by | 11.17.2010 | 12:46am
By Ray PaulickResponding to complaints from racing secretaries that horses were being claimed in California races and immediately shipped out of state – often to tracks with purses enriched with slot machine revenue — the California Horse Racing Board in 2005 amended its rules to prohibit any claimed horse from racing outside of the state (except in a stakes race) until 60 days after the end of the meeting at which it was claimed.

The problem with the restrictive regulation, alleges horse owner Jerry Jamgotchian in a lawsuit filed on Monday in U.S. District Court for the Central District of California, is that it is unconstitutional because it violates the Commerce Clause of the U.S. Constitution. Jamgotchian filed the action against the CHRB, its executive director, Kirk Breed, CHRB chairman John Harris and vice chairman David Israel.


here to read CHRB rule 1663. Click here for a copy of Jamgotchian's lawsuit and attached exhibits.Jamgotchian, no stranger to lawsuits against the CHRB, isn't the only one who believes the section of CHRB rule 1663, prohibiting a horse claimed in California from racing out of state for an extended period of time, is unconstitutional. In 2003, when the proposed rule was discussed for at least the second time (it also was brought up in 2001), the state's deputy attorney general, Derry L. Knight, provided informal advice to the board to the effect that the rule, if challenged, would be “found invalid as a violation of the Commerce Clause.”

“A California restriction on the out-of-state racing of a California-claimed horse would, as noted by the opponents of the suggested CHRB rule 1663 amendment, have a very direct extraterritorial effect on the owner of that animal,” the deputy attorney general wrote to then-executive director Roy Wood in September 2003. “Other states imposing similar, or perhaps conflicting, restrictions on the out-of-state racing of horses claimed in their states could lead to the very inconsistent projection of one state regulatory regime into the jurisdiction of another state that (the 1989 Supreme Court ruling, Heely v. Beer Institute) counsels the Commerce Clause is intended to prevent. … It would seem undeniable that the proposed 60-day post-race meeting prohibition of out-of-state racing of a California-claimed horse would have the effect of controlling commercial activity occurring wholly outside the boundary of the state.”

In other words, the rule restricts owners from doing what they feel is in the best interest of the horses they own, and places the CHRB in the position of dictating racing regulations to other states.

The CHRB has issued fines and suspensions against horsemen violating rule 1663. In a 2007 case, CHRB licensee Edgar Clarke was fined $6,000 and suspended 60 days for violating rule 1663. Other CHRB licensees have also had their horses scratched by CHRB officials in other states for violation of this rule.

Jamgotchian says he claimed a filly named Look Closely at Del Mar on Sept. 3, 2006, three days before the end of that track's meeting, and entered her within the 60-day “jail time” in a race at Turf Paradise in Arizona on Oct. 27. Following a call to a Turf Paradise steward from Ingrid Fermin, then the executive director of the CHRB, Jamgotchian alleges, the filly was scratched because of the 60-day clause in rule 1663.


He said last month he is interested in the private purchase of a recently claimed horse for the purpose of sending it out of state and sought a clarification of the rule from the CHRB's executive director.

Prior to filing the suit, an attorney retained by Jamgotchian sent a letter to the CHRB asking that the claiming rules be suspended in order for both parties to avoid litigation.  The CHRB has not acted on that request.

Amending the rule so that horses could race out of state 60 days after being claimed (rather than 60 days after the close of the meeting at which they were claimed) was discussed at last month's meeting of the CHRB. Staff analysis prepared for the discussion publicly disclosed the 2003 letter from the attorney general's office for the first time. The vote to approve the restrictive clause came two years after the attorney general's advised the CHRB that it was unconstitutional.

John Harris, a member of the board since 2000 and currently the CHRB's chairman, mentioned potential legal problems with the rule when it was proposed at a 2001 board meeting. “We're really dealing in interstate commerce, which is not really one of our expertise areas in the Racing Board,” Harris said at the time. “And we can get ourselves into trouble and run up a lot of legal bills and lose.”

Thoroughbred Owners of California opposed the restrictive rules proposed in 2001. Jim Ghidella, then with the TOC, commented: “We believe it is a violation of the Interstate Commerce Clause. I think any time you put a restrictive covenant on property, any kind of property … you lessen the value.”

The proposal came up again in July 2003 when trainer Roger Stein spoke at a board meeting in support of the restrictions. Stein said he claimed numerous horses at Emerald Downs in Washington to send to California, and Washington regulators quickly put in restrictive rules to prevent that from happening again. No action was taken by the CHRB at the July 2003 meeting, and only three months later the board received the opinion from the deputy attorney general.

In 2005, however, after racing secretaries again said horses were being claimed to be sent out of state, the board approved the new restrictions to claiming rules. Harris again commented that “it could be argued on an interstate commerce issue that we're trampling on that.”

When discussions to change the claiming rule were held last month, CHRB member Jesse Choper, the Earl Warren professor of public law at the University of California school of law, said he agreed with the position taken by the attorney general's office in 2003. Still Choper said the board “ought to stick with (rule 1663) until someone challenges it …”

“Until we get caught – I mean, challenged,” Harris interjected, drawing some laughter. “Yeah,” said Choper.

“Caught's kind of a severe term,” Harris added. “But, I mean, that's what it really amounts to, which is the one reason I was leaning toward a lesser period of time, because that lessens the challenges that might be out there.”

Jamgotchian, who recently won another legal battle against the CHRB in the court of appeals concerning the role of stewards, seems more than willing to offer that challenge. His action seeks the rule be overturned and that he be reimbursed for the cost of the suit, including attorney's fees.

We believe that the Federal Court will send a clear message to the CHRB to strike this oppressive rule and hope that by eliminating this rule many recently claimed horses from other states will relocate to California,” Jamgotchian said in a press release.

Copyright © 2009, The Paulick Report

Sign up for our Email flashes to get the latest news, analysis and commentary from Ray Paulick

Visit the Paulick Report for all the latest news throughout the racing world.

Twitter Twitter
Paulick Report on Instagram