad in relation to

section 102.07(a)(1) because the phrase “interest in the business of a brewer” is narrower than the

breadth of the Code as a whole.158 The independence of the three tiers was the Legislature’s explicit

objective, and tied houses were originally formed because of the intersection of retailers’ financial

pressures and brewers’ corresponding financial benevolence. The prohibition of cross-tier

interests, then, affects financial interests.

FEMSA’s twenty-percent stock ownership in the Heineken Holding Companies does not

mean it can step into the shoes of the Heineken Brewers or even flex influence to the point of

affecting the Brewers’ business. The publicly traded FEMSA is separated by at least three parent

or holding companies from the Heineken Brewers. Two of these intermediate companies are

internationally publicly traded companies. Additionally, though FEMSA’s officers hold positions

on the board of directors and a “supervisory board,” these positions relate only to the Heineken

Holding Companies, not the Heineken Brewers. Insofar as the holding companies control the

actions of the Brewers, the Corporate Governance Agreement strips FEMSA of any ability to direct

or control any aspect of the Brewers’ dealings. FEMSA is both legally (by the Corporate

Governance Agreement) and practically (by nature of its attenuation from the Brewers) barred

from any attempt to act in place of or exert control over the Heineken Brewers.

157
Ante at ___; see also TEX. ALCO. BEV. CODE § 102.01(a).
158
See TEX. ALCO. BEV. CODE § 102.07(a)(1).

39
 The statutory context of section 102.07 strongly indicates that an “interest” must involve

more than mere stock ownership. Elsewhere in section 102, for example, the Legislature

expressly—and repeatedly—refers to interests in “corporate stock”:

 Section 102.01(c) discusses an “ownership interest in the business or corporate
stocks.”159

 Section 102.10(b) includes “any interest in the permit, business, assets, or
corporate stock.”160

 Section 102.18(b) refers to “any interest in the license, business, assets, or
corporate stock.”161

This treatment is not unique to section 102. Indeed, throughout the Alcoholic Beverage

Code references to interests in corporate stock appear frequently and—at least three times—are

distinguished from interests in a business:

 Section 37.04 states that “[a] person who holds a nonresident seller’s permit
may have an interest in the business, assets, corporate stock, or permit of a
person who holds a brewer’s permit.”162

 Section 37.07 refers to “an interest in the permit, business, assets, or corporate
stock.”163

 Section 5.05 distinguishes between “hold[ing] stocks or bonds in an alcoholic
beverage business” on one hand,164 and “hav[ing] any financial connection with
a person engaged in an alcoholic beverage business” and “hav[ing] a pecuniary
interest in an alcoholic beverage business” on the other hand.165
159
Id. § 102.01(c) (emphasis added).
160
Id. § 102.10(b) (emphases added).
161
Id. § 102.18(b) (emphases added).
162
Id. § 37.04 (emphases added).
163
Id. § 37.07 (emphases added).
164
Id. § 5.05(a)(2).
165
Id. § 5.05(a)(1), (3).

40
 This distinction is also true for statutes outside the Alcoholic Beverage Code; in many other

instances “interest” encompasses even the ownership of a small percentage of stock.166

Nevertheless, and as articulated above, section 102.07(a) does not define interest as stock

ownership and does not contemplate that even a small percentage of stock qualifies as an “interest.”

Texas law recognizes corporate separateness, the principle that subsidiaries have distinct legal

identities from their holding or parent corporations.167 It is a fundamental principle that different

corporate entities must be treated as legally distinct, even if one is owned by another. Thus a

shareholder, as an investor, has a financial interest in a company’s monetary value. But the

shareholder has no cognizable legal interest in the company’s assets.168

There is not even the assertion here that the complicated FEMSA/Heineken corporate

structure, specifically the intermediate entities between FEMSA and the Heineken Holding

Companies, are being finagled to circumvent Texas tied-house laws.169 Nevertheless, the Court

disregards the entities’ corporate separateness, collapsing all distinctions between parent

