FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 07/01/2026 OSCAR NO. 615819 -PAGE Page 1 of 17 * PUBLIC *

FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 07/01/2026 OSCAR NO. 615819 -PAGE Page 1 of 17 * PUBLIC *

PUBLIC

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

__________________________________________

)

)

)

Jason Scott, DVM,

)

)

Appellant.

)

__________________________________________)

In the Matter of

Docket No. 9449

ORDER GRANTING LEAVE TO SUBMIT SUPPLEMENTAL BRIEFS

ON APPELLANT’S OBJECTION AND MOTION TO STRIKE

Since completion of the briefing on Dr. Scott’s Objection and Motion to Strike

the Authority’s Dispositive Brief, the Federal Trade Commission issued its decision

in Matter of Serpe, 1 reversing that part of my decision which imposed a civil penalty

on trainer Serpe. A copy of the Commission’s decision is attached to this Order.

If either party deems it appropriate, they are GRANTED LEAVE to submit a

supplemental brief addressing the Serpe decision. The supplemental brief is limited

to 1,500 words and must be filed on or before 5 p.m. July 9, 2026 and

contemporaneously served on the other party. The word count exclusions set forth

in FTC Rule of Practice § 3.22(c) will apply.

ORDERED:

Jay L. Himes

Jay L. Himes

Administrative Law Judge

Date: July 1, 2026

1 Decision of the Commission on Review Under 15 U.S.C. § 3058(c)(1), No. 9441 (June 30, 2026).

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UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

COMMISSIONERS:

Andrew N. Ferguson, Chairman

Mark R. Meador

In the Matter of

Philip Serpe.

DOCKET NO. 9441

DECISION OF THE COMMISSION ON REVIEW UNDER 15 U.S.C. § 3058(c)(1)

Philip Serpe has worked with racehorses for decades. He has had a successful career by

many metrics, training horses that have won some of the sport’s biggest races. But a post-race

urine test showed that one of his horses had traces of a banned substance after a 2024 win. The

private party tasked by Congress with regulating the sport, subject to Commission oversight,

charged him accordingly. Following arbitration, Serpe’s results were disqualified and he was

suspended for two years, but he received no financial penalty. One of the Commission’s

administrative law judges reviewed the matter and affirmed those sanctions, adding a $25,000 fine

on top. The Commission sua sponte granted review shortly thereafter.

Mr. Serpe believes that the process Congress, the Commission, and that regulator have

developed to adjudicate his charges violates his constitutional rights. We hold that the

administrative law judge was not authorized to impose a civil penalty itself, but that Mr. Serpe’s

constitutional rights were not violated.

We therefore affirm in part and reverse in part the administrative law judge’s decision. Mr.

Serpe’s disqualification and suspension stand, but he need not pay the civil penalty imposed by the

administrative law judge.

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I.

The Horseracing Integrity and Safety Act1 (“the Act”) directs the Horseracing Integrity

and Safety Authority (“the Authority”), a private entity,2 to propose rules pertaining to

horseracing (“HISA Rules”) and to enforce those rules through either administrative proceedings

or federal-court actions.3 In 2023, the Authority fulfilled one of its statutory obligations4 by

proposing the Anti-Doping and Medication Control Rule (“ADMC Rule”).5 Among other things,

the ADMC Rule prohibits the presence of banned substances in the bodies of covered horses and

sets punishments for violations.6 Covered horse trainers whose horses have tested positive for

banned substances will have their horses disqualified from affected races7 and may be suspended

from participating in covered horse races for two years and fined unless they can show that they

were neither at fault for, nor negligent in allowing, exposure to the substance. 8 The ADMC Rule

also lays out the process for investigating, charging, and adjudicating Anti-Doping Rule

Violations (“ADRVs”). Staff of the ADMC enforcement agency, the Horseracing Integrity and

Welfare Unit (“HIWU”), have the authority to conduct interviews, issue document requests,

inspect facilities, and access veterinary records as part of an investigation of possible rule

violations.9 HIWU also conducts post-race testing.10 If a test produces a positive result for a

banned substance, a covered person receives a notice and may request testing of a B sample. If

that test is waived or comes back positive, HIWU may issue a Charge Letter.11

An arbitration panel consisting of either one or three impartial arbitrators12 then conducts

an arbitration in accordance with the procedures set forth in the ADMC Rule and determines

whether a violation occurred. In these proceedings, HIWU has the burden of proving the ADRV

“to the comfortable satisfaction of the hearing panel . . . . This standard of proof in all cases is

1 15 U.S.C. ch. 57A.

2

15 U.S.C. § 3052(a) (“The private, independent, self-regulatory, nonprofit corporation, to be known as the

‘Horseracing Integrity and Safety Authority,’ is recognized for purposes of developing and implementing a horseracing

anti-doping and medication control program and a racetrack safety program for covered horses, covered persons, and

covered horseraces.”).

3 Id. §§ 3055, 3056, 3057(c)(1).

4 See Id. § 3055(a) (requiring “horseracing anti-doping and medication control” rules).

5 Fed. Trade Comm’n, Notice of HISA Anti-Doping and Medication Control Rule, 88 Fed. Reg. 5,070 (Jan. 26, 2023),

https://www.federalregister.gov/documents/2023/01/26/2023 -00957/hisa-anti-doping-and-medication-control-rule.

6 See Fed. Trade Comm’n, Order Approving the Anti-Doping and Medication Control Rule Proposed by the

Horseracing Integrity & Safety Authority (Mar. 27, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/P222

100CommissionOrderAntiDopingMedication.pdf; see also 15 U.S.C. § 3055.

7 HISA Rule 3220(a)(1).

8 HISA Rules 3223–29.

9 HISA Rules 3040(a)(2), 3040(b)(8); see also 15 U.S.C. §§ 3054(e)(1)(E), 3055(c)(4)(B).

10 HISA Rule 3132, 3133(a).

11 HISA Rule 3248.

12 The arbitrators’ impartiality must be “commensurate with the seriousness of the alleged” violations and resultant

civil sanctions. 15 U.S.C. § 3057(c)(3).

