Livingston v. Minnesota Racing Commission
Minnesota Court of Appeals
UNPUBLISHED, 2004 WL 1445232
June 29, 2004
Summary of Opinion
Plaintiff Livingston is a licensed race horse trainer, whose horse tested positive for albuterol, a prohibited drug, after finishing first in a race. The defendant Racing Commission suspended the trainer for 30 days and required a re-distribution of the winner’s purse. In this opinion, the Court of Appeals uphold the decision of the Racing Commission. It upholds the constitutionality of the trainer responsibility rule and affirms the suspension even though there was testimony that the drug as administered could not have enhanced the performance of the horse.
Text of Opinion
On appeal from an order of the Minnesota Racing Commission (the commission) (1) affirming the Board of Stewards's 30-day suspension of relator Claude Livingston because of a positive finding of albuterol in a urine sample taken from a horse he trained after she won a race at Canterbury Park; (2) affirming the disqualification of the horse; and (3) requiring relator Joe Allen, owner of the horse, to return and redistribute the purse money, relators argue that (1) the commission's ruling violated their due-process rights because Allen was not joined as a party to the proceedings of the Board of Stewards of the commission and did not receive notice of the proceedings before the board; (2) the rules on which the suspension and redistribution order is based are invalid, were incorrectly interpreted, and were not reasonably applied to relators; and (3) the commission lacked jurisdiction to redistribute the purse money without a contested case hearing. We affirm.
Relator Joe Allen has a Class C Occupational License as a horse owner at Canterbury Park. On July 27, 2003, JA Sofisticated Lady, a racehorse owned by Allen, finished first in a race. The "purse" or prize money for the winner of the race was over $11,000. Immediately following the race, JA Sofisticated Lady was taken to the testing facility to test for drugs as per Minnesota horse racing procedure. A urine sample was taken from the horse, and test results conducted by Truesdale Laboratories, Inc. revealed that albuterol was found in JA Sofisticated Lady's system.
Albuterol is a drug that is designed to aid horses in breathing because of congestion often caused by seasonal allergies. Albuterol is a prohibited medication in Minnesota and there is no acceptable level allowed in a racehorse. Minn.Stat. § 240.24, subd. 1 (2002). In fact, the Association of Racing Commissioners International, and the North American Pari-mutuel Regulators Association, classify albuterol as a class III drug and recommend a 60-day to 180-day suspension and a $1,500 fine when the drug is found in a horse.
On August 6, 2003, Truesdale Laboratories, Inc. notified the commission that JA Sofisticated Lady had tested positive for albuterol. The commission's veterinary office then notified the Board of Stewards (the stewards), who in turn contacted the commission investigators who conducted an investigation into the matter and submitted a report back to the stewards. [FN1] Shortly thereafter, the stewards issued a notice of stewards' hearing and summons to Conna Livingston, an assistant trainer and the wife of relator Claude Livingston. Claude Livingston was informed of the hearing by telephone.
FN1. Pursuant to Minn.Stat. § 240.16 (2002), the Board of Stewards is appointed by the commission to preside over all races run at a licensed track and has various powers and duties under the statute.
A hearing was held on August 9, 2003. Conna Livingston and the relators' attorney appeared personally, and Claude Livingston participated via telephone. At the hearing, Claude Livingston requested that a split sample be conducted of JA Sofisticated Lady's urine that was taken from the July 27 race. Relators requested, in order of preference, that the testing be conducted at one of the following places: (1) Louisiana State University; (2) the Center for Tox Services; or (3) Iowa State University. However, relators were informed that Louisiana State University was not an option because it was not on the approved list of split-sample testing laboratories. Similarly, relators' second choice, the Center for Tox Services, was also not an option because it did not have the necessary instruments to perform the appropriate tests. Relators were further informed that Iowa State University was unable to conduct the test because the required machinery to conduct the testing was inoperable. Ultimately, the split sample was sent to the Texas Veterinary Medical Diagnostic Laboratory where it again tested positive for albuterol.
