Fifth Circuit Court of Appeals | Horse Racing Free Tips

Facing a United States Court of Appeals decision from the Fifth Circuit that the Horseracing Integrity and Safety Act (HISA) is unconstitutional and battling three similar lawsuits in various stages within the federal court system, the HISA Authority and the Federal Trade Commission (FTC) were informed Monday that a U.S. District Court judge in Texas won't grant those defendants a requested stay that would halt the briefing schedule in that case pending a final resolution of the Fifth Circuit order.

“No Good Cause Exists to Stay This Action,” wrote U.S. District Judge Matthew Kacsmaryk (Northern District of Texas, Amarillo Division) in his Dec. 12 order. “This is not one of the 'rare' circumstances in which Plaintiffs should be compelled to stand aside while Defendants litigate another case. Defendants make no showing of 'hardship or inequity' in complying with the briefing schedule they previously agreed to. Defendants were already aware of the then-pending appeal in [the Fifth Circuit] when they agreed to the schedule.

“The Court recognizes that the Fifth Circuit's decision [declaring HISA unconstitutional] could moot this challenge or clarify some of the issues,” the judge continued. “But Plaintiffs advance seven distinct constitutional challenges to HISA-including the nondelegation doctrine. Plaintiffs argue HISA violates the doctrine on three alternate bases. [The Fifth Circuit decision] considered only one of those bases. Thus, the Court does not anticipate that the final resolution of [the Fifth Circuit decision] will necessarily clarify the issues in this case by much.

“Additionally, Defendants are considering whether they will petition for a writ of certiorari before the Supreme Court. Hence, it could be months or even years before [the Fifth Circuit decision] reaches finality. Until then, a stay could unfairly harm Plaintiffs because [that order] only binds the parties in that case,” the judge wrote.

The judge did, however, give the HISA Authority 60 days of extra time by mandating a revised briefing schedule that now calls for the HISA and FTC defendants to file their combined responses to the plaintiffs' motion for summary judgment on or before Mar. 6, 2023, which in effect grants the defendants' motion in part.

The plaintiffs in the case are Global Gaming LSP, a limited liability company that owns Lone Star Park; Gulf Coast Racing LLC, the owner of a greyhound track in Nueces County, and both LRP Group Ltd. and Valle De Los Tesoros, which are two limited partnerships separately looking to operate new horse tracks in south Texas. They collectively filed their suit July 29, seeking declaratory and injunctive relief and a preliminary injunction against HISA.

The Fifth Circuit suit was initiated by the National Horsemen's Benevolent and Protective Association (NHPBA) back in 2021. That case was dismissed by a federal judge Mar. 31, 2022, but the Fifth Circuit reversed that decision Nov. 18.

That NHBPA lawsuit is separate from a similar 2021 anti-HISA complaint, again over alleged constitutional issues, headed by racing commissions and attorneys general in Oklahoma and West Virginia. That case, too, was dismissed by a federal judge on June 3, 2022, but the plaintiffs appealed the decision to the Sixth Circuit, which heard arguments on reversing that decision Dec. 7.

A fourth lawsuit, in which both HISA and the FTC are defendants in a complaint initiated by the states of Louisiana and West Virginia, plus the Jockeys' Guild, alleges unconstitutionality and federal rulemaking procedure violations regarding HISA's initial framework of regulations that went into effect July 1. According to the electronic court docket, there has been no filing activity in that case since Sept. 7.

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By Bill Finley & Dan Ross

The bombshell decision Friday out of the United States Court of Appeals for the Fifth Circuit that ruled that the Horse Racing Integrity and Safety Act (HISA) was unconstitutional has opened up a pandora's box of problems and had legal experts scrambling to make sense of the opinion and figure out what is the best path forward for HISA after a resounding setback in court.

