# FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 07/16/2026 OSCAR NO. 615900 -PAGE Page 1 of 23 * PUBLIC *

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A5a0386e88f44b2a7

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

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UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
OFFICE OF ADMINISTRATIVE LAW JUDGES

__________________________________________

)
)
)
Jason Scott, DVM,
)
)
Appellant.
)
__________________________________________)
In the Matter of

Docket No. 9449

ORDER DENYING APPELLANT’S OBJECTION AND MOTION TO STRIKE
THE AUTHORITY’S DISPOSITIVE BRIEF AND REPLY BRIEF
The Horseracing Integrity and Welfare Unit (“HIWU”) charged Appellant
Dr. Jason Scott with two violations of Rule 3214(a) of the Anti-Doping and
Medication Control (“ADMC”) Program, which prohibits Possession of Banned
Substances absent “compelling justification” for Possession. 1 After a hearing, the
Arbitrator ruled in HIWU’s favor and awarded the following sanctions:
A period of ineligibility of eighteen (18) months from the date of the initial
inspection (February 13, 2025) for possession of two prohibited substances.
The 18 month period of ineligibility will expire on August 13, 2026.
A fine of $25,000 and a payment of $5,000 in adjudication costs based upon
all of the facts and evidence presented. 2

1 Capitalized terms used, but not defined, in this Order, are from HISA Rule 1020 of the General

Provisions included in the ADMC Program rules.

2 Appeal Book (“AB’’) 7678 (Arbitrator’s Final Decision).

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In its opening briefing of the merits of this review proceeding, the
Horseracing Integrity and Safety Authority (“the Authority”) argued that Dr. Scott
was properly found liable for the two Possession Anti-Doping Rule Violations
(“ADRVs”) and that “the real error in this case is the sanction issued by the
Arbitrator. Dr. Scott committed two Possession ADRVs, each of which carries a
default sanction of two years Ineligibility and a $25,000 fine, yet the Arbitrator
imposed reduced and backdated Consequences [that is, the sanctions] without a
legal basis for doing so.” 3 The Authority therefore argued that I should award
sanctions “consistent with the ADMC Program Rules.” 4
The parties thereafter filed their reply briefs on the merits of the review, and
Dr. Scott also filed an objection and motion to strike parts of both the Authority’s
opening brief and its reply brief. The basis for his motion is that “the Authority’s
attempt to modify [upwards] the penalty on review” allegedly is a matter that “[t]his
Court has no jurisdiction to rule on. . . .” 5 The Authority opposed, arguing that
“[w]hen Dr. Scott invoked the ALJ’s review of his civil sanction, he placed his civil
sanction fully before the ALJ for a de novo review. He cannot selectively accept the
benefits of de novo review while insulating his sanction from scrutiny.” 6 As it

3 Authority’s Opening Brief at 15, dated June 12, 2026.
4

Id. See also id. at 13, at ¶¶ e-g (Proposed Order).

5 Scott Memorandum in Support of Objections and Motion to Strike at 1 (“Scott Mem.”), dated June

22, 2026.

6 The Authority’s Response to Dr. Scott’s Objection and Motion at 5 (“Authority Response”), dated
June 30, 2026. See also id. at 8 (“It should come as no surprise to Dr. Scott that when he requested a
de novo review of his civil sanction, he would get a de novo review of his sanction—for better or for
worse.”).

2

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further argued, in opposing Dr. Scott’s motion, “the Authority cannot ignore clear
legal issues with the sanction. It would be an absurd result for the ALJ to be
mandated to review the sanction de novo while the Authority is simultaneously
prohibited from identifying the legal errors that the review is designed to catch.” 7
After the briefing had concluded on Dr. Scott’s motion to strike, the Federal
Trade Commission issued its decision in Matter of Serpe. 8 The Commission held
that, where—as in Serpe—“the Authority decline[d] to impose a fine,” I “was not
authorized to impose a civil penalty” under the review authority conferred in HISA
cases. 9 As the Commission further emphasized, “Mr. Serpe and the Authority were
in agreement: the ALJ cannot impose a fine sua sponte.” 10 The word “modify” in the
ALJ’s review authority, the Commission found, did not authorize “add[ing] a species
of sanction that the Authority declined to impose. . . .” 11 The underpinnings of Serpe
were: (1) the party-presentation principle, which instructs that, “when it comes to
what is best for each party in litigation, courts assume that the parties know best
and decide the case accordingly.” 12; and (2) the “longstanding” cross-appeal rule,

7

Id. at 6.

8 No. 9441, 2026 WL 1906387 (FTC June 30, 2026).
9

Id. at *1, *8.

10

Id. at *8.

11

Id. at *10.

12

Id. (footnote omitted).

3

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which bars “alter[ing] a judgment to benefit a nonappealing party.” 13 The
Commission thus reversed the $25,000 fine that I had directed.
Upon Serpe’s issuance, I afforded the parties the opportunity to submit
supplemental briefs on Dr. Scott’s motion, and they have since done so. Dr. Scott
argues, in essence, that Serpe is dispositive. Because, he notes, “the Authority is a
non-appealing party . . . [n]othing about the [Commission’s] reasoning . . . was
limited to the facts of Serpe.” 14 Thus, Dr. Scott contends that the scope of this
review is “limited . . . to the issues [he raised] by [his] application,” and that
“[b]ecause the Authority seeks relief outside those limits, the motion to strike must
be granted.” 15
The Authority, on the other hand, largely sidesteps Dr. Scott’s motion. It
maintains that I should rule on the merits of Dr. Scott’s “application for review,
mak[ing] any finding or conclusion that, in [my] judgment . . . is proper and based
on the record.” 16 If, after undertaking that merits review, I conclude that “the
imposed sanctions are too lenient,” then I should “remand this case for sanctioning
consistent with [those] findings.” 17 The Authority’s position thus requires that I
resolve the merits of its objections to the sanctions under review.

