Baffert v. California Racing Board, et al., 2003 Cal. Daily Op. Service 4771 (US Ct. App. 9 th cir).
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1 Horse Racing and the Courts A Summary of the Relevant Case Law for June 2002 June 2003 By Sarah Le Cain 04 Dale Angelle v. Louisiana State Racing Commission, 828 So. 2d 1153 (La. Ct. App. 4th This is a consolidation of two cases involving the penalties associated with the illegal drugging of horses. On February 7, 2000, the Stewards of the Fair grounds determined that the first place horse, Rare Money had excessive levels of carbon dioxide in his blood. The Stewards concluded that this condition is adverse to the best interests of racing and adverse to the best interest of the horse, resulting in a fine for the horse s trainer, Dale Angelle and redistribution of the purse. On February 10, 2000, The Village Queen who was trained by Arlene Laws, was identically penalized for the same reasons. The plaintiffs appealed the decisions, but the Racing Commission upheld the Stewards rulings. Upon further appeal before the Civil District Court for the parish of New Orleans, the actions were consolidated and the decisions affirmed. The plaintiffs appealed a third time claiming several errors in the lower courts ruling. First, they claim that the court applied the wrong standard of review. The District Court held that based on Louisiana law, barring manifest error, the court had to accept the facts found by the Board and can only determine if the Board properly applied the facts to the case. However, the Court of Appeal found that the District Court should have made a determination based on the preponderance of the evidence. Applying this standard would have determined that the case against Angelle was sound because of the testing results and expert testimony, but that the case against Laws was weak because the testing results were unsubstantiated and witnesses testified to corroborate Laws claim of innocence. As to the allegation that the Board applied rules that were not yet promulgated, the Court found that the application was appropriate. It found that although there was not a specific rule dealing with milkshakes, the Board appropriately relied on general provisions regarding drug use already in effect. Therefore, the Court affirmed the decision against Angelle, but reversed the decision against Laws. Baffert v. California Racing Board, et al., 2003 Cal. Daily Op. Service 4771 (US Ct. App. 9 th cir). On May 3, 2000, Nautical Look, trained by Bob Baffert, tested positive for morphine. At the hearing, the plaintiff learned that the Board had only tested the urine samples and not the blood samples and that the samples had been destroyed since no request had been made within the allotted time period. The lower court granted a preliminary injunction and later a permanent injunction declaring that the Board had failed to preserve the blood tests. The Board appealed and the Court reverses the lower court s determination. Specifically, the Court finds that due process was served and that there are no exceptions, no bad faith on the part of the Board and no special circumstances warranting special preservation of the blood samples. The Plaintiff was aware of the rules and made no request for the samples until well after the expiration date.
2 Balmoral Racing Club, Inc. v. Topinka, 334 Ill. App. 3d 454, 778 N.E.2d 239, 268 Ill. Dec. 253 (App. Ct. 1st Dist. 5th Dept. June 25, 1999, the Illinois General Assembly enacted a law, which created a pari-mutuel tax beginning January 1, 2000 as well as a credit for racetracks awarded live racing dates during a given year. Both Balmoral Park and Hawthorne Race Course were awarded live races in 1999 and consequently applied for the tax credit. Both were denied their requests by the Racing Board who held that the credit was not yet in effect. Upon appeal with the circuit court, the plaintiffs agreed to consolidate their matters and a preliminary injunction was granted. Finally, the Circuit Court granted the plaintiff s motion for summary judgment. The Board appealed the decision. On appeal, the defendants claimed that the lower court erred because the tax credit was not available until the tax became effective. The Appellate Court of Illinois reviewed the matter under de novo because the question presented was one of law and de novo is proper when making a ruling based on a lower court s grant of summary judgment. The Court found that the legislative intent was to provide a break for the racing industry as a whole. Furthermore, the Court held that the credit was available for the 1999 calendar year because each amendment had a specific effective date, except the amendment dealing with the credit. The language was ambiguous because it used the words current year and immediately. Since no specific effective date was mentioned, the Court held that the June 25, 1999 effective date applied, making the tax credit immediately available for the current calendar year. Therefore the decision of the lower court was upheld and the tax credit available for the plaintiffs. BALMORAL RACING CLUB, INC. v. GONZALES, 2003 Ill. App. LEXIS 388 ( 2003). Capone v. New Jersey Racing Commission, 358 N.J. Super. 