166
See TEX. EDUC. CODE § 51.923(e) (defining “[f]or purposes of this section” the term “substantial interest
in a business entity” as, among other things, owning “10 percent or more of the voting stock or shares of the business
entity”); id. § 66.08(k) (defining “[f]or purposes of this section” the term “interest in a business entity” as, among
other things, owning five percent or more of the voting stock or shares of the business entity); TEX. LOC. GOV’T CODE
§ 171.002(a) (defining “[f]or purposes of this chapter” the term “substantial interest in a business entity” as, among
other things, owning “10 percent or more of the voting stock or shares of the business entity”); TEX. GOV’T CODE
§ 572.005 (defining “a substantial interest in a business entity” as, among other things, “a controlling interest in the
business entity” and owning “more than 10 percent of the voting interest in the business entity”).
167
See Gentry v. Credit Plan Corp. of Hous., 528 S.W.2d 571, 575 (Tex. 1975); Bell Oil & Gas Co. v. Allied
Chem. Corp., 431 S.W.2d 336, 340 (Tex. 1968) (citing Drye v. Eagle Rock Ranch, Inc., 364 S.W.2d 196, 202 (Tex.
1962)).
168
See, e.g., Reid Rd. Mun. Util. Dist. No. 2 v. Speedy Stop Food Stores, Ltd., 337 S.W.3d 846, 854 (Tex.
2011) (“[S]hareholders of a corporation are not owners of corporate assets.”).
169
See SSP Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d 444, 450–51 (Tex. 2009); Castleberry v.
Branscum, 721 S.W.2d 270, 271–72 (Tex. 1987) (holding corporate separateness will not be observed when the
separation is used as a means to “perpetrat[e] fraud,” a monopoly, or evade legal obligations).

41
companies, holding companies, and subsidiaries. I disagree that veil-piercing principles do not

apply “in the regulatory context,” absent evidence of furtiveness. Cadena and FEMSA are distinct

corporate entities, separated by multiple layers of intermediate corporations. Likewise, the

Heineken Holding Companies and Heineken Brewers are distinct corporate entities, separated by

multiple layers of intermediate corporations. The burden should have rested on TABC to make the

case for disregarding distinct corporate identities. But, despite TABC offering no evidentiary basis

for ignoring corporate separateness, the Court adopts TABC’s reasoning as its own.

Again, the Legislature knows well how to forbid specific relationships. If lawmakers had

wished for section 102.07(a)(1) to disrespect corporate separateness, paying no mind to distinct

legal identities, they could have done so, as they did in other Code provisions.170 Chapter 102 of

the Code indeed specifies certain prohibited intra-industry relationships and different degrees of

acceptable inter-tier connectedness. Some sections within Chapter 102 explicitly include

“affiliates” and “subsidiaries” of a permittee when listing prohibited relationships.171 Other

sections, like section 102.07(a)(1), do not.172 Some sections within the Code broadly define

prohibited relationships and forbid “an interest of any kind,” including stock ownership.173 Others,

like section 102.07(a)(1), do not.174 All to say, the Legislature is adept at prohibiting specific

170
See TEX. ALCO. BEV. CODE. §§ 11.48(a)–(b), 37.07, 74.01(d), 101.41(a), 101.43(a), 108.01(a), 108.05–
.06, 109.08.
171
Id. §§ 102.03(b), 102.11–13, 102.14(a), 102.15(a), 102.18(a)(3), 102.22(a), 102.31(b).
172
Id. § 102.07(a)(1).
173
See id. §§ 11.48(a)–(b), 28.03(8), 61.71(a)(21), 61.71(a)(26), 102.03(b).
174
See id. § 102.07(a)(1).

42
relationships when it wishes to, and vice versa. We should presume the Legislature included words

it wanted to include and excluded words it wanted to exclude.175

The Court should have rejected TABC’s contention that corporate separateness can be

blithely disregarded in the regulatory context. Our cases are precisely the opposite, resisting

regulators’ attempts to treat distinct legal entities as one, unless the record shows the parent

controls the internal business operations and affairs of the subsidiary.176 In this case, TABC has

never produced evidence of (or even alleged) “subterfuge ownership” or other abuse or

circumvention that would justify veil-piercing.177 Cadena fully disclosed the complicated FEMSA-

and Heineken-related corporate relationships, complexity driven by tax and corporate laws, and

TABC never alleged, much less demonstrated, that these entities were anything other than distinct

legal identities. The Legislature has repeatedly drafted language to forbid specific corporate

relationships involving parents, subsidiaries, affiliates, etc. It did not so do in section 102.07,

presumably on purpose.