13 Id. at *11 (footnote and internal quotation marks omitted) (quoting Greenlaw v. United States, 554
U.S. 237, 244 (2008)).
14 Appellant’s Supplemental Brief in Support of Motion to Strike at 3, dated July 9, 2026.
15

Id. at 5.

16 The Authority’s Supplemental Response at 3-4, ¶ 6 (internal quotations omitted) (quoting 15

U.S.C. § 3058(b)(3)(A)(iii)), dated July 9, 2026.
17

Id. ¶¶ 5, 7.

4

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Having considered both rounds of briefs on Dr. Scott’s motion, and the
Commission’s decision in Serpe, I conclude that the facts here are materially
different, and that the decision is not dispositive. For the reasons discussed below, I
hold that I have jurisdiction to decide the issues Dr. Scott has argued I am disabled
from addressing. I therefore deny Dr. Scott’s motion.
I am not, however, deciding whether the Authority prevails on the upward
sanctions adjustments it has asserted. Nor am I deciding the appropriate relief if I
were to rule in the Authority’s favor. These matters will be handled in the merits
decision.
I.

Analysis.
A.

The Differing Facts Presented in Dr. Scott’s Case.
1.

Party-Presentation.

From the outset of the case against Dr. Scott, HIWU asserted that, if
Dr. Scott were found to have committed the two ADRVs alleged, sanctions could
include “for each violation: two years of Ineligibility . . . ; [and] a fine of up to
$25,000 USD. . . with the potential for combined Consequences totaling four years
of Ineligibility . . . and a fine of up to $50,000 USD.” 18 That was HIWU’s consistent
position—two years Ineligibility, running consecutively, and a $25,000 fine for
“each” ADRV, totaling $50,000. 19 As the adverse party on Dr. Scott’s review, the

18 AB 119 (EAD Notice) (emphasis in original).
19 See AB 146 (EAD Charge), 1091 & 1112 (opening prehearing brief), 5428 (reply prehearing brief),
6424 (closing argument at hearing), 6478, ¶ 85 (post-hearing proposed conclusions of law), 7541,
¶ 3.d (supplemental authority submission).

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Authority necessarily assumes HIWU’s arbitration position, and the Authority itself
has maintained that the Arbitrator erred in awarding, without explanation, a single
18-month Ineligibility period, beginning from the date of HIWU’s search of
Dr. Scott’s vehicle, and a single $25,000 fine. 20
Thus, the Authority contends that the Arbitrator erred by: (1) deviating,
without explanation, from the default two-year Ineligibility period and $25,000 fine
for each violation; and (2) failing to run Ineligibility for each violation consecutively
and to accumulate two $25,000 fines to a $50,000 total. 21
There is no party-presentation issue in this case. HIWU framed and
preserved the issues relating to sanctions that the Authority has raised—and that it
contends the ALJ may properly hear—on this de novo review. 22 The Authority’s
only other objection—the Arbitrator “back-dating” the Ineligibility period to the
date of HIWU’s search—arises from the Arbitrator’s decision, made (1) on his own
initiative, (2) without notice to either side after all their post-hearing papers were
submitted, and (3) without requiring Dr. Scott to meet the requirements of ADMC
Rule 3323(c)(3). The issue raises only a question of law, and “good cause” to resolve
the issue, required by FTC Rule 1.146(a)(1), is shown.

20

Id. 7678 (Arbitrator’s Final Decision), Authority Response at 7.

See Authority’s Opening Brief at 15, 22-23, 26-27; Authority’s Proposed Conclusions of Law ¶¶ 1314, 20.a & b; Authority Response at 8.
21

22 See Authority’s Opening Brief at 15, 22-23, 26-27; Authority’s Proposed Conclusions of Law ¶¶ 1314, 20.a & b; Authority Response at 8.

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2.

The Cross-Appeal Rule.

For similar reasons, the cross-appeal rule does not preclude resolving the
issues the Authority has raised, even though if decided in its favor, the sanctions
imposed on Dr. Scott could increase. The cross-appeal rule is, indeed, long-standing
and salutary. However, as the rule’s name acknowledges, it pre-supposes that party
seeking to benefit on review (or to further burden its opponent) has a right to appeal
or cross-appeal. For example, under federal law prosecutors may appeal a criminal
sentence in prescribed circumstances, and the Department of Homeland Security
similarly is deemed “a party affected” by an ALJ decision for appeal purposes. 23
In HISA cases, however, a decision in Matter of Shell 24 holds that HIWU is
not “a person aggrieved by the civil sanction” and thus cannot seek review of
adverse arbitrator rulings. There also is dicta that arguably suggests the Authority
cannot seek review either. 25 While the decision of another ALJ acting in a HISA
case is entitled to respectful consideration, it is not binding on other ALJs. 26 Here,

