W. Va. Racing Comm'n v. Reynolds

780 S.E.2d 664

WEST VIRGINIA RACING COMMISSION, Respondent Below, Petitioner

v.Lawrence REYNOLDS, Anthony Mawing, Alexis Rios–Conde, Jesus Sanchez, Dale Whittaker, Luis Perez, and Tony A. Maragh, Petitioners Below, Respondents.

No. 14–0957.

Supreme Court of Appeals of West Virginia.

Submitted Nov. 3, 2015.

Decided Nov. 18, 2015.

Patrick Morrisey, Esq., Attorney General, Kelli D. Talbott, Esq., Senior Deputy Attorney General, Charleston, WV, for Petitioner.

Benjamin L. Bailey, Esq., Christopher S. Morris, Esq., Bailey & Glasser LLP, Charleston, WV, for Respondents.

BENJAMIN, Justice:

Petitioner West Virginia Racing Commission ("the Commission") appeals the September 2, 2014, order of the Circuit Court of Kanawha County that reversed the Commission's order that suspended the occupational permit of each of seven respondent jockeys for thirty days and imposed a fine of $1,000 each for violating a rule governing horse racing. After review of the circuit court's order, the assignments of error, the applicable law, and pertinent portions of the appendix, for the reasons stated below, we reverse the circuit court's order.¹

I. FACTUAL AND PROCEDURAL BACKGROUND

The Commission is charged with overall regulation of horse racing in West Virginia.² The respondents are seven jockeys who hold permits issued by the Commission which allow them to ride thoroughbred horses at State racetracks. Prior to each race, the jockeys must weigh out by stepping onto a digital scale operated by a clerk of scales who is an employee of the racetrack. A jockey's weight is used to determine which horse he will ride in the upcoming race. Generally, younger horses are assigned lighter jockeys, and more mature or better-performing horses are assigned heavier jockeys. The purpose of having horses carry different weights is to make the races more competitive. The betting public is informed if a jockey is overweight prior to a race, and this information is used in making wagering decisions.

In March of 2009, management of the racetrack at Charles Town Races & Slots heard rumors that certain jockeys were permitted to ride in excess of their stated weights. As a result, track management installed two hidden surveillance cameras in the area where the weigh outs occur. The day after video recordings were made of weigh-outs, the clerk of scales was relieved of his duties and removed from the track. Thereafter, the respondents were summoned to hearings on allegations that they had engaged in corrupt activities and ridden at weights in excess of their reported weights.

In April 2009, the board of stewards concluded that the respondents had violated certain provisions of the West Virginia Code of State Rules including failure to declare an overweight amount.³ The board of stewards imposed a $1,000 fine on each of the jockeys and a thirty-day suspension of each of the jockey's occupational permits. The respondents appealed the decision of the board of stewards to the Commission.⁴ The administrative de novo hearing before the Commission hearing examiner occurred over five days in August and September 2009. In his recommended decision, the hearing examiner found that the respondents were guilty of conniving with the clerk of scales in the commission of a corrupt practice by engaging in improper weigh outs. This decision was adopted by the Commission which suspended each respondent's occupational permit for thirty days and imposed the fine of $1,000 each.

The respondents appealed the Commission's decision to the Circuit Court of Kanawha County which reversed and vacated the Commission's order in its September 2, 2014, final order. The circuit court found that the Commission engaged in improper rule-making by defining two terms in an administrative rule, and that the retroactive application of the new rule to the respondents' conduct was unlawful. The Commission now appeals the circuit court's ruling to this Court.

II. STANDARD OF REVIEW

This Court has held that

[o]n appeal of an administrative order from a circuit court, this Court is bound by the statutory standards contained in W. Va.Code § 29A–5–4(a) and reviews questions of law presented de novo; findings of fact by the administrative officer are accorded deference unless the reviewing court believes the findings to be clearly wrong.

Syl. pt. 1, Muscatell v. Cline, 196 W.Va. 588, 474 S.E.2d 518 (1996). Moreover, "[i]n cases where the circuit court has amended the result before the administrative agency, this Court reviews the final order of the circuit court and the ultimate disposition by it of an administrative law case under an abuse of discretion standard and reviews questions of law de novo. " Syl. pt. 2, id. With these standards in mind, we proceed to analyze the issues.

