Md. high court: Baltimore bar owners can be held strictly liable for illicit acts

Baltimore bar owners can be stripped of their liquor licenses for illicit sexual activity in their taverns regardless of whether they knew it was occurring, Maryland’s top court unanimously ruled Friday.

In its 7-0 decision, the Court of Appeals reinstated a one-month suspension of the liquor license at Club Harem, owned by Steven Kougl. The intermediate Court of Special Appeals had lifted the suspension last year after ruling that bar owners can be held liable only if they knew or reasonably should have known of the illicit behavior.

But the Court of Appeals said owners can be held strictly liable by Baltimore’s liquor board.

The high court noted that liability attaches under the board’s rules if the owners “permit or suffer” or “allow” an employee to solicit anyone for prostitution or other immoral purposes. None of these words require actual or constructive knowledge by the owner, only that he or she provided the opportunity for the behavior to occur, Judge Sally D. Adkins wrote for the court.

“Just as lax security could permit an escape without knowledge that it is happening, licensees can permit prohibited conduct without knowledge of the offending behavior,” Adkins wrote. Similarly, an owner can “allow” illicit behavior to occur without any knowledge it is happening, she stated.

In addition, holding owners strictly liable “comports with the purpose of Maryland’s liquor regulations, which seek to ensure respect and obedience for the law,” Adkins wrote. She cited approvingly a Wisconsin Supreme Court decision that found strict liability “a price that the licensee pays for the privilege of being licensed.”

Albert J. Matricciani Jr., who chairs the Baltimore liquor board, said Monday that the high court’s decision upheld the city panel’s long-held position of imposing strict liability on licensees and not excusing their “willful ignorance” of illicit behavior in their bars.

“If you are running an establishment like that and there are things going on like those that were alleged in this case, it is hard to imagine that the proprietor, that the licensee, doesn’t know about it, and even if they don’t, they should,” said Matricciani, senior counsel at Whiteford Taylor Preston LLC in Baltimore and a retired Court of Special Appeals Judge. “You just can’t run an operation that way and be in compliance with our rules and regulations.”

Kougl’s attorney, Peter A. Prevas, voiced concern Monday that the Court of Appeals’ holding of strict liability could unfairly result in license suspensions or revocations for events beyond the licensees’ control, such as robberies.

“Hopefully, (the ruling) won’t be interpreted that broadly, but it is what it is,” said Prevas, of Prevas & Prevas in Baltimore. “Hopefully, (liquor boards) will appeal to a sense of fairness.”

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 court papers.

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.

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 last June.

The board then sought review by the Court of Appeals, which heard oral arguments in December.

The high court rendered its decision in The Board of Liquor License Commissioners for Baltimore City v. Steven Kougl et al., No 43, September Term 2016.