See 18 U.S.C. § 3742; BIA PRAC. MAN. Ch. 4 (E.O.I.R.), 1999 WL 33435429, at *4 (§ 4.3(a)(2)) (Nov.
14, 2022) (“DHS is entitled to appeal an immigration judge decision and is deemed a party for any
appeal filed by the respondent.”).
23

24 Order (1) Dismissing HIWU’s Application for Review and (2) Denying Dr. Shell’s Motion to Strike
as Moot (ALJ Dec. 6, 2024) (“Shell II Jurisdiction Order”), https://www.ftc.gov/system/files
/ftc_gov/pdf/612325.2024.12.06_order_dismissing_hiwus_application_for_review_and_denying_dr._sh
ells_motion_to_strike.pdf.
25

Shell II Jurisdiction Order at 1, 3, 5, 6-7.

See, e.g., Am. Elec. Power Co. v. Conn., 564 U.S. 410, 428 (2011) (trial level judges “lack authority
to render precedential decisions binding other judges, even members of the same court.”); Camreta v.
Greene, 563 U.S. 692, 709 n.7 (2011) (“A decision of a federal district court judge is not binding
precedent in either a different judicial district, the same judicial district, or even upon the same
judge in a different case.”) (citing 18 J. Moore et al., MOORE’S FEDERAL PRACTICE § 134.02[1] [d], at
134–26 (3d ed.2011)).
26

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however, since neither HIWU nor the Authority has filed any paper denominated a
“cross-application,” there is no need to revisit Shell II.
Instead, on the facts presented, I conclude that the Authority’s express
objections to the Arbitrator’s award of sanctions are properly part of the case on
review. Both the inter-relatedness of the issues presented and the other reasons
discussed below militate against applying the cross-appeal rule to deny the Court’s
jurisdiction. 27
First, construing FTC Practice Rule 1.146(a)(1) to categorically import the
cross-appeal rule, regardless of the facts, would be problematic. The Rule provides,
in pertinent part, that where “an aggrieved person” such as Dr. Scott files an
application for review, “[w]ithin 10 days of being served. . . , the Authority may file
a response . . . stating the reasons the sanction should be upheld. . . .” Although the
Rule refers to the Authority’s response on “uphold[ing]” the sanctions, that cannot
mean that the Authority must remain silent if it believes they should not be. “De
novo” review to “determine whether . . . the final civil sanction . . . was arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law” is not

27 See Arizona Alliance for Cmty. Health Ctrs. v. Arizona Health Care Cost Containment Sys., 47
F.4th 992, 998 n.2 (9th Cir. Cir. 2022) (the court’s “de novo review” permitted consideration of an
“inherent[ly] interrelated[]”issue); Wellpoint, Inc. v. Comm’r of Internal Revenue, 599 F.3d 641, 650
(7th Cir. 2010) (Doubt “should therefore be resolved against finding that . . . failure to file a crossappeal forfeited [the party’s] right to argue . . . alternative ground[s]”) (citing authorities); GeorgiaPacific Consumer Prods. LP v. NCR Corp., 40 F.4th 481, 485 (6th Cir. 2022) “[M]any courts of
appeals have long considered the cross-appeal rule to be a non-jurisdictional rule of practice, not a
statutory command.”) (internal quotation marks omitted; citing authorities).

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one-sided. 28 Due process necessarily permits the Authority to be heard on alleged
errors.
HISA and the FTC Practice Rules afford an opportunity for ALJ review of the
Arbitrator’s decision and the sanctions imposed. “[O]nce established, [this] avenue[]
must be kept free of unreasoned distinctions that can only impede open and equal
access to the courts.” 29
Equally significant, although Rule 1.146(a) calls Dr. Scott’s filing an
“application,” HISA “does not grant the Administrative Law Judge the discretion to
refuse to conduct such a review.” 30 Thus, Dr. Scott’s “application” is effectively a
notice of appeal as of right—and one that requires details not included in a
conventional notice of appeal. Rule 1.146(a)(1) instructs that the contents of an
aggrieved party’s review application must include, among other things, “the reasons
for challenging the sanction and whether the person requests an evidentiary
hearing” along with “[e]ach issue,” citing (a) to those “error[s] based on the record,”
and (b) to “the principal legal authorities the applicant relies upon. . . .” Together
with the Authority’s response to this detailed “application,” the two papers provide

28

See 15 U.S.C. § 3058(b)(1) & (b)(2)(A)(iii); FTC Practice Rule 1.146(b)(3).

Rinaldi v. Yeager, 384 U.S. 305, 310 (1966). See also Adsani v. Miller, 139 F.3d 67, 77 (2d Cir.
1998) (“[P]rinciples of due process and equal protection mandate that an appeal process established
by statute must be fairly and equally accessible to all litigants.”); 4 C.J.S. Appeal and Error § 44
(“Even where there is no constitutional right to appeal in a state, once a state has created such a
statutory right, the procedures afforded to secure that right must comport with due process and
equal protection.”). Cf. Lindsey v. Normet, 405 U.S. 56, 77 (1972) (“When an appeal is afforded, . . . it
cannot be granted to some litigants and capriciously or arbitrarily denied to others without violating
the Equal Protection Clause.”).

29

30 87 Fed. Reg. 60077 (Oct. 4, 2022).

