MALCOLM HOTCHKISS vs. STATE RACING COMMISSION.

LAURENCE, J. Justice Holmes once stated a corollary to one of our most familiar legal apothegms:

"Great cases like hard cases make bad law. For great cases are called great, not by reason of their real importance in shaping the law of the future, but because of some accident of immediate overwhelming interest which appeals to the feelings and distorts the judgment."

Northern Sec. Co. v. United States, 193 U.S. 197, 400 (1904) (Holmes, J., dissenting). Malcolm Hotchkiss's effort to overturn the State Racing Commission's decision to eject him from Suffolk Downs racetrack and, following a Superior Court judge's ruling in Hotchkiss's favor, the commission's determination to

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vindicate that ejection by its appeal to this court hardly seem the stuff of greatness, or even of overwhelming interest, in the course of legal events. They do, however, suggest a variation on Justice Holmes's observation: "Sympathetic cases make bad law"; at least they do when, as here, a judicial effort to right a perceived wrong to a worthy individual is at odds with principles governing review of administrative agency action.

Factual and procedural background. Hotchkiss, a Revere resident, was hired as a mutuel clerk in late 1995 by Suffolk Downs, a licensed thoroughbred pari-mutuel racetrack (see generally Wonderland Greyhound Park, Inc. v. State Racing Commn., 45 Mass. App. Ct. 226 [1998]), located in Revere. Mutuel clerks are nonlicensed racetrack employees responsible for collecting cash from members of the public placing bets on the results of horse races held at the racetrack and for delivering tickets to bettors reflecting their wagers. Clerks such as Hotchkiss may handle tens of thousands of dollars each day, have access to the racetrack "money room," and can accept or cancel wagers that can affect the odds and payoffs on races.

On March 24, 1996, Hotchkiss reported to his supervisor that he had received a counterfeit twenty dollar bill. As a result of this incident, Hotchkiss came to the attention of Brian Mulhern, a Massachusetts State police sergeant assigned to the State Racing Commission and to Suffolk Downs. (See G. L. c. 128A, s. 8.) Mulhern recognized Hotchkiss's name from a prior State police investigation. After conducting a check of Hotchkiss's probation record, Mulhern discovered that Hotchkiss had a criminal record from the late 1970's and early 1980's involving two convictions for drug possession and several charges of other offenses (including larceny, assault and battery, firearm possession, and insurance violations) that did not result in convictions.

Mulhern's check also revealed that Hotchkiss was then under indictment in both Massachusetts and Federal courts for fencing or assisting in the operations of fences, conspiring to transport stolen goods in interstate commerce, and transporting stolen goods. Those indictments related to a large-scale theft operation with multiple defendants (many from Revere) operating throughout the northeastern United States, with Hotchkiss's role

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described as that of an intermediary or courier of stolen merchandise and cash. [Note 1]

Based upon Mulhern's investigation and findings, a State police official acting as representative of the commission on May 11, 1996, ordered Hotchkiss off the Suffolk Downs premises and denied him access to any other racing establishment in the State. [Note 2] Hotchkiss, claiming that he had informed the person who hired him at Suffolk Downs about his criminal record and the pending indictments, appealed his ejection to the full commission, which held an evidentiary hearing on May 27, 1996, as required by the ejection statute. Mulhern, other State police officers assigned to the commission, and Hotchkiss testified at that hearing. On May 30, 1996, the commission notified Hotchkiss that it had decided to uphold his ejection until his outstanding criminal matters had been resolved, after which he could petition the commission for such remedial action as then might appear appropriate.

On July 10, 1996, the commission issued its formal findings, conclusions, and orders in Hotchkiss's case. In addition to confirming Mulhern's findings regarding Hotchkiss's earlier criminal record and all of the reported information regarding the pending theft and conspiracy indictments, the commission found that an identified agent of the Federal Bureau of Investigation had advised Mulhern that Hotchkiss "has associations with organized crime members." It further found that in a prior investigation Mulhern had been told by a confidential informant

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who was involved in bookmaking activities that "there was a large scale bookmaking office that took sports bets at two telephone numbers in Revere . . . both [of which, Mulhern discovered,] . . . were listed to Malcolm Hotchkiss." [Note 3] Those findings - most significantly, Hotchkiss's "alleged contacts and associations with organized crime figures" and his charged involvement in massive thefts occurring in the virtual shadow of Suffolk Downs - were combined by the commission with (a) the fact of Hotchkiss's "integral" position handling large amounts of money and (b) its own statutory "responsibility to the public to insure that all persons who participate in racing are honest and trustworthy" to form the basis for the order affirming the propriety of the ejection action.

