FTC upholds trainer Serpe's suspension

The Federal Trade Commission has upheld a two-year suspension to trainer Phil Serpe first imposed last July, ruling that the Horseracing Integrity and Safety Authority has the power to impose sanctions on racing licensees.

Serpe, who was suspended July 10 after appealing a clenbuterol positive in one of his horses that ran in August 2024 at Saratoga Race Course, had challenged the suspension on several Constitutional grounds, including a right to a jury trial. The Federal Trade Commission is the final adjudicator of cases brought by HISA against licensees.

The ruling, issued June 30, relied heavily on certain cases resolved by the Supreme Court to dismiss arguments by Serpe’s legal counsel alleging that his Constitutional rights were violated. It did, however, overrule a decision by an arbitrator who heard the case to attach a $25,000 fine to the initial penalty of a two-year suspension.

“The [administrative law judge] must typically abstain from modifying those sanctions in the Authority’s favor,” the ruling said. “The ALJ’s departure from this cardinal rule was error, and we reverse it.”

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Clenbuterol, a bronchodilator that can build muscle mass when administered regularly to a horse, is a banned substance, though it can be administered under a specific diagnosis of respiratory disease. Serpe argued in the case that he had never administered clenbuterol to the horse, and he provided testimony from his veterinarians, who also said that the drug was never used on the horse.

After the arbitrator decided the case, Serpe’s legal team brought up six grounds for review, some of which took issue with the constitutionality of HISA’s enabling legislation. The FTC threw out three of the challenges.

The other three challenges involved whether Serpe had a legal right under the Seventh Amendment for a jury trial. But the course dismissed those arguments, first by saying that it was raised “improperly” for the purposes of the review, and then by saying that it was “skeptical of its merits.”

The argument rested substantially on the imposition of the fine, with Serpe’s legal team arguing that the fine triggered the Seventh Amendment’s guarantee of a jury trial. But the FTC ruled that the argument had several mistaken assumptions.

“If the Seventh Amendment applied in this context, Mr. Serpe would have been guaranteed a jury trial from the moment that he was charged with violating the [rule],” the ruling said. “But the Seventh Amendment guarantees a jury trial only where sanctions are being levied and adjudicated by a 'state' actor ('state' being used in the same sense as 'government,' rather than referring to one of the 50 states). And the Authority is neither the state nor a state actor.”

Serpe has a separate federal challenge of the penalty in a Florida court, in which he has argued that HISA’s enabling legislation is unconstitutional. The judge in that case has twice denied Serpe’s motions for preliminary injunction seeking a stay of the suspension.

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