After receiving the split-sample test results, the stewards contacted relators and informed them that the split sample tested positive for albuterol. A hearing was held on August 30, 2003, at which time the stewards issued Ruling No. 03092 suspending Claude Livingston's Class C Occupational License for 30 days and ordering a redistribution of the purse to the second, third, and fourth place finishers. Relators appealed and a hearing was held before the commission on September 10, 2003. The commission affirmed the decision on September 23, 2003. This appeal followed.
"Decisions of administrative agencies enjoy a presumption of correctness, and courts must show deference to the agency's expertise and special knowledge in its field of technical training, education and experience." In re Petition of Space Ctr. Transp., 444 N.W.2d 575, 579 (Minn.App.1989). The reviewing court must uphold an agency decision unless the decision violates the constitution, exceeds the agency's authority or jurisdiction, results from unlawful procedure or other error of law, is not supported by substantial evidence, or is arbitrary and capricious. Minn.Stat. § 14.69 (2002). "The party seeking review of the agency action has the burden of proving that the agency's conclusions violate one or more of the provisions of section 14.69." In re Space Ctr., 444 N.W.2d at 579.
Relators argue that when the commission redistributed the purse money and suspended Livingston's license, they were deprived of due process of law because neither one of them received proper notice of the proceedings, and Allen was not joined as a party to the proceedings. "This court reviews de novo the procedural due process afforded a party." Zellman ex rel. M.Z. v. Indep. Sch. Dist. No. 2758, 594 N.W.2d 216, 220 (Minn.App.1999), review denied (Minn. July 28, 1999).
Due process requires that deprivation of property be preceded by notice and an opportunity to be heard. Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542, 105 S.Ct. 1487, 1493 (1985). The concept of right to notice is that the right to be heard "has little reality or worth unless one is informed that the matter is pending and can choose for himself whether to appear." Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657 (1950). The degree of notice required does not follow one specific, technical definition but rather varies "with the circumstances and conditions of each case." In re Christenson, 417 N.W.2d 607, 611 (Minn.1987).
The Minnesota Rules provide that whenever the stewards have reasonable cause to believe that a Class C licensee has committed an act or engaged in conduct in violation of statute or rules of the commission, the licensee shall be summoned to a meeting of the stewards called for the purpose of investigating suspected or alleged misconduct by the licensee. Minn. R. 7897.0150, subp. 1B (2003). The rules further provided that the licensee shall be summoned to the meeting within three days of the matter coming to the attention of the stewards. Id. Finally, the rules state that "[t]he summons given to the licensee shall be in writing and give adequate notice of the date, time, place, and purpose of the stewards' meeting, and shall specify by number the statutes or rules allegedly violated." Minn. R. 7897.1050, subp. 1C (2003).
Here, the record reflects that Conna Livingston was personally served with a written notice and summons. Conna Livingston was served because relator Livingston was no longer at Canterbury Park. After talking with Conna Livingston, the stewards obtained a telephone number where relator Livingston could be reached, and he was subsequently contacted via telephone and informed of the hearing. The record further reflects that relator Livingston was present at the hearing via telephone. We conclude that relator Livingston had proper notice of the proceeding.
Relators also contend that Allen did not have proper notice of the proceedings. We disagree. Livingston was the trainer of the horse owned by Allen. According to Minn. R. 7877.0170, subp. 2J (2003), Livingston represented Allen in "all matters pertaining to the running of race." Under rule 7877.0170, subp. 2J, because Livingston had notice of the proceedings, Allen was also deemed to have notice of the proceedings. Moreover, the record also reflects that relator Allen was sent a notice of the hearing. Accordingly, Allen had proper notice of the proceedings.
Relators further contend that they were deprived of due process of law because Allen was not joined as a party to the proceedings. But as stated above, Minn. R. 7877.0170, subp. 2J, provides that "[a] trainer shall represent an owner in making entries and scratches, and in all other matters pertaining to the running of a race." Since Livingston was essentially deemed Allen's agent pursuant to rule 7877.0170, subp. 2J, Allen would have been a party to the proceeding. Therefore, relators were not deprived of due process of law.
Next, relators challenge the validity of various rules and the applicability of those rules based upon the evidence presented at the hearing.