The Superior Court review. Hotchkiss challenged the commission's decision under G. L. c. 30A, s. 14, and obtained a favorable forum in Suffolk Superior Court. There, the stated reasons for vacating the commission's ejection order barely concealed judicial displeasure with what appeared an injustice done Hotchkiss: "[H]e reported to his employer, as he was supposed to, that he had received a counterfeit twenty dollar bill. The reward for this honesty was the loss of his job." The judge saw the ejection decision as unsupported by substantial evidence. Hotchkiss's past criminal record was "ancient history" and "entirely unrelated to racing." Similarly irrelevant were his pending indictments, which "did not arise out of actions at the track" and had not yet resulted in any actual convictions. Further detracting from the commission's conclusion that Hotchkiss's presence was detrimental to racing were three circumstances: (a) the praiseworthy motivation of the act that brought him to police attention - he "took steps to protect the integrity of the betting process"; (b) the encomium his union

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gave him (in a letter its lawyer wrote to the commission) as "an exemplary employee and union member"; and (c) his voluntary revelation of his criminal past and pending indictments to the person hiring him at Suffolk Downs. The judge also concluded, based on the same perceived lack of nexus between Hotchkiss's criminal conduct (both actual and alleged) and "the racing industry itself," that the commission's decision reflected unspecified "errors of law" and an arbitrary and capricious action amounting to an abuse of discretion. [Note 4]

Our review of the record convinces us that the commission's decision to confirm the ejection of Hotchkiss was supported by substantial evidence, was within its unusually broad discretion, and reflected no error of law. [Note 5] It merits affirmance on the basis of that evidence, in light of the peculiar features of the racing industry, the breadth of the commission's discretionary authority, the proper limits on judicial review under G. L. c. 30A,

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s. 14, and the restrictive nature of the "substantial evidence" test of c. 30A, s. 14(7)(e). Reversing the commission's determination would amount to substitution of judicial judgment for that of an expert agency which had made a rational, discretionary choice in implementing the statutory scheme it has been empowered by the Legislature to oversee - an outcome reviewing courts must especially eschew in our system of separation of powers. See Barrington Fair Assn., Inc. v. State Racing Commn., 27 Mass. App. Ct. 1159 , 1161 (1989); Lisbon v. Contributory Retirement Appeal Bd., 41 Mass. App. Ct. 246 , 257-258 (1996), and cases cited. [Note 6]

The unique regulatory background. Long celebrated as the sport of kings and a respectable diversion of the leisure class, horse racing had become by the second half of the twentieth century an extensive entertainment and gambling business sufficiently tarnished by roguish participants (at least in Massachusetts) to require "a complete and integrated plan for the regulation and control of horse racing and legalized wagering thereon." Landers v. Eastern Racing Assn., Inc., 327 Mass. 32 , 45 (1951). The chief reason for such enhanced regulation of racing was a "substantial public concern about the manner in which, and by whom, it is conducted." Bay State Harness Horse Racing & Breeding Assn., Inc. v. State Racing Commn., 342 Mass. 694 , 700 (1961). Because of "all of the many perils, pitfalls, temptations and traps for the unwary . . . [and] the occasions for corruption for the participants, all of which are inherent in any gambling operation of such proportions," the Legislature gave the commission "very broad powers necessary" to regulate the industry to prevent "these dangers."

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Colella v. State Racing Commn., 360 Mass. 152 , 159 (1971).