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greater than a mere balance of probability (i.e., a preponderance of the evidence) but less than

clear and convincing evidence or proof beyond a reasonable doubt.”13

ADMC violations that arise from a post-race sample, like here, automatically lead to the

disqualification of the covered horse’s results at the covered race and all purses or other prizes are

forfeited.14 In cases where a horse tested positive for a banned substance, the horse is also subject

to a period of ineligibility15 and the responsible person (in most cases, the trainer) is subject to a

period of ineligibility commensurate with their level of fault.16 The ineligibility period may,

however, be eliminated or reduced if the covered person can demonstrate that they bear no or no

significant fault or negligence.17 The responsible person may also be required to pay a fine.18 The

final decision of the arbitration panel is subject to review by an Administrative Law Judge (“ALJ”)

and then, on a discretionary basis, by the Commission.19 Consistent with the Act, the Federal Trade

Commission exercises oversight of the Authority by approving, modifying, and adding to the HISA

Rules.20 The Commission also engages in oversight by reviewing the final sanctions imposed by

the Authority through its arbitration proceedings.21 When the Authority imposes sanctions, either

the Commission or an aggrieved person can initiate de novo review before an ALJ.22 The ALJ

“may make any finding or conclusion that . . . is proper and based on the record,” and “may affirm,

reverse, modify, set aside, or remand for further proceedings, in whole or in part, the final civil

sanction of the Authority.”23

The Commission may then decide to review de novo the ALJ’s decision, either on its own

motion or on application for review by an aggrieved party, if (1) the proceedings before the ALJ

contained a prejudicial error, (2) the decision involved an erroneous application of the HISA Rules,

or (3) if “the decision involved an exercise of discretion or a decision of law or policy that warrants

13 HISA Rule 3121(a).

14 HISA Rule 3221.

15 HISA Rule 3229.

16 HISA Rule 3223.

17 HISA Rules 3223(b), 3224, and 3225.

18 HISA Rule 3223(b).

19 HISA

Rules 3263, 3264; 15 U.S.C. § 3058. The Commission’s procedures for review of final civil sanctions

imposed under the Act are set forth in 16 C.F.R. Part 1, Subpart T.

20 15 U.S.C. § 3053(b)(2) (“A proposed rule, or a proposed modification to a rule, of the Authority shall not take effect

unless the proposed rule or modification has been approved by the Commission.”); id. § 3053(c)(2) (“The Commission

shall approve a proposed rule or modification if the Commission finds that the proposed rule or modification is

consistent with [the Act] and applicable rules approved by the Commission.”); id. § 3053(e) (“The Commission . . .

may abrogate, add to, and modify the rules of the Authority promulgated in accordance with [the Act] as the

Commission finds necessary or appropriate[.]”).

21 Id. § 3058(b) (providing for “de novo review” of a sanction imposed by the Authority “by an administrative law

judge” upon “application by the Commission or a person aggrieved”); id. § 3058(c) (“The Commission may, on its

own motion, review any decision of an administrative law judge” or, in its discretion, grant “an application for review”

submitted by “[t]he Authority or a person aggrieved by” an such decision).

22 15 U.S.C. § 3058. The Authority cannot seek review of its own decision. Id.

23 Id. § 3058(b)(3).

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review by the Commission.”24 We may likewise make any finding or conclusion that is proper and

based on the record and “affirm, reverse, modify, set aside, or remand for further proceedings, in

whole or in part, the decision of the” ALJ.25

II.

Appellant Philip Serpe is a horse trainer covered by the Act. 26 In September 2024, Mr.

Serpe was notified that one of his horses, Fast Kimmie, had tested positive for clenbuterol. 27 The

ADMC Rule bans clenbuterol because it is “typically used to improve the flow of air to the lungs

in a horse” and can have “muscle-building effects in racehorses.”28 So, in October 2024, HIWU

notified Mr. Serpe that it was charging him.29

Consistent with the HISA Rules,30 that charge was litigated before a neutral arbitrator in

June 2025.31 Mr. Serpe provided letters from his veterinarians, who swore they did not prescribe

or dispense clenbuterol to Mr. Serpe’s horses, and he argued that any of a dozen or so individuals

who came into contact with Fast Kimmie in the days leading up to the positive drug test could

have been responsible.32 But on July 9, 2025—ten months after Mr. Serpe was put on notice that

Fast Kimmie tested positive for clenbuterol—the arbitrator determined that Mr. Serpe had violated

the Rule and suspended him for two years.33 The arbitrator did not levy a fine.

The Authority submitted the arbitrator’s punishments to the Commission as the Authority’s

final civil sanctions, and Mr. Serpe timely sought ALJ review. He only nominally disputed liability.

He instead argued that the Authority was required to fine him if it suspended him. In his view, a

suspension sanction would not necessarily trigger his Seventh Amendment right to a jury because

a suspension is akin to an injunction—an equitable remedy to which the Seventh Amendment jurytrial right does not ordinarily apply.34 A fine, by contrast, resembles a remedy at law to which the

Seventh Amendment jury-trial right ordinarily applies.35 Mr. Serpe asked the ALJ to “‘set aside’

24 Id. § 3058(c)(2)(A), (C).

25 Id. § 3058(c)(3).

26 ALJ Decision at 4.

27 Id. at 6.

28 Id.

29 Id. at 7.

30 See HISA Rules, Series 7000 (delegating the Authority’s responsibility to adjudicate ADMC Rule violations to an

independent arbitral body).

31 ALJ Decision at 11–12.

32 Id. at 8.

33 Notice of Appeal to ALJ, Ex. A, https://www.ftc.gov/system/files/ftc_gov/pdf/613720.2025.07.15_notice_of_ap

peal_and_application_for_review_ redacted.pdf.

34 See FCC v. AT&T, 608 U.S. —, 146 S. Ct. 1418, 1430 (2026) (rejecting argument that “the Seventh Amendment

applies . . . even where no money is at stake” because the Seventh Amendment “applies only to suits ‘where the value

in controversy shall exceed twenty dollars”).