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more notice and issue-framing than would a notice of appeal and cross-appeal in a
typical civil, criminal, or agency enforcement case. Hearing the issues thus framed
promotes, rather than impairs, sound review, regardless of the titles of the two
papers that present them. 31
Since HIWU asserted and preserved the sanctions issues, which the
Authority has now presented for review through the procedures available to it,

Serpe does not control. Dr. Scott’s “standing,” “party-presentation,” and
preservation arguments are without merit. 32 I will resolve the question that
Dr. Scott’s motion raises: does the ALJ’s review jurisdiction include considering
upward adjustment of sanctions?
B.

The ALJ’s Review Jurisdiction.

To reiterate, the ALJ’s review authority in this HISA proceeding is, as
relevant to this motion, “whether . . . (iii) the final civil sanction of the Authority
was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.” 33 The review is de novo, which means that “the [ALJ] does not defer to
the [Arbitrator’s] ruling but freely considers the matter anew, as if no decision had
been rendered below.” 34 In exercising review authority, the ALJ, as well as the

31 See 15A Charles Alan Wright & Arthur R. Miller, FEDERAL PRACTICE & PROCEDURE § 3904 (3rd ed.
Apr. 2026 update) (“Probably the [cross-appeal rule] does have some value in fostering repose,
identifying the issues to be met, shaping the progress of the appeal, and regulating enforcement of
the judgment. The uncertainties, however, suggest that the requirement should be administered
with substantial flexibility.”) (footnote omitted).
32

See Scott Mem. 2-5.

33 15 U.S.C. § 3058(b) (1)(b) & (2)(A)(iii).

See also FTC Rule 1.146(b)(3).

Bartolome v. Sessions, 904 F.3d 803, 812 (9th Cir. 2018) (construing de novo review by an
immigration judge). See also, e.g., Harris v. Lincoln Nat’l Life Ins. Co., 42 F.4th 1292, 1295 (11th Cir.
34

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Commission itself, may “affirm, reverse, modify, set aside, or remand for further
proceedings, in whole or in part” and “make any finding or conclusion that, in [their]
judgment . . . is proper and based on the record.” 35 In agency enforcement cases
involving review under provisions such as this, the authority for upward sanction
adjustment is well-recognized.
1.

SEC Review Authority.

Gonnella v. SEC 36 rejects Dr. Scott’s argument that I lack jurisdiction to
decide whether upward sanctions adjustment is warranted. There, the SEC had de

novo review authority over ALJ decisions, and the SEC was authorized to “affirm,
reverse, modify, set aside or remand for further proceedings, in whole or in part, an
initial decision by a hearing officer and may make any findings or conclusions that
in its judgment are proper and on the basis of the record.” 37
After both sides sought SEC review of the ALJ’s order, the SEC not only
increased the ALJ’s sanctions against a securities trader, but also directed
sanctions that the SEC’s Enforcement Division “did not specifically request” 38—a
“bar from [Gonnella] serving or acting in certain capacities with respect to an

2022) (“De novo means . . . a fresh, independent determination of the ‘matter’”) (quoting with
approval Doe v. United States, 821 F.2d 694, 697-98 (D.C. Cir. 1987)).
35 15 U.S.C. § 3058(b)(3)(A)(ii) & (iii); FTC Rule 1.146(d)(3).

FTC Rule 1.147(c)(5)(ii)(A) & (B) (Commission review).
36 954 F.3d 536 (2d Cir. 2020),

2016).

37

Id. at 550.

38

Id. at 551.

See also 15 U.S.C. § 3058(c)(3)(i) & (ii);

aff’g Matter of Gonnella, No. 4476, 2016 WL 4233837 (SEC Aug. 10,

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investment company.” 39 The bar sanction itself was authorized under the
Investment Company Act, and the Court of Appeals upheld the SEC’s increase:
“[t]he SEC’s ability to increase penalties flows logically from the statutory scheme—
its review is de novo, and the ALJ’s decision is not final.” 40 The Court further wrote
that it “must not disturb the SEC’s choice of sanction unless it is unwarranted in
law or without justification in fact . . . Here, we have no reason to doubt that the
sanctions imposed by the Commission were both warranted by law and justified in
fact.” 41
As the SEC itself has explained: “Our authority to increase the sanction
imposed by the law judge is set forth in Rule of Practice 411(a), which provides that
‘“[t]he Commission may affirm, reverse, modify, set aside, or remand for further
proceedings, in whole or in part, an initial decision by a hearing officer and may
make any findings or conclusions that in its judgment are proper and on the basis of
the record.’” 42 The SEC Rule dates back at least to 1964, when it was then embodied
in 17 C.F.R. § 201.17(g)(2) and later renumbered as part of the SEC’s Rules of
Practice amendments. 43

39

Gonnella, 2016 WL 4233837, at *12 n.52.

40

Id., 954 F.3d at 551.

41

Id. (internal quotation marks and citation omitted).

Matter of Altman, No. 63306, 2010 WL 5092725, at *19, n.68 (Nov. 10, 2010) (quoting 17 C.F.R.
§ 201.411(a)), aff’d, 666 F.3d 1322 (D.C. Cir. 2011).
42

43 See SEC Part 201-Rules of Practice, 29 Fed. Reg. 9486, 9489 (July 11, 1964); 60 Fed. Reg. 32738,
32813 (June 23, 1995) (§ 201.411(a)).

