Attorneys who practice in the commercial law arena are all quite familiar with the laws governing the risk of loss for goods in transit. The Uniform Commercial Code, or “UCC” is a body of laws that have been adopted by the overwhelming majority of states. The UCC sets forth certain terms that dictate at what point the seller of goods is no longer responsible for their loss and the buyer bears the risk of losing them prior to receipt.
Consider a seller who entrusts millions of dollars’ worth of goods to a shipping company. The merchant delivers the goods to the dock and leaves. Loaded with the merchandise, the vessel hits stormy weather, and the goods are damaged beyond repair. Neither seller nor buyer is at fault for such an unfortunate event. Does the seller take the loss; or does the buyer have to pay for the goods, notwithstanding that they no longer have commercial value? The answer dictates which party will need to pursue a claim against the shipping company, so as to be made whole.
In claiming, the rules of racing in a jurisdiction establish the risk of loss as between the claimant and the horseman who enters the horse for the tag. Traditionally, state rules have provided that once a claim is filed, it is irrevocable and is at the risk of the claimant1.
In New York, for example, the applicable harness rule provides that every horse claimed races in the interest and for the account of the owner who declared it to such race, but that title to the claimed horse is vested in the successful claimant from the time the word “GO” is given by the starter. At that point, the successful claimant becomes the owner of the horse, whether it is alive or dead, sound or unsound, or injured either before, during or after the race2. Exceptions to this rule occur when horse’s age or sex is misrepresented, a mare races with an unannounced pregnancy, or there is a drug positive. In these limited circumstances, the claim is not automatically void; it is “voidable” at the option of the claimant3.
While Thoroughbred claiming rules typically followed suit, recent spates of equine injuries and deaths have led to the abandonment of tradition in some states. After a rash of catastrophic breakdowns at New York’s Aqueduct Racetrack in the winter of 2011/2012, both the track and the state’s gaming commission established emergency, later permanent, rule changes.
In New York Thoroughbred racing, in the event that a horse dies during a race or is euthanized on the track following a race, any and all claims made for the horse are void4. Additionally, a claim is voidable at the discretion of the new owner, for a period of one hour after the race is made official, for any horse that is vanned off the track after the race5.
Further, based upon the questionable opinion of New York regulators that the VLT-enriched purses in claiming races caused horsemen to enter less than sound horses in such races, the Commission promulgated a rule setting the minimum price for which a horse may be entered in a claiming race to be at not be less than fifty percent of the value of the purse for the race6. For example, if a race is carded for $20,000 claiming tags, the purse of the race cannot exceed $40,000.
In California, claiming procedures have changed even more dramatically. Prior to 2013, the Golden State’s applicable rule called for voiding a claim only if the horse suffered a fatality during the running of the race or before the horse returned to be unsaddled. On May 16, 2013, an amendment to the rule took effect, mandating the stewards to also void a claim if the racing or official veterinarian determines the horse will be placed on the Veterinarian’s List as unsound or lame before the horse is released to the successful claimant7.
Concededly, lameness is a fairly objective veterinary diagnosis. What constitutes unsoundness obviously runs an entire gamut of potential maladies, not all of which can be readily or correctly diagnosed during the course of a cursory veterinary examination. Invariably, any horse suspected of unsoundness would have passed a pre-race veterinary examination, possibly conducted by the same professional now charged with the post-race examination, just hours before it raced. Of further concern is that fact that the successful claimant cannot accept the horse, even if he or she wants to take the halter despite the vet’s opinion. The rule renders the claim void, as opposed to voidable at the claimant’s option.
On February 18 of this year, California decided to go even further. The Board approved for public notice a proposed regulatory amendment requiring that claims be voided for horses that are placed on the veterinarian’s list for having visibly bled8. Epistaxis, the veterinary term for blood presenting in the nostrils, is somewhat rare. One can only surmise that eventually, in addition to serum collection, horses with a slip deposited in the box will be mandatorily scoped for blood and mucous, resulting in a voided claim for a positive result.
The intentions that form the basis for all of these rules changes are laudable. Protection of the well-being of the animal and the finances of the prospective claimant are legitimate objectives. Still, amidst these Band-Aid approaches among various jurisdictions, there is a larger picture that is being overlooked.
At base level, both handicappers and horsemen are asking the same question: When a horse is in for a claiming tag less than its previous start, is the steed being risked to get much needed purse money at a soft level, or is it being unloaded by its present connections?
There are trainers of both breeds who are specialists at the “drop down” game. The horse is competitive at a higher claiming price, but the conditioner takes a plunge, often getting both a large slice of the purse and the horse back to his barn. Potential takers literally fear fear itself, passing on the horse based on the belief that because it was in for so low a tag there was necessarily something amiss with him.
Conversely, there are horses that go down the claiming ladder simply because they are not presently, and may never again be competitive at their recent level. Euphemistically, the horse is now “slower,” or “she ain’t what she used to be.” Putting it bluntly, the horse has problems, the nature and extent of which may or may not render them correctable. The horse may or may not pass a swift, abbreviated post-race soundness exam. What is sure is that the claimant is putting a slip in on the horse because he or she thinks it’s a bargain. Unless the drop down is for a quick purse grab, the present connections are not going to want the horse back in the barn.
Yet, governmental rules increasingly interfere with the business decisions of the prospective seller and purchaser. Purse ceilings on claiming races make the contests less attractive for the “drop down” conditioners. The likelihood that connections will be forced to take a less than perfect horse back anyway based upon a singular, subjective opinion of unsoundness, make claiming races less and less of an attractive place to sell the unwanted.
In truth, horses die or are vanned off because of issues other than soundness. Less than optimum track conditions or on-track accidents involving quite healthy horses can lead to catastrophic results. If a sound horse, approved for racing by the state or track vet, enters the track but fails to leave under its own power, why should the selling connections be forced to retain the horse?
The solution might be to allow prospective claimants to examine a horse before a race, and at a time just prior to when a slip is due in the claim box. In the same way a hopeful bidder is permitted to have his vet examine a horse in a consignment barn before it goes through the sales ring, a claimant could make an informed decision about soundness issues without a state or track vet making a decision for him, post-race. This approach would allow the ancient principle of caveat emptor (‘let the buyer beware’) to retake its prominence in the claiming realm. It would also ensure that claimed horses are healthy ones. The recent hodge-podge of curative regulations which increasingly interferes with the horsemen’s right of contract would be rendered unnecessary, and the traditional, less government-intrusive rules of claiming will return.
In sum, it’s time to look very carefully at the overregulation of claiming, before we lose claiming races altogether.
Chris E. Wittstruck is an attorney, a director of the Standardbred Owners Association of New York and a charter member of the Albany Law School Racing and Gaming Law Network.
1 – See, generally, New York, 9 NYCRR 4038.9; Delaware, Harness Racing Rule 6.3.3.9; Pennsylvania Harness Rule 183.151(u)
2 – 9 NYCRR 4109.3(i); see, also, Pennsylvania Harness Rule 183.151(g); U.S.T.A. Rule 11.03(d)(6)
3 – 9 NYCRR 4109.6; 4109.7
4 – 9 NYCRR 4038.5(a)(2)
5 – 9 NYCRR 4038.5(a)(3)
6 – 9 NYCRR 4038.2
7 – CHRB Rule 1658
8 – Summary of California Horse Racing Board Actions and Discussions 2-18-15, last read online February 23, 2015 at: http://www.chrb.ca.gov/press_relea
by Chris E. Wittstruck, Esq.