The Court’s error here is two-fold: (1) it improperly ignores corporate separateness

(collapsing distinct legal entities across multiple levels throughout the FEMSA and Heineken

corporate families based solely on stock ownership), and then (2) interprets “interest” so open-

endedly that it prohibits nonprohibited relationships. TABC erred in treating far-removed entities

as one interconnected business enterprise and the Court compounds that error here. Cadena and

175
See Wasson Interests, Ltd. v. City of Jacksonville, 489 S.W.3d 427, 438 (Tex. 2016) (citing Ruttiger, 381
S.W.3d at 452).
176
See BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 799 (Tex. 2002) (requiring evidence of
parental control to “fuse” the parent and subsidiary for jurisdictional purposes).
177
See TEX. ALCO. BEV. CODE § 109.53; see also SSP Partners, 275 S.W.3d at 455 (holding “there must be
evidence of abuse, injustice, or inequity” to disregard corporate separateness) (cleaned up).

43
FEMSA are not a single retailer entity, nor are the Heineken Brewers and Heineken Holding

Companies a single brewer entity. The majority’s free-wheeling interpretation, disregarding

distinct legal identities, confers limitless power upon TABC. Unanchored in statutory text, the

Court’s interpretation grants TABC the authority to selectively and arbitrarily permit similar

applicants dissimilarly.

3. TABC’s Ascetic View That the Code Allows “No De Minimis Exception”—aka the
Single-Share Theory—Invites Absurd and Arbitrary Results

The Court today adopts TABC’s view that section 102.07(a)(1) covers not only every type

of interest, but also every quantum of interest, however slight and trifling. The Court offers

assurances that we aren’t dealing with a single-share issue here, concluding we need not decide

the issue.178 But the logically inescapable extension of interpreting “interest” to mean any financial

interest is the so-called single-share theory, an interpretation that would yield nonsensical results—

not just odd results, but preposterous ones. A single-share interpretation, as opposed to asking

whether an entity in one tier exerts control or influence over an entity in another tier, is neither

rational nor practical. No reasonable person could have intended it, which is the very definition of

absurdity. Indeed, changing “an interest” to “any interest”—and applying it across the board—

would require the revocation of many currently issued alcohol permits (those granted to brewers

178
Ante at ___.

44
and retailers alike).179 The absurdity bar in this Court is a high one,180 but the single-share theory

scales it—easily.

Under the Court’s hyperliteral interpretation of section 102.07(a)(1), an individual or

special-interest group could easily manipulate and potentially wreak havoc on the permitting

system. Everyone could be affected—from the mom-and-pop general stores that dot our rural

counties to the large retail chains with locations across the state and nation. Without the ability to

provide alcohol to their guests and customers, many of these establishments would be run out of

business. Under the Court’s restrictive view—a practical application of the single-share theory—

any person can unilaterally imperil the permit of a Texas business. How? Buy a share of stock in

that company. Then buy a share in another company permitted within another tier. According to

the Court and TABC, both companies are now in violation of section 102.07(a)(1) and must lose

their permits.181 A disgruntled employee could potentially buy shares in a retailer and a

manufacturer and ensure both will lose their permits. Motivated competitors could buy cross-

shares of both up-and-coming and long-standing industry rivals and end their quests for economic

success. The consequences of the Eighteenth Amendment could again be realized if modern-day

teetotalers obtained interests in different tiers of the industry in order to shut down the Texas