339, 817 A.2d 995 ( 2003). In this appeal, the Racing Commission failed a final decision until seven months after receiving the Administrative Law Judge s initial decision. The ALJ had determined to overturn the suspensions of two trainers who had separate violations for reversal of form. The Commission had previously suspended the trainers, but upon appeal, the ALJ found the Commission had failed to prove the charges against the appellants. As prescribed by New Jersey law, the ALJ sent the decision to the Commission. The Commission did not render its decision reinstating the suspensions until nearly five months later. The trainers appealed the final order and the New Jersey Superior Court because the Commission acted with inexcusable negligence in overturning the ALJ s decision. The Court found that the Commission had approved the ALJ s decision when it failed to render a timely final determination. Chick v. Brimm, 2002 Del. C.P. Lexis 44, (Ct. Comm. Pl. Kent The Plaintiff sought damages following a horse sale where upon further inspection, the horse turned up lame. The Plaintiff purchased the horse and went through the normal inspect at the time of the sale. However in practice a short time later, the
3 horse began limping. After examining the leg, the veterinarian determined that the horse had a previous break that had not healed properly. The Plaintiff then brought this action seeking the return of the price paid and the payment of fees for caring for the horse. The court found that under the Uniform Commercial Code, contract principles, the Plaintiff was entitled to the remedies sought because the goods sold were defective and therefore rendered the sale contract void. Clarendon National Insurance Co. v. Roberts, 2003 Ark. App. LEXIS 557 (Ct. App. Div ). Stanley Roberts and Rick Turman (appellees) owned horses and insured them with Clarendon. Upon the death of one of their new horses, they notified the company, who later denied them coverage. Clarendon claimed that the appellees had failed to continue coverage under the Automatic Extension because they had failed to pay the premium on their new acquisition. At trial, the court held that the policy did provide automatic coverage and awarded the appellees the $20,000 due. Clarendon appealed, but the Court of Appeals upheld the decision stating that the policy language did not create a condition precedent and thus, an enforceable contract automatically existed. Delaware Racing Association v. Twin City Fire Insurance Co., 2003 Del. Super. LEXIS 110 (Del. Super. Ct. 2003). Several horses and riders collided during a practice at the Delaware Park. When one of the inured riders brought suit, the insurance company turned away the claim because he was not involved in racing when the accident occurred. However, the Delaware Superior Court determined that the riders were participating in racing because the breeze riders were practicing racing which is a condition of the insurance contract. Therefore, the Court determined that the riders were entitled to damages. Dolphin v. Equibase Company, LLC, 2003 U.S. App. LEXIS 9127 (Ct. App. 8th Cir. 2003). Hartman, et. al v. New Jersey Racing Commission, 352 N.J. Super. 490, 800 A.2d 279 (N.J. Super. Ct. 2002) The New Jersey Racing Commission ordered the return of purse monies of several owners whose horses won while under the care of a trainer suspended in New York. The Commission Rules stated that a trainer suspended in other states may not participate in racing in New Jersey. The Commission determined that although the owners were unaware of the trainer s suspension, they were still liable because they should have attempted to determine the trainer s license status. However, the owners appealed the decision and the Superior Court overturned the ruling because it determined that although the trainer had been suspended in New York, he had not been suspended at the time of the races in question in the present case.
4 Hennessey v. Department of Business and Professional Regulation, Division of Pari- Mutuel Wagering, 818 So. 2d 697 (Ct. App. 1st Div. The trainers in this case sought review of their suspensions alleging that the new version of the Florida Absolute Insurer Rule was an invalid exercise of delegated legislative authority. The Court found that the new rule was a stricter rule than the first, and was properly promulgated. Specifically, the Court determined the trainer was the proper person to hold responsible because either the trainer or his representative are constantly in control of the horse. Therefore, the trainers suspensions were upheld. Hochstetler v. Delaware Harness Racing Commission, 2003 Del. Super. LEXIS 68 (Del. Super. Ct. 2003). On November 4, 2001, the horse Kadabra qualified for the finals of the Matron Series. Following the race, the horse tested positive for bute and was disqualified. The owner appealed the ruling alleging that the horse was not prohibited from racing in the finals despite the disqualification in the elimination race. However, the Superior Court upheld the ruling because the horse did not run under normal conditions and in being disqualified was not eligible for the finals. Johnson v. Smith, 88 S.W.3d 729 (Court of Appeals of Texas, 30 dis, corpus Christi A thoroughbred stallion owned by the defendant but the plaintiff. Johnston brought suit but the lower court dismissed