III. ANALYSIS

A. Circuit Court's Finding of Impermissible Rule-making

The Commission first assigns as error the circuit court's ruling that the Commission's defining of the terms "connive" and "corrupt" in W. Va.Code R. § 178–1–60.5 constituted improper rule-making. According to the Commission, it did nothing more than define undefined terms in a legislative rule which it is permitted to do. We agree with the Commission.

The Commission found in its final order in pertinent part:

W. Va. Code R. § 178–1–60.5⁵ states "[n]o person shall conspire with any other person for the Commission of a corrupt or fraudulent act or practice, or connive with any other person in any corrupt or fraudulent practice in relation to racing nor commit an act on his or her own part.

....

The Commission hereby finds that "connivance", as that term is used in this Commission's rule, W. Va.Code R. 178–1–60.5, includes acquiescence by a licensee in the behavior of others. Further, the Commission finds that "corrupt" as that term is used in the aforementioned rules includes the diminution or adulteration of procedures necessary for thoroughbred racing and pari-mutual wagering to work in such a way as to ensure confidence in the integrity of the process by the wagering public.

Hence ... review of the evidence shows ... an acquiescence by the appellants in the diminution and adulteration of the weigh-out process of a level sufficient as to injure confidence in the integrity of that process. It is axiomatic that confidence in the process is a, if not the, necessary component in assuring continued public participation in the pari-mutual wagering that allows thoroughbred racing to maintain its viability.

Accordingly, the Commission, with the modifications noted herein, finds that the appellants did, in fact violate the provisions of W. Va.Code R. § 178–1–60.5 in that they "connived" with [the Clerk of Scales] in the commission of a "corrupt" practice. The Commission would again note that the appellants as licensees acquiesced in [the Clerk of Scales'] allowing the weigh-out procedure to be made meaningless if not misleading, and that constitutes a "corrupt" act or practice.

(Footnote added).

In its order reversing the Commission's ruling, the circuit court found that the Commission's defining of the words "connive" and "corrupt" constituted rule-making in violation of prescribed rule-making procedures. Moreover, the circuit court found that the retroactive application of the new rule to the respondents' conduct violated constitutional ex post facto provisions⁶ as well as the respondents' constitutional procedural due process rights.⁷

Under our law, "[i]t is generally accepted that statutes and administrative regulations are governed by the same rules of construction." Snider v. Fox, 218 W.Va. 663, 667, 627 S.E.2d 353, 357 (2006) (internal quotations and citations omitted). One such rule of construction provides that "[i]n the absence of any definition of the intended meaning of words or terms used in a legislative enactment, they will, in the interpretation of the act, be given their common, ordinary and accepted meaning in the connection in which they are used." Syl. pt. 1, Miners v. Hix, 123 W.Va. 637, 17 S.E.2d 810 (1941), overruled on other grounds by Lee–Norse Co. v. Rutledge, 170 W.Va. 162, 291 S.E.2d 477 (1982). Therefore, it is clear that an administrative body, in applying an administrative rule, may give an undefined term in the rule its common, ordinary and accepted meaning. The Commission in this case did nothing more than give the undefined terms "connive" and "corrupt" in W. Va.Code R. § 178–1–60.5 their common, ordinary, and accepted meanings.⁸

The respondents make much of how the Commission characterized its defining of "connive" and "corrupt." Specifically, the Commission stated in its order that it adopted different interpretations for the "terms of art" than were used by the board of stewards or the hearing examiner. The Commission indicated that "[w]hereas much discussion has been had regarding the intent or mens rea⁹ required to connive it is incumbent upon this Commission to clarify the level of intent or agreement necessary for a violation to occur." (Footnote added). Despite the Commission's inartful explanation of its defining of the two terms at issue, the terms "connive" and "corrupt" are not terms of art unique to the horseracing industry but are common terms used in a variety of contexts. As such, under our law, the Commission gave these terms their common, ordinary, and accepted meanings. In addition, it was well within the discretion of the Commission to reject definitions of the terms applied by the board of stewards or the hearing examiner and to adopt its own definitions.

In ruling that the Commission engaged in improper rulemaking by defining the terms "connive" and "corrupt," the circuit court primarily relied on this Court's decision in Coordinating Council v. Palmer, 209 W.Va. 274, 546 S.E.2d 454 (2001). In Palmer, providers of certain homemaker services sued the State Tax Commissioner challenging the Commissioner's imposition on them of a health care services privilege tax. The Tax Commissioner did not impose the tax on providers of the homemaker...