Oral arguments in trainer Philip Serpe's two-year suspension were heard May 1 before the Federal Trade Commission at its Washington, D.C., headquarters.
The hearing was scheduled by the FTC, a federal regulatory agency, after the case was briefed by attorneys.
The case arose when one of Serpe’s horses, Fast Kimmie, tested positive for clenbuterol, a banned substance, after winning a race at Saratoga Race Course in August 2024. The Horseracing Integrity and Safety Authority moved forward with its enforcement powers, temporarily suspending Serpe and proceeding with a hearing before an appointed arbitrator.
The arbitrator held that the Horseracing Integrity and Welfare Unit of HISA proved an anti-doping rule violation against Serpe, denied his defense that he was entitled to a jury trial in a civil court, and imposed a two-year period of ineligibility. The arbitrator declined to fine Serpe, who appealed.
The appeal was heard by Jay L. Himes, an appointed administrative law judge who wrote a 121-page decision released last September affirming the arbitrator's ruling and adding a $25,000 fine. He also ruled that Serpe was not entitled to trial by jury.
That decision is now being reviewed by the FTC with Friday's oral arguments being the latest and probably final administrative development in the dispute. The FTC review panel was headed by its chairman Andrew Ferguson.
A large percentage of time was spent discussing whether the imposition of a $25,000 fine against Serpe was lawful in terms of whether the arbitrator had the right to impose a fine even though he did not; and whether the administrative law judge who imposed the fine in Serpe's appeal had that right when the arbitrator explicitly declined to do so. Virtually no time was devoted to reviewing the evidence of the medication infraction that led to Serpe's two-year suspension from training.
Serpe's defenses are based primarily on issues of constitutional law that have been litigated in several federal appellate courts and are likely to eventually be considered by the Supreme Court of the United States.
The trainer's legal team said Congress cannot lawfully delegate lawmaking and enforcement power to a private entity; and that HISA acts as rulemaker, prosecutor, judge, and jury in violation of the separation of powers. Serpe also claims he was not facing a neutral judge, although that issue was not addressed during oral arguments. He also contends the imposition of a fine and other sanctions is prohibited by the Seventh amendment of the U.S. Constitution; and that the administrative law judge's addition of a fine to the arbitrator's ruling is not permitted under the statutory scheme.
Three federal appellate courts have ruled HISA has legal rulemaking authority. One of them, however, held its enforcement powers are unconstitutional. Those cases are likely to be heard eventually by the U.S. Supreme Court.
Serpe has dealt with the charges against him using a two-edged sword, playing defense in the HISA proceeding and filing suit in a federal court in October 2024 when he twice unsuccessfully sought a preliminary injunction against his suspension. The court held Serpe’s suspension alone "is not a cognizable form of irreparable harm" and that the trainer has not demonstrated "a substantial likelihood of success on the merits." Both factors are thresholds required to obtain preliminary injunctive relief.
The FTC filed a status report with the federal court April 15, which said Serpe should have waited for a final outcome in the HISA proceeding before filing a lawsuit, citing the legal doctrine of exhaustion of administrative remedies. Instead, the court has allowed the legal case to proceed in tandem with the regulatory case.
Serpe is facing an uphill battle in the FTC proceeding to obtain relief from the finding he committed a medication violation—or the extent of his suspension. His motion filed early this year to introduce new evidence was denied by the FTC for being untimely.
In an order the FTC panel wrote, "We also decline to further expand our review to include Mr. Serpe’s liability or the length of his suspension. Mr. Serpe all but abandoned any argument about his liability before the ALJ (administrative law judge). As the ALJ recognized, '[a]part from a perfunctory assertion that he dispute[d] liability, Serpe d[id] not develop any argument' to that end."
Attorney Josh Robbins of the Pacific Legal Foundation appeared for Serpe, and attorney Pratik Shah appeared for HISA. At the conclusion of the hearing, Serpe's case was taken under submission. The FTC is expected to issue a decision within 60 days.