35 SEC v. Jarkesy, 603 U.S. 109, 122–23 (2024). (discussing Tull v. United States, 481 U.S. 412, 422 (1987)).

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the Arbitrator’s decision as ‘unlawful,’” and “remand with directions for HIWU not to initiate an

arbitration against” him.36

On September 12, 2025, the ALJ held that HIWU had proved that Mr. Serpe violated the

ADMC Rule and that Mr. Serpe did not disprove that the violations were attributable to him. On

the other hand, the ALJ held that the Authority violated Mr. Serpe’s statutory due-process right by

interfering with HIWU’s “prosecutorial independence” and that the arbitrator thus insufficiently

considered whether to issue a fine. In the first instance, and without being asked to do so, the ALJ

determined both that (1) a fine should have been included in the sanctions award and (2) under

Securities & Exchange Commission v. Jarkesy,37 the adjudication did not trigger Mr. Serpe’s

Seventh Amendment jury-trial right because the Act and HISA Rules concern a public right. The

ALJ ultimately affirmed the Authority’s sanctions and added a $25,000 fine on top.38

Three days later, the Commission, on its own motion, granted review of the matter. 39 Mr.

Serpe later filed three separate motions concerning the scope of this review.40

On September 23, 2025, Mr. Serpe asked the Commission to clarify the issues being

reviewed. He did not request nor did he propose that the Commission address any specific issues.

The Commission ordered the parties to address: (1) whether the ALJ was authorized to impose a

civil sanction not imposed by the arbitrator and not requested by any party to the proceeding; (2)

whether, if authorized, the additional sanction, here the fine, was appropriate; and, (3) whether Mr.

Serpe’s Seventh Amendment jury-trial right was triggered.41

On December 10, nearly three months after the Commission granted review, Mr. Serpe

filed his first motion for leave to brief additional issues. These issues were: (4) whether the

Commission has the authority to adjudicate sanctions imposed pursuant to the Act; (5) whether

enforcement under the Act violates the private-nondelegation doctrine; and (6) whether the

Authority violated Mr. Serpe’s due-process rights.42 Before the Commission could resolve his

motion, Mr. Serpe filed his opening brief, so we denied that motion as moot and notified the parties

36 ALJ Decision at 17–18, 22 (quoting Serpe’s Opening Brief).

37 693 U.S. 109.

38 See generally ALJ Decision.

39 Order Partially Staying ALJ Decision, https://www.ftc.gov/system/files/ftc_gov/pdf/d9441_2025.09.15_commissi

on_order_partial_stay__0.pdf.

40 Mot. Clarification and Extension (Sep. 23, 2025), https://www.ftc.gov/system/files/ftc_gov/pdf/614134.2025.09.2

3_motion_for_clarification_and_extension_of_time.pdf; Mot. Leave to Br. Add’l Issues (Dec. 10, 2025),

http://www.ftc.gov/system/files/ftc_gov/pdf/614420.2025.12.10_serpe_ftc_mot._to_expand_briefing.pdf; Combined

Mot. Consider Add’l Evid. (Jan. 22, 2025), https://www.ftc.gov/system/files/ftc_gov/pdf/614722.20

26.01.22_new_evidence_motion_and_exhibits.pdf.

41 Order Granting Mot. Clarification (Sept. 30, 2025), https://www.ftc.gov/system/files/ftc_gov/pdf/d9441_2025.09

.30_commission_order_regarding_clarification_.pdf.

42 Mot. Leave to Br. Add’l Issues (Dec. 10, 2025), https://www.ftc.gov/system/files/ftc_gov/pdf/614420.2025.12.10_

serpe_ftc_mot._to_expand_briefing.pdf.

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that we would consider the brief in full.43 Importantly, the Commission did so “without making a

determination that such issues were preserved by Mr. Serpe or are otherwise appropriately

addressed in this proceeding.”44 As discussed below, we now determine that Mr. Serpe preserved

none of these three issues.45

And on January 22, 2026, Mr. Serpe filed his second motion for leave to brief additional

issues. Therein he requested reconsideration of whether he was liable at all, in light of supposedly

new evidence. The Commission denied the motion, ultimately declining to question the ALJ’s

decision to affirm the arbitrator’s liability finding in light of an argument that was not presented to

the ALJ.46

III.

The parties have briefed six issues for Commission review, but Mr. Serpe forfeited three of

them.47 The remaining three concern whether the Authority and the Act itself violate Mr. Serpe’s

Seventh Amendment right to a jury trial. The Seventh Amendment requires causes of action and

remedies resembling those traditionally litigated in, and awarded by, courts of law to be tried

before a jury in an Article III court (unless the party protected by the Seventh Amendment forgoes

that right).48 Because the Authority—including its delegees, HIWU and the arbitrator—is not a

state actor, the Authority’s adjudication did not trigger Mr. Serpe’s Seventh Amendment right. And

because the ALJ was not authorized to impose a civil penalty against Mr. Serpe, the ALJ’s review

of the Authority’s decision did not trigger Mr. Serpe’s right to a jury trial either.

(1) The Seventh Amendment and the Jarkesy Framework

The right to be tried by a jury of one’s peers is as near to sacrosanct as any that exists in

the American legal system. Two hundred and fifty years ago this week, Thomas Jefferson

submitted to the world that Americans needed independence from King George III because, among

other “abuses and usurpations,” he was depriving Americans of jury trials.49 When it came time to

consider what rights were so important that the Constitution could not do without their

codification, the jury trial was front and center. 50 Over the last 90 years, however, Congress has

43 Order Den. As Moot (Jan. 2, 2026), https://www.ftc.gov/system/files/ftc_gov/pdf/d9441_2026.01.02_order_denyi

ng_motion_regarding_additional_issues_.pdf.

44 Id.

45 See infra nn. 72, 92 & 93 and accompanying text.

46 Order Den. In Part (Feb. 4, 2026), https://www.ftc.gov/system/files/ftc_gov/pdf/d9441_2026.02.04_commiss

ion_order_denying_in_part_appellant_motion_.pdf.

47 See infra nn. 72, 92 & 93 and accompanying text. As communicated in our February 4, 2026, Order, we think it

prudent to ensure that our review of an ALJ’s decision is actually a review of the ALJ’s decision, not a review of a

case never presented to the ALJ. See Order Den. In Part. We thus routinely refuse to consider matters that were not

brought before the ALJ absent compelling reasons to do so. See 16 C.F.R. § 1.147(b)(4), (c)(1).