Consistently with those "full power[s]," conferred upon the commission in G. L. c. 128A "in the broadest possible language" because of the peculiar susceptibility of racing "to fraud and corruption," Fioravanti v. State Racing Commn., 6 Mass. App. Ct. 299 , 303, 305 (1978), the Legislature tightened the commission's grip on the industry in 1978 by enacting, among other reforms, the ejection statute, s. 10A. That provision was part of a "substantial[] strengthen[ing of] the [c]ommission's power and ability to control horse racing in the public interest," Perez v. State Racing Commn., 23 Mass. App. Ct. 268 , 271 (1986), and was motivated in significant part by the Legislature's concern for restoring "public confidence in the integrity of the sport" (St. 1978, c. 494, s. 1), which had fallen into a state of exceptional decline by the 1970's. See Catrone v. State Racing Commn., 17 Mass. App. Ct. 484 , 490 (1984).

In effecting those reforms, the Legislature again utilized the "broadest possible language" (Fioravanti v. State Racing Commn., supra at 303) - "the sole judgment" of the commissioner, the commission's representative, or the licensee being the determinant of the "detrimental" nature of an ejected individual's "presence" to the proper and orderly conduct of racing (G. L. c. 128, s. 10A) - so that the commission could "take swift action against anyone whose presence imperils the normal operation of the track." Solimeno v. State Racing Commn., 400 Mass. 397 , 403 (1987). Among the reasons for investing the commission with such extraordinary discretion was the need to take swift action against unlicensed individuals detrimentally involved in racing operations, who were not subject to the commission's existing power to suspend or revoke licenses. Even that significant power had proved "insufficient to maintain order at horse . . . racing tracks." Ibid.

A preliminary appraisal. Having thus set out the specifics of Hotchkiss's case, a profile of the applicable regulatory scheme, and an overview of the commission's authority thereunder, we are tempted to conclude our review. No extended analysis would seem required in order to uphold the challenged decision by an agency charged with taking swift action in order to suppress fraud and corruption and to preserve the integrity of and public confidence in racing. The commission's expulsion of an individual of Hotchkiss's reputed character - an individual

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who in the past had been involved in drug-related crimes [Note 7] and who, the commission had good reason to believe, [Note 8] had long participated with numerous criminal associates in a massive, ongoing theft operation in Revere and elsewhere - from a position akin to that of a bank teller handling large sums of money would appear supported by common sense and experience, if nothing else. The expressly limited scope of the commission's action (excluding Hotchkiss only until such time as he had resolved his pending State and Federal criminal problems) stands as an exemplar of considered, balanced judgment, in decided contrast to an arbitrary or capricious act. [Note 9] Notwithstanding these considerations, a decent respect to the opinions of the parties and the legal community, as well as tradition, requires (at the risk of burdening the readers of these reports) that we declare the substance of our conclusions at somewhat greater length.

The deferential standard of review. Fundamental precepts of judicial review mandate judicial deference to any expert agency's interpretation and application of the statute within its

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charge, under both traditional principles of review, Berrios v. Department of Pub. Welfare, 411 Mass. 587 , 595-596 (1992); Fioravanti v. State Racing Commn., 6 Mass. App. Ct. at 302, 303, and the explicit provisions of G. L. c. 30A, s. 11(5) and 14(7). [Note 10] Such deference is especially due in this very regulatory context, where the courts have emphasized that "[i]t is not open to th[e] court to question the wisdom" of the commission's exercise of its duly delegated power, Colella v. State Racing Commn., 360 Mass. at 159, and that a "court should be slow to decide that . . . [the commission] has acted unreasonably or arbitrarily and should search for some ground which reasonable [persons] would regard as a proper basis for the agency's action." Fioravanti v. State Racing Commn., 6 Mass. App. Ct. at 302.

Such a search requires rejection of an interpretation of G. L. c. 128A, s. 10A, that engrafts a precondition not contained in the statute or warranted by the underlying rationale of the relevant case law: i.e., that the ejected person's questionable conduct must, to be held "detrimental," take place in the racing industry itself (see supra at 687-688). The commission did not so construe s. 10A, and "[t]he commission's construction is entitled to weight." Solimeno v. State Racing Commn., 400 Mass. at 403. That construction, allowing ejection for discreditable conduct wherever it may occur (see note 20, infra), was a reasonable one. When such a construction is, as it was here, grounded in substantial evidence (see infra at 695-700), it cannot be supplanted by reviewing courts. See Massachusetts Med. Soc. v. Commissioner of Ins., 402 Mass. 44 , 62 (1988).