the case because liability was limited to activities that are related to public equine activities. The plaintiff appealed the ruling claiming that he was more than an independent contractor. The Texas Court of Appeals overruled the lower court s decision because the handler was a person involved in equine activities related to the care of a horse in public equine activities. Livingston Downs Racing Association, Inc. v. Jefferson Downs Corporation, McCutcheon v. Workers Compensation Appeals Board, 2003 Cal. App. Unpub. LEXIS 3539 (Cal. Ct. App. 2 div. 2003) While holding a racehorse that was being shod, a groom was injured when the horse bolted. The groom brought suit and was granted damages under the Workers Compensation Laws. The trainer appealed the decision claiming that the groom was not an employee because he had not specifically asked her to do the work for him. The Court found that the groom was an employee and not an independent contractor because she qualified under the control-of-work test. Her husband was the farrier who asked her to hold the horse, which she had done on several other occasions in the presence of the trainer. Furthermore under the 9 remaining factors: the trainer could have prevented her from holding the horse, holding a horse is not a distinct occupation, holding the horse puts her under the supervision of the farrier or trainer, no special skill is required, she did not provide any special tools, the length of the job is short, she was paid by the job,
5 holding a horse is part of the regular business of a groom, and she did not consider herself an employee of the trainer. The substantial weight of the factors demonstrates that the groom was an employee of the trainer and therefore eligible for benefits. Michigan v. Lueth, 253 Mich. App. 670, 660 N.W.2d 322, (M.I. Ct. App. 2002) The Defendant appealed his convictions for illegal gambling and embezzlement claiming that the rules promulgated by the Legislature were unconstitutional. Specifically, he alleged that the laws were overbroad and abuse of discretion in delegating the authority to the Racing Commission. The Court found that the rules were not overbroad because they did not prohibit a constitutionally protected right such as free speech. Instead they were regulating an industry. Furthermore, the Court found that the legislature properly delegated the authority because in doing so, it set out specific guidelines for the agencies to follow. As for his convictions for embezzlement, the orders stand because the lower court had substantial evidence on which to base its decision and properly laid out punishments fitting the crime. In re Application of John Mongeon, 756 N.Y.S.2d 42 (N.Y. Sup. Ct. 1st Dept. 2003) The respondent appealed the New York State Racing and Wagering Board s decision to set his horse back from second place to fourth place for failing to pull the horse back to a proper gait. The respondent claimed the decision was improper because there was no determination as to whether the outcome of the race would have been affected. The Supreme Court upheld the decision because it determined that once the horse had been brought back to the proper gait, it had won by a much smaller distance. Therefore, if it had remained at the proper gait throughout the race, the outcome may have been different. Pennsylvania National Turf Club, Inc. v. State Horse Racing Commission, 2003 Pa. Commw. LEXIS 258 (Pa. Commw. Ct. 2003) The petitioners sought review of a decision of the Racing Commission prohibiting them from receiving simulcasts of Quarter Horses and Arabian Horses. The petitioners alleged that the Commissioner erred in holding that it did not have the authority to license such activities and that the Commission erred in permitting licensee only to receive simulcasts of Harness and Thoroughbred racing. Pennsylvania Nation claims there are errors because there are references in the law to permitting nation and international horse races. The Court looked to the statutory interpretation and found that the rules discussed racing and horse races and there is no evidence that they were intended to include races outside the thoroughbred and harness racing realms. Furthermore, the other types of racing are never mentioned in the laws promulgated by the Commission and it falls well within its discretion to make the determinations. Perez v. Hoblock, et al., 248 F. Supp. 2d 189 (S.D.N.Y. 2003)
6 Robert Perez appealed a decision of the New York State Racing and Wagering Board fining him $3,000 for a profanity-laced verbal and physical outburst at a meeting he requested. Perez alleges that the Defendants improperly penalized him for exercising his free speech rights under the First and Fourteenth Amendments. The meeting was called to discuss Perez s complaint that the secretary of NYRA, Mike Lakow was allegedly acting unfairly in determining which horse would race in which races. Lakow indicated that he also had a complaint because the day before, Perez had started cursing and screaming loudly outside the NYRA administrative offices. During the meeting, Perez exploded allegedly cursing, pounding the desk, and threatening Lakow. An employee next door heard the commotion and cam into the room. The meeting was adjourned and Perez became more abusive and agitated. Following