48 Jarkesy, 603 U.S. 109.

49 The Declaration of Independence para. 2 (U.S. 1776).

50 See Jarkesy, 603 U.S. at 121–22 (quoting The Federalist No. 83, p. 495 (C. Rossiter ed. 1961) (A. Hamilton)).

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slowly disfavored the jury trial, moving adjudication of many federal-law disputes from Article III

courts to administrative agencies. But the last decade has seen the right to a jury trial become a

focus once again.

In Securities & Exchange Commission v. Jarkesy, the Supreme Court reconfirmed that

Congress cannot give executive-branch agencies, rather than federal courts, the authority to

adjudicate claims that are “quintessentially suits at common law.”51 “Even when an action

‘originates in a newly fashioned regulatory scheme,’ what matters is the substance of the action,

not where Congress has assigned it.”52 In short, where the federal government brings “claims

whose causes of action are modeled on common law [claims] and that provide a type of remedy

available only in law courts,” the claims “typically must be adjudicated in Article III courts.”53

Cases that implicate the Seventh Amendment because of a common-law cause of action

typically come with a common-law remedy.54 As the Supreme Court has explained, the remedy

often is “all but dispositive.”55 In Jarkesy, for example, the claim was securities fraud—closely

related to the quintessentially common-law claim of fraud—and the remedy was a civil penalty—

akin to the “prototypical common law remedy” of money damages. 56 The Court thus held that the

claim belonged before a jury in an Article III court, rather than in an SEC hearing room. Similarly,

in Tull v. United States, the United States sought to recover civil penalties for violations of the

federal environmental laws, and civil penalties are “a type of remedy at common law that could

only be enforced in courts of law,” where the jury-trial right attached.57 And in Granfinanciera,

S.A. v. Nordberg, the Supreme Court held that an action to avoid a fraudulent transfer required a

jury because, at common law, such an action was “traditionally provided by law courts or on the

law side of courts having both legal and equitable dockets.”58 The upshot of Jarkesy and the

Supreme Court’s other Seventh Amendment cases is that if the cause of action sounds in the

common law, and the remedy is a remedy that would have been available in a court of law rather

than in chancery, the claim must be adjudicated before a jury in an Article III court. 59

There is one exception to this rule. A claim that implicates a “public right” need not be

litigated before a jury in an Article III court even if the cause of action sounded in the common

law and the remedy were available only in a court of law. Thus, for example, the Supreme Court

51 Id. at 133 (quoting Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 56 (1989)).

52 Id. at 134 (quoting Granfinanciera, 492 U.S. at 52).

53 Id. at 136.

54 In re Express Scripts, 176 F.4th 301, 309 n.6 (4th Cir. 2026) (“[W]hen

courts today try to evaluate an equitable

‘claim’ separately from an equitable ‘remedy,’ they are often asking a question without any clear historical answer—

at least insofar as that claim originated in equity's concurrent jurisdiction. This difficulty perhaps explains the Supreme

Court’s repeated statements that the remedial inquiry is ‘more important.’”).

55 Jarkesy, 603 U.S. at 122–23 (discussing Tull, 481 U.S. at 422).

56 Id. at 122–26.

57 Id.; Tull, 481 U.S. at 422. Tull, of course, originated in federal court, but a jury trial was not afforded.

58 492 U.S. at 49.

59 See Express Scripts, 176 F.4th at 309.

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held in Oil States Energy Services v. Greene’s Energy Group that the grant of a patent is a public

right which may be adjudicated in an executive-branch agency rather than an Article III court

notwithstanding that the validity of patents was ordinarily the subject of suits at common law.60

Only claims that, at common law, had to be decided in a court of law by its “nature” triggered the

Seventh Amendment.61 This public-rights exception “has been applied in a handful of areas where

such matters ‘historically could have been determined exclusively by the executive and legislative

branches’ without Article III involvement.”62 Exactly what this means “is an ‘area of frequently

arcane distinctions and confusing precedents’”63 because the “Court has not ‘definitively

explained’ the distinction between public and private rights, and its precedents applying the publicrights doctrine have ‘not been entirely consistent.’” 64 The doctrine at least includes revenue

collection, immigration, foreign commerce, the administration of public lands, 65 and workplace

safety regulation.66 If a claim implicates a public right, Congress is free to assign the matter for

adjudication as it sees fit.67

Throughout this matter, the parties seemed to agree that Mr. Serpe’s right to a jury trial

would be triggered only if he was facing a fine, because a fine is the sort of monetary remedy that

typically would be available only in a court of law.68 There was disagreement as to whether the

relevant focus for that inquiry was the Authority’s adjudication or the ALJ’s review of the

Authority’s sanctions. And the parties disagreed over whether the Act and the HISA Rules

concerned public or private rights. But Mr. Serpe repeatedly acknowledged that his right to a jury

trial in federal court hinged on whether he faced a fine.69

60 584 U.S. 325, 339–340 (2018).

61 Id. at 340 (quoting Stern v. Marshall, 564 U.S. 462, 484 (2011)).

62 Ortega v. Off. of the Comptroller of the Currency, 155 F.4th 394, 402 (5th Cir. 2025).

63 Id. (quoting Thomas v. Union Carbide Agric. Prods., 473 U.S. 568, 583 (1985)).

64 Oil States Energy Servs., 584 U.S. at 334 (quoting N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50,

69 (1982), and Stern, 564 U.S. at 488).

65 Id. at 402–03 (collecting cases).

66 Atlas Roofing Co. v. Occupational Safety & Health Rev. Comm’n , 430 U.S. 442 (1977). Serious doubt has been cast

as to the forcefulness of this precedent, but the Supreme Court, in Jarkesy, specifically recognized its continuing

validity. Until the Supreme Court formally overrules it, we are bound to recognize this public-rights example.

67 Id. at 455.

68 See, e.g., Notice of Appeal to ALJ at 2–3 (arguing that the arbitrator was required to levy a fine and that such a fine

would trigger Mr. Serpe’s Seventh-Amendment jury-trial right).

