Kougl v. Board of Liquor License Commissioners
137 A.3d 1062
Md. Ct. Spec. App.2016Background
- Steven Kougl owned Club Harem and held a Baltimore City liquor license; on April 25, 2013 an undercover officer testified a dancer exposed her breasts and solicited sex at the club.
- The Liquor Board charged Kougl with violations of Rule 4.17(a) (solicitation/prostitution), Rule 4.17(b) (indecent exposure/obscenity), and Rule 4.18 (illegal conduct/public morals).
- At the July 17, 2014 hearing Detective Fletcher Jackson was the only prosecution witness; Kougl testified but did not directly dispute the detective’s account.
- The Board found Kougl guilty by a 2–1 vote and suspended his license for one month; Kougl sought judicial review in the Circuit Court, which affirmed.
- On appeal to the Court of Special Appeals the principal contested legal question was whether the Board’s use of the words “suffer,” “permit,” and “allow” imposes strict liability on licensees or requires proof of knowledge (actual or constructive).
- The court concluded the Board’s factual summary was sufficient for review but reversed the Board’s findings because there was no evidence Kougl had actual or constructive knowledge of the employee’s conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of Board findings | Kougl: Board statements lack specific findings of fact to permit meaningful review | Board: informal findings and post-hearing "Board Summary" suffice | Held: Board’s oral statements plus Board Summary provided sufficient factual basis for review |
| Whether Rules 4.17/4.18 impose strict liability | Kougl: Rules require proof that licensee "suffered/ permitted/allowed" conduct — i.e., some level of knowledge | Liquor Board: terms impose strict liability; comparable to strict rule for sales to minors | Held: "suffer/permit/allow" imply knowledge; Board erred treating them as strict liability |
| Type of knowledge required | Kougl: no evidence of actual or constructive knowledge here | Board: insisted licensee liability exists regardless of knowledge | Held: knowledge element can be satisfied by actual knowledge (including willful blindness) or constructive knowledge (what licensee should have known with reasonable diligence) |
| Application to this record | Kougl: no evidence of actual/constructive knowledge; long delay in prosecution undercuts inference of licensee knowledge | Board: relied on crediting detective’s testimony and general rule of licensee responsibility | Held: No evidence supported finding Kougl had actual or constructive knowledge; convictions reversed and case remanded to enter judgment reversing the Board |
Key Cases Cited
- City of West Allis v. Megna, 133 N.W.2d 252 (Wis. 1965) (held statutory use of “suffer/permit” imposed strict liability on licensee)
- Division of Alcoholic Beverage Control v. Maynards Inc., 927 A.2d 525 (N.J. 2007) (interpreting "allow/permit/suffer" as imposing licensee responsibility regardless of knowledge)
- Full Moon Saloon, Inc. v. City of Loveland, 111 P.3d 568 (Colo. App. 2005) (construed “permit” to require actual or constructive knowledge; constructive knowledge suffices)
- Laube v. Stroh, 3 Cal. Rptr. 2d 779 (Cal. Ct. App. 1992) (licensee must have actual or constructive knowledge before being found to have "permitted" conduct)
- Leake v. Sarafan, 35 N.Y.2d 83 (N.Y. 1974) ("suffer/permit" implies knowledge or opportunity through reasonable diligence to acquire knowledge)
- Hoyle v. Bd. of Liquor License Comm’rs for Balt. City, 115 Md. App. 124 (1997) (distinguished: Rule forbidding sale to minors upheld as strict liability because it contains no permissive/knowledge language)