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Thus, in Matter of O’Leary, 44 the SEC imposed bar orders after the ALJ had
imposed shorter suspensions, explaining: “neither the Administrative Procedure Act
nor our own Rules of Practice restrict our power to impose more severe sanctions
whenever, as here, the issue of their adequacy is properly raised on review of an
examiner’s decision. While we give due consideration to an examiner’s initial
decision, the final determination within the scope of our review must and should be
our own.” The accompanying footnote elaborated:
The administrative Procedure Act (5 U.S.C. §557(b)) provides that, “On
appeal from or review of the initial decision, the agency has all the powers
which it would have in making the initial decision except as it may limit the
issues on notice or by rule.” Rule 17(g)(2) of our Rules of Practice (17 CFR
201.17(g)(2)) provides, “On review the Commission may affirm, reverse,
modify, set aside or remand for further proceedings, in whole or in part, the
initial decision by the hearing officer and make any findings or conclusions
which in its judgment are proper on the record.” 45
The Courts of Appeals have repeatedly upheld the SEC’s authority, in reviewing
ALJ decisions, to increase sanctions under Rule 17(g)(2) and its successor. 46

44 No. 3–503, 1968 WL 88160, at *6 (July 25, 1968) (footnote omitted).
45 Id. at n.25. See also Matter of Valicenti Advisory Servs., Inc., No. 3-8854, 1997 WL 362000, at *21
(ALJ July 2, 1997), rev’d, 1998 WL 798699, at *6 (SEC Nov. 18, 1998) (imposing a cease and desist
order and fines, and directing mailing of the Commission’s order to the Respondent’s clients, after
the ALJ limited the sanction to censure), aff’d, 198 F.3d 62, 65 (2d Cir. 1999); Matter of Sheldon, No.
3-6626, 1992 WL 353048, at *18-19 (SEC Nov. 18, 1992) (imposing a “total bar” after the ALJ had
permitted reapplication with two years), aff’d, 45 F.3d 1515 (11th Cir. 1995); Matter of Fee, No.
1082, 1992 WL 213847, at *3 (SEC Aug. 24, 1992) (imposing an industry bar after the ALJ imposed a
90-day suspension), aff’d, 998 F.2d 1002 (3d Cir. 1993); Matter of Long, No. 3-5788, 1981 WL 37852,
at *5 (SEC Oct. 6, 1981) (imposing an “unqualified bar . . . from association with any investment
advisor” after the ALJ imposed a 12-month bar).

See, e.g., Gross v. SEC, 418 F.2d 103, 107 (2d Cir. 1969) (upholding SEC sanctions that were
“substantially more severe than the suspension ordered by the hearing examiner”); Hanly v. SEC,
415 F.2d 589, 599 (2d Cir. 1969) (“The Commission clearly has the authority to modify, including the
authority to increase, sanctions ordered by a hearing examiner in his initial decision, and we so
hold.”) (footnote omitted); Nees v. SEC, 414 F.2d 211, 217 (9th Cir. 1969) (rejecting the argument
46

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Here, the ALJ’s express authority, when called on to review an arbitrator’s
decision, is analogous to that of the SEC reviewing an ALJ’s initial decision.
2.

CFTC Review Authority.

The CFTC has comparable review authority over an initial ALJ decision. Its
own Rule of Practice dates back to at least 1976. 47 Brenner v. CFTC 48 is a recent
illustration of the Rule’s application. After both sides appealed the ALJ’s decision,
the CFTC increased the ALJ’s trading ban sanction and the fines imposed. On
review to the Seventh Circuit, the sanctioned petitioners argued that the
Commission’s Enforcement Division failed to re-file its appeal to the CFTC after the
ALJ modified his decision. This failure, they argued, deprived both the CFTC and
the Court of Appeals of jurisdiction over the ALJ’s sanctions order. 49 The Seventh
Circuit was not persuaded.
First, the Court rejected the argument that CFTC lacked jurisdiction as a
result of non-substantive modification of the ALJ’s decision. 50 But, “[e]ven assuming
that the [Enforcement] Division’s failure to re-file its notice thereby deprived the
Commission of jurisdiction,” the Seventh Circuit upheld the CFTC’s order

that “it was improper for the Commission to impose a harsher punishment than the hearing
examiner.”).

See Adoption of New Rules and Revocation of Old Rules, 41 Fed. Reg. 2508, 2521 (§§ 10.104(a)
& (b)) (Jan. 12, 1976).
47

48 338 F.3d 713 (7th Cir. 2003).
49

Id. at 720-21.

50

Id. at 721-22.

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increasing sanctions. 51 The Court noted “once an appeal ha[d] been taken, the
Commission ha[d] broad powers”: “On review, the Commission may affirm, reverse,
modify, set aside or remand for further proceedings, in whole or in part, the initial
decision by the Administrative Law Judge and make any findings or conclusions
which in its judgment are proper based on the record in the proceeding.” 52
Therefore, “the petitioners’ appeal properly put the ALJ’s initial decision before the
Commission.” 53 And under the CFTC’s “broad authority once an appeal is before it,
consideration of the adequacy of the sanctions imposed by the ALJ was proper.” 54
Second, regardless of the absence of a cross-petition by the Enforcement
Division, the Court of Appeals upheld its own jurisdiction and affirmed the CFTC’s
decision to “impos[e] increased sanctions, greater than those initially imposed by
the ALJ . . . .” 55 Like the Second Circuit, the Seventh Circuit held that “the choice of
sanction is not to be overturned unless the Court of Appeals might find it
unwarranted in law or without justification in fact. If the agency’s sanction falls
within the statutory limits, it must be upheld unless it reflects an abuse of
discretion.” 56
Therefore, to compare the review provisions:

51

Id. at 722.