69 See Serpe Second Supp. Br. (May 19, 2026), https://www.ftc.gov/system/files/ftc_gov/pdf/615478.20

26.05.19_2nd_notice_of_supp._auth.pdf (“[T]he availability of a civil money penalty remedy in Serpe’s adjudication

is ‘virtually determinative in entitling [him] to a jury trial.’”). This is despite presenting what he believed to be

analogous common-law causes of action to the Commission. See Opening Br. at 18 –21. To be clear, Mr. Serpe’s is not

a case where a cause of action is so analogous that it outweighs the unavailability of a legal, rather than equitable,

remedy. A strict-liability charge for the presence of illegal substances in a racehorse is not an action in debt; the

Authority is not suing Mr. Serpe to collect owed money but to establish liability for an offense. See Opening Br. at 18.

Nor is Mr. Serpe’s case an action for fraud, breach of contract, or tortious interference. Se e id. at 19–21. Mr. Serpe is

not being punished for lying to the Authority, for breaking “a promise to ride a fair race,” or for “intentionally

undermin[ing] the race’s integrity.” He is being punished because of the amount of a drug found in his horse’s blood.

His promises, state of mind, and intentions are irrelevant to that claim.

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Now, for the first time, he argues that the entire enforcement action “must be adjudicated

in federal court irrespective of whether the Seventh Amendment70 applies because it does not

concern public rights.”71 Mr. Serpe did not raise the argument before the ALJ and waited months

before raising it to the Commission; he has thus forfeited the argument.72 As we told him in our

February 4, 2026, Order we will not, in reviewing the ALJ’s decision, address new issues and new

arguments that were not presented to the ALJ.73 Even had Mr. Serpe timely raised this argument,

however, the Commission is skeptical of its merits. One federal district court has rejected this

argument outright.74 And federal courts of appeal have recognized that “nothing in Jarkesy

displaced an administrative agency’s ability to impose equitable remedies, consistent with their

statutory authority.”75 Only one court has extended Jarkesy’s reasoning beyond the Seventh

Amendment to claims involving purely equitable relief, holding that the Commission’s deceptiveadvertising actions are so parallel to traditional common-law actions for deceit that Article III

places them exclusively within the jurisdiction of the federal courts notwithstanding the equitable

nature of the remedy.76 The Fifth Circuit’s decision in Intuit was, however, narrowly cabined and

heavily reliant on historical records indicating that the Commission, in policing unfair methods of

competition, was enforcing a common-law standard.77 Nothing in that opinion or the history of the

Act would suggest that Mr. Serpe would have been able to prevail on this argument had he raised

it properly.78

(2) Jarkesy in Arbitration

The Act and rules provide Arbitrators with the power to issue fines.79 Mr. Serpe was

therefore subject, at least potentially, to the imposition of a remedy of the sort that ordinarily would

have been imposed by a court of law rather than the chancery. If the Seventh Amendment applied

in this context, Mr. Serpe would have been guaranteed a jury trial from the moment that he was

70 Mr. Serpe seeks to apply the Jarkesy framework

outside of the Seventh Amendment context. Mot. Leave to Br.

Add’l Issues at 3–4; Serpe Supp. Br. at 1. In his view, the Jarkesy framework is merely a “necessary part of the Seventh

Amendment analysis,” Mot. Leave to Br. Add’l Issues at 3–4, that applies regardless of whether legal or equitable

remedies are ultimately sought. Serpe Supp. Br. at 1–2 (discussing Intuit, Inc. v. FTC, 170 F.4th 411 (5th Cir. 2026));

see also Intuit, 170 F.4th at 416–17 n.5.

71 Opening Br. at 24.

72 In re Luis Jorge Perez, 2024 WL 3824065, at *4 (F.T.C. Aug. 8, 2024); see also In re Luis Jorge Perez (Comm’r

Ferguson, concurring), 2024 WL 3824062, at *2 (F.T.C. Aug. 7, 2024).

73 Order Den. In Part at 4.

74 Scott v. HISA, No. 2:25-cv-632, 2025 WL 2987598, at *9 (D.N.M. Oct. 22, 2025) (“Nothing in Jarkesy limited

agencies’ power to seek civil fines for suits without a common law mirror or to pursue equitable remedies. Arbitration

is thus obviously appropriate . . . when the HIWU seeks exclusively equitable relief.” ).

75 NLRB v. Starbucks Corp., 159 F.4th 455, 474 (6th Cir. 2025); see also NLRB v. N. Mtn. Foothills Apts., 157 F.4th

1089, 1199–1200 (9th Cir. 2025) (equitable monetary relief award does not implicate Jarkesy).

76 Intuit, Inc. v. FTC, 170 F.4th 411, 420 (5th Cir. 2026).

77 Id. (quoting Sears, Roebuck & Co. v. FTC, 258 F. 307, 311 (7th Cir. 1919), and then citing FTC v. Gratz, 253 U.S.

421, 427 (1920)).

78 As discussed above, none of Mr. Serpe’s claimed common-law analogues are actually analogous. See supra n. 69.

79 HISA Rule 3223(b).

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charged with violating the ADMC Rule. But the Seventh Amendment guarantees a jury trial only

where sanctions are being levied and adjudicated by a “state” actor (“state” being used in the same

sense as “government” rather than referring to one of the several States).80 And the Authority is

neither the state nor a state actor.

Mr. Serpe recognizes that the Authority is a private entity.81 Indeed, his entire

nondelegation argument turns on that proposition. 82 He further recognizes that the Seventh

Amendment “protect[s] only against infringement by governments,”83 but he argues that the

Authority’s adjudicative process is “fairly attributable” to the government84 and can thus “be

regarded as governmental action for constitutional purposes.”85 As relevant here, the Supreme

Court has indicated a private entity’s conduct may be state action if “the government acts jointly

with the private entity.”86 But this requires more than the mere fact that an ALJ and the Commission

review the Authority’s enforcement determination.

Mr. Serpe largely relies on the Commission’s role in rulemaking to satisfy the state-action

doctrine’s test. Congress has directed the Commission to take part in the rulemaking process.87

The Commission approves, and may even set or modify, the rules that the Authority must follow

in its horseracing regulation. But “unless the [Authority] is performing a traditional, exclusive

public function,” “[b]eing regulated by the State does not make one a state actor.”88 And, in

Manhattan Community Access Corp. v. Halleck, the Supreme Court explicitly recognized that

“running sports associations and leagues” is not such a function. 89

What Mr. Serpe really needs to show is that enforcement of those rules is a joint enterprise.