The commission's proactive powers. Additionally supporting the commission's action against Hotchkiss is long-standing judicial recognition of the commission's right not to have to wait passively until someone has actually committed (or been judicially determined to have committed) a crime at the racetrack before it can take swift and decisive action to protect the industry against corruption. Rather, our courts have acknowledged the commission's authority under c. 128A to

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forestall "reasonably foreseeable . . . danger," Solimeno v. State Racing Commn., 400 Mass. at 405, posed by "anyone whose presence imperils the normal operation of the track," id. at 403, by taking anticipatory, preventive action.

Thus, the commissioner or the commission's representative may exclude even licensed persons [Note 11] who have not yet actually done anything illegal but are merely suspected of misconduct and have, in the commission's view, come "dangerously near" to committing detrimental acts; the commissioner or the commission's representative "could reasonably feel" that such persons were "an avoidable potential source of future difficulty" and accordingly take steps to exclude them before the potential harm eventuated. Catrone v. State Racing Commn., 17 Mass. App. Ct. at 491. [Note 12] Indeed, an individual who is himself personally innocent of anything illegal but should, in the commission's view, be held responsible for facilitating potential wrongdoing by others, may be excluded by the commission in order to maximize protection of the integrity of racing. Fioravanti v. State Racing Commn., 6 Mass. App. Ct. at 302, 305

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(upholding license suspension of a trainer because, inter alia, hypodermic needles and syringes were found in the room assigned to him, which a rule of the commission made him responsible for, although he himself was not shown to have known of their presence; "[t]he commission could reasonably have determined that prohibiting the mere presence of instruments which could be used to administer prohibited substances was the best way to prevent illicit use of those substances"). [Note 13]

The exercise of its prophylactic authority has consistently been affirmed as in accord with legislative intent that the commission be able to act swiftly so as "to avoid any possible involvement in evils of the type" inherently associated with gambling-entwined horse racing. See Catrone, 17 Mass. App. Ct. at 492. It is a preemptive power that the courts have held to be essential in "a sport 'where the greatest importance should attach to dissipating any cloud of association with the undesirable, and in which the appearance as well as the fact of complete integrity is of paramount consideration'" (citation omitted). Ibid. The commission's exercise of such power deserves special deference, because "[t]he importance of an administrative interpretation of a statute is 'never greater than where, as here,

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an agency must interpret a legislative policy which is only broadly set out in the governing statute.'" Consolidated Cigar Corp. v. Department of Pub. Health, 372 Mass. 844 , 850 (1977), quoting from School Comm. of Springfield v. Board of Educ., 362 Mass. 417 , 442 (1972).

In short, under the authorities, the commission's determination that Hotchkiss's presence was detrimental to racing reflected no legal error or arbitrary choice. It should have been accorded "all rational presumptions . . . in favor of [its] validity" and should have been upheld unless "it 'cannot be supported upon any rational basis of fact that reasonably can be conceived to sustain it.'" Fioravanti v. State Racing Commn., 6 Mass. App. Ct. at 305, quoting from Colella v. State Racing Commn., 360 Mass. at 156. [Note 14]

The substantial evidence test. Condemnation of the commisSion's otherwise lawful determination could, therefore, be affirmed only if the challenged action was unsupported by substantial evidence in the record. We are satisfied that the ejection decision was amply supported when measured by the substantial evidence standard, which imposes significant constraints on judicial review:

"Judicial 'review under the substantial evidence standard is circumscribed.' Cherubino v. Board of Registration of Chiropractors, 403 Mass. 350 , 354 (1988). It is a standard of review 'highly deferential to the agency', which requires (as G. L. c. 30A, s. 14[7] mandates) ac-

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cording '"due weight to the experience, technical competence, and specialized knowledge of the agency, as well as to the discretionary authority conferred upon it." ' Flint v. Commissioner of Pub. Welfare, 412 Mass. 416 , 420(1992).

