Thana v. Board of License Commissioners

ROBERT A. ZARNOCH, J. (Retired, Specially Assigned). In this appeal of a decision of the Circuit Court for Charles County, a liquor licensee seeks to raise a First Amendment challenge to a “consent order” of a county liquor board that prevented the establishment from offering “go-go entertainment.” In musical terms, this case, at first glance, may look like The Miracles’ 1965 hit, “Going to a Go Go” meets 1984’s “Footloose.” 1 Ultimately, we conclude that, because of waiver and preservation problems, the appropriate tune is the Grass Roots’ 1967 hit, “Things I Should Have Said.” This case revolves around go-go, but not the go-go that Smokey Robinson and the Miracles sang about in 1965. Go-go music — an offshoot of funk — originated in Washington, D.C., in the 1970s, and is characterized by a syncopated drum beat and call and response. 2 In 2012, appellants Thai Seafood & Grill, Inc., trading as Thai Palace, a restaurant and bar in Waldorf, Sutasinee ⁵⁵⁹ Thana, and Michael J. Lohman (“Thai Palace” or “licensee”), proposed and consented to restrictions on the use of promoters and on providing go-go entertainment in exchange for the ability to present live entertainment at the restaurant as reflected in a consent agreement with appellee, the Board of License Commissioners for Charles County (the “Board”).

Soon after, the Charles County Sheriffs Office received information that Thai Palace was using promoters and playing go-go music. The Board brought an enforcement proceeding against Thai Palace, and after a hearing, found that it had violated the consent order. Thai Palace raised no constitutional objection at this time. The Board revoked Thai Palace’s liquor license and its ability to host live entertainment.

Thai Palace petitioned the Circuit Court for Charles County to review the Board’s decision, arguing, inter alia, for the first time that the restrictions in the second consent order violated the due process and equal protection clauses of the Fourteen Amendment to the U.S. Constitution. After a hearing held on June 28, 2014, the circuit court denied Thai Palace’s petition in part in an order and memorandum opinion entered on October 15, 2014. 3 Thai Palace then appealed to this Court. Now for ⁵⁶⁰ the first time on appeal, the licensee raises a First Amendment challenge to the 2012 consent order. Thai Palace now presents the following questions for our review, which we have consolidated and rephrased: I. Whether this Court should dismiss the appeal as moot because the consent order at issue expired on January-12, 2015, prior to oral argument?

II

Whether substantial evidence supported the Board’s finding that Thai Palace used promoters who maintained control over the entertainment provided on site?

III

Whether Thai Palace preserved its First Amendment argument and whether it waived its right to raise constitutional issues when it entered into the consent agreement with the Board? And, if the issue is preserved and not waived, whether a liquor board violates a licensee’s free speech rights under the First Amendment of the United States Constitution and the doctrine of unconstitutional conditions when it conditions certain benefits of a liquor license upon the business not providing a certain type of music? We hold that the case is not moot, but that the licensee’s constitutional claim is not properly before us. Thus, we affirm the circuit court and the decision of the Board.

BACKGROUND It is helpful to provide some background from the record on the incidents that occurred prior to the proceedings at issue here and the interactions between Thai Palace, the Waldorf community, and the Board. From 2006 through 2008, police responded to numerous reports of fights, disorderly behavior, controlled-dangerous substance violations, and concealed weapon violations at the location of the licensee’s restaurant. In 2007, these incidents resulted in 35 adult arrests and 35 juvenile arrests. That year, Thai Palace’s alcoholic beverage ⁵⁶¹ license was revoked after it hosted entertainment that featured nudity — a violation of the Alcoholic Beverages Article, Article 2B of the Maryland Code (1957, 2011 Repl.Vol.). 4 From 2007 to 2009, after the liquor license was revoked, Thai Palace held regular go-go events hosted by promoters.

During this time period, the Charles County Sheriffs Office received numerous calls reporting criminal activity, including fights, disorderly behavior, and controlled-dangerous substance violations. On August 13, 2009, the Board held a hearing in which it considered Thai Palace’s application for a Class B, beer, wine, and whiskey, liquor license. 5 Following the hearing, on November 12, 2009, the Board issued a consent order (the “first consent order”) in which it imposed several conditions on the restaurant, including the condition that “there shall be no entertainment other than dinner music from either a radio and/or t.v. and that there will be no other source of entertainment without prior written approval of the Board ...” The order provided that it “shall remain in effect until changed by the Board of License Commissioners[.]” The first consent order remained in effect for two years without incident. In 2011, Thai Palace requested that the ⁵⁶² Board rescind the earlier consent order to allow the restaurant to once again provide live entertainment. The licensee assured the Board that it would “maintain control over arranging ... entertainment and [would] not use an outside promoter to do so”, and that it would not “offer any ‘go-go’ type entertainment.” Following a hearing on December 11, 2011, the Board issued a second consent order on January 12, 2012, modifying the conditions imposed on the restaurant.

