Jackson to Push for Licensing of Bloodstock Agents

Jess Jackson, the California winemaker who has been pushing for ethics reform in public and private horse sales since filing suit against three former advisers last September, should have felt right at home Wednesday while addressing a roomful of attorneys attending the University of Kentucky Equine Law Seminar in Lexington.

But Jackson, who formerly practiced law in California, said this isn't what he had in mind when he "charged" into the horse business a few years ago. "I'm 76 years old, and this isn't what I wanted to be doing at this stage of my life," Jackson said during a panel discussion, moderated by Louisville attorney Edward S. Bonnie of Frost Brown Todd.

Jackson spoke about the Kentucky dual agency legislation he lobbied for during the recent general assembly. That bill, HB 446, was recently signed into law by Gov. Ernie Fletcher. Jackson said he plans to lobby for a licensing requirement for bloodstock agents during Kentucky's next legislative session, citing state licensing of professions ranging from barbers to real estate agents.

Jackson said little about his lawsuit against agents Emmanuel de Seroux and Brad Martin and trainer Bruce Headley. He did speak about a "subculture which has a dark side of disrespecting the ethics and honesty of the industry" and is "tolerated" by the rest of the industry. "I'm sorry to be the messenger, and quite often it's necessary to shoot the messenger instead of correcting a problem. But you can't correct a problem unless you acknowledge a problem exists and take steps to correct it. This industry was taking steps to correct it before I got here. What I couldn't understand is why it hadn't been corrected."

Jackson was apparently alluding to the Sales Integrity Program, initiated by the Thoroughbred Owners and Breeders Association in 2004. Reynolds Bell, a member of the TOBA task force that created a Code of Ethics and other programs designed to increase buyer confidence at horse sales, provided a review of the Sales Integrity Program for the seminar attendees.

One of its shortfalls, Bell acknowledged, was a lack of enforcement. He listed The Jockey Club, sale companies, or state agencies as possible enforcers of the Code of Ethics. "Obviously, there are still some questions that are looking for answers," Bell said, "but are we in a better place than we were two years ago? Absolutely."

Joel Turner, an attorney with Frost Brown Todd of Louisville, outlined existing Kentucky statutes that have dealt with fiduciary responsibilities of agents, though the statutes were not specific toward the horse industry. Jackson compared those statutes with Swiss cheese – "full of holes."

Keeneland was represented by William T. "Buddy" Bishop III of the Stoll Keenon Ogden law firm. Bishop is one of three trustees who governs the Lexington sale company and racetrack. Harvie Wilkinson, an attorney who serves as vice president and treasurer of Keeneland, also made a presentation.

Bishop defended horse sales as "capitalism in its purest form," borrowing a quote from former Kentucky Gov. Brereton C. Jones, owner of Airdrie Stud and a consignor who admitted during a sworn deposition in the Jackson lawsuit to paying commissions to Headley while Headley was representing Jackson.

Bishop said dual agency and fraud are not new to the horse industry and said the sale company traditionally has not been a police force, that they "play the role of referee." Bishop also said transparency in sales (disclosing the true seller and buyer) is not necessarily in the best interests of the auction industry.

Wilkinson thanked Jackson on behalf of Keeneland for pushing for HB 446 and said Keeneland "will do all they can to assist" individuals who believe they have been defrauded. Wilkinson, however, said the auction company is "not judge and jury" -- that the court system is where disputes should be heard.

Also speaking was Mill Ridge Farm's Bayne Welker, chairman of the Consignors and Commercial Breeders Association, which he said was in the formative stages before TOBA's Sales Integrity Program was launched. Welker said many have incorrectly assumed the CBA was a "retaliatory reaction" to the Sales Integrity Program. "The role of the CBA is educational," he said, citing an informational booklet it published on endoscopic throat examination and an upcoming pamphlet on OCD lesions. Welker said he also applauded Jackson for his efforts to pass HB446, noting that the CBA played a role in amending some sections of the bill.

Veterinarian Craig Van Balen discussed sale medication guidelines proposed by an American Association of Equine Practitioners committee on which he served. The guidelines were solicited by the TOBA task force but have not been endorsed by the Sales Integrity Program. Implementation of other Sales Integrity Program recommendations on medication and veterinary procedure disclosures have been delayed, in part because of opposition from the CBA.

A final speaker was Julie Goodman, legal counsel for the United States Equestrian Foundation, Goodman said the USEF is in the process of creating mediation and arbitration procedures to resolve disputes between members, including problems related to fraud or dual agency in the sale of horses.