"In order to be supported by substantial evidence, an agency conclusion need not be based upon the 'clear weight' of the evidence . . . or even a preponderance of the evidence, but rather only upon 'reasonable evidence,' Medical Malpractice Joint Underwriting Assn. of Mass. v. Commissioner of Ins., 395 Mass. 43 , 54 (1985), i.e., 'such evidence as a reasonable mind might accept as adequate to support a conclusion,' after taking into consideration opposing evidence in the record. G. L. c. 30A, s. 1(6), 14(8); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456 , 466 (1981). If the agency has, in the discretionary exercise of its expertise, made a 'choice between two fairly conflicting views,' and its selection reflects reasonable evidence, '[a] court may not displace [the agency's] choice . . . even though the court would justifiably have made a different choice had the matter been before it de novo.' Southern Worcester County Regional Vocational Sch. Dist. v. Labor Relations Commn., 386 Mass. 414 , 420 (1982). Retirement Bd. of Somerville v. Contributory Retirement Appeal Bd., 38 Mass. App. Ct. 673 , 677 (1995). See also Wheat v. United States, 486 U.S. 153, 164 (1988) (the essence of discretionary authority is the power to choose within a range of acceptable options, whether or not courts might reach differing or even opposite conclusions on the same record)." (Footnote omitted.)

Lisbon v. Contributory Retirement Appeal Bd., 41 Mass. App. Ct. at 257-258. Most pertinently, "[u]nder the substantial evidence test, a reviewing court is not empowered to make a de novo determination of the facts, to make different credibility choices, or to draw different inferences from the facts found by the [agency]." Retirement Bd. of Brookline v. Contributory Retirement Appeal Bd., 33 Mass. App. Ct. 478 , 480 (1992), quoting from Pyramid Co. v. Architectural Barriers Bd., 403 Mass. 126 , 130 (1988).

The commission's evidence regarding Hotchkiss easily passed

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the substantial evidence test as delineated above, particularly when viewed through the highly discretionary lenses of (a) the deference due the commission's expertise in matters relating to the racing industry, (b) the expansive "sole judgment" standard of G. L. c. 128A, s. 10A, and (c) the commission's preventive power to nip detrimental situations prefiguring corruption in the bud. The quantum and quality of the evidence leading to the decision to eject Hotchkiss compare more than favorably with what was held substantial in the cases previously cited (see supra at 691-695).

The undisputed evidence that the commission found of most concern consisted of Hotchkiss's well-publicized indictments for large-scale thievish activities and reputed associations with organized crime figures. [Note 15] The commission concluded that those factors made his presence in an area of racing so integral and sensitive as collecting cash and paying off wagers inconsistent with its responsibility to insure that all participants in racing are in fact honest and trustworthy and with the need to preserve the appearance of complete integrity in racing operations. Had Suffolk Downs, as a licensee racetrack, determined to eject Hotchkiss as a detrimental presence (which G. L. c. 120A, s. 10A, also authorizes, see note 2, supra) on the basis of such evidence, we have no doubt that it would be upheld as a "reasonable discretionary business judgment." See Catrone v. State Racing Commn., 17 Mass. App. Ct. at 488-489. [Note 16] The commission's ejection decision was no less reasonable, and the findings on

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which it was based comported with the practical underpinning of the substantial evidence standard: "[W]hether experience permits the reasoning mind to make the finding; [i.e.] whether the finding could have been made by reference to the logic of experience" (emphasis original). New Boston Garden Corp. v. Assessors of Boston, 383 Mass. at 466, quoting from Boston Edison Co. v. Selectmen of Concord, 355 Mass. 79 , 92 (1968). Restated as the common sense precaution that foxes should be denied access to hen houses, the commission's exclusion of Hotchkiss was both evidentially and experientially justified.