179
The Court insists we need not address the single-share theory, asserting, and eventually holding, that it
need only decide whether FEMSA has a prohibited interest without deciding what “interest” really means. But litigants
come to this Court seeking concrete guidance, not coy Magic 8 Ball responses like, “Ask again later” or “Better not
tell you now.” How can we apply a statutory term without knowing what it means? More to the point, TABC presented
its single-share theory at trial in this case to explain its legal basis for denying Cadena’s permit. TABC then continued
to defend the single-share theory before the court of appeals. Here, TABC says application of the theory is simply not
present. I disagree.
180
Jaster v. Comet II Constr., Inc., 438 S.W.3d 556, 569 (Tex. 2014) (plurality) (holding the absurd-result
bar is “high, [as] it should be.”) (quoting Combs v. Health Care Serv. Corp., 401 S.W.3d 623, 630 (Tex. 2013)).
181
See, e.g., TEX. ALCO. BEV. CODE § 102.01(j) (setting the penalty for a tied-house violation at suspension
or cancellation of a permit and ineligibility to reapply for one year).

45
alcohol trade. A lone citizen convinced of the evils of alcohol could use today’s holding to ensure

his neighborhood grocery store was alcohol-free. This is a ridiculous interpretation. And it not

compelled by a fair, contextual reading of section 102.07(a)(1).

Even without a bad actor spurred by malicious intent, the single-share theory will still affect

the management of mutual funds, insurance agreements, retirement plans, and nearly anyone with

a diversified portfolio.182 If section 102.07(a)(1) applies to any financial interest, then:

 Section 102.07(a)(2) prohibits a father who owns stock in a brewery from
giving a Christmas present to his son who owns stock in a retailer.183

 A neighbor who owns stock in one tier is forbidden from housesitting for a
neighbor with an interest in another tier.184

 A child with an investment account for college tuition can no longer receive his
allowance from parents who own even a single stock in a different tier of the
industry.185

 A bank cannot loan money to both a local brewer and a local retailer.186

If these situations seem impossible or far-fetched, it bears repeating: TABC insists there is

“no de minimis exception.” Their position, baked into today’s holding, inevitably leads to the

single-share rule, which, given the nature of modern stock ownership, mutual funds, and pension

182
TABC argues mutual funds should (and would) be treated differently, much like the rules governing the
recusal of judges contemplate and except most mutual funds from consideration. But as TABC is quick to point out—
no exception exists in section 102.07 for de minimis ownership or interest. So, too, the statute does not contain an
exception for participation in mutual funds. Instead it’s an all-or-nothing argument. If an interest means “any interest,”
then, absent an explicit exception, it necessarily includes mutual funds and the like.
183
See TEX. ALCO. BEV. CODE § 102.07(a)(2) (prohibiting cross-tier gifts of any “thing of value”).
184
See id. (prohibiting cross-tier furnishing or lending of “services”).
185
See id. (prohibiting cross-tier furnishing of money).
186
See id.

46
plans, would be tantamount to de facto Prohibition if enforced. TABC counsel agreed that under a

single-share rule, “a large number of current permit holders . . . are violating the statute.” And “if

the statute does impose share . . . prohibition,” that would “cause[] a lot of problems and would

result in a lot of cancellations and revocations.” Nonetheless, the Court, while acknowledging

TABC’s post-argument view that there is no de minimis exception, adopts an expansive

interpretation indistinguishable from the “one-share rule” and dictates a disquieting result:

Countless current permittees, including State permittees, are operating illegally by TABC’s own

admission.

TABC says regardless of whether the Code prohibits de minimis cross-tier interests,

“TABC need not enforce that prohibition against a de minimis interest.” Today’s case, though, is

about selective permitting, not selective enforcement. This is a permitting case, not an enforcement

case. The Legislature sets the permitting criteria, not TABC. The question is simply stated: Does

Cadena meet the objective statutory criteria? Either Cadena qualifies for a retailer permit or it

doesn’t. And if Cadena qualifies, TABC has no discretion to deny the permit. Courts, including

the U.S. Supreme Court, have repeatedly recognized that selective permitting, unlike prosecutorial

discretion, is impermissible where someone is “treated differently from others similarly situated”

with “no rational basis for the difference in treatment.”187

TABC contends, “it is one thing to interpret a statute as being applicable to a certain factual

scenario, and quite another to enforce it in that scenario,” adding, “just because an agency

interprets a statute to apply in a particular situation does not mean the agency must always enforce

187
Village of Willowbrook v. Olech, 528 U.S. 562, 564 (2000); see also Lindquist v. City of Pasadena, Tex.,
525 F.3d 383, 387 (5th Cir. 2008).