the incident, the Steward s met and fined Perez. Perez appealed the decision, but the Board upheld the fine. Upon further appeal, the Court found that Perez was engaging in first amendment activity, but that the right to free speech is not absolute especially when the activity is disruptive and threatening. Furthermore, the statute allowing for the fine is proper because it does not set out to impede free speech, it is meant to curb any ill effects on racing, and the Board has the right and authority to impose fines relating to conduct in the racing arena. Therefore, the decision and fine were upheld. Pinero v. Pennsylvania State Horse Racing Commission, 804 A.2d 131 (Pa. Commw. Felix Pinero was a jockey licensed by the state of Pennsylvania. He appealed a decision of the Racing Commission suspending his license for 5 years due to charges of accepting bribes in races. Specifically, the Commission found that he failed to properly try to win races and that he failed to properly notify the Commission of being approached. Pinero appealed the ruling and the hearing officer upheld the decision for one race, but found insufficient evidence to sustain the second decision. Pinero claims the decision was improper because the Commission failed to conduct its own investigation, but instead relied on the findings of the FBI and that he was not given the opportunity to present his own exculpatory evidence. The Court found that the Commission was not a party to the Federal case and as such, the federal decision had no bearing on the Commission s ruling. However, the Court did find that there was substantial evidence to support the ruling that Pinero failed to timely notify the Commission. Furthermore, the Court held Pinero s due process rights were not violated as he was given an opportunity to be heard and that he was informed of the Rules of Racing because he had testified he was afraid to come forward regarding the bribe. Therefore, the Court upheld the suspension order. Raceway Park, Inc. v. Ohio State Racing Commission, 2002 Ohio 5615 (OH Ct. App. 10 th dist. The Raceway appeals the decision of the Racing Commission to reject its license application. Specifically, the Raceway believes the Commission improperly rejected the application for failure for provide the necessary fingerprints. The Court upheld the decision because the fingerprints were a necessary part of the application process,
7 rendering the application incomplete. The Court also held that the appeal failed because the Commission had the right to reject the application when it is necessary for the control of racing. Racing Association of Central Iowa, et al. v. Fitzgerald, 648 N.W.2d 555 (Sup. Ct. IA Serey v. New York State Racing and Wagering Board, 300 A.D.2d 493, 750 N.Y.S.2d 881 (Sup Ct. App. 2 nd Div. Juan Serey appealed the decision of the Board suspending and fining him for the presence of ergonovine in two of his horses. He alleged the decision was arbitrary and capricious. However, the Court upheld the decision citing a previous case Matter of Mosher, which declares a decision is not arbitrary or capricious when based on substantial evidence. In this case, the Board had substantial evidence and the penalty was not so overbroad as to shock the human conscience. Zito v. New York State Racing and Wagering Board, 300 A.D.2d 805, 752 N.Y.S.2d 109 (App. Div. 3 rd Dept. The trainer Nick Zito appealed a decision of the Board fining him for the presence of lidocaine in one of his horses. He alleged that the horse may have come into contact with the substance in the receiving barn by licking a groom s hand. He also alleges that his due process rights were violated and the penalty was too harsh. The Court found that the evidence presented by the appellant was circumstantial not substantial. Furthermore, the Court determined that a penalty will only be disturbed if it is disproportionate to the crime, which is not the case here since the penalty had been reduced. Finally, the Court held that Zito s due process rights were not violated because there was no showing that the respondent failed to make an independent review of the situation. Other cases dealing with taxation, land use, and health insurance Belcher v. Ohio State Racing Commission, 2003 Ohio 2187 (Ct. App. 10th Dist. 2003). Bosco v. Clark, 2002 Ohio 3016 (Ct. App. 7th Dist. Dolphin v. Equibase Co., 2003 U.S. App. LEXIS 9127 (Ct. App. 8th Cir. 2003). Hengen v. Coyne, 2002 Conn. Super. LEXIS 4169 (Super. Ct. Windham Livingston Downs Racing Assoc. v. Jefferson Downs Corp., et al, 2002 U.S. Dist. LEXIS (Dist. Ct. LA Markham v. PPI Inc., 28 Fla. L. Weekly D 755 (Ct. App. 4th Dist. 2003). Miami v. McGrath, 824 So. 2d 143 (Sup. Ct. Phillips v. Saratoga Harness Racing Inc., 233 F. Supp. 2d 361 (N.D.N.Y. Racing Association of Central Iowa v. Fitzgerald, 648 N.W.2d 555 ( Sup. Ct. Raceway Park, Inc. v. Ohio State Racing Commission, 150 Ohio App. 3d 702, 2002 Ohio 6838, 782 N.E.2d 1205 (Ct. App. 10th Dist.
8 Robbins v. Dept. of Revenue, State of Florida, l833 So. 2d 306 (F.L. Ct. App. 3rd Dist. 2003). Thomas v. Commissioner of Internal Revenue, T.C. Memo (U.S. Tax Ct. Video Projects Company, Inc. v. NYRA, et al., 301 A.D.2d 648, 754 N.Y.S.2d 342 (App. Div. 2d Dept. 2003).
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