52

Id. (quoting 17 C.F.R. § 10.104(b)).

53

Id.

54

Id.

55

Id.

56

Id. (cleaned up).

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SEC→ALJ

The Commission may affirm, reverse, modify, set aside or remand
for further proceedings, in whole or in part, an initial decision by a
hearing officer and may make any findings or conclusions that in
its judgment are proper and on the basis of the record.

CFTC→ALJ

On review, the Commission may affirm, reverse, modify, set aside
or remand for further proceedings, in whole or in part, the initial
decision by the Administrative Law Judge and make any findings
or conclusions which in its judgment are proper based on the
record in the proceeding.

ALJ→Arb.

With respect to a matter reviewed under this subsection, an
administrative law judge . . . (ii) may affirm, reverse, modify, set
aside, or remand for further proceedings, in whole or in part, the
final civil sanction of the Authority; and (iii) may make any
finding or conclusion that, in the judgment of the administrative
law judge, is proper and based on the record.

FTC→ALJ

In matters reviewed under this subsection, the Commission may—
(i) affirm, reverse, modify, set aside, or remand for further
proceedings, in whole or in part, the decision of the administrative
law judge; and (ii) make any finding or conclusion that, in the
judgement of the Commission, is proper and based on the record.

Sources, respectively: 17 C.F.R. § 201.411(a), 17 C.F.R. §10.104(b), 15 U.S.C.
§ 3058(b)(3)(A) & FTC Rule 1.146(d)(3), and 15 U.S.C. § 3058(b)(3)(A) & FTC Rule
1.147(c)(5)(ii)(A) & (B). 57

When the SEC and CFTC promulgated their Rules to review ALJ decisions, it
is a fair inference that each agency sought comprehensive, not restricted, oversight

57 And, to be clear, the SEC and CFTC review regulations are simply illustrative. See also 19 C.F.R.
§ 210.45(c) (ITC), 24 C.F.R. § 26.52(k) (HUD), 31 C.F.R. § 501.742(a) (Treasury Office of Foreign
Assets Control), 47 C.F.R. § 1.117(c) (FCC).

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authority. This review authority is qualified only by the requirement that the
determination be “proper” and based on “the record.” Further, as the Gonnella,

Brenner, and predecessor decisions reflect, these agency review provisions operate
as an integrated whole to confer broad review authority, which includes increasing
sanctions. And under the prior-construction canon, “[w]hen administrative and
judicial interpretations have settled the meaning of an existing statutory provision,
repetition of the same language in a new statute indicates, as a general matter, the
intent to incorporate its administrative and judicial interpretations as well.” 58
Here, like the notice of appeal in Brenner, Dr. Scott’s own review application
“put the [Arbitrator’s] initial decision before [this Court].” 59 HIWU framed in the
arbitration, and the Authority has advanced on this review, the sanctions
contentions the Arbitrator implicitly rejected (subsequent Ineligibility backdating
aside). Like their SEC and CFTC counterparts, the HISA and the FTC Rules
provide for: (1) de novo review authority over the Arbitrator’s decision and the
resulting sanctions; and (2) review authority that is virtually identical to that of the
SEC and CFTC. 60

Bragdon v. Abbott, 524 U.S. 624, 645 (1998). See also Lorillard v. Pons, 434 U.S. 575, 581 (1978)
(“[W]here, as here, Congress adopts a new law incorporating sections of a prior law, Congress
normally can be presumed to have had knowledge of the interpretation given to the incorporated
law, at least insofar as it affects the new statute.”); United States v. Lipsky, No. 24-1351, 2025 WL
692345, at *2 (6th Cir. Mar. 4, 2025) (“That this new provision mirrors the old one offers a good
reason to assume it operates in the same way.”).
58

59

Brenner, 338 F.3d at 722.

See also Guttman v. CFTC, 197 F.3d 33, 41 (2d Cir. 1999), aff’g sub nom. Matter of Glass, No. 93-4,
1998 WL 205134, at *22, *25 (CFTC Apr. 27, 1998) (the CFTC imposed a permanent trading ban
after the ALJ had imposed a five-year ban, and increasing to $300,000 the fine imposed on a
respondent (who did not appeal to the Second Circuit) after the ALJ had ordered $150,000); Vercillo
v. CFTC, 147 F.3d 548, 552, 558-59 (7th Cir. 1998) (the CFTC increased the trader’s revocation of
60

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*

*

*

Both the administrative and judicial case law recognize that the reviewing
body may adjust upward, as well as downward, sanctions imposed by the initial
decisionmaker, such as an arbitrator or ALJ, when—unlike Serpe—the issues are
properly framed for, and asserted on, review. So long as “the penalty fixed for the
violation is within the limits of [the ADMC Rules] and [the ALJ] has made an
allowable judgment in its choice of remedy,” the sanctions ruling is permissible,
subject of course to FTC review. 61 In prescribing ALJ and FTC oversight over
individual enforcement decisions in §§ 3058(b)(2)-(3) & (c)(3), Congress conferred
fulsome, not cabined, authority.

