Rule Suspension Leaves Tracks Scrambling

A settlement has apparently been reached over a lawsuit involving a claiming rule.

A settlement has apparently been reached over a federal lawsuit involving a controversial California claiming rule, but racetracks in the state are scrambling to deal with the fall-out left from the suspension of the regulation.

Owner Jerry Jamgotchian claims he has reached a settlement in his federal lawsuit against the California Horse Racing Board, which recently fully suspended a “jail-time” restriction challenged in the legal action.

A subsection of the rule, which restricted the racing of certain California-claimed horses out of the state until 60 days elapsed from the end of the meet in which it was claimed, was recently suspended by the CHRB. Jamgotchian’s lawsuit claimed the jail-time subsection, which was adopted in 2005 in an effort to fend off “raiding” by out-of-state owners, violated the Commerce Clause of the U.S. Constitution.

In asking to confirm the settlement, the CHRB said in an e-mail to The Blood-Horse that “until a notice of dismissal is filed with the court, a lawsuit is not settled, and until that time, the California Horse Racing Board will not comment on the status of the lawsuit."

The settlement is believed to include a payment to Jamgotchian of $9,500 for reimbursement of legal fees and costs.

The CHRB has authorized a 45-day public notice for a revision to the rule that would change the out-of-state restriction language to “60 days after the date of the race” instead of “after the close of the meeting.” Horses running in out-of-state stakes races are exempt from the rule. There will be a public hearing on the proposal at the May 19 board meeting.

The board also has requested an opinion from the California Office of the Attorney General on this provision. According to documents included in Jamgotchian’s lawsuit, the Attorney General advised the board in 2003 that such a claiming restriction would violate the U.S. Constitution.

In the meantime, California racetracks are left with trying to figure out how to deal without the regulation’s protection. Santa Anita Park president Ron Charles and Del Mar vice president of racing Tom Robbins both told The Blood-Horse California tracks and owners are collectively trying to come up with a solution to the problem that will work within the confines of constitutional issues raised in Jamgotchian’s lawsuit.

“There are some options that we have that we are looking at to protect our racing inventory,” Charles said without elaborating on the specifics of any plans. “I think it is fair to say that the tracks and the (Thoroughbred Owners of California) are trying to get their heads together to see what we can do. We don’t always look at things in the same way, but in this case, we’re on the same team.”

Robbins said parties are “exploring all of the available legal avenues to create some protection for a dwindling resource.”

“Right now, there is absolutely no protection,” he added.

Charles said that some solutions might be announced as early as next week. “It might be a program that might slow down the invasion,” he said. “Our horses have proven to be extremely valuable.”

He added that Santa Anita has seen no immediate spike in claiming since the rule’s suspension. Increased claiming at the track "usually happens in the last two weeks of the meet, and we’re four weeks out,” he said.

TOC president Drew Couto, who said his organization had earlier expressed its concerns to the board about the rule being too restrictive, said tracks “in the interim” may have to formulate "house rules" involving jail-time.

“We are going to work with the tracks,” he said.

Jamgotchian in response to discussion about the rule at a March 19 CHRB meeting said he believes elimination of the rule will bring more horses to California.

"Elimination of rule 1663(b) should further stimulate claiming in the state and provide the state of California with much needed claiming tax revenue,” he said at the time.

Jamgotchian said he was happy with the result of his lawsuit, and suggested any further alleged unconstitutional actions by either the CHRB would likely prompt further litigation from him.

"I'm pleased that the CHRB has decided to settle our litigation and suspend their unconstitutional claiming restriction,” he wrote in an e-mail, adding he would likely follow through with separate lawsuits against former CHRB chairman Richard Shapiro and former executive director Ingrid Fermin “to learn why they punitively continued to enforce this claiming restriction against CHRB licensees after it had been suspended ...”

Jamgotchian alleged the jail-time rule had been temporarily waived in June 2006 while Shapiro and Fermin were still with the CHRB, and was never fully reinstated.