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Texas Judge Says No to ADMC Injunction

The Texas judge handling the National Horsemen's Benevolent and Protective Association (NHBPA) constitutionality lawsuit that is trying to halt the Horseracing Integrity and Safety Act (HISA) on Wednesday refused to grant an injunction that would delay the May 22 implementation of the Anti-Doping and Medication Control (ADMC) program.

In issuing his order, United States District Court Judge James Wesley Hendrix of the Northern District of Texas (Lubbock Division) pointed out that it is the second time in two weeks that he has informed the plaintiffs in a court order that they have not established a likelihood of success on the merits of their case.

The judge also stated in the May 17 order that the horsemen “misunderstand” the legal standards that apply to the granting of an injunction in this particular instance.

“The Court denies the motion for an injunction pending appeal,” Hendrix wrote. “As detailed in its 55-page Memorandum Opinion and Order [issued May 4], the plaintiffs have not established a likelihood of success on the merits. And even if their proposed standard applied, they have not made a substantial case on the merits given the congressional amendment in response to the Fifth Circuit's opinion…

“Because the plaintiffs have not established a right to an injunction pending appeal under either the correct standard or their preferred standard, the Court denies the motion,” Hendrix wrote.

“The plaintiffs misunderstand the correct standard for a district court considering a motion for injunction pending appeal,” Hendrix continued, adding at a later point, “The 'substantial case on the merits' standard does not apply to injunctions pending appeal.”

The planned appeal to the Fifth Circuit is the latest wrinkle in a lawsuit that has lingered in the courts for over two years.

On Mar. 15, 2021, the NHBPA and 12 of its affiliates sued personnel from the Federal Trade Commission (FTC) and the HISA Authority, seeking to keep HISA from being implemented. Judge Hendrix dismissed that suit on Mar. 31, 2022.

The NHBPA plaintiffs appealed, leading to a Fifth Circuit Court reversal on Nov. 18, 2022 that remanded the case back to Hendrix's court. In the interim, an amended version of HISA got signed into law on Dec. 29, 2022. That fix was designed to make HISA compliant with the constitutional defects the Fifth Circuit had identified.

On May 4, 2023, Hendrix validated the newer version of HISA as constitutional. One day later, the NHBPA informed him it is planning another appeal back to the Fifth Circuit, and it wanted the ADMC's rollout stopped while that process played out.

On May 8, Hendrix wrote that, “The Court previously denied injunctive relief, but the plaintiffs again request an injunction, arguing that they will be injured by the ADMC rule during the pendency of an expected appeal.”

Nine days later, on May 17, Hendrix handed down his decision denying that motion, noting that “the Court is not persuaded by these passing references to [cases that the NHBPA cited as precedents], especially when the plaintiffs have not identified any case in which a district court granted an injunction pending appeal after denying a motion for preliminary injunction (much less following a consolidated bench trial).”

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FTC: Latest Anti-HISA Suit Doesn’t Come ‘Within a Furlong’ of Demonstrating Harms

The Arkansas-based lawsuit filed six weeks ago that is the most recent among five separate federal complaints attempting to derail the Horseracing Integrity and Safety Act (HISA) via alleged constitutionality claims was broadly rebuffed Monday in separate legal filings by the defendants in the case, who are executives with the HISA Authority and the Federal Trade Commission (FTC).

The plaintiffs, led by Bill Walmsley, president of the Arkansas Horsemen's Benevolent and Protective Association (HBPA), and Jon Moss, the executive director of the Iowa HBPA, had asked a judge in United States District Court (Eastern District of Arkansas, Northern Division) on Apr. 6 to declare HISA unlawful and to impose an injunction prohibiting the defendants from enforcing the Anti-Doping and Medication Control (ADMC) rules scheduled to go into effect May 22.

The HISA Authority's opposition brief stated that the plaintiffs in this case, much like those in the other four cases currently swirling in the federal court system, represent only “a faction of the industry long opposed to any change” who continue to “search for a favorable forum” by essentially making similar arguments in front of different judges.