Under the second consent order, Thai Palace was “authorized to offer additional entertainment in the licensed premises to include instrumental and acoustical music; Karaoke; DJ music and dancing[.]” However, the order restricted Thai Palace from allowing “an outside promoter to maintain control of any entertainment” and from offering any “ ‘go-go’ entertainment^]” These provisions were obviously a response to the police involvement at the establishment from 2007 to 2009 and were designed to limit the size and unruliness of the crowds in and around Thai Palace. The order was also to “remain in effect for a period of three years from the effective date of this order and shall act as an endorsement on the alcoholic beverage license issued to the licensees for the same three year period[.]” It further provided that, “upon the expiration of three years from the effective date of this order, ... this Order shall expire and be null and void and of no further effect.” The order was signed for the Board by a Charles County assistant county attorney and by the chairman of the Board of License Commissions for Charles County, and “[a]pproved and [consented to” by Suta-sinee C. Thana, Michael J. Lohman, and their attorney, David J. Martinez, for Thai Palace. A year after the issuance of the second consent order, the Charles County Sheriffs Office sent a memorandum to the Board, detailing several violations of the second consent order. On June 20, 2013, the Board issued a show cause order to Thai Palace that alleged that the restaurant hosted numerous events that were advertised by promoters and that featured go-go music. ⁵⁶³ The Board held a hearing on December 12, 2013, to review the alleged violations of the second consent order.

The Board’s attorney called Master Corporal Judith Thompson of the Alcohol Enforcement Unit at the Charles County Sheriffs Office. Officer Thompson provided the details of her investigation, which commenced in February 2012. She described flyers and Facebook posts that advertised purported go-go bands at the restaurant. Several of these advertisements contained names of promoters and used the words “promoted by,” described in further detail below.

The Board’s attorney then called Officers Curtis and Chandler, also with the Charles County Sheriffs Office, both of whom worked security for Thai Palace as second jobs. They each testified that they observed go-go music playing at Thai Palace on several occasions while they were working. Officer Curtis stated that she observed go-go music on two occasions while the second consent order was in effect. When asked how she knew that it was go-go music, she stated “Just from my generation, growing up.

Going to school, I know what go-go music is____ [from] personal experience.” She described go-go music as “go-go music is a — to me is people— a lot of bass, drums, talking — you know, kind of screaming somewhat into the music, very fast beat.... It’s hard to explain.” She also commented on the difference between go-go and rhythm and blues as: “Go-go has — it’s pretty much the same beat. Whatever song is played, it’s the same beat, same fast-paced beat. R & B is different beats, different sounds, different words, everything is different.” Officer Chandler stated that she observed go-go bands playing at Thai Palace about five or six times, but could not recall the dates.

She knew that it was go-go music from personal experience, and when asked to define go-go music, Chandler stated “It’s just a different sound, a different beat. I really can’t explain what it is.” The Board’s attorney then rested its case and counsel for Thai Palace called Mrs. Thana to testify. When questioned about promoters and how Thai Palace chose and booked ⁵⁶⁴ entertainment, Mrs. Thana testified that she made appointments to meet with the bands and told them of the restrictions on playing go-go music. 6 Mrs. Thana stated that she made the final decision as to whom was allowed to perform at Thai Palace and that bands must receive approval from her before printing flyers. Mrs. Thana testified that she approved the flyers that had been introduced as exhibits, with the exception of one flyer, which she said was printed without her permission.

Mrs. Thana stated that she allowed a DJ who was scheduled to play music to book VIP tables for patrons in advance. She also approved an advertisement with the DJ’s telephone number, advising patrons to call the D J to book a VIP table. Mrs. Thana maintained that she communicated with each band manager, but, when pressed by a member of the Board, she could not remember the names of specific band managers. Regarding payment, Mrs. Thana reported that she paid in cash or made checks out to the band leader and the name of the performer.

Mrs. Thana stated that she made the final decision on hiring entertainment, but that her daughter and husband would help if there was a language barrier. Samantha Thana, Mrs. Thana’s daughter, testified and corroborated her mother’s testimony. Thai Palace presented its closing argument and asked the Board to credit the testimony of Mrs. Thana that she did not allow outside promoters to maintain control of the entertainment and did not allow bands to play go-go music at the restaurant. Notably, Thai Palace did not argue that the second consent order, or any potential enforcement based on it, violated its constitutional rights.

