Appeals Court Hears Arguments on 2019 Kentucky Derby DQ

Based on questions from judges on a federal appeals court June 16, a key point in determining if a lower federal court should consider owners Gary and Mary West's lawsuit contesting the disqualification of their Maximum Security from an apparent victory in the 2019 Kentucky Derby Presented by Woodford Reserve (G1) is if stewards' decisions amount to de facto regulatory hearings.

The legal fight involving last year's Derby picked up in earnest Tuesday when Ronald Riccio, attorney for Maximum Security's owners, argued that a federal judge should not have dismissed their case contending the Wests' constitutional property rights were violated when their horse was disqualified from last year's Derby after reaching the wire first. Jennifer Wolsing, general counsel for the Kentucky Horse Racing Commission, argued that the dismissal of the case was proper, backing state regulations that do not allow for appeals of stewards' judgment calls in the running of races.

Each side was given 15 minutes to make oral arguments Tuesday, by teleconference, before the United States Court of Appeals for the Sixth Circuit in Cincinnati. The case was conducted remotely because of the COVID-19 pandemic restrictions.

Wolsing argued that the stewards are the experts put in place to make such judgment calls. Although when Wolsing said, "Just as it would be ludicrous to litigate an umpire's decision at a high school baseball game, it's also inappropriate to ignore Kentucky regulations and allow the Wests to challenge the stewards' unappealable disqualification determination," it triggered a question from Judge John Bush.

Judge Bush noted, "This is a little different from an umpire at a Little League game. You have a situation where you have a regulated sport where gambling is sanctioned by the government as part of the sport," Bush said. "And there's an elaborate procedure by regulation as to how the stewards are to function. Also there was a lot more formality in this decision; it's not the normal umpire or referee call at a game where they take a look at a replay camera and make a call. 

"They (the stewards) actually issued an order on what their decision was after interviewing witnesses. Doesn't this look more like an agency determination that would be subject to a statute … that all final orders of an agency should be subject to judicial review?"

Wolsing offered that the stewards' decision is not the same as an agency decision, or "final order," that would be subject to appeal.

"First, the stewards are not the agency's head of the racing commission," Wolsing said. "And second, their decision-making process was not sufficiently formal as to constitute a hearing."

Riccio argued that the stewards' actions amounted to such a hearing as they heard objections from race participants, took testimony from those riders, deliberated, issued an oral opinion, and then a written opinion. He argued that Kentucky law allows appeals of judicial review of agency determinations and the stewards' order falls into the category of an agency determination. Furthermore, he argued that the stewards were state actors who denied property interests of the Wests under the U.S. Constitution.

Wolsing countered that because a purse is not awarded until a race is made official, there is no property interest. Wolsing said as part of licensure, Thoroughbred owners agree to compete in racing under Kentucky rules which give racing stewards discretion on interference calls—if it occurred and if it should result in disqualification—during the running of a race.

"Participation in horse racing is a privilege," Wolsing said. "This means, among other things, that people can participate if, and only if, they agree to the rules of racing. It also means that there is no due-process interest in any racing event in the commonwealth. Importantly, the same rules apply to every Kentucky race, whether it's a Friday night claiming race or the Kentucky Derby."

The court's Tuesday schedule only called for oral arguments; no decision was expected or issued.

The appeal is of a Nov. 15 decision of United States District Judge Karen Caldwell to dismiss the Wests' case after she ruled that Kentucky regulations clearly state that disqualification decisions for in-race infractions are not subject to judicial review, and, furthermore, the disqualification procedure does not implicate an interest protected under the due process clause of the Constitution. 

The Wests filed the lawsuit in U.S. District Court May 14, 2019 after Maximum Security finished first in the May 4 Derby at Churchill Downs but was disqualified to 17th for interference near the five-sixteenths pole. Country House, who reached the wire second, was named the winner. A request in the days after the race to appeal the stewards' decision to the KHRC was denied. 

The lawsuit filed in federal court named the KHRC, commission staff, and the stewards as defendants and referred to the disqualification of Maximum Security as a "bizarre and unconstitutional process." But the Kentucky rule is in line with horse racing's model rules, which do not allow for appeals of stewards' judgment calls on interference. 

Judge Caldwell's decision to dismiss the Wests' litigation backed the industry's current standard, which potentially could face more scrutiny should the appeals court send the Wests' case back to district court to be heard; or strengthened should the appeals court back the dismissal. Wolsing noted that the standard is in place in 16 of 34 U.S. racing jurisdictions.

"The Wests have not established that the defendants' conduct deprived them of a protected life, liberty, or property interest," Caldwell ruled. "Accordingly, their procedural due process claim based upon how the stewards arrived at the decision to disqualify Maximum Security must be dismissed."

Three days after the federal judge dismissed his case, Gary West announced his commitment to challenge that decision.

"The Court's decision holding that disqualification decisions by Kentucky's stewards are never 'subject to judicial, or any kind of review' literally puts Kentucky's stewards above the law," West said in a statement Nov. 18, later adding, "I cannot, and will not, allow such a dangerous precedent to stand unchallenged. I have, therefore, authorized my attorneys to immediately appeal."

In a March 6 filing with the appeals court, attorneys for the Wests argued that the appeals court should send the case back to district court to be heard.

"Plaintiffs respectfully submit that the district court's judgment granting defendants' motion to dismiss, denying as moot plaintiffs' motion for summary judgment, and dismissing this action should be reversed and the case remanded with instructions to the district court to terminate the stay and address the merits of plaintiffs' motion for summary judgment consistent with the opinion of this court," they argued.