Md. high court to consider Baltimore board’s power to suspend liquor licenses

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Maryland’s top court will consider whether Baltimore bar owners can be stripped of their liquor licenses for illicit sexual activity that occurs in their taverns regardless of whether they knew.

The Court of Appeals has agreed to hear the city liquor board’s appeal of a lower court decision that overturned the board’s one-month suspension of Steven Kougl’s license for Club Harem. The board acted based on evidence that an employee at the bar and strip club invited a city detective to touch her breasts and moments later agreed to have sex with him for $100 plus the cost of the room.

In June, the intermediate Court of Special Appeals overturned the suspension, saying the board’s rules enable it to suspend licenses only if the licensee had actual knowledge of the illicit activity or should have known about it through the exercise of reasonable care and diligence. The court held such actual or “constructive” knowledge is necessary based on the rules’ requirement that a licensee not “permit or suffer” any employee soliciting anyone for prostitution or immoral purposes.

The words “permit” and “suffer” imply “knowledge, a willingness of the mind and responsible control or ability to prevent,” the intermediate court said.

But Maryland Attorney General Brian E. Frosh, in pressing the board’s high-court appeal, argued the words have broader meaning and enable bar owners to be held responsible for illicit activities of which they have neither actual nor constructive knowledge.

For example, to “permit” something to occur, one need not have knowledge of its occurrence but could merely provide an “opportunity for” it to happen, as in “lax security permitted the escape,” Frosh, citing Black’s Law Dictionary, stated in his written filing with the high court. In addition, the Merriam-Webster online dictionary defines permit as “to make possible,” he added.

“Obviously, these definitions do not require any advance or contemporaneous knowledge of the occurrence of each act that one ‘permits,’” Frosh wrote.

Frosh also urged the Court of Appeals court to defer to the liquor board’s interpretation of its own rules and agree that they allow licensees owners to be held strictly responsible for illegal activity that occurs in their bars.

“The agency presumably knows best the history of the rule and the need that prompted its adoption,” Frosh wrote in the petition co-signed by Assistant Attorneys General Brian L. Oliner, Michael J. Salem and Schonette J. Walker. “Because the intermediate appellate court failed to demonstrate that the liquor board’s interpretation of its rules is plainly erroneous or inconsistent with the regulation, further review is needed to provide an opportunity for this court to consider the liquor board’s license suspension in light of the correct level of deference to be afforded an agency’s interpretation of its rules under this court’s precedent.”

Kougl’s attorney, Peter A. Prevas, urged the high court in vain not to hear the board’s appeal, saying the Court of Special Appeals “thoroughly and correctly” reviewed the words “permit” and “suffer” in concluding that the liquor licensees must have “some level of knowledge” of the illicit activity. Licensees have historically been held strictly responsible only in cases when alcohol was sold to an underage customer, added Prevas, of Prevas & Prevas in Baltimore.

‘Do whatever’

The controversy arose April 25, 2013, when plainclothes detective Fletcher Jackson entered the club on East Baltimore Street as part of a prostitution investigation. Employee Jamaica Brickhouse allegedly asked Jackson to join her and he bought her a drink, according to the Court of Special Appeals’ opinion.

After some small talk, she allegedly exposed her breasts to Jackson, suggested a lap dance and a trip to a place where they could “do whatever.” Jackson asked how much it would cost for sex; she allegedly replied it would be $170 for the room plus a tip for services. Jackson said he would tip her $100 and she allegedly agreed, the opinion stated.

Brickhouse was issued a criminal summons eight months later but the state declined to prosecute.

The liquor board charged Kougl with the rules violations on July 2, 2014, nearly 15 months after the incident at the club.

A few weeks later, the board voted 2-1 to suspend Kougl’s license.

Kougl lost his appeal in Baltimore City Circuit Court before winning in the Court of Special Appeals.

The high court will likely hear arguments in the case in December and render its decision by Aug. 31, according to the Court of Appeals’ clerk’s office.

The case is The Board of Liquor License Commissioners for Baltimore City v. Steven Kougl et al., No 43, September Term 2016.