registration from five years to permanent); Ryan v. CFTC, 145 F.3d 910, 915-16, 922 (7th Cir. 1998)
(the CFTC imposed a six-year market ban after the ALJ had granted floor trader status); LaCrosse
v. CFTC, 137 F.3d 925, 928, 929 (7th Cir. 1998) (the CFTC imposed a five year trading ban after the
ALJ had imposed a three-year ban); JCC, Inc. v. CFTC, 63 F.3d 1557, 1564 (11th Cir. 1995) (the
CFTC revoked the trader’s floor registration after the ALJ declined to do so); Lawrence v. CFTC, 759
F.2d 767, 770-71 (9th Cir. 1985) (the CFTC suspended registration although the ALJ had not done
so); Silverman v. CFTC, 562 F.2d 432, 437, 438-39 (7th Cir. 1977) (the CFTC revoked the trader’s
registration after the ALJ declined to do so); Nyman v. U.S. Center for SafeSport, No. 3:20-cv-2256,
2021 WL 857084, at *3 (N.D. Ohio Mar. 8, 2021) (There was no error where, following the sports
regulator’s sanctions award, the arbitrator “impose[d] a sanction within the universe of sanctions
permitted by the SafeSport Code.”); Matter of Soule, No. 99-4, 2005 WL 1993860, at *1 (CFTC Aug.
17, 2005) (the CFTC imposed a $400,000 fine after the ALJ imposed none); Matter of Saberi, No. 0111, 2005 WL 517453,at *8-9 (CFTC Mar. 2, 2005) (the CFTC shortened the trading ban period, while
expanding it to apply to all regulated markets, and not simply to the Chicago Mercantile Exchange,
as the ALJ had ordered).
61 G. H. Miller & Co. v. United States, 260 F.2d 286, 296 (7th Cir. 1958). See also Mathis v. SEC, 671
F.3d 210, 216 (2d Cir. 2012) (“We will not disturb the SEC’s choice of sanction unless it is
unwarranted in law or without justification in fact.”) (internal quotation marks omitted); Altman v.
SEC, 666 F.3d 1322, 1329 (D.C. Cir. 2011) (upholding a “sanction [that] was statutorily authorized”);
CFTC v. Levy, 541 F.3d 1102, 1112 (11th Cir. 2008) (upholding a “per violation” civil penalty that
was authorized by regulation); Wilson v. CFTC, 322 F.3d 555, 560 (8th Cir. 2003) (“[S]anctions
within statutory limits will be upheld in the absence of an abuse of discretion.”) (citing authorities);
LaCrosse, 137 F.3d at 929 (“If the agency’s sanction falls within the statutory limits, it must be
upheld unless it reflects an abuse of discretion.”) (internal quotation marks deleted).

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This approach drew on sports law generally, where there was “a robust antidoping framework that has been tested before arbitration tribunals for many years,
and that has generated a well-developed body of precedent and guidance for
interpreting the provisions in those frameworks.” 62 As one treatise notes in
discussing appeals to the Court of Arbitration for Sport (“CAS”), “the Panel can
review all or part of the decision being appealed de novo. . . . The Panel might
uphold all or part of the decision, vacate all or part of it, or even increase a
sanction.” 63
C.

Dr. Scott’s “Commission Cross-Appeal” Argument.

Dr. Scott contends that HISA and the FTC Rules “do permit cross-appeals to
correct unlawful penalties; that right just does not belong to the Authority,” but
“[i]nstead,[to] the [Federal Trade] Commission.” 64 This “cross-appeal” from the
Arbitrator’s decision, Dr. Scott maintains, requires the Commission, within 30 days,
to file an application for review, which “must identify matters that the Commission

62 88 Fed. Reg. 5073 (Jan. 26, 2023). See also AB 1750 (2021) (WADA Code § 13.1.2 (“In making its
decision, CAS shall not give deference to the discretion exercised by the body whose decision is being
appealed.”) & n.84 (Comment: “CAS [review] proceedings are de novo.”); ADMC Rule 3070(d) (The
“WADA Code Program” and related “case law . . . may be considered when adjudicating cases
relating to the Protocol, where appropriate.”).

See also Court of
Arbitration for Sport, Code of Sports-related Arbitration R57 (eff. July 1, 2025) (“The [CAS] Panel
has full power to review the facts and the law. It may issue a new decision which replaces the
decision challenged or annul the decision and refer the case back to the previous instance.”);
Zamalek SC v. Sassi, CAS 2022/A/8679, at ¶ 140 (Mar. 27, 2023) (“CAS does not act as an
administrative court reviewing an act of an administrative authority where, usually, the scope of
review is characterised by minimum standards of scrutiny . . . . In contrast, it is the duty of a CAS
panel in an appeals arbitration procedure to make its independent determination of whether the
Appellant’s and Respondent’s contentions are correct on the merits . . . .”).
63 Adam Lewis & Jonathan Taylor, SPORT LAW AND PRACTICE 1189 (4th ed. 2021).