Unlike rulemaking, however, the Commission does not actively take part in the Authority’s

investigative and enforcement decisions. As Mr. Serpe recognizes, administrative enforcement of

80 See Thomas v. Humboldt Cnty., 146 S. Ct. 27, 28 (2025) (statement of Gorsuch, J., respecting the denial of certiorari)

(“When a federal agency accuses someone of fraud and seeks civil penalties, the Seventh Amendment guarantees that

individual the right to have the case heard by a jury of his peers—not by other agency officials who work side by side

with those bringing the charges. But thanks to Bombolis, state and local agencies pursuing similar charges and similar

relief sometimes claim that they are free to dispense with the hassle of proving their case to a jury.” (referencing

Minneapolis & St. Louis R. Co. v. Bombolis, 241 U.S. 211 (1916))); see also Nguyen v. Wells Fargo Clearing Servs.,

No. 4:24-cv-1310, 2025 WL 436062, at *4 (E.D. Mo. Feb. 7, 2025) (“[W]hatever the [government] can (or, more

accurately, cannot) do in the context of civil enforcement proceedings has no bearing on what private parties can (or

in this case, must) do in the context of agreeing to arbitrate their private disputes.”).

81 Opening Br. at 13.

82 Id. at 25–26.

83 Id. at 13 (quoting Lugar v. Edmondson Oil Co., 457 U.S. 922, 936 (1982)).

84 Id. (quoting Lugar, 457 U.S. at 937).

85 Id. (quoting Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374, 378 (1995)).

86 Manhattan Cmty. Access Corp. v. Halleck, 587 U.S. 802, 809 (2019) (listing the “few limited circumstances” in

which “a private entity can qualify as a state actor”).

87 See 15 U.S.C. § 3053; see also Walmsley v. FTC, 117 F.4th 1032, 1038–39 (8th Cir. 2024) (vacated on other

grounds).

88 Halleck, 587 U.S. at 814, 816.

89 Id. at 810.

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the rules is “a multi-step process”90 that begins with the Authority.91 The Act and the HISA Rules

require the Authority to bring administrative enforcement actions through its enforcement agency,

HIWU, which in the case of ADRVs adjudicates charges before an arbitral body. In this way, the

Authority makes its own initial determination whether covered persons violated the rules, whether

sanctions are warranted, and which sanctions are warranted—all without Commission input or

involvement.92 Instead, we wait until the Authority’s decision has been made and review it as

Congress has directed, either sua sponte or on an aggrieved party’s application.

Lugar v. Edmondson Oil Co., the precedent Mr. Serpe believes most parallel to his, is a

good example of what a joint enterprise actually looks like. In Lugar, the government created a

process by which one private party could apply for attachment of a second private party’s property

and government officials would seize that property themselves. In other words, Lugar involved

the government acting with a private party. Compare that to what we have here: two private parties

argue their case before an impartial hearing officer, as required by government-approved rules,

and then the government reviews the impartial hearing officer’s determination as part of the

government’s regulation of a private party.

Neither Lugar nor Halleck support treating the Authority as a state actor capable of

violating Mr. Serpe’s Seventh Amendment rights in considering whether to levy a civil penalty

against him.93

90 Opening Br. at 14.

91

The Authority’s enforcement actions occur pursuant to HISA Rules the Commission has approved , and the

Commission at all times maintains oversight over the Authority, even if the Commission does not conduct initial

enforcement investigations and proceedings.

92 Mr. Serpe argues, for the first time in this matter, that this scheme violates the Supreme Court’s private nondelegation doctrine. Opening Br. at 25. He has forfeited this argument. See In re Luis Jorge Perez, 2024 WL 3824065,

at *4 (F.T.C. Aug. 8, 2024); see also In re Luis Jorge Perez (Comm’r Ferguson, concurring), 2024 WL 3824062, at *2

(F.T.C. Aug. 7, 2024). In any event, his argument is contrary to the consistent position of this Commission across

extensive litigation in the federal courts of appeals and the Supreme Court. See Brief for the Federal Respondents,

Walmsley v. FTC, 145 S. Ct. 2870 (2025) (No. 24-420); Brief for the Federal Respondents in Opposition, Oklahoma

v. United States, 145 S. Ct. 2836 (2025) (No. 32-402); Petition for a Writ of Certiorari, FTC v. Nat’l Horsemen’s

Benevolent & Protective Ass’n, 145 S. Ct. 2837 (2025) (No. 24-429); see also Oklahoma v. United States, 163 F.4th

294 (6th Cir. 2025). HIWU is “subject to the FTC’s pervasive surveillance and authority” and any sanction it imposes

is necessarily contingent on our approval. Oklahoma, 163 F.4th at 311 (6th Cir. 2025) (citing FCC v. Consumers’

Rsch., 606 U.S. 656, 695 (2025)); see also 15 U.S.C. § 3058(b), (c) (providing that the Commission, on its own motion,

can review the Arbitrator’s and the ALJ’s decisions); but see Nat’l Horsemen’s Benevolent and Protective Ass’n v.

Black, — F.4th —, No. 23-10520, 2026 WL 1689717 (5th Cir. 2026). This satisfies the private non-delegation doctrine.

And, as the Authority points out, it is especially ironic to make the argument in this case, where the Commission sua

sponte granted review, demonstrating the active role the Commission has taken in overseeing the Authority. Answer

Br. at 24.

93 Mr. Serpe also argues for the first time that his Fifth Amendment rights have been violated . This argument has been

forfeited. In re Luis Jorge Perez, 2024 WL 3824065, at *4 (F.T.C. Aug. 8, 2024); see also In re Luis Jorge Perez

(Comm’r Ferguson, concurring), 2024 WL 3824062, at *2 (F.T.C. Aug. 7, 2024). Because the Authority is not a state

actor, though, this argument would have failed regardless. See Navarro v. U.S. Ctr. for SafeSport, — F.4th —, 2026

WL 1129085, at *7–9 (4th Cir. 2026) (affirming district court’s holding that sport regulatory organizations were “not

state actors and thus [] not subject to the Due Process Clause of the Fifth Amendment ”). Mr. Serpe has made no

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(3) Jarkesy and the ALJ

Having determined that only ALJ or Commission proceedings under the Act may implicate

the Seventh Amendment, and even then only when the covered person faces the prospect of a fine,

we turn to whether the ALJ’s review fits that bill. It does not because we hold that, if the Authority

declines to impose a fine, neither the ALJ nor the Commission are authorized to impose one. Mr.