“We have a chaotic situation right now,” said attorney Alan Foreman, an expert in equine law and the Chairman/CEO of the Thoroughbred Horsemen's Association. “That's probably the easiest way to describe it. HISA is still in effect, the anti-doping program is anticipated to go into effect on Jan. 1 and now we have a court ruling that declares HISA unconstitutional. And there are still legal maneuvers that can take place. It would have happened regardless of who prevailed at this level because it is clear that the HBPA, its affiliates and those who joined in the lawsuit would have taken it further if there was an adverse ruling. Now it is HISA that has to take it to the next step.”

According to Frank Becker, a private Kentucky-based attorney, the next step for HISA will be to either petition the Supreme Court to take the case or to seek an “en banc” hearing before the Fifth Circuit. Friday's ruling was handed down by a panel of judges, while an en banc hearing would require the case to be heard by the full circuit court.

The Supreme Court hears oral arguments in fewer than 100 cases a year, but Becker thought the court might take this case.

“They might take this one because it's so unusual,” he said.

Foreman agreed.

“When you have different circuits issuing different rulings as has been the case with this those cases often ultimately end up in the Supreme Court,” he said. “I think this case will ultimately wind up with the Supreme Court and a lot of people feel that way. I think they will take the case. It's got to get there first and there has to be a reason for them to take the case, but what has happened so far has set the stage for them to take it.”

Attorney Bennett Liebman, a Government Lawyer in Residence at Albany Law School, said it was a tossup as to whether or not the Supreme Court would take the case, but said that if it does there are far from any guarantees that the court will rule in favor of HISA.

“This has never been a case from the HISA standpoint that you want to end up in the Supreme Court because the court is obviously very conservative and you just don't know how they are going to rule on this,” he said.

In the meantime, Foreman said, HISA will have to get a stay. Otherwise, it will have to disband on Jan. 10 when Friday's ruling goes into effect.

“Unless there is a stay HISA has to stop in its tracks,” Foreman said.

Foreman said he didn't see a problem getting a stay. Becker disagreed and said he is skeptical HISA will succeed in getting a stay on the ruling in the interim.

Liebman added that there is another way for HISA to prevail. The Fifth Circuit ruling was based on its findings that HISA is ultimately in charge and not the Federal Trade Commission (FTC). “But the Authority is not subordinate to the FTC,” the ruling read. “The reverse is true. The Authority, rather than the FTC, has been given final say over HISA's programs.”

Liebman suggested that HISA could go back to drawing board and ask Congress to rewrite the legislation so that the FTC is clearly put in charge.

“The obvious solution is to try to get Congress to remedy what the Fifth Circuit thought was the problem, that the FTC does not have enough power,” Liebman said. “You could make sure that the FTC had significant power over the rules of the Authority. They could in effect make the rules. They could take recommendations from Authority, but still but make the rules. That is the way to go, but can we achieve that? The way the government works these days, I don't know.”

Becker didn't see that happening.

“Have you seen Congress at work lately?” he said. “Congress is going to be in chaos for the next year or so.”

All three attorneys agreed that the plaintiffs picked the right court when deciding to take their case to the Fifth Circuit.

“It's the Fifth Circuit, which is an extremely conservative circuit, even more conservative as a general rule than the Supreme Court,” Liebman said. “In that sense, this decision is not surprising coming out of the Fifth Circuit. The judge (Circuit Judge Stuart Kyle Duncan) who wrote the decision is ultra conservative.”

Said Foreman: “The experts thought it was constitutional and now it has been declared unconstitutional. I suspect that has something to do with the Supreme Court and this whole focus on the federal government versus states rights. The one circuit that would have reversed the decision and declared it unconstitutional is this circuit. That's why they went there. They were the ones most likely to declare it unconstitutional. The plaintiffs brought this case to the Fifth Circuit for a reason. They know this partuclar court has been very, very anti-government and very anti-regulation.”

In the days and weeks ahead, the industry will no doubt hear more from HISA and its plan of attack. But Friday was not a good day for the Authority. Can it survive and what will it take to do so? Amid the chaos, that appears to be anyone's guess.

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