47
it in that situation.” The rules are the rules, and I am unaware of any principled basis, certainly

none required by the Code, for applying them differently to different companies. Alcohol laws are

complex, but the Rule of Law requires uniformity, not selective enforcement and anticompetitive

favoritism benefitting preferred permittees.

Every industry actor has an “interest” in knowing what Texas law does and does not

require. Every industry actor has an “interest” in TABC adopting a consistent permitting approach

that applies the law uniformly to incumbents and newcomers alike. It is not enough to cast the

single-share situation as a purely hypothetical scenario and insist that TABC would refrain from

expending its enforcement resources in such an audacious way. In this Court, TABC was unwilling

to defend the single-share theory yet also unwilling to disavow it. It dismisses the single-share

standard as a fictitious stalking horse that it refuses to dismount.

At oral argument, the State reaffirmed its view that the statute contains no de minimis

exception and that numerous current permittees are in violation of Texas tied-house laws:

JUSTICE BROWN: But under the interpretation that the agency favors, aren’t there
already a large number of current permit holders who are violating the statute?

ATTORNEY: There are, there are. And this gets through to the distinctions
between interpretation of the statute and enforcing it.

* * *

JUSTICE BROWN: But it’s the agency’s position that there is not a de minimis
exception, correct?

ATTORNEY: There is no de minimis exception.

* * *

CHIEF JUSTICE HECHT: I take your point about the difference between
enforcement and licensing. But if the statute does impose a single-share prohibition,
can it practically be enforced?

48
 ATTORNEY: Probably not or at least in the way that causes a lot of problems and
would result in a lot of cancellation or revocations. But again, we don’t have any
evidence that that’s happening.

TABC asserts it is “not trying to walk away from” the one-share rule; it will just never enforce it.

Startlingly, the Court seems untroubled by TABC’s insistence on an admittedly unenforceable

standard that arbitrarily favors some businesses and disfavors others.

Again, every Texan possesses a legitimate “interest” in knowing what Texas law prescribes

and proscribes and that those in power will enforce it evenhandedly. TABC, when pressed for a

principled basis for treating similar businesses dissimilarly, responds: fear not—lack of

enforcement resources will prevent uniform enforcement of its “no de minimis exception” position.

This is distressing.

Legal rules must apply consistently to everyone, meaning TABC treatment of industry

upstarts must match TABC treatment of industry heavyweights. TABC’s enforcement regime

today can fairly be described as passive-aggressive: passive for some, aggressive for others. “[N]o

de minimis exception” is synonymous with “no limit to our discretion.” But equal treatment under

the law means precisely that, not vesting regulators with standardless power to play legal favorites.

As noted above, TABC promises to exercise prosecutorial discretion in enforcing its

expansive interpretation of the statute, partially by admitting its inability to enforce uniformly a

single-share rule. Indeed, TABC’s denial of Cadena’s application clashes with its treatment of

other similarly situated permittees. The record shows billions of dollars of cross-tier ownership by

permittees at the retail and brewer tiers. Cadena’s application was rejected while other retail

permittees simultaneously own stock in publicly traded manufacturers.

49
 Interpreting a statute in a manner that ratifies unequal enforcement is odd. Our focus should

not be on line-drawing—isolating the lowest percentage below which ownership interests must

fall to satisfy section 102.07(a)(1). Instead, we should read “interest” in the context of related

statutes, particularly the codified purpose of ensuring actors’ “independence.” This non-ascetic

reading yields a more contextual and thorough understanding of “interest”: a financial stake

sufficient to exert cross-tier influence or coercion.

