Pierce v. Texas Racing Com'n

• Citation: 212 S.W.3d 745
• Decision Date: 17 October 2006
• Docket Number: No. 03-04-00699-CV.,03-04-00699-CV.
• Parties: John L. PIERCE, II, Appellant, v. TEXAS RACING COMMISSION, Appellee.
• Court: Court of Appeals of Texas

212 S.W.3d 745

John L. PIERCE, II, Appellant, v. TEXAS RACING COMMISSION, Appellee.

No. 03-04-00699-CV.

Court of Appeals of Texas, Austin.

October 17, 2006.

Rehearing Overruled December 12, 2006.

John L. Pierce, II, Navasota, appellant pro se.

George A. Warner, Assistant Attorney General, Administrative Law Division, Austin, for appellee.

Before Chief Justice LAW, Justices PATTERSON and PURYEAR.

OPINION

W. KENNETH LAW, Chief Justice.

Appellant John L. Pierce, II appeals from a district court judgment that upheld an order by appellee, the Texas Racing Commission, imposing penalties after a racehorse owned by Pierce tested positive for a prohibited drug. In two issues, Pierce complains that the Commission's order prejudiced his substantial rights and violated his constitutional rights. Within these two issues, Pierce presents five specific complaints related to the order: that the Commission erred by (1) modifying conclusion of law 11 from what was recommended by the Administrative Law Judge; (2) punishing Pierce, the owner, more harshly than the trainer was punished; (3) failing to notify Pierce of or make Pierce a party to the initial stewards' hearing; (4) improperly shifting the burden of proof to Pierce at the State Office of Administrative Hearings; and because (5) certain provisions of the Commission's rules are unconstitutional. We will affirm.

BACKGROUND

After Kristy's Gold Star, a thoroughbred filly owned by Pierce, placed second in a race at Lone Star Park on June 8, 2002, urine and blood samples were taken. The urine sample tested positive for ipratropium, a Class 3 prohibited drug. The subsequent split-sample test confirmed the positive finding. See 16 Tex. Admin. Code Ann. §§ 319.361-.362 (2006) (setting forth rules for horse drug testing).¹

The racing stewards notified Richard Duhon, the trainer of Kristy's Gold Star, about the positive test and the upcoming stewards' hearing on the matter. See Tex. Rev.Civ. Stat. Ann. art. 179e, § 3.07(b) (West Supp.2006) ("Texas Racing Act") (contemplating stewards' hearing as initial step in administrative process for horseracing violation). Duhon then informed Pierce of the positive test result and the hearing. The presiding steward also spoke to Pierce about these matters prior to the hearing. Duhon attended the August 21, 2002 stewards' hearing, but Pierce did not. On August 23, the stewards issued a formal ruling ("Stewards' Ruling Retama Park 1355"), which assessed a $500 fine against the trainer,² suspended the trainer's license for 15 days, and stated that "Kristy's Gold Star is disqualified, declared unplaced, and the purse is ordered redistributed."³

Pierce appealed the portions of the ruling that unplaced the horse and redistributed the purse.⁴ See id. § 3.08 (West Supp.2006). This appeal was conducted by an Administrative Law Judge (ALJ) at the State Office of Administrative Hearings (SOAH). On January 27, 2003, the ALJ issued her Proposal for Decision (PFD), in which she agreed that the Commission's rules had been violated but recommended that Pierce's penalty be decreased "based on convincing evidence that the veterinarian administered the ipratropium for a legitimate medical purpose and in a manner that did not affect the race." Thus, in conclusion of law 11, the ALJ determined that "the Commission should order that Kristy's Gold Star be placed second and the purse distributed accordingly."

The Commission Staff then appealed the PFD to the Commission. The Commission considered this appeal at its February 4, 2003 open meeting. Both Pierce and the Staff appeared and presented arguments. The commissioners voted at the hearing to modify the PFD by deleting findings of fact 15-18 and by altering conclusion of law 11 to uphold the initial stewards' ruling in full. Yet, following the hearing, the Commission determined that only conclusion of law 11 should be modified without any change to the ALJ's fact-findings.

Findings of fact 15-18 state that Kristy's Gold Star's performance was not affected by the ipratropium, which had been administered 25 hours prior to the race, because the withdrawal time for ipratropium is 24 hours, ipratropium is clinically effective for only six hours, and ipratropium has no effect on a horse's performance outside of that time. At the hearing, it was suggested that findings of fact 15-18 be deleted because, given the Commission's "zero-tolerance" drug policy, it is irrelevant whether the drug actually affected the horse's performance. The Commission later decided to maintain these fact-findings because they are not inconsistent with its ultimate conclusion.