And, the HISA Authority's filing pointed out, both Walmsley and Moss are already involved as parties who have taken various legal actions in three of the other four anti-HISA cases.

“Apparently discontent with those courts' rulings, the Iowa HBPA, Walmsley, and Moss now seek the same extraordinary relief here,” the HISA Authority's May 15 filing stated.

The HBPA-affiliated plaintiffs wrote in their complaint last month that HISA “barely pretends to comply with the Constitution's separation of powers. The Act allows a private corporation to issue binding rules with no guiding principle. The FTC's ostensible oversight serves as a mere mirage.”

The HISA Authority saw the situation differently in its filing.

“The vast majority of industry participants and horseracing states have welcomed the uniform national standards, which took effect on July 1, 2022. Two [presidential] administrations have now supported the law and two bipartisan Congresses have embraced it–including through a statutory amendment that reinforced the Act's constitutionality in December 2022,” the HISA Authority's filing stated.

“Plaintiffs come nowhere near the showing required for a court to dismantle this critical federal regulatory program. Most notably, Plaintiffs cannot demonstrate a likelihood of success on the merits: All four federal judges that have considered Congress's recent amendment to HISA have concluded that the Act is constitutionally sound,” the HISA Authority's filing stated.

“Plaintiffs next rely on a meritless public nondelegation claim that the challengers in the other cases wisely abandoned, or did not consider worth [pursuing], in light of the clear intelligible principles Congress provided,” the HISA Authority's filing stated.

“And Plaintiffs' final claim under the Appointments Clause is contradicted by the undisputed fact that the Authority is not a governmental entity [and] by the decisions of the two federal courts that have already denied the same Article II claim,” the HISA Authority's filing continued.

“None of the other preliminary injunction factors favor Plaintiffs, either. Plaintiffs fail to show irreparable harm: They have been subject to HISA's racetrack safety rules for over 10 months and to similar anti-doping rules under State law for years; purses in Arkansas and Iowa have surged; and the racing season in Arkansas has now ended,” the HISA Authority's filing stated.

“The balance of harms and the public interest also weigh heavily against disrupting a federal regulatory scheme that Congress has mandated (twice) and that has enjoyed substantial compliance already,” the HISA Authority's filing stated. “This Court should deny Plaintiffs' motion for a preliminary injunction.”

The FTC's May 15 filing put it this way: “[The plaintiffs] do not come within a furlong of demonstrating, with evidence, that any purported 'harm is certain and great and of such imminence that there is a clear and present need for equitable relief.'”

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Sixth Circuit Parties Argue Whether New HISA Law Renders Anti-Constitutionality Claims Moot

Parties on both sides of a Sixth Circuit United States Court of Appeals case that seeks to reverse a lower court's decision to dismiss a constitutional challenge of the Horseracing Integrity and Safety Act (HISA) argued via written briefs Thursday as to whether or not a pro-HISA law passed at the tail end of 2022 renders as “moot” any constitutionality claims in the under-appeal lawsuit.

The Jan. 12 briefs were filed in accordance with a Dec. 30 request from the Sixth Circuit to explain how the Dec. 29 signage of the new law (which amended the operative language of HISA) might affect the oral arguments both sides had made in the Sixth Circuit case Dec. 7.

Not surprisingly, the plaintiffs appealing the lower court's ruling–led by the states of West Virginia, Oklahoma and Louisiana–told the court that the anti-constitutionality claims are still relevant.

The defendants–primarily the HISA Authority and the Federal Trade Commission (FTC)–informed the panel of judges that the new law has smoothed over any alleged constitutional issues and paves the way for HISA to move forward.