A common-sense reading of the Code is especially warranted here given the Legislature’s

express admonitions against “subterfuge and related practices” by industry participants. 188 When

it comes to liquor regulation, the path of the law has been a rocky one. Perhaps because of the

long, colorful history of liquor regulation and the difficulties governments invariably experience

in attempting to regulate alcohol, the Legislature has inserted repeated statutory edicts into the

Code that prohibit specific conduct as well as any “subterfuge” whereby industry participants

engage in gamesmanship that technically complies with the Code but undermines its goals. In my

view, prohibiting subterfuge should cut both ways, by seeing through attempts to avoid compliance

but also by avoiding hyper-technical constructions that find violations defying common sense. The

Legislature’s unease with artifice should dissuade interpretations that invite nonsensical ripple

effects that either permit proscribed conduct or proscribe permitted conduct.

188
See TEX. ALCO. BEV. CODE § 102.07(a) (requiring certain payments by cash and further providing that
“[n]o holder of either type of license may use a maneuver, device, subterfuge, or shift by which credit is accepted”);
id. § 102.01(g) (“If a permittee secures a loan from a source outside the state, there is a presumption of a tied house
relationship or subterfuge . . . .”); id. § 109.53 (“It is the intent of the legislature to prevent subterfuge ownership of
or unlawful use of a permit or the premises covered by such permit; and all provisions of this code shall be liberally
construed to carry out this intent, and it shall be the duty of the commission or the administrator to provide strict
adherence to the general policy of preventing subterfuge and related practices hereinafter declared to constitute
unlawful trade practices.”).

50
 IV. CONCLUSION

During Prohibition, Americans seeking alcoholic refreshments scarpered to the black

market in mass disobedience. The “noble experiment” (President Hoover’s term)189 had many

ignoble consequences, however, and after the Twenty-First Amendment was ratified, states were

urged to adopt protective measures to forestall pre-Prohibition licentiousness and lawlessness.

President Roosevelt pleaded for temperance, condemning “the curse of excessive use of

intoxicating liquors” and imploring states to regulate liquor purchases in a way that avoided the

“repugnant conditions” that predated the Eighteenth Amendment: “I ask especially that no state

by law or otherwise authorize the return of the saloon in its old form or in some modern guise.”190

For 80-plus years, Texas’s tied-house laws have mandated a three-tiered alcohol industry—

producers, distributors, and retailers—to guard against the criminal element in alcoholic-beverage

trafficking and to prevent cross-tier ownership overlaps that induce coercion, monopolies, and

domination. With this in mind, in the tied-house context, “interest” should mean “control.”

This Court has a well-earned reputation for textualism, an interpretive mooring that prizes

clear interpretive rules, eschews legal dice-loading, and minimizes judicial lawmaking. Policy

calls are for the political branches, not adventurist, reform-minded judges. Fidelity to text, by

curtailing judicial discretion and prizing well-defined rules consistently applied, best secures

certainty and thus the Rule of Law. Unlike other methods of interpretation, like purposivism,

scrupulous textualism is politically agnostic, and proudly so—caring not whether a result scratches

189
Herbert U. Feibelman, Another Noble Experiment, 34 COM. L. LEAGUE J. 152 (1929).
190
Presidential Proclamation, Dec. 5, 1933; see also “Prohibition Repeal is Ratified,” N.Y. TIMES, Dec. 5,
1933, at A1.

51
an ideological itch, but only whether interpretive principles are applied forthrightly to honor the

political bargains of legislators, whatever color their jersey.

That said, interpretation is done by flesh-and-blood people, and as this case shows,

textualism does not guarantee unanimity. Some disputes are hard, and avowed textualists will

disagree. Chief Justice Marshall observed the slipperiness of words nearly two centuries ago:

“Such is the character of human language, that no word conveys to the mind, in all situations, one

single definite idea . . . .”191 Words are slippery, and interpreting slippery words eludes robot-like

precision. Textualist readers invariably read text variably. Judges seize upon different interpretive

clues and balance them differently, not to reach a desired outcome but through earnest grappling.