A. Minn. R. 7877.0170 (2003)
First, relators challenge the constitutionality of Minn. R. 7877.0170, subp. 2C. This rule provides that:
A trainer shall be responsible for horses he or she enters as to eligibility; weight or other allowances claimed; physical fitness of the horse to perform credibly at the distance entered; absence of prohibited medication; proper shoeing, bandaging, and equipment; and timely arrival in the paddock.
(1) No trainer may start or permit a horse in his or her custody, care or control to be started if he or she knows, or might have known, or has cause to believe, that the horse has received any medication in contravention of the provisions of chapter 7890.
(2) The commission shall consider any positive test to be prima facie evidence that the trainer is responsible for such positive test unless he or she can prove by substantial evidence that neither the trainer nor any employee or agent of the trainer was responsible for the administration of the medication.
(3) A trainer must guard each horse trained by him or her in such a manner and for such time prior to racing the horse as to prevent the administration of any medication in contravention of the provision of chapter 7890.
Minn. R. 7877.0170, subp. 2C (2003).
Relators argue that Minn. R. 7877.0170, subp. 2C, is unreasonable and unenforceable because it is not practical for a trainer or his staff to stay with a horse at all times. An administrative rule is unreasonable and therefore invalid when it fails to comport with substantive due process because it is not rationally related to the objective sought to be achieved. Mammenga v. State Dep't of Human Servs., 442 N.W.2d 786, 789 (Minn.1989). The mere fact that application of the rule may yield a harsh or unfair result does not render the rule invalid. Id.
Here, relators fail to show that Minn. R. 7877.0170, subp. 2C, is unconstitutional. See Scott v. Minneapolis Police Relief Ass'n, Inc., 615 N.W.2d 66, 73 (Minn.2000). Minn.Stat. § 240.03 (2002) provides the commission with the powers and duties to regulate horse racing in Minnesota and to ensure that it is conducted in the public interest. Ensuring the integrity of horse racing in Minnesota is a legitimate public purpose. Minn. R. 7877.0170, subp. 2C, is rationally related to achieving that public purpose because it increases the public's confidence that a horse is not racing with prohibited medication in its system. This enables the public to place bets on various horses without the concern of some horses having a possible advantage because they are on "performance enhancing" medications. By requiring a trainer or a staff member to guard the horse prior to the start of a race, the integrity of the racing industry is increased because there is a lack of opportunity for tampering. Because Minn. R. 7877.0170, subp. 2C, is rationally related to a legitimate public purpose, the rule is not unconstitutional.
Relators also contend that even if the rule is constitutional, the evidence does not support the commission's findings under the rule. Relators assert that the test results were only prima facie evidence, and the results were overcome by the uncontradicted testimony of Livingston. Because Livingston testified that he did not give albuterol to the horse, and there was no other evidence contradicting Livingston's testimony, relators argue that Livingston made his case by substantial evidence as required by Minn. R. 7877.0170, subp. 2C(2).
This court will reverse an administrative agency decision when the findings of fact are unsupported by substantial evidence. White v. Minn. Dep't of Natural Res., 567 N.W.2d 724, 730 (Minn .App.1997). "Substantial evidence" has been defined as: (1) such relevant evidence as a reasonable mind might accept as adequate to support a conclusion; (2) more than a scintilla of evidence; (3) more than some evidence; (4) more than any evidence; and (5) evidence considered in its entirety. Id. Under this definition, an appellate court evaluates the evidence upon which the agency relied in view of the entire record as submitted. Id. If an administrative agency engages in reasoned decision-making, this court will affirm, even though we may have reached a different conclusion. Id.
Here, the fact that the horse tested positive for albuterol was prima facie evidence that Livingston was responsible for the presence of albuterol in the horse's system. Livingston testified at the hearing that he did not administer albuterol to the horse. But the commission concluded that his testimony standing alone was not substantial evidence that he was not responsible for administering the albuterol. The commission is in a better position to judge Livingston's credibility. We conclude that the evidence presented at the hearing supports the commission's findings.