Serpe therefore never faced the prospect of having a monetary penalty imposed by a government

actor, which would have triggered his Seventh Amendment right to a jury trial.

Both the Act itself and longstanding common-law principles foreclose the ALJ or

Commission from imposing a fine where the Authority declined to do so. First, Congress, by using

the word “modify” authorized only incremental changes to sanctions actually imposed, rather than

the imposition of new sanctions that were not imposed. Adding a fine where the Authority

determined that only equitable relief was necessary would be a transformative change beyond the

scope of that authorization. Second, background principles of American law counsel against

allowing a reviewing body to punish a litigant for seeking review or reward a litigant that did not

seek review. It would contravene these principles for an ALJ to add a fine that no party wanted.

a) Authority to Impose Fines

The question in which Mr. Serpe’s Seventh Amendment claim turns is whether the ALJ had

the authority to impose a fine sua sponte where the Authority forewent imposing a fine, such that

Mr. Serpe was potentially subject to the imposition by a government actor of a sanction similar to

those imposed by the law courts at common law. If not, then Mr. Serpe never faced the prospect

of a fine by a government actor and his Seventh Amendment right, as recognized by Jarkesy, was

never implicated. In seeking review, Mr. Serpe and the Authority were in agreement: the ALJ

cannot impose a fine sua sponte. Mr. Serpe best presented the parties’ agreement: “The ALJ may

not . . . impose [a] fine on de novo review. The ALJ must instead ‘set aside’ the Decision and direct

HISA, through HIWU, to enforce its charge against [Mr. Serpe] in an Article III court[.]” 94 Mr.

Serpe now argues otherwise, but we agree with his original position.

Mr. Serpe argues that the Act “give[s] FTC ALJs authority to review cases and impose civil

sanctions they deem appropriate regardless of the sanctions imposed by HIWU arbitrators.”

argument that the ALJ or the Commission itself has deprived him of constitutional due process, and so any Fifth

Amendment claim would have failed.

Nor has Mr. Serpe argued that the Authority deprived him of statutory due process. The Act provides that HISA rules

“shall provide for adequate due process, including impartial hearing officers or tribunals commensurate with the

seriousness of the alleged . . . rule violation and the possible civil sanctions for such violation.” 15 U.S.C. § 3057(c).

Even had he argued that this statutory protection was violated, the Authority’s conduct resulted in no additional

consequences. The only “consequence” Mr. Serpe faced as a result was a guarantee that the process would not violate

his constitutional rights.

94 Notice of Appeal to ALJ at 3. At argument, Mr. Serpe clarified that this position was intended only to convey that

the Seventh Amendment prevented the ALJ from levying a fine, not that the Act did. Oral Arg. Tr. at 12 ¶¶ 21–24.

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Without further elaboration, he asserts that “[t]he phrase ‘final civil sanction’ refers to the set of

sanctions that the Arbitrator imposed.”95 And, he argues, “adding an additional sanction is a

modification of the total mix of sanctions that HISA allows to be ‘modif[ied].’” 96 But to say that

the imposition of a fine “modifies” a suspension is akin to saying “the French Revolution

‘modified’ the status of the French nobility.”97

Reading a grant of authority to “modify” a decision as authorizing the fundamental

transmutation of that decision betrays the word. “Modify” “connotes moderate change” and would

lose its nuance if stretched to “mean both ‘to change in some respects’ and ‘to change

fundamentally.’”98 Mr. Serpe nevertheless argues that “modify” means something different here

than it does everywhere else for two reasons.99 First, this case involves the word in an adjudicative

context, not a rulemaking context.100 We do not understand why the use of the word in a statute

about rulemaking would carry an entirely different meaning than its use in a statute about

adjudications, and Mr. Serpe fails to elaborate. The word’s connotation does not change depending

on what one is modifying. Whether one is modifying a rule or a sanction, “virtually every

dictionary … says that ‘to modify’ means to change moderately or in a minor fashion.”101 Mr.

Serpe has no answer for this.

Second, he argues that the context in which the word “modify” appears in Section 1209 of

the Act (the adjudication section)102 makes clear that it means “to change” without the ordinary

connotation of “limitation or increment”103 because it “is grouped with the authority to ‘affirm’

and ‘reverse’ the sanction.”104 His argument fails. For one thing, he cannot explain why its

appearance alongside “affirm” and “reverse” would fundamentally alter its ordinary meaning of

minor or moderate change. Worse still, he commits the very sin he decries by ignoring statutory

context. The adjudication section provides that the ALJ may “affirm, reverse, modify, set aside, or

remand” the Authority’s “final civil sanction.”105 Section 1204, however, which governs the

Commission’s supervision of the Authority’s rulemaking, grants the Commission the power to

“abrogate, add to, and modify the rules of the Authority.”106

95 Opening Br. at 9.

96 Id. (brackets in original).

97 MCI Telecomms. v. AT&T, 512 U.S. 218, 227–28 (1994).

98 See id. at 227–28; see also Biden v. Nebraska, 600 U.S. 477, 494–95 (2023).

99 Opening Br. at 9 n.34 (citing Biden v. Nebraska, 600 U.S. at 494, and then citing FDA v. Brown & Williamson

Tobacco Corp., 529 U.S. 120, 133 (2000)).

100 Id.

101 MCI Telecomms., 512 U.S. at 225.

102 15 U.S.C. § 3058(b)(3)(A)(ii), (c)(3)(A)(ii).

103 Ibid.

104 Opening Br. at 9 n.34 (citing Brown & Williamson, 529 U.S. at 133).

105 15 U.S.C. § 3058(b)(3)(A)(ii), (c)(3)(A)(ii).