Determinations can be particularly indeterminate when excavating how an original interpretive

community, perhaps generations or centuries ago, understood the language they enacted. That’s

why we’re a nine-member Court, in hopes that collaborative (and hopefully collegial) jousting will

sharpen our analysis.

The Court doubtless believes its hyperliteral interpretation—reading “an interest” as “any

interest”—is more pragmatic and workable. I disagree with this consequentialist view, which, in

any case, does not square with reality, given the irrationality of the single-share theory. Our

commitment to judicial textualism and self-abnegation requires us to honor what has been written.

Judges ought neither draft laws nor revise them under the guise of interpreting them. Rather, we

should seek an objective basis for interpretation, namely the semantic, contextual meaning of the

191
McCulloch v. Maryland, 17 U.S. (4 Wheat) 316, 414 (1819).

52
words themselves.192 The term “interest” may seem all-encompassing standing alone, but as

explained above, context clarifies content. Courts are tasked every day with assigning meaning to

imprecise language. Isolating the exact point when an “interest” becomes unduly influential or

coercive resists mathematical certainty. But it is no more blurred as when judges determine under

the U.S. Constitution when a search is “unreasonable”193 or bail “excessive”194 or cause

“probable”195 or punishment “cruel and unusual.”196 These are vexing, fact-laden inquiries,

requiring judges to be judgmental.

Unfortunately, the Court adopts a construction of “interest” so stringent as to deform fair

meaning. TABC does not dispute that numerous current permittees hold billions of dollars in so-

called cross-tier investments, and nothing like the evils that plagued the classic tied-house

paradigm of saloons controlled by breweries has befallen Texas. It blinks reality to grumble that

the State’s entire regulatory scheme hangs in the balance when TABC countenances scores of

overlapping interests that, under its “no de minimis exception” position, are illegal and ripe for

revocation. If anything threatens functional derailment of the three-tier system, it is strict, no-

favorites enforcement of TABC’s no-exception standard.

FEMSA’s equity stake in the Heineken Holding Companies does not implicate section

102.07(a)(1)’s concern with retailer-manufacturer overlap. The Court seeks to enforce “strict

192
“We do not inquire what the legislature meant; we ask only what the statute means.” Oliver Wendell
Holmes, The Theory of Legal Interpretation, 12 HARV. L. REV. 417, 419 (1899).
193
U.S CONST. amend. IV.
194
U.S. CONST. amend. VIII.
195
U.S. CONST. amend. IV.
196
U.S. CONST. amend. VIII.

53
separation” between the three tiers, but the Legislature does not proscribe all cross-tier

relationships, only specifically enumerated ones. The Code is a hodgepodge of laws enacted since

Prohibition’s repeal, and lawmakers over time have tweaked the Code, inviting overlap through

exceptions to the three-tier system. For example, wineries can operate across all three tiers;197

brewpubs can sell their product directly to retailers;198 small brewers and manufacturers can

distribute wholesale and sell retail;199 package stores can also be local distributors.200 Strict in

rhetoric is sometimes lenient in reality.201

Nothing in section 102.07 addresses, much less forbids, an applicant’s parent company

from having an indirect minority stock ownership in the parent companies of non-resident brewers.

The Code’s overriding goal of safeguarding “independence”—the absence of control, coercion,

and subjection—is not imperiled by such attenuated, far-removed connectedness that doesn’t

portend vertical domination, or even trace influence.

The state vested TABC with authority to regulate the alcoholic-beverage industry, and

history provides a backdrop for the wisdom of tied-house statutes. But no state agency should be

able to discriminate indiscriminately. TABC’s “no de minimis exception” standard confers vast

197
TEX. ALCO. BEV. CODE § 16.01.
198
Id. § 74.03(a).
199
Id. § 12.052.
200
Id. § 22.03(a).
201
That said, some Texas liquor restrictions are quite sacrosanct, and unique to the Lone Star State, For
example, privately held companies can sell hard liquor in Texas while publicly traded companies cannot. TEX. ALCO.
BEV. CODE § 22.16. Another example: the five-permit cap on liquor store ownership. Id. § 22.04. Under Texas law,
no person can hold more than five “package store” permits, but certain people avoid the cap by consolidating permits
“into a single legal entity” with their parents, siblings, and children, a maneuver that frees them to own an uncapped
number of liquor stores. Id. § 22.05. Consanguinity matters, and so does incumbency—businesses established before
May 1, 1949 are exempt from the five-permit limit. Id. § 22.04(c).