B. Minn. R. 7890.0130 (2003)
Under Minn. R. 7890.0130, subp. 1 (2003), a finding of a foreign substance in a horse is prima facie evidence that the medication, substance, Bute, or furosemide was administered to the horse and carried in the body of the horse while participating in the race. Relators contend that the prima facie evidence was refuted in this case because (1) the testing process was flawed, (2) the testimony of Dr. Hvoda indicates that the administration of albuterol could not have aided the performance of JA Sofisticated Lady unless it was administered in full view of the public immediately before the race, (3) there is no evidence that albuterol is a performance-enhancing substance, and (4) there was no quantitative analysis completed to determine the amount of albuterol in the horse's system.
First, relators contend that the testing process was flawed simply because the split sample was sent to Texas Veterinary Medical Diagnostic Laboratory, which was not one of their top three choices. We disagree. As stated above, relators' first three choices, Louisiana State University, the Center for Tox Services, and Iowa State University, were not available for the testing. The commission has no contract with Louisiana State University to conduct split-sample testing, and the Center for Tox Services was unable to perform the test because it did not have the necessary instruments. Iowa State University was also unable to conduct the test because the pertinent machinery needed to conduct the testing was inoperable. Although Minn. R. 7892.0120, subp. 5 (2003), stipulates that a person accused of violating chapter 7890 shall designate the laboratories to conduct testing in descending order of preference, the rule goes on to state that "the sample must be sent to the laboratory given highest preference and that is capable of testing for the substance within 14 days." Before the 2003 racing season, the commission approved three independent laboratories to conduct split-sample services. The only approved laboratory available at the time of the violation was Texas Veterinary Medical Diagnostic Laboratory. In order to comply with the timeliness requirements set forth in Minn. R. 7892.0120, subp. 5, the split sample was ultimately sent to Texas Veterinary Medical Diagnostic Laboratory. The fact that the split sample was sent to a location other than one of relators' top three choices seems to be more of a case of bad luck than an actual flaw in the system.
Next, relators assert that the administration of albuterol could not have aided the performance of JA Sofisticated Lady unless it was administered in full view of the public immediately before the race. Relators also contend that regardless of whether albuterol was administered, there is no evidence that albuterol is a performance-enhancing substance. But any testimony or evidence concerning the effect of albuterol is irrelevant under the commission's rules. The rules state that any evidence of any prohibited medication is prima facie evidence that the substance was administered to the horse and carried in the body of the horse while participating in the race. Minn. R. 7890.0130, subp. 1. Albuterol is a prohibited substance and it was found in JA Sofisticated Lady immediately following the race. This is prima facie evidence of the existence of the substance, and any testimony with regard to when the albuterol may have been administered, or its effect on the horse's performance is irrelevant.
Finally, relators argue that there was no quantitative analysis completed to determine the amount of albuterol in the horse's system. Again, the amount of albuterol contained in the horse is irrelevant under the rules. See id. Albuterol was found in the horse and relators did not refute the evidence of its existence.
C. Minn. R. 7879.0200 (2003)
Minn. R. 7879.0200, subp. 1C (2003), provides the stewards with "the authority to suspend, according to the applicable law, the license of a participant in racing." In making a decision to suspend and/or fine a licensee, the applicable rule provides:
[w]hen making judgments with respect to the conduct of horse racing, the stewards shall take into consideration the following:
(1) their prior experience in horse racing;
(2) the applicability of similar prior decisions being made;
(3) all relevant circumstances surrounding the decision under consideration;
(4) what effect, if any, the decision being made has upon the integrity of racing and the safety, health, and welfare of the participants and the general public; and
(5) any other relevant factors which affect the integrity of horse racing, so long as the same factors are considered with regard to all similar decisions.
Minn. R. 7879.0200, subp. 3A (2003). Additionally, the commission "may revoke a class C license for a violation of law or rule which in the commission's opinion adversely affects the integrity of horse racing in Minnesota." Minn.Stat. § 240.08, subd. 5 (2002).
Relators concede that the stewards have the authority to suspend licenses, but they contend that the suspension in this case was not done in accordance with the law as applied to the facts of this case. Relators assert that in making the decision to suspend and to redistribute the purse money, the stewards failed to consider Livingston's prior record as a trainer, which shows that he has never been suspended for medication violation. Relators also contend that the stewards applied the precedents that were set forth in two previous cases without investigating the factual differences among the cases.