“The recent amendment to HISA addresses only one of these many constitutional problems,” stated a joint brief filed by all of the plaintiffs, which also include the Oklahoma and West Virginia racing commissions, three Oklahoma tracks, the Oklahoma Quarter Horse Association, the U.S. Trotting Association, and Hanover Shoe Farms, a Pennsylvania Standardbred breeding entity.

“All of HISA's other constitutional defects, however, remain unremedied,” the plaintiffs contended.

The HISA Authority defendants saw it differently, writing that, “Congress's response obviates the principal basis for Plaintiffs' private nondelegation claim in this case, which is predicated on a prior version of HISA that no longer exists.”

In a separate brief, the FTC defendants put it this way: “Congress's recent amendment eliminates any doubt that the private Horseracing Authority 'function[s] subordinately' to the [FTC] in satisfaction of the private-nondelegation doctrine….Congress's grant of general-rulemaking authority to the [FTC] resolves the 'core constitutional defect' plaintiffs purported to identify in support of their private-nondelegation claim….”

The underlying case that the plaintiffs are trying to get overturned via appeal dates to Apr. 26, 2021, when they alleged in a federal lawsuit that “HISA gives a private corporation broad regulatory authority.”

On June 2, 2022, that claim was dismissed by a judge in U.S. District Court, Eastern District of Kentucky (Lexington) for failure to state a claim of action. The plaintiffs then appealed to the Sixth Circuit.

While that Sixth Circuit appeal was pending, the Fifth Circuit came out with its own decision in a similar case against HISA that was led by the National Horsemen's Benevolent and Protective Association (HBPA).

That Nov. 18 Fifth Circuit ruling stated that HISA is unconstitutional because it “delegates unsupervised government power to a private entity,” and thus “violates the private non-delegation doctrine.” The order remanded the case back to U.S. District Court (Northern District of Texas) for “further proceedings consistent with” the Appeals Court's reversal.

But in the interim after the Fifth Circuit ruled and the Sixth Circuit heard oral arguments, Congress in late December amended the operative language of HISA to fix the alleged constitutional defect the panel had identified, and President Biden signed the measure into law as a tiny part of a vastly larger year-end spending bill.

An expected Jan. 10, 2023, mandate issuance date for the Fifth Circuit to enforce its order, has come and gone without any directive from that court that seeks to enforce its anti-constitutionality ruling against HISA. So now the next major court decision on HISA's constitutionality is expected to come when Sixth Circuit issues its order.

The plaintiffs cited specifics about why they believed the new law doesn't alter HISA's alleged unconstitutionality.

“In particular, the FTC still lacks front-end ability to veto the Authority's proposals for policy reasons, a crucial power that the Securities and Exchange Commission (SEC) enjoys when reviewing proposed rules of the self-regulatory organizations that it supervises…” the brief stated.

“The amendment also continues to permit the Authority to exercise numerous executive powers without any supervision or control by the FTC,” the plaintiffs continued. “The Authority continues to have unfettered discretion to bring enforcement actions in federal court and expand HISA's regulatory scope to include any non-Thoroughbred horse breed.

“Finally, and crucially, the amendment does nothing to cure HISA's anticommandeering violation. HISA still pushes the costs of administering HISA onto the States by requiring them to fund the Authority's operations or lose the ability to collect fees for matters that the Authority isn't even regulating.”

The FTC brief also made a comparison between HISA and the SEC, but in a different light.

Because of the new law, the FTC brief stated, “the [FTC's] oversight power is 'now also materially identical' to that of the SEC, a statutory scheme that 'has been upheld against constitutional challenge on many occasions.'”

At a different point, the FTC wrote, “It is unclear whether plaintiffs will continue to press secondary arguments in support of their private-nondelegation doctrine claim. The government has explained either why those arguments fail on the merits, why plaintiffs lack…standing to press them, or both. If plaintiffs continue to urge their arguments despite Congress's amendment to the statute, the Court should reject them…”

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14 HBPA Affiliates, 4 Tracks Want in on HISA Lawsuit

Led by 14 affiliates of the Horsemen's Benevolent and Protective Association (HBPA) and four racetracks, an alliance of entities seeking protection from the alleged harms of the Horseracing Integrity and Safety Act Authority (HISA) have asked a federal judge to allow them to participate in an existing lawsuit that claims HISA and the Federal Trade Commission (FTC) violated the Fourth and Seventh Amendments to the U.S. Constitution, plus the process by which federal agencies develop and issue regulations.

