Cocktail Hour…A Challenge to Baltimore City’s Hours of Operation Limitations

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H.B. No. 954, Gen. Assemb., Reg. Sess., Chapter 389 (Md. 2022) (hereinafter “Chapter 389”) — went into effect on July 1, 2020 restricting Class B-D-7 beer, wine, and liquor license holders (tavern operators) from operating their businesses at certain hours. The law required that these types of license holders only operate until 10 P.M., regardless of when the establishment opened. The bill only applied to certain purportedly high crime areas with the stated purpose of reducing crime in those areas.

In Kim v. Board of Liquor License Commissioners for Baltimore City, Nos. 137, 140, 885, 886, Sept. 2021, 2022 WL 2336173 (June 29, 2022)(hereinafter “Kim”), the Court of Special Appeals reviewed petitions to the Board of Liquor License Commissioners for Baltimore City (“the Board”). Three liquor establishments (“Licensees”) were cited. It was uncontested that the Licensees were within the confines of the designated boundaries and that they were, in fact, operating outside the hours authorized by Chapter 389. What was challenged, and at issue for the Board, was the legality of Chapter 389. The Licensees proffered two arguments: (1) that Chapter 389 violated the “one subject” requirement contained in Article III, § 29 of the Maryland Constitution; and (2) that Chapter 389 violated the Fourteenth Amendment’s Equal Protection Clause (and thereby Article 24 of the Maryland Constitution).

The Board concluded that there was insufficient evidence to support an Equal Protection challenge and also found that Chapter 389 did not violate the “one subject” requirement of Article III, § 29. The Licensees filed petitions for judicial review in the Circuit Court of Baltimore City. The cases were assigned to two judges. One judge affirmed the Board on both arguments while the second judge reversed the Board on the Equal Protection argument, finding that the incorrect legal standard was applied. The Court of Special Appeals consolidated the cases and affirmed the Board’s decision on both arguments.

First, the Court of Special Appeals addressed the “one subject” argument under Article III, § 29 of the Maryland Constitution, which states in relevant part: “every Law enacted by the General Assembly shall embrace but one subject.” The Licensees argued that “limiting the hours of operation of one area of Baltimore City and granting the ability to exchange a Class B license for a Class [B-D-7] license in a separate discrete area are two different subjects[…and thus the] provision limiting the hours of operation should be stricken from the law as unconstitutionally violative of Article [III] § 29 of the Maryland Constitution.” Kim, 2022 WL 2336173 at *5. However, the Court rejected this argument explaining that the Licensees were misguided in the interpretation of the “one subject” rule. The Court opined that the rationale of the “one subject rule” was to prevent members of the legislature from either selfishly or surreptitiously inserting unnecessary provisions which, standing alone, would not receive enough support to pass.

Additionally, the Court noted that the other function of the “one subject” rule was to protect the integrity of the governor’s veto power. The “one subject rule” prevents the governor from having to refrain from vetoing a  bill with one desirable matter for the people and one undesirable. The “one subject” rule prevents the legislature from attempting to use a bill as a means of slipping in unrelated provisions, knowing the addition could not stand alone. The Court relied on Porten Sullivan Corp. v. State, 318 Md. 387 (1990). Under Porten Sullivan Co., the two provisions must share the “requisite ‘connection and interdependence’” to survive a “one subject” challenge. Kim, 2022 WL 2336173 at *10 (citing Porten Sullivan Corp., 318 Md. at 407). Specifically, the Court of Special Appeals held that both provisions regulated the sale and distribution of alcohol in Baltimore City, and both clearly refer to the same subject matter. Moreover, the acts of the General Assembly did not suggest, nor was there evidence to support, that legislators were “selfishly or surreptitiously inserting unnecessary provisions.”

In denying the Equal Protection argument, the Court explained that there was no evidence of a racially discriminatory intent to trigger a strict scrutiny review needed for an Equal Protection challenge. The Court acknowledged that while no equal protection clause is contained in the Maryland Constitution, it is well settled that the Due Process Clause of the Maryland Constitution—contained in Article 24 of the Declaration of Rights—embodies the concept of equal protection to the same extent as the Equal Protection Clause of the Fourteenth Amendment. Thus, the Court turned to the Fourteenth Amendment for guidance on the issue.

The Licensees argued that strict scrutiny is the only appropriate lens for this Equal Protection claim because although the law is facially neutral, race is implicated. The Licensees contended that the impacted district is almost exclusively African American and restricting the hours unfairly targets a suspect class. However, the Court explained that “evidence of a racially disproportionate impact, standing alone, is insufficient to prove a violation of the Equal Protection Clause.” Kim, 2022 WL 2336173 at *13 (citing Washington v. Davis, 426 U.S. 229, 242 (1976)). Rather, proof of a racially discriminatory intent or purpose is required to show a violation. The Complaining party must make a prima facie showing of intent before the burden shifts to the State to rebut the presumption of unconstitutional action. Id.

The Court considered the Licensees’ evidence of Census data, showing the racial distribution of different neighborhoods in Baltimore City but determined that this evidence did not support discriminatory intent worthy of applying strict scrutiny. Moreover, the Court expressed that a thorough review of the record, including all legislative history materials, reveals “that the sponsors and supporters of Chapter 389 were solely focused on curtailing crime in the region—not on discriminating against a suspect class.”

In conclusion, the Court disagreed with the Licensees’ “one subject” argument and because they failed to carry their burden of proving that discriminatory purpose was a motivating factor in the enactment of Chapter 389, the Equal Protection claims failed.