54
autonomy and conjures an erratic system of constantly moving goalposts. Government must not

treat similarly situated parties dissimilarly, playing regulatory favorites by applying different

standards to different companies.

Such effects were in fact predicted by the authors of Toward Liquor Control in 1933:

Any licensing system tends to project the whole question into politics and to keep
it there. Indeed, it compels the traffic to be in politics of self-protection. The
licensing body becomes a powerful political engine. Every licensee . . . begins to
marshal his own political strength to serve his own ends.202

Section 102.07(a)(1) prohibits one with an interest in a brewer from having a direct or

indirect interest in a retailer. Neither Cadena (the applicant) nor its distant parent FEMSA

influences or controls the business of the Heineken Brewers in such a way as to hazard the

Brewers’ “independence.” It is fanciful to contend that Texas tied-house laws, explicitly aimed at

preserving actors’ independence, are remotely imperiled.

On this record—corporate separateness cemented by a governance agreement that denies

FEMSA any form of influence that would imperil the Code’s stated goal of “independence”—

there is no prohibited, cross-tier “interest” under section 102.07(a)(1). Because the Court holds

otherwise, I respectfully dissent.

__________________________________________
Don R. Willett
Justice

OPINION DELIVERED: April 28, 2017

202
FOSDICK, supra note 47, at 59.

55
 DOES THE BREWER HAVE AN INTEREST SUFFICIENT TO AFFECT THE INDEPENDENCE OF THE RETAILER?
FEMSA OWNERSHIP STRUCTURE
Mexican Families
and companies

HEINEKEN OWNERSHIP STRUCTURE
Mexican Control Trust Free float

38.69% 61.31%
Heineken Family Greenfee B.V.

Fomento Económico Mexicano, S.A.B. de C.V. 88.55% 11.45%

(Mexican Holding)
Shares listed in Mexico and NY
LÁrche Green Free Float

99.999%
99.999% 99.999% 100%
51.083% 33.982%
44.999%
Emprex Franquicias, 0.001% Grupo Industrial Information based Priority
TH Beer Equity Ltd
S.A. de C.V. Emprex, S.A. de C.V. on public sources Shareholders
(UK)
(Mexican Holding) (Mexican Holding ) Cía Internacional de
Bebidas, S.A. de C.V.
0.001% (Mexican Holding ) 25% 0.001%
0.001% Heineken Holding NV
99.999% 99.999%
(the Netherlands)
0.001% Shares listed in
Perfil Corporativo, Emprex Servicios, 30% CB Equity LLP Registered Owner 14.935% Free Float
S.A. de C.V. S.A. de C.V. Euronext Amsterdam
(Mexican Holding ) (UK)
0.001% (Mexica Holding )
General Partner A General Partner A 50.005% 37.463%

0.001% 99.999% 99.9998% 100%
In the Mexican law there is a
Limited Heineken NV
requirement that each
Partner
company shall have at least 2 General Partner B Premium Enterprise General Partner B (The Netherlands)
FEMSA Comercio, S.A. de C.V. 0.0001% *12.532%
shareholders, this is the reason 0.0001% Management B.V. Shares listed in
why there’s a shareholder with (Mexican Holding )
0.0001% (The Netherlands) 0.0001% Euronext Amsterdam
0.001% in each

100% CV1 Netherlands Beer CV2 Dutch Equity
Partnership One C.V 99.9998% Partnership Two C.V.
(The Netherlands) (The Netherlands)
Limited Partner Information based on research and
other sources that can not be verified and there may
(Beneficial Owner) be some other intermediate companies

Cadena Comercial USA Corp. Heineken Brouwerijen
(Texas) Heineken Italia CCM – (Mexico)
(The Netherlands)

RETAILER
BREWER