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By Kendall Camuti, Esq.

Holding

A Maryland statute that allowed certain beer, wine, and liquor license holders in a certain area of a legislative district to exchange their licenses for other licenses under certain circumstances and restricted the hours of operation for certain licensees in a separate area of the same legislative district did not violate the one subject requirement in Article III, § 29 of the Maryland Constitution and was not shown to violate equal protection as guaranteed by the Fourteenth Amendment to the United States Constitution and Article 24 of the Maryland Constitution.

Opinion By: J. Beachley

Summary

Three Class B-D-7 beer, wine, and liquor license holders (the “Licensees”) in Baltimore City (the “City”) were cited for violating a statute that (i) allowed Class B beer, wine, and liquor license holders in a certain area of the City to exchange their licenses for Class B-D-7 licenses, provided that the license holder executed a memorandum of understanding with a local community association; and (ii) restricted the hours of operation for Class B-D-7 licenses in a separate area of City where the Licensees where located.  The Licensees challenged their citations before the Board of Liquor License Commissioners for Baltimore City (the “Board”), arguing that the statute was unconstitutional because (i) it violated Article III, § 29 of the Maryland Constitution, which requires that all laws enacted embrace but a “single subject” and; (ii) it violated equal protection as guaranteed by the Fourteenth Amendment to the United States Constitution and Article 24 of the Maryland Constitution, because the law improperly targeted African Americans because the restriction of operating hours impacted a predominantly African American community.  The Board held that the statute did not violate the single subject requirement and that the Licensees did not produce evidence to support their equal protection claim.  The Licensees appealed the Board’s decisions to the Circuit Court for Baltimore City.  The Circuit Court affirmed the Board’s decision with respect to the single subject holding but reversed the Board’s decision with respect to the equal protection holding.  On appeal from the Circuit Court, the Court of Special Appeals (now known as the Maryland Appellate Court) affirmed the Board’s original decisions.

Analysis

The Maryland Appellate Court began its analysis by discussing the rationale underlying the single subject provision.  First, it “prevent[s] members of the legislature from either selfishly or surreptitiously inserting unnecessary provisions which, standing alone, would likely not receive sufficient support to pass.”  Second, it preserves the integrity of the governor’s veto power by preventing “a practice under which the legislature could include in a single act matters important to the people and desired by the Governor and other matters opposed by the Governor or harmful to the welfare of the state, with the result that in order to obtain the constructive or desired matter the Governor had to accept the unwanted portion.”  The Court then noted its historically deferential approach to evaluating whether legislation violated the single subject rule, noting that a statute violates the single subject requirement only when the statute involves “two distinct and incongruous subjects” but that “a statute’s constitutionality may be upheld if the act’s subjects are ‘germane’ to one another, meaning that they have a ‘connection and interdependence’.” The Court further noted that “[i]f several sections of the law refer to and are germane to the same subject-matter, which is described in its title, it is considered as embracing but a single subject, and as satisfying the requirements of the Constitution in this respect.”  Applying these concepts, the Court held that, although the statute accomplished two separate things, the statute clearly referred to and were germane to the same subject matter—the overall regulation of alcohol in the City—and the statute thus did not violate the single subject requirement.  Additionally, the Court found that the legislative history showed that the two components of the statute were not put together in a way that implicated the underlying rationale for the requirement.

Next, the Maryland Appellate Court addressed the Licensee’s argument that the statute failed the “strict scrutiny” test and thus violated equal protection as guaranteed by the United States and Maryland Constitutions.  The Court noted that the strict scrutiny test applies when evaluating a statute that “‘creates a distinction based upon clearly suspect criteria (such as race, gender, religion, or national origin), or when it infringes on a ‘fundamental’ right.’”  The Court then noted that the strict scrutiny test “will invalidate a statute … unless it ‘is necessary to promote a compelling governmental interest.’”  Finding that the statute is facially neutral, the Court held that the Licensees had the burden of establishing that a discriminatory purpose was a motivating factor in enacting the statute.  In reviewing the record, the Court found that the Licensees relied only on legislative history materials concerning the statute and Census data showing that the areas of the City affected by the operating restrictions were all approximately 90% African American but that contiguous areas of the City unaffected by the statute were closer to 5% African American.  Based on the record, the Court held that “The Licensees failed to meet their burden. Their reliance on the legislative history materials concerning Chapter 389, as well as the Census data showing the racial distribution of different neighborhoods in Baltimore City simply show, at most, a racially disparate impact. That evidence does not, however, demonstrate the discriminatory intent or purpose necessary to support strict scrutiny review for equal protection purposes. In fact, our thorough review of the record in this case, including all of the legislative history materials available from the General Assembly, 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.”

Full opinion available HERE | MSBA Business Law Section Blog HERE


Kendall Camuti is a member of the McNees Real Estate and Construction Group, where he counsels clients on a wide range of issues, including real estate sales and development transactions, commercial leasing, mergers and acquisitions, and business planning, as well as general corporate matters.