Serpe’s Legal Team, Flummoxed by Vague Order, Asks FTC for Direction

[Wandering Eyes]

As part of the Federal Trade Commission (FTC)'s Sept. 15 order staying the issuance of a $25,000 fine that had been imposed against Phil Serpe by an administrative law judge (ALJ) Sept. 12, the suspended Thoroughbred trainer was directed to file a brief by Oct. 16 that will serve as the first step in a “further review” that the FTC itself will undertake to adjudicate Serpe's year-old clenbuterol positive case.

The case has so far been handled at the administrative level by the Horseracing Integrity and Safety Authority (HISA) and the Horseracing Integrity and Welfare Unit (HIWU), and Serpe has already appealed his penalization before a HIWU arbitrator and the ALJ assigned by the FTC.

Separately, Serpe has also sued HISA and the FTC in federal court, alleging that a federal regulatory agency's enforcement for civil monetary penalties must be brought in a federal court, as per a Seventh Amendment precedent that Serpe claims has been established by the United States Supreme Court.

In sum, the 66-year-old East Coast-based conditioner is claiming that the non-pursuit of a fine by HISA, HIWU and the FTC is an alleged end-around by those agencies to stymie his efforts to prove in a federal lawsuit that he has been wrongfully denied a constitutional right to a jury trial.

But this latest order by the FTC has Serpe's legal team flummoxed: Because the FTC's two-page Sept. 15 order did not state any reasons or findings about why the stay of the fine was necessary or appropriate, Serpe's attorneys are unsure what they agency wants addressed in the brief the trainer's attorneys have been told to produce.

Customarily, the party that is requesting an appeal in legal and administrative proceedings is the side that is responsible for filing the first brief in a case.

But Serpe did not request any review of the ALJ's decision-the FTC did, via a process called “sua sponte” review.

That Latin legal term refers to an action taken by a judge, court or other ruling body of its own initiative, without being asked to do so by either party.

Serpe's lawyers, in a Sept. 23 motion to the FTC, asked for both a clarification and an extension of time to file.

“When exercising its authority to sua sponte review the ALJ's decision, the FTC is required to issue an order that 'set[s] forth the scope of such review and the issues to be considered,'” the Tuesday filing to the FTC stated.

“Respectfully, the Order did not include this information. Neither Serpe nor the Authority has identified any error for appeal, and the ALJ's decision included several independent holdings, any of which could be dispositive,” the trainer's filing stated.

“Without an order clarifying the issues on appeal, Serpe has no way of knowing which issues to address in his opening brief,” the filing stated.

“Serpe respectfully requests that the FTC issue an order clarifying the issues on appeal in accordance with 16 C.F.R. § 1.147(a),” the filing stated.

“By extension, Serpe requests that his deadline be tolled until the entry of such an order and that his deadline for filing his opening brief is extended accordingly,” the filing stated.

When the FTC's stay of the fine was first reported on Sept. 17, TDN had also sought clarification from April Tabor, the secretary of the FTC, who had signed the document overturning the ALJ's re-imposition of the fine.

One week later, that query has still not yielded any reply from the FTC.

Serpe's suspension stems from a clenbuterol positive detected in the urine samples taken from his trainee, Fast Kimmie (Oscar Performance) after her Aug. 10, 2024, victory in a $30,000 claiming race at Saratoga Race Course. He initially faced a two-year suspension and a possible fine of up to $25,000.

Both the HIWU/HISA proceedings and the lawsuit lingered for eight months until this past spring, when HIWU, at the behest of HISA, withdrew the threat of the $25,000 fine just as Serpe's case was about to go to HIWU arbitration.

At that time, attorneys for the FTC and HISA wrote in an Apr. 24 federal court filing that the move to make the monetary fine go away “moots Plaintiff's Seventh Amendment claim and removes any risk of cognizable harm with respect to it.”

Subsequently, a HIWU arbitrator issued a decision that meted out the exact penalties sought by HIWU and HISA: A two-year suspension, plus a race disqualification and forfeiture of purse winnings.

Over the summer, Serpe's legal team responded with its own series of filings, alleging in a July 15 court document that the agencies' decision to take the fine off the table was “gamesmanship” intended to stymie Serpe's efforts to prove that he has been wrongfully denied a constitutional right to a jury trial.

HISA, in an Aug. 15 legal filing, denied those allegations, writing that Serpe “has completely turned this case on its head.”

A separate appeal to the FTC that was assigned to ALJ Jay Himes resulted in a 130-page decision Sept.12. In it, Himes stated that he would “modify the award to add a $25,000 fine against Serpe” even though he also opined that, “I hold without merit Serpe's argument that he is entitled to a jury trial under the Seventh Amendment.”

The ALJ wrote in the decision that HISA's reasoning behind withdrawing the threat of a fine against Serpe “misses the forest for the trees” and puts Serpe in a “catch-22” by setting up a situation whereby “the Authority and HIWU have sought to deprive Serpe of the opportunity to have his Seventh Amendment claim heard and resolved…”

The FTC's order, dated Sept. 15, stayed Serpe's fine (but not the suspension) and also mandated the “further review” that Serpe's legal team is now trying to understand.

 

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