The record reflects that in making their decision, the stewards used their collective experience in horse racing and referred to two previous cases involving albuterol. Although there may have been differences between those two cases and the present case, the stewards determined that any dissimilarity did not warrant a different conclusion. The stewards also considered the integrity of racing and noted that the national guidelines of the Association of Racing Commissioners International and the North American Pari-mutuel Regulators Association model rules on albuterol recommend a 60 to 180-day suspension, a $1,500 fine, and a purse redistribution when albuterol is found in a horse's urine. After considering the national standards, the stewards imposed a lesser penalty. The fact that Livingston has never been suspended for a medication violation does not change the test results showing that albuterol was found in the horse's system. The commission reviewed all of the findings and upheld the sanction. We conclude that the commission's decision was justified under the Minnesota Racing Commission's rules.
Pursuant to Minn.Stat. § 240.16, subd. 1(d) (2002), the stewards have the authority "to impose on licensees, for violations of law or commission rules, fines not exceeding $2,000 and license suspensions not exceeding 90 days." For suspensions in excess of 90 days and fines in excess of $2,000, a formal chapter 14 contested case proceeding is required by statute. Minn.Stat. § 240.22 (2002). Relators argue that the redistribution of the purse money effectively penalized Allen in the amount of $11,000, and therefore under Minn.Stat. § 240.22, the stewards and the commission were not legally permitted to proceed in the matter without initiating a contested case procedure under the Minnesota Administrative Procedure Act because the "penalty" exceeded $2,000.
"[A]n agency's interpretation of the statutes it administers is entitled to deference...." Geo. A. Hormel & Co. v. Asper, 428 N.W.2d 47, 50 (Minn.1988). Also, an administrative agency's assessment of penalties or sanctions is an exercise of its discretionary power. In re Haugen, 278 N.W.2d 75, 80 n. 10 (Minn.1979). We, therefore, may not interfere with the penalties or sanctions imposed by an agency decision unless a clear abuse of discretion is shown by the party opposing the decision. See In re Minn. Tipboard Co., 453 N.W.2d 567, 569 (Minn.App.1990), review denied (Minn. May 30, 1990).
Here, the commission concluded that the redistribution of the purse money was not a "penalty" or "fine," but rather it is a remedial act required by the rules. Minn. R. 7892.0150, subp. 1 (2003), states that:
Upon receipt of a positive laboratory report, the stewards shall direct that no undistributed purse money won by the horse tested may be awarded pending final determination of the matter. The stewards shall order distributed purse money returned, and it must be returned. If it is determined finally that a violation of chapter 7890 has occurred, the purse money won by the horse involved may be forfeited and redistributed among the other horses in the race according to their order of finish.
Subpart 2 of the rule lists various factors to be considered by the commission in determining whether or not to redistribute a purse. Minn. R. 7892.0150, subp. 2 (2003).
Based on the plain language of the rule, as soon as a horse tests positive for some type of prohibited substance, the owner of the winning horse is not entitled to the purse money. The rule states that "[u]pon receipt of a positive laboratory report, the stewards shall direct that no undistributed purse money won by the horse tested may be awarded pending final determination of the matter." Minn. R. 7892.0150, subp. 1. If the purse money has already been distributed, the rule states that: "The stewards shall order distributed purse money returned, and it must be returned." Id. This part of the rule is mandatory and not permissive. See Minn.Stat. § 645.44, subd. 16 (2002) (stating that "shall" is "mandatory"). Because JA Sofisticated Lady tested positive for albuterol after finishing first in the race, Allen was required to return the purse money pursuant to Minn. R. 7892.0150, subp. 1. Therefore, the return of the purse money was not a "fine" or "penalty" under the commission's rules, and a contested case hearing was not required in this matter.
Relators also contend that the redistribution of the purse was improper because the commission failed to consider the factors set forth in Minn. R. 7892.0150, subp. 2. We disagree. Although not specifically laid out in the order, the transcripts reveal that the factors were sufficiently considered by the commission. We conclude that the commission properly redistributed the purse pursuant to Minn. R. 7892.0150.
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