Matter of Finger Lakes Racing Assn. Inc. v State of New York Racing & Wagering Bd.
Annotate this CaseDecided on December 2, 2005
Supreme Court, Albany County
In the Matter of the Application by Finger Lakes Racing Association, Inc., Petitioner,
against
State of New York Racing and Wagering Board and New York Racing Association, Respondents.
4098-05
APPEARANCES:
Kevin M. Kearney, Esq.
Richard L. Weisz, Esq.
Catherine Granteir Cooley, Esq.
Kathleen M. Sellers, Esq.
Hodgson Russ LLP
Attorneys for Finger Lakes Racing Association
One M & T Plaza, Suite 2000
Buffalo, New York 14203
Hon. Eliot Spitzer
Attorney General of the State of New York
Jaime I. Roth, Esq.
Assistant Attorney General
Attorneys for NYS Racing and Wagering Board
The Capitol
Albany, New York 12224
Edward P. Hourihan, Jr., Esq.
Harris Beach PLLC
Attorneys for New York Racing Association, Inc.
99 Garnsey Road
Pittsford, New York 14534
Joseph C. Teresi, J.
Petitioner brings this Article 78 proceedings challenging Respondents, New York State Racing and Wagering Board's ( hereinafter "the Board"), June 17, 2005, determination which held that Finger Lakes Racing Association (hereinafter "FLRA") was to reimburse New York Racing Association (hereinafter "NYRA") the sum of $2,849,668.00. Respondents the Board and NYRA, oppose the petition with an answer.
The New York State Legislature, in 1997, passed Section 1017 of the New York Racing and Wagering Law, which governs the wagering on simulcasts of out-of-state races broadcast in New York. Later that year, FLRA and NYRA gathered to discuss the interpretation of Section 1017 and together decided that this newly enacted section required them to make payments to one another when they accepted wagers on such regulated out-of-state simulcasts. In 2002, the Board began to investigate the payments being made between the two racing associations and on November 4, 2004, the Board determined that such payments were not required by Section 1017 and ordered the payments to cease. The Board also ordered FLRA and NYRA to calculate the amount of payments made to one another during the period.
In December 2004, FLRA requested that the Board reconsider it's decision, which the Board agreed to and they subsequently issued another decision on February 10, 2005. This second decision was similar, with minor changes, but still concluded that such reciprocal payments were not necessary under Section 1017. FLRA, again, asked the Board to readdress the issue and they again agreed. The Board issued their last decision on June 17, 2005 that required FLRA to pay NYRA $2,849,668.00in reimbursements, determined by the Board to not be required by Raging and Wagering Law § 1017.FLRA brought this suit to challenge the Board's decision; first, alleging that they were denied due process of law, pursuant to CPLR § 7803, second, that the Board's determination was arbitrary and capricious, pursuant to CPLR § 7803(3), and lastly, that the Board exceeded it's jurisdiction, pursuant to CPLR § 7803(2). Both the Board and NYRA oppose the petition and request it's dismissal.
Initially, this Court finds that the four month statute of limitations for Article 78 proceedings has not expired. CPLR § 217. CPLR § 217(1) requires that "a proceeding against a body or officer must be commenced within four months after the determination to be reviewed becomes final and binding upon the petitioner." Determinations become final when they "deny a right or fix some legal relationship as a consummation of the administrative process." Essex County v. Zagata, 91 NY2d 447, 453 (NY 1998). Courts must consider " the completeness of the administrative action' and a pragmatic evaluation must be made of whether the decisionmaker has arrived at a definitive position on the issue that inflicts an actual, concrete injury.'" Id. at 453.This Court finds that the Board's final determination occurred on June 17, 2005. That determination was issued after a reconsideration and re-submission by various parties, and non-parties, regarding their positions of the matter at hand. As a result, this Court finds that the June 17, 2005 determination was the Board's definitive position on the matter and stands as the date from which the statute of limitations is measured. Therefore, the filing of this [*2]petition on July 12, 2005, was within the four month statute of limitations and this Article 78 proceeding is deemed timely commenced.
Further, this Court also notes that the Petitioner did not waive their objections to the
Board's alleged lack of jurisdiction or the Board's alleged failure to provide Petitioner with due
process of law. Some courts have held that failure to raise an objection at the administrative level
waives the Petitioner's right to subsequently raise the challenge in court. See Rauer v. St.
Univ. of NY, 159 AD2d 835, 836 (3d Dept. 1990). However, "it is well established that the
exhaustion rule is not inflexible and that the presence of a substantial constitutional issue can, in
limited circumstances, excuse a petitioner's failure to exhaust his administrative remedies before
seeking judicial review." Valvano v. Jones, 122 AD2d 336, 336 (3d Dept. 1986). Further,
as New York's highest court has held, the exhaustion rule "need not be followed . . . when an
agency's action is challenged as either unconstitutional or wholly beyond its grant of power, or
when resort to an administrative remedy would be futile or when its pursuit would cause
irreparable injury." Watergate II Apts. v. Buffalo Sewer Auth., 46 NY2d 52, 57 (1978).