On Friday, the anti-HISA parties filed what is known as a “motion to intervene” in United States District Court (Western District of Louisiana). If accepted by the judge, it would grant the petitioners status in the case alongside the lead plaintiffs from the states of Louisiana and West Virginia.

An “intervenor” designation allows outside parties who have a personal stake in the outcome of a civil suit to participate in a case, even if their interests don't align exactly with those of the original plaintiffs.

“[Our] interests will be seriously impaired if Defendants prevail in their effort to enforce the enjoined HISA Rules beyond Louisiana and West Virginia,” the movants wrote in their Aug. 12 court filing. “Intervenors are not adequately represented by the parties to this action. Intervenors therefore respectfully request that this Court grant their motion to intervene as plaintiffs to protect their and their members' interests.

“Specifically, Intervenors seek to ensure that HISA does not kneecap the horseracing industry as a whole or themselves with the implementation and enforcement of defective HISA Rules,” the filing continued.

HISA and the FTC have consistently denied the allegations listed in the underlying June 29 lawsuit, which was filed two days before the federally mandated July 1 start date for HISA's first set of rules.

“Plaintiffs' eleventh-hour challenge to those rules on the eve of the statutory deadline [is an] emergency of their own making,” the defendants wrote in court documents just after the complaint was filed, noting that the plaintiffs waited a full three months after the approval of the rules to challenge them in court as being immediately harmful.

The HBPA affiliates wanting in on the suit are Arizona, Arkansas, Illinois, Iowa, Indiana, Kentucky, Minnesota, Nebraska, Ohio, Oklahoma, Pennsylvania, Washington, Charles Town and Tampa Bay Downs. The Colorado Horse Racing Association, which is that state's statutorily recognized horsemen's group for all racing breeds, also wants to be an intervenor.

Three of the four opting-in racetracks are in Nebraska: Fonner Park, Horsemen's Park, and the recently approved racino that will go by the name Legacy Downs. The fourth is Arizona's Turf Paradise.

The North American Association of Racetrack Veterinarians, plus the state of Oklahoma and its racing commission, round out the list of potential intervenors.

“Intervenors seek to join this action to protect their interests and those of their members or citizens in avoiding severe economic harms to the horseracing industry generally and to Intervenors specifically through the enforcement of HISA Rules that suffer from fatal procedural and substantive defects,” the Aug. 12 filing stated.

“Intervenors further seek intervention to address HISA's exercise of regulatory power against Intervenors and the threat of severe sanctions that HISA is currently imposing on Intervenors,” the filing continued.

“Intervenors interests may not–indeed, will not–be adequately represented by the existing parties because they have a different ultimate objective from the [existing plaintiffs] by covering a different portion of the United States and of the horseracing industry,” the filing stated.

Beyond the states of Louisiana and West Virginia, the Jockeys' Guild and various Louisiana-based “covered persons” under HISA rule are the existing plaintiffs.

Friday's motion to intervene asked for “expedited” consideration. But that might not be possible because aspects of the underlying lawsuit have been appealed to a higher court.

When cases go under appeal, the lower-court judge has limited power to change anything in the underlying case until the appeals process has been completed. The movants in Friday's filing wrote that they recognized that fact.

“Of course, Intervenors understand that though this Court's preliminary injunction order is on appeal to the Fifth Circuit, which partially stayed the injunction pending the outcome of an expedited appeal,” the filing stated. “At a minimum, the Court could hold the motion to intervene in abeyance, pending the resolution of the appeal.”

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