At the conclusion of the hearing, the Board found that Thai Palace violated the second consent order and voted to revoke all consent. In a decision and order dated January 9, 2014, the Board concluded: ⁵⁶⁵ That from February 2012 through April 20, 2013, Suta-sinee Thana, Michael James Lohman, Thai Seafood and Grill, Inc., or their agents and employees, allowed numerous outside promoters to maintain control of the entertainment at Thai Palace in violation of the modified Consent Order dated January 12, 2012; and ... That from February 2012 through April 20, 2013, Suta-sinee Thana, Michael James Lohman, Thai Seafood and Grill, Inc., or their agents and employees, hosted numerous events that included “go go” entertainment in violation of the modified Consent Order dated January 12, 2012. The order revoked the first and second consent orders as well as Thai Palace’s Class-B alcoholic beverage license.

On February 6, 2014, Thai Palace petitioned for judicial review of the Board’s decision pursuant to Maryland Rule 7-201 et seq. Before the circuit court, the licensee argued: 1) that the findings by the Board that Thai Palace had allowed promoters to maintain control of entertainment and play go-go music were not supported by substantial evidence; 2) that the restriction on having go-go entertainment placed on its license was a violation of Article 24 of the Maryland Declaration of Rights and the Equal Protection and Due Process Clauses of the 14th Amendment to the United States Constitution; and 3) that the decision of the Board to revoke the alcoholic beverage license for violations of the 2012 consent order was beyond the power of the Board because there were no allegations that Thai Palace had violated the alcoholic beverage laws or regulations of Charles County, nor was there an allegation that Thai Palace had violated any other provision of Article 2B for which revocation of a license is a penalty. The Board countered that its findings were supported by substantial evidence; that Thai Palace was barred from contesting the constitutionality of the consent order because it had agreed to the restrictions on go-go entertainment; and that the Board had authority to revoke Thai Palace’s license ⁵⁶⁶ because the license was predicated on compliance with the second consent order. At a hearing held before the circuit court on June 23, 2014, Thai Palace did not expand on its constitutional claims.

It maintained its argument that the language of the second consent order violated equal protection because “it was discriminatory as opposed to all types of music” and due process “because there was no ascertainable standard for [the music’s] inclusion or exclusion, and was therefore unconstitutionally vague.” The circuit court issued an order and memorandum opinion on October 16, 2014, in which it concluded that substantial evidence was presented at the hearing to sustain the Board’s findings. The court agreed with the Board that Thai Palace waived any constitutional challenge to the prohibition on go-go music because Thai Palace proposed and consented to the restriction and would have had to appeal the restriction at the time it was imposed to obtain judicial review. The court did, however, hold that the Board was not authorized to revoke the liquor license, because it was not conditioned on Thai Palace’s compliance with the terms of the second consent order and the hearing did not otherwise meet the procedural requirements for revoking a liquor license under Article 2B § 10-403(a)(1). The court remanded the case to the Board for further proceedings to determine whether the liquor license should be revoked.

Thai Palace filed its appeal to this Court on November 13, 2014. 7 The Board did not cross-appeal the circuit court’s order. ⁵⁶⁷ DISCUSSION I. Mootness As an initial matter, the Board argues that this appeal should be dismissed as moot because the second consent order expired by its own terms on January 12, 2015, three years from the date of its issue. Thai Palace responds that this appeal is not moot because it could have collateral estoppel implications for its federal case, currently on appeal in the U.S. Court of Appeals for the Fourth Circuit. Thai Palace also argues that, if affirmed, the Board could consider the violation in subsequent proceedings to impose greater penalties. “A case is moot when there is no longer any existing controversy between the parties at the time that the case is before the court, or when the court can no longer fashion an effective remedy.” Green v. Nassif, 401 Md. 649, 654 , 934 A.2d 22 (2007) (quoting In re Kaela C., 394 Md. 432, 452 , 906 A.2d 915 (2006)) (Internal quotation marks omitted). “Where, however, it seems apparent that a party may suffer collateral consequences from a trial court’s judgment [or administrative decision], the case is not moot.” In re Kaela C., 394 Md. at 453, 906 A.2d 915 (citing Toler v. Motor Vehicle Admin., 373 Md. 214, 219 , 817 A.2d 229 (2003)); see Toler, 373 Md. at 219 , 817 A.2d 229 (holding that the potential for enhanced penalties for future violations kept a case from becoming moot); see also Case of Seila’s Liquor License, 124 Pa.Super. 519 , 190 A. 203, 205 (1937) (The collateral consequences, in the form of increased penalties, “of a violation of the liquor laws prevent ⁵⁶⁸ the questions [on appeal] from becoming moot at the expiration of the term of a license”). “ ‘Unlike the Article III constitutional constraints on the federal courts, ... [Maryland’s] mootness doctrine is based entirely on prudential considerations’ that do not constitutionally bar us from reaching the merits of a moot action.” Comptroller of the Treasury v. Zorzit, 221 Md.App. 274, 291-92 , 108 A.3d 581 (2015) (quoting Carroll Cnty. Ethics Comm’n v. Lennon, 119 Md.App. 49, 57 , 703 A.2d 1338 (1998)).