Here, the Petitioner's challenges are within the purview of the stated exceptions and are not
frivolous in nature. Therefore, the Court finds that Petitioner has not waived his right to make
such objections in this Article 78 proceeding and permits such objections in accordance with the
exhaustion rule exceptions.
However, in deciding the Petitioner's objections, this Court finds that the
Petitioner fails on the merits of its objections. First, this Court finds that the Board did not
exceed its jurisdiction in making the determination. The Board has "general jurisdiction over all
horse racing activities and all pari-mutuel betting activities, both on-track and off-track, in the
state and over corporations, associations, and persons engaged therein." NY Racing, Pari-Mutuel
Wagering and Breeding Law § 101. The broad power includes interpretation of statutes
enacted and furthermore;
"the Board's interpretation of the statute[s] is entitled to judicial deference. The
Court of Appeals has held that the Board is vested with broad discretion and power' to oversee
and regulate all horse racing and pari-mutuel betting activity in the State. Moreover . . . the
relationship between municipalities, off-track betting operators and racing associations is highly
complex and the interpretation of Racing, Pari-Mutuel Wagering and Breeding Law . . . draws
upon knowledge and understanding of the underlying operational practices and the problems of
simulcasting. For the foregoing reasons, the interpretation adopted by the Board must be upheld
if not irrational or unreasonable." Ontario County v. Capital Dist. Regional Off-Track Betting
Corp., 162 AD2d 865, 867 (3d Dept. 1990).
The interpretation of the Racing and Wagering Law is well within the
jurisdiction of the Board. Further, the interpretation of sections involving simulcasting is highly
complex and judicial deference will be given to the expertise of the Board's interpretation. This
Court finds that the Board's determination in this matter was an interpretation of a statute, which
is well within the power of the Board. This Court is not persuaded that a contract existed between
FLRA and NYRA regarding the reciprocal payments but rather that the payments were made in
accordance with both parties inaccurate interpretation of a new statute. Therefore, this Court
finds that the Board did not exceed its jurisdiction in determining that Section 1017 did not
require reciprocal [*3]payments between FLRA and NYRA and
that no contract existed between the parties.
It is also this Courts finding that the proceeding in the instant matter provided
Petitioner with adequate due process as required by law and the decision reached by the Board
was not arbitrary and capricious. "[P]rocedural safeguards required by due process are flexible
and vary with the circumstances and type of proceeding, that is to say the governmental function
involved." See Vector East Realty Corp. v. Abrams, 89 AD2d 453, 456 (1st Dept. 1982).
Adjudicatory proceedings are;
"a determination of legal rights, duties or privileges of named parties thereto is
required by law to be made, only on a record and after an opportunity for a hearing provided
however, that such term shall not apply to a rule making proceeding or an employee disciplinary
action or other personnel action." 9 N.Y.C.R.R. § 5402.2(b).
The Court finds that the hearing in this case was not an adjudicatory proceeding. In
this case, the Board meeting was held to interpret the meaning of a newly enacted statute and,
while the determination certainly effects the parties involved, this was not a determination of
their legal rights, duties or privileges, that would qualify it as an adjudicatory proceeding.
Therefore, the due process rights available to the Petitioner are the requirements of "notice and
opportunity to be heard." Board of Regents of State of Colleges v. Roth, 408 U.S. 564,
569 (1972). This Court finds that the Board provided adequate notice to the Petitioner, through
their public notice of their meetings, and also complied with the opportunity to be heard, through
the several memorandum/letters provided to this Court by Petitioner. Accordingly, this Court
finds that the Board did not violate Petitioner's due process rights.
Further, the Court of Appeals has held that where,
" no quasi-judicial hearing is required; the petitioner need only be given an
opportunity to be heard' and to submit whatever evidence he or she chooses and the agency may
consider whatever evidence is at hand, whether obtained through a hearing or otherwise. The
standard of review in such a proceeding is whether the agency determination was arbitrary and
capricious or affected by an error of law." Scherbyn v. Wayne-Finger Lakes Bd. of Coop.
Edu. Ser., 77 NY2d 753, 758 (1991); see CPLR § 7803(3); see also
Arrocha v. Bd. of Edu., 93 NY 361, 363-64 (1999).
Generally, if there was any rational basis upon which the decision can be based the
Court is not at liberaty to exercise its discretion to determine what the appropriate basis is and as
such any rational basis will suffice. See Scherbyn, 77 NY2d at 758. In this case,
the Court finds that the determinations made by the Board were not done in an arbitrary and
capricious manner and were also supported by a rational basis. Therefore, the Board's
determination will stand, finding that the Petitioner, FLRA, is to reimburse NYRA
$2,849,668.00 in previously paid monies found not to be required by the Racing and Wagering
Law § 1017.
Therefore, FLRA's petition will be dismissed. Compliance on the part of FLRA with
such determination is deemed ordered on the date of receipt of this decision.
All papers, including this Decision and Order are being returned to the attorney
for the Respondent, New York Racing and Wagering Board. The signing of this Decision and
Order shall not constitute entry or filing under CPLR § 2220. Counsel are not relieved
from the applicable provisions of that section respecting filing, entry and notice of entry.
[*4]SO ORDERED!
Dated: December 2, 2005
Albany, New York
___________________________________
JOSEPH C. TERESI, J.S.C.
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