106 Id. § 3053(e).

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“Add to” does the work in the rulemaking section that Mr. Serpe argues “modify” does in

the adjudication section.107 “Modify” in the rulemaking section therefore quite obviously carries

the word’s ordinary connotation of limitation or increment rather than wholesale change. If it did

not, it would be mere surplus to “add to,” which we cannot interpret it to be. 108 When Congress

uses “‘identical words [] in different parts of the same statute,’” the “usual presumption” is that

the words “carry ‘the same meaning.’”109 In the presence of this presumption, Mr. Serpe would

need an especially compelling explanation of why “modify” means one thing in the rulemaking

section, and something entirely different in the adjudication section. And given that Congress’s

inclusion of language in one section of a statute but exclusion of that language in another section

of the same statute is intentional,110 and that we must give full effect to Congress’s intentional

inclusions and exclusions,111 Mr. Serpe also would need an especially compelling explanation of

what work “add to” is doing alongside “modify” in the rulemaking section given that he reads

“modify” to mean “add to” in the adjudication section. But he offers no explanation for either

incongruity. He therefore gives us no reason to read “modify” to bear anything other than its usual

connotation of limited or moderate change.

Of course, this does not leave the Commission without recourse in conducting oversight of

the Authority. Although “modify” does not allow adding a sanction, Congress gave the ALJ the

ability to “set aside,” “in whole or in part.”112 Congress has therefore given us the authority to

change a sanction fundamentally by removing all or part of a sanction. And, as Mr. Serpe argued

in seeking review, should the ALJ or Commission think imposed sanctions are too lenient, we are

authorized to “remand” the matter to the Authority for further proceedings. But Congress withheld

from the ALJ and the Commission the authority to add a species of sanction that the Authority

declined to impose—a withholding that statutory context makes clear was intentional and to which

we must give full effect.

b) Party Presentation Principles & Greenlaw

There is a second reason why it was improper for the ALJ to impose a fine in Mr. Serpe’s

case: It was beyond the scope of appellate review. The American legal system is built on the

principle of party presentation; when it comes to what is best for each party in litigation, courts

107 Walmsley, 117 F.4th at 1040.

108 Polselli v. IRS, 598 U.S. 432, 441 (2023) (“We ordinarily aim to give effect to every clause and word of a statute.”

(cleaned up)).

109 Answer Br. at 10 (citing Henson v. Santander Consumer USA, 582 U.S. 79, 85 (2017) (quoting IBP, Inc. v. Alvarez,

546 U.S. 21, 34 (2005)).

110 Russello v. United States, 464 U.S. 16, 23 (1983) (“Where Congress includes particular language in one section of

a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and

purposely in the disparate inclusion or exclusion.” (cleaned up)).

111 Mullin v. Al Otro Lado, 609 U.S. — (2026), slip op. at 10 (June 25, 2026) (“We ‘are required to give effect to

Congress’ express inclusions and exclusions.’” (quoting Nat’l Ass’n of Manufacturers v. Dep’t of Defense, 583 U.S.

109, 126 (2018)).

112 15 U.S.C. § 3058(b)(3)(A)(ii).

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assume that the parties know best and decide the case accordingly.113 Of course, the Commission

is not an Article III court. Our task is oversight of the Authority and, we, unlike the courts, can

review the Authority’s sanctions on our own motion. When we do so, we set the scope of review

and have parties brief the questions we believe need answering. But, in the vast majority of cases,

ALJ review is initiated by an aggrieved party, and the ALJ sits in the shoes of an appellate court.

When sitting as neutral arbiters judging what is proper under the Act and HISA Rules, the

ALJ must take care to act accordingly and “decide only questions presented by the parties,” absent

good reason to abstain.114 This also means that the ALJ must abide by the “longstanding rule”

against “alter[ing] a judgment to benefit a nonappealing party.” 115 In accordance with the scheme

Congress set out in the Act, the ALJ may grant only the relief requested by the applicant for review,

whether that be the aggrieved party or the Commission itself, absent the extraordinary

circumstances that Article III courts have recognized necessary to justify departure from this

longstanding rule.116

As a practical matter, we recognize that Congress has decided that the Authority cannot

appeal its own final civil sanctions,117 meaning that the ALJ must typically abstain from modifying

those sanctions in the Authority’s favor.118 The ALJ’s departure from this cardinal rule was error,

and we reverse it.

c) Propriety of the Fine

Because Mr. Serpe’s Seventh Amendment jury-trial right did not attach before the ALJ’s

review, and because the ALJ was not authorized to impose a civil penalty that would have triggered

that right, we need not address whether imposition of the fine would have been appropriate nor

whether the Jarkesy framework applies in this case.

113 Greenlaw v. United States, 554 U.S. 237, 244 (2008).

114 Id. (quoting United States v. Samuels, 808 F.2d 1298, 1301 (8th Cir. 1987)); see also id. at 262–63 (Alito, J.,

dissenting) (“A reviewing court will generally address an argument sua sponte only to correct the most patent and

serious errors,” as required to prevent “grossly prejudicial errors of law that undermine confidence in our legal

system”).

115 Id.at 244 (majority op.).

116 See In re M-A-S-, 24 I. & N. Dec. 762, 767 n.2 (B.I.A. 2009) (rejecting respondent’s argument that the immigration

judge needed to impose a bond, so that he could pay it and be released, because “[t]he argument that the Immigration

Judge should have placed additional conditions on” respondent “would normally come from the DHS, and the DHS

has not advanced such an argument on appeal”); see also In re Wendy Cabrera, AXXX XX2 063, 2009 WL 2437127,

at *2 n.4 (B.I.A. July 24, 2009) (“[T]he immigration judge erred . . . . [but] since the DHS has not appealed the

decisions below, we will not disturb [them].”); In re Jaime Humberto Garcia-Tavera, AXXX XX8 019, 2009 WL

952489, at *2 (B.I.A. Mar. 19, 2009) (“[T]his Board may not rectify the Immigration Judge’s mistake and order the

respondent detained without bond” because DHS “has not appealed the Immigration Judge’s erroneous order”).

117 See 15 U.S.C. § 3058(b)(1) (allowing for ALJ review only “on application by the Commission or a person aggrieved

by the civil sanction”).

118 See Greenlaw, 554 U.S. at 245–46 (“Congress has eased our decision by specifying the instances in which the

Government may seek appellate review of a sentence[.]”).

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***

For the above reasons, we AFFIRM IN PART the Administrative Law Judge’s decision,

and REVERSE IN PART. The final civil sanctions issued by the Authority are upheld but the

$25,000 fine imposed by the ALJ was improper and cannot stand.

By the Commission.

April J. Tabor

Secretary

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