However, even under the more stringent federal case or controversy requirement, a licensee who asserts an intent to continue to operate under the terms of a valid license will be deemed to have satisfied the requirement for setting forth an existing controversy between the parties. See Clark v. City of Lakewood, 259 F.3d 996 , 1012 (9th Cir.2001) (holding that case was not moot where adult business stated intention to reopen his business if ordinance were enjoined); Dolls, Inc. v. City of Coralville, Iowa, 425 F.Supp.2d 958, 986 (S.D.Iowa 2006) (Case not moot where adult business currently asserted an intent to reopen, even though it had not applied for, nor been denied zoning permit); cf. City News & Novelty, Inc. v. City of Waukesha, 531 U.S. 278, 285 , 121 S.Ct. 743 , 148 L.Ed.2d 757 (2001) (holding that no controversy existed where party had exited the adult business and asserted no plan to reenter). In the present case if the Board prevails, it could use the existence of the violations against Thai Palace in future proceedings. At oral argument, Thai Palace expressed its intention to petition the Board again to allow the restaurant to provide live entertainment.

Therefore, because the outcome of these proceedings will affect the licensee’s future treatment by the Board, we hold that the case is not moot, and we deny the Board’s motion to dismiss.

II

Restriction on the Use of Promoters A key issue here is whether substantial evidence existed to support the decision of the Board. Thai Palace argues that substantial evidence did not exist to support the Board’s ⁵⁶⁹ findings that Thai Palace violated the second consent order by allowing promoters to maintain control of the entertainment. Thai Palace does not contest the sufficiency of evidence to support a finding that it provided go-go entertainment; however, it does challenge the constitutionality of the restrictions on go-go entertainment in the second consent order. We discuss these arguments below.

Our review of the Board’s decision is the same as that of the circuit court: [T]he action of the local licensing board shall be presumed by the court to be proper and to best serve the public interest. The burden of proof shall be upon the petitioner to show that the decision complained of was against the public interest and that the local licensing board’s discretion in rendering its decision was not honestly and fairly exercised, or that such decision was arbitrary, or procured by fraud, or unsupported by any substantial evidence, or was unreasonable, or that such decision was beyond the powers of the local licensing board, and was illegal. The case shall be heard by the court without the intervention of a jury. Art. 2B, § 16-101(e)(1)(i).

Thus, our review of the decision of the Board is similar to our review of decisions of other administrative agencies — in short, if the Board’s decision was supported by substantial evidence, and if it committed no error of law, we must affirm. Paek v. Prince George’s County Bd. of License Com’rs, 381 Md. 583, 590 , 851 A.2d 540 (2004). Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Blackburn v. Board of Liquor License Comm’rs for Baltimore City, 130 Md.App. 614, 634 , 747 A.2d 725 (2000) (quoting Bulluck v. Pelham Wood Apartments, 283 Md. 505, 512 , 390 A.2d 1119 (1973)). Reviewing courts assume the capability of the board members “who are familiar with the matter in dispute and informed by training and experience to pass upon the questions of fact presented to them”; therefore, the courts will “not substitute their own judgments for the findings of administrative officials” State Ctr., LLC v. Lexing ⁵⁷⁰ ton Charles Ltd. P’ship, 438 Md. 451, 568 , 92 A.3d 400 (2014) (quoting Coddington v. Helbig, 195 Md. 330, 337 , 73 A.2d 454 (1950)).

The second consent order states that Thai Palace “shall not allow an outside promoter to maintain control of any entertainment.” An “outside promoter” is a party unaffiliated with Thai Palace who encourages or promotes the entertainment. “Promoter,” Black’s Law Dictionary (10th ed.2014). The phrase, “maintain control” means to “exercise power or influence over” something. “Control,” Black’s Law Dictionary (10th ed.2014). Accordingly, in this context, the second consent order prohibits third parties from influencing or exercising power over