Inappropriate judicial factfinding. The most significant vulnerability of the Superior Court's conclusion that the commission's evidence failed the substantial evidence test derived from judicial findings of fact and drawing of inferences inconsistent with those supporting the commission's decision. Such a venture is to be avoided in judicial review of agency action generally, see Retirement Bd. of Brookline v. Contributory Retirement Appeal Bd., 33 Mass. App. Ct. at 480, and is contrary to explicit appellate admonitions regarding review of this commission's decisions in particular. See Solimeno v. State Racing Commn., 400 Mass. at 406 ("[T]he commission, not the [Superior Court] judge or this court, is the finder of fact . . . ."); Fioravanti v. State Racing Commn., 6 Mass. App. Ct. at 303 ("In determining whether the commission's findings are based upon substantial evidence. . . . [t]he court may not displace the commission's choice between fairly conflicting views"); Catrone v. State Racing Commn., 17 Mass. App. Ct. at 486 ("The trial judge, in reviewing the commission's decision, purported to make findings as if the proceeding before him constituted a trial de novo. Under s. 14, '[it] is . . . the function of the [agency] and not a judge to make findings of fact' . . . [and] to weigh the credibility of witnesses . . . ."). [Note 17]

The judge below considered the commission's ultimate finding that Hotchkiss's presence was detrimental to racing to be undermined by two sets of facts, found or inferred. The first

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related to Hotchkiss's supposed good character; the second concerned the relevance to racing of Hotchkiss's criminal involvement. As to the first set, the judge found that, prior to being hired, Hotchkiss had disclosed his criminal record and pending indictments to his new employer, Suffolk Downs; that he had brought the counterfeit money to the attention of his supervisor "to protect the integrity of the betting process"; and that his good work performance and honesty were illustrated by his union's praise. The commission made no express findings regarding any of these matters, but its decision to eject Hotchkiss reflects its rejection of them all as either lacking credibility or irrelevant to the issue of the potential detriment to racing that Hotchkiss's presence posed. [Note 18]

The imputation to Hotchkiss of honesty and concern for the integrity of racing because of his disclosure of the counterfeit bill was based entirely upon Hotchkiss's self-serving testimony about his good intentions. Aside from the impropriety of such credibility determinations by a reviewing court, Hotchkiss's testimony did not ineluctably yield such an inference. Having initially shown the counterfeit bill to another mutuel clerk, Hotchkiss could as well have been motivated (the commission could reasonably infer) by a self-protective concern that any failure thereafter to disclose the bill to a supervisor might lead to an accusation against him by his coworker, which could

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result in his termination or the uncovering of the full extent of his embroilment in the criminal law. [Note 19]

The de novo finding that Hotchkiss's criminal record (including the pending indictments) was unrelated to racing and therefore irrelevant to the commission's purview was particularly inapt. [Note 20] It squarely contradicted the ultimate finding of the commission - that it was necessary, in order to preserve the ap-

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pearance of integrity in the racing industry and to maintain public confidence in the trustworthiness of all involved in it, to remove a person strongly suspected of extensive dishonesty from a position that required honest handling of large sums of money. The faulty finding of lack of relationship led directly to the incorrect inference that larcenous acts, which two grand juries had found Hotchkiss probably guilty of engaging in, were not detrimental to the orderly conduct of racing.

That questionable inference further suffered from a failure to take into consideration the information conveyed to the commission by the indictments and by State police witnesses (see supra at 686-687 and note 3) regarding Hotchkiss's reputed associations with organized crime figures, not only in the massive theft operations but in illegal gambling activities as well. See New Boston Garden Corp. v. Assessors of Boston, 383 Mass. at 466 ("substantial evidence" review involves consideration of the entire record, not merely selected portions thereof). The commission expressly determined such associations to be highly relevant, in conjunction with the serious indictments, to its conclusion that Hotchkiss's continued presence was detrimental to racing - an eminently reasonable determination on this record.

Conclusion. The commission's decision upholding Hotchkiss's ejection, based upon its finding that his presence at Suffolk Downs was detrimental to racing, was within its statutory authority and grounded on substantial evidence, derived in large part from its assessment of the credibility of the witnesses who appeared before it and the reasonable inferences it drew from that evidence. It was not the function of a reviewing court under G. L. c. 30A, s. 14, to displace the factual determinations of the agency experienced in the unique features and requirements of the racing industry or to exercise an independent assessment of the evidence. It was, rather, the court's obligation to accept them when, as here, they were supported by substantial evidence in the record considered as a whole and reflected a reasoned choice between conflicting views of that evidence.

Accordingly, the judgment is reversed, and a new judgment is to be entered affirming the July 10, 1996, decision of the commission.

So ordered.