Thus, the commissioners were mailed a proposed final order that modified only conclusion of law 11 and kept findings of fact 15-18 intact. The commissioners approved this order by their returned signatures in March 2003. The Commission then issued its final order, which stated that, by a "unanimous vote of the members of the Texas Racing Commission present at the meeting, the Commission adopted the Proposal for Decision with modifications as explained below. . . . Conclusion of Law No. 11 is modified to read as follows: `11. Based on the above Findings of Fact and Conclusions of Law, the Retama Board of Stewards' Ruling 1355 is upheld in full.'" After receiving a copy of the Commission's final order, Pierce filed a motion for rehearing, which was overruled by operation of law.

Pierce then appealed to the district court. On October 22, the district court issued its final judgment stating that the "Commission's decision should be affirmed." Pierce now appeals from that judgment, complaining that his substantial rights were prejudiced and his constitutional rights were violated based on the Commission's (1) modification of conclusion of law 11, (2) unequal punishment of Pierce and the trainer, (3) failure to provide Pierce written notice of or to make Pierce a party to the initial stewards' hearing, (4) shifting of the burden to Pierce at the SOAH hearing, and (5) unconstitutional rules. We will consider each of these complaints in turn.

ANALYSIS

Standard of Review

We review the Texas Racing Commission's order for substantial evidence. Tex. Gov't Code Ann. § 2001.174 (West 2000); 16 Tex. Admin. Code § 307.39 (2006); see also Bandera Downs, Inc. v. Alvarez, 824 S.W.2d 319, 322 (Tex. App.-San Antonio 1992, no writ). Under this standard, we presume that the Commission's findings, inferences, conclusions, and decisions are supported by substantial evidence, and the burden of proving otherwise rests on the appellant. Granek v. Texas State Bd. of Med. Exam'rs, 172 S.W.3d 761, 778 (Tex.App.-Austin 2005, no pet.). The Commission's order may be reversed only if a party's substantial rights have been prejudiced because the administrative decisions (1) violate a constitutional or statutory provision, (2) exceed the agency's authority, (3) were made through unlawful procedure, (4) are affected by another error of law, (5) are not reasonably supported by substantial evidence when considering the reliable and probative evidence in the record as a whole, or (6) are arbitrary or capricious or characterized by an abuse of discretion. Tex. Gov't Code Ann. § 2001.174. The test is not whether the agency reached the correct conclusion, but whether some reasonable basis exists in the record to support the agency's action. Mireles v. Texas Dep't of Pub. Safety, 9 S.W.3d 128, 131 (Tex.1999); see also Keeton v. Texas Racing Comm'n, No. 03-03-00049-CV, 2003 WL 21939996, at *4, 2003 Tex.App. LEXIS 6925, at *12 (Tex. App.-Austin Aug. 14, 2003, no pet.) (mem. op.). We may not substitute our judgment for that of the agency on questions committed to agency discretion. Texas Dep't of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 197 (Tex. 2004).

Modification of Conclusion of Law 11

The crux of Pierce's appeal is based on the Commission's decision to reject the ALJ's penalty recommendation and, instead, uphold the stewards' initial ruling, which punished Pierce by disqualifying Kristy's Gold Star and redistributing the purse. Pierce prefers the outcome recommended by the ALJ in conclusion of law 11—that Kristy's Gold Star remain in second place, allowing Pierce to collect the purse—and asserts that the Commission's decision to modify conclusion of law 11 was arbitrary and capricious, characterized by an abuse of discretion, made through unlawful procedure, affected by other error of law, in violation of the Commission's statutory authority, and not supported by substantial evidence.

Without question, when a PFD is appealed to the Commission, the Commission may reject what the ALJ has proposed. As Pierce recognizes in his brief, "[t]he ALJ only makes a recommendation to the Commission for it to accept or reject." The Commission is expressly authorized to modify or vacate the PFD. By rule, the Commission shall consider a PFD at an open meeting during which "the Commission may . . . decline to adopt the proposal for decision, in whole or in part." 16 Tex Admin. Code § 307.36 (2006). Furthermore, Section 2001.058(e) of the government code provides that

A state agency may change a finding of fact or conclusion of law made by the administrative law judge, or may vacate or modify an order issued by the administrative judge, only if the agency determines: (1) that the administrative law judge did not properly apply or interpret applicable law, agency rules, written policies provided under Subsection (c),⁵ or prior administrative decisions. . . . The agency shall state in writing the specific reason and legal basis for a change made under this subsection.

Tex. Gov't Code Ann. § 2001.058(e) (West 2000) (emphasis added). The Commission complied with section 2001.058(e) by expressly setting forth in its final order the reasons and legal basis for its modification. The essence of the Commission's explanation was that the ALJ had failed to properly apply or interpret...