64 Scott Mem. at 3 (emphasis omitted).

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finds material to the Administrative Law Judge’s review.” 65 By failing to make a
timely filing here, the Commission, Dr. Scott continues, “waived any right to seek
an upward modification of the penalty,” and the Authority “cannot revive the
Commission’s forfeited cross-appeal. . . .” 66 Similarly, he maintains that “the ALJ,
as agent of the Commission, cannot revive a right that the Commission itself
forfeited.” 67
Dr. Scott bases his argument on HISA § 3058(b)(1), which states, as relevant,
that sanctions “imposed by the Authority, on application by the Commission, . . .
shall be subject to de novo review by an administrative law judge.” HISA defines
“Commission” to mean “the Federal Trade Commission.” 68
But Dr. Scott’s reading of § 3058(b)(1) simply cannot be sound for several
reasons. First, the Commission is a non-party to a HIWU-convened and prosecuted
arbitration and has no involvement until the Authority gives it notice of sanctions
the Authority has imposed after an arbitrator’s award. The notice itself marks the
date on which the 30-day period to seek ALJ review begins to run; it requires no
Commission action at all. 69

Id. at 3-4 (emphasis added) (quoting FTC Practice Rule 1.146(a)(1), entitled “Review of Civil
Sanctions by the Administrative Law Judge” and providing for the 30-day filing deadline).

65

66 Scott Mem. at 4.
67

Id. at 5.

68 15 U.S.C. § 3051(3).
69 15 U.S.C. § 3058(b).

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The import of Dr. Scott’s argument is, therefore, that Congress, in
§ 3058(b)(1), intended to authorize the Commission, upon receiving the Authority’s
notice of sanctions:
(1) to initiate a review of the sanctions arising from a case it did not decide to
bring or participate in, or otherwise have a role, and
(2) to somehow decide, during a compressed 30 days, to pursue a “crossappeal” and identify issues from a free-standing HISA case that are “material” to a
forthcoming review by its own ALJ,
(3) whose decision the Commission itself has authority to review, either “on
its own motion” under § 3058(c)(1) or on discretionary basis if the Authority or the
sanctioned person petitions for review under § 3058(c)(2), and thus
(4) hear claimed errors arising from an ALJ proceeding that the Commission
may have previously pursued.
The process that would flow from Dr. Scott’s argument is simply implausible.
Second, in Dr. Scott’s view, the parties to the ALJ’s review could be the
disciplined individual, the Commission, and the Authority. The only way the
Authority’s views on upward sanctions adjustment could be heard would seemingly
be through the Commission if it concurred in the Authority’s position and was
prepared to argue it. But if the two parties did not align—or if the Commission
simply refrained from any cross-appeal—the Authority could only preserve its

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position on sanctions before the ALJ “for the record,” so that after the ALJ’s
decision, it could seek Commission review. 70
Thus, if Dr. Scott’s argument were sound, unless there was Commission
participation and alignment with the Authority in the review before the ALJ, the

first time the Authority could present its position on sanctions would be on an
application to the Commission to review the ALJ’s decision. Such an unusual review
process would deprive the Commission of the benefit of an ALJ decision, fashioned
after a full vetting of the sanctions issues by two adversaries, to aid its own review
decision-making. 71
For these reasons, Dr. Scott’s Commission “cross-appeal” argument is
markedly unconvincing. I reject it as necessary “to avoid results glaringly absurd”—
“long . . . a judicial function.” 72 Even “[t]he most natural grammatical reading” of a
statute may be overlooked where it “would produce results that [are] not merely
odd, but positively absurd.” 73

See 15 U.S.C. § 3058(c)(2) and FTC Rule 1.147(b). See also Scott Mem. at 3-4 (arguing the
Authority’s ability to seek Commission review).
70

71 Cf. Sheet Metal Workers’ Health & Welfare Fund of N.C. v. Law Off. of Michael A. DeMayo, LLP,
21 F.4th 350, 355 (6th Cir. 2021) (Requiring that an issue be raised below, assures “that both the
parties and this Court have the benefit of the district court’s assessment of the issue when the case is
taken up on appeal” and enables the appellate court “to review the case presented to the district
court, rather than a better case fashioned after a district court’s unfavorable order.”) (internal
quotation marks omitted).
72

Armstrong Paint & Varnish Works v. Nu-Enamel Corp., 305 U.S. 315, 333 (1938) (footnote citing

authorities omitted).

United States v. X-Citement Video, Inc., 513 U.S. 64, 68, 69 (1994). See also Holy Trinity Church
v. United States, 143 U.S. 457, 460 (1892) (“If a literal construction of the words of a statute be

73

absurd, the act must be so construed as to avoid the absurdity.”) (internal quotation marks omitted);

United States v. Mannava, 565 F.3d 412, 416 (7th Cir. 2009) (“an interpretation that, though

literally correct—though dictated by “plain meaning”—was absurd, and therefore erroneous.”).

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II.

Conclusion.
HISA calls for a de novo review by the ALJ to determine “whether . . . the

final civil sanction . . . was arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law.” 74 If, on review, the Authority contends that an
arbitrator’s sanction fails to measure up—and if, as here, the issues are properly
preserved and asserted—there is ALJ jurisdiction to decide the dispute, regardless
of whether increased sanctions could result.
Accordingly, Dr. Scott’s motion is DENIED, and his objection is
OVERRULED.

ORDERED:

Jay L. Himes

Jay L. Himes
Administrative Law Judge

Date: July 16, 2026

74 15 U.S.C. § 3058(b)(2)(A)(iii).

23

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A5a0386e88f44b2a7. Public record. Not legal advice.