On appeal from a final order of the New Jersey Racing Commission.
Before Judges Petrella, Kestin and Alley.
The opinion of the court was delivered by: Petrella, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Three owners of race horses appeal from a final determination of the New Jersey Racing Commission requiring them to return purse monies won by their horses that were under the supervision of a trainer who, unknown to them during that time, was under a suspension in New York State and, thus, held to be ineligible to participate in the races in New Jersey.
The New Jersey Racing Commission (Commission) on March 22, 2001, required the owners of the affected horses, Leonardis, Lawton, and Hartman (owners) to return purse monies won by their horses and trained by William Robinson in races between March 1 and March 15, 1999, *fn1 the period when Robinson was serving a fifteen-day suspension imposed on him in a Notice of Suspension *fn2 dated February 22, 1999, effective March 1, 1999, by the New York State Race and Wagering Board after one of the horses he trained tested positive for the illegal chemical, Lidocaine.
After being made aware of the trainer's suspension, a State Steward, Richard O'Donnell (steward), conducted a hearing that resulted in a May 8, 1999 decision imposing a thirty-day suspension and a $500 fine on Robinson. This ruling further provided:
In addition the horses that raced in New Jersey during the period of suspension are declared ineligible to have participated and as such all purse monies earned by these horses are to be returned and the trainers fee also returned. Suspension will not be terminated until all moneys are returned.
Only the impact on the three affected horse owners is implicated in this appeal. It is not disputed that neither the Commission nor the horse owners were aware of Robinson's suspension at the time of the 1999 harness races. They were informed of the steward's decision by letters dated November 11 and November 12, 1999, advising them that they were required to return their winnings. They appealed this determination to the Commission and the dispute was referred to the Office of Administrative Law as a contested case. The matters were consolidated and the parties' motion for summary decision was heard on October 30, 2000 by an Administrative Law Judge (ALJ).
The steward indicated in an October 17,2000 certification submitted to the ALJ that he did not receive notice of Robinson's "suspension until after March 13, 1999, the last day that the horses in issue raced," and that he did not receive a copy of the Notice of Suspension, dated February 22, from New York until March 25, 1999. O'Donnell further certified that:
All rulings affecting trainers in every jurisdiction are sent to the United States Trotting Association (USTA) in Columbus, Ohio. Once a week a penalty record is printed and forwarded to the various state racing associations. New Jersey neither controls nor dictates the method by which another state transmits its notices to the USTA.
Interestingly, N.J.S.A. 5:5-30 provides "that all harness races shall be subject to the reasonable rules and regulations from time to time prescribed by the [USTA] organized under the laws of the State of Ohio." This statute goes on to provide that the Commission may modify or abrogate a rule or regulation of the USTA after giving it "an opportunity to be heard." New Jersey's implementing regulations declare that where there is a conflict between the Commission's rules and those of the USTA, "the rules of the Commission shall govern." N.J.A.C. 13:71-1.1(b). The ALJ rendered an "initial decision" in favor of the owners. He found that although Robinson was in violation of state regulations, *fn3 N.J.A.C. 13:71-1.10 does not contemplate strict liability of an owner for such conduct. The ALJ further stated that although there are circumstances where owners are the "absolute insurers" of their horses, fundamental fairness requires knowledge of wrongdoing in this instance. Because he concluded that the owners acted in good faith, the ALJ determined that they should not be required to return their winnings.
In its final decision, dated March 22, 2001, the Commission adopted the ALJ's findings of fact, but disagreed with and reversed his legal conclusions and ordered the owners to return all purse monies they won from the disputed races. The Commission reasoned:
Although this result, at first glance, may seem fundamentally unfair to the petitioners, the Commission must uphold and enforce the rules of racing. In weighing the equities of this case and deciding who should benefit under the facts of this case, it is clear that the purses can only be ...