HISA Appeal to be Argued Aug. 30; Judge Denies Contempt Motion

The United States Court of Appeals for the Fifth Circuit will now hear oral arguments Aug. 30–slightly earlier than expected–in the injunction appeal brought by the Horseracing Integrity and Safety Act Authority (HISA) and the Federal Trade Commission (FTC).

Both entities are defendants in an underlying lawsuit that alleges unconstitutionality and federal rulemaking procedure violations regarding HISA's initial framework of regulations that went into effect July 1.

The Appeals Court docket previously indicated a September oral argument date was being planned.

At issue in the appeal is whether a lower court (U.S. District Court, Western District of Louisiana) erred in preliminarily enjoining HISA regulations that were purportedly harming the plaintiffs, who are led by the states of Louisiana and West Virginia, plus the Jockeys' Guild.

The Appeals Court ordered Aug. 8 that with the exception of three specifically contested HISA rules, HISA's legal authority would once again be valid in the two plaintiff states until that court heard “expedited” oral arguments from the two sides.

What happens in the Appeals Court will affect other actions in the lower court that are currently pending.

One such motion that had been outstanding was the plaintiffs' motion for the defendants to be held in contempt of court for allegedly violating terms of the preliminary injunction.

But on Aug. 15, Judge Terry Doughty of the district court denied that motion on the basis that, “The filing of a notice of appeal confers jurisdiction on the Court of Appeals and divests this Court over their aspects of the case. Once jurisdiction has divested, this Court may not take any action that would alter the status of the case as it rests before the Court of Appeals. Because the appeal involves the Preliminary Injunction at issue, this Court lacks jurisdiction to enforce the preliminary injunction or hold Defendants in contempt.”

Separately, a Tuesday filing in the district court stated that a pending “motion to intervene” involving 14 affiliates of the Horsemen's Benevolent and Protective Association and several other entities that want to join the lawsuit as plaintiffs has been assigned an Oct. 13 court date.

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Industry Will Pay Twice For HISA Litigation

Barely six weeks into its existence as the sport's national rule enforcer, the Horseracing Integrity and Safety Authority (HISA) has spent $1.8 million defending itself in four separate lawsuits currently pending or under appeal in federal court.

But the true irony behind the spiraling costs of the anti-HISA litigation is that almost all entities–owners, trainers, jockeys, tracks, racing commissions and states–are going to have to pay twice, regardless of the final outcomes of those complex lawsuits.

That's because plaintiffs like the Jockeys' Guild and various horsemen's associations will spend their organizations' money trying to halt HISA on constitutional grounds and federal rulemaking procedures, while at the same time HISA will be using money it collects from federally sanctioned assessments paid by those same industry participants to fight the lawsuits.

Lisa Lazarus, HISA's chief executive officer, disclosed the to-date litigation costs Sunday as the keynote speaker at the 70th annual Round Table Conference on Matters Pertaining to Racing hosted by The Jockey Club in Saratoga Springs, New York.

“As you all know, HISA is industry-funded,” Lazarus said. “So these lawsuits are ultimately being paid for by the industry, and ironically in part by the entities suing us. It is really a shame to see industry dollars that could [otherwise] be spent on positive reforms to make racing safer. It's deeply disappointing because there is so much we could do as an industry for unity.”

Stuart Janney III, The Jockey Club's chairman, didn't try to hide his disdain for the groups trying to derail HISA, terming the plaintiffs in the lawsuits as “certain politically charged states, rogue horsemen's groups, and–'Surprise, surprise!'–the Jockeys' Guild.”

And while the annual Round Table has largely devolved over the years into a two-hour echo chamber of platitudes, preaching-to-the-choir presentations, and a pep rally for pet Jockey Club projects, Janney did give a succinct analysis of where those lawsuits stand from a pro-HISA perspective during his closing remarks.

Janney focused on one of the lawsuits in particular, in which HISA and the Federal Trade Commission (FTC) are alleged to have violated the Fourth and Seventh Amendments to the United States Constitution, plus the Administrative Procedure Act, which governs the process by which federal agencies develop and issue regulations.

The states of Louisiana and West Virginia, plus the Guild, are the lead plaintiffs in that case, and just this past Friday, Aug. 12, 14 affiliates of the Horsemen's Benevolent and Protective Association petitioned a federal judge to be allowed to join the lawsuit.

“Significantly, the Louisiana federal district court found zero constitutional violations,” Janney said. “But it did initially agree with plaintiffs that the Authority's definition of 'covered horse' and its search-and-seizure rules expand beyond the scope of the statute ever so slightly.

“Practically speaking, this portion of the ruling has no impact, because the Authority voluntarily revised both rules to comply with the statute,” Janney said.

“The district court also questioned the Authority's rule on funding, which was actually favorable to the plaintiffs, Louisiana and West Virginia. And amazingly, if the plaintiffs prevail, it will have those two states paying hundreds of thousands more for HISA.

“And finally, [the court] queried the length of the notice and comment period, though it recognized that any of the claimed deficiencies can easily be remedied by the Authority, even if the Authority is ultimately unsuccessful on the merits,” Janney said.

“In other words, in ruling in favor of the Authority's opponents, the Louisiana federal district court nevertheless acknowledged that the implementation of the Authority's rules cannot be stopped,” Janney said.

“So to be clear, none of these issues threaten HISA's long-term viability. But they certainly waste time and money,” Janney said.

“Another federal lawsuit challenging the Authority and HISA was filed in Texas last week,” Janney said. “It recycles many of the failed claims. Like the cases that came before it, and those that will come after it, the new lawsuit merely serves as a distraction and a waste of industry resources,” Janney said.

“Ironically, under HISA, horsemen will be the ones who bear the brunt of these additional legal costs,” Janney said.

Lazarus gave an update on HISA's next steps, acknowledging that she understands HISA needs to build trust within the industry, even among those who already support it.

“We at HISA are accountable to you. We have to listen to everyone and adapt as appropriate,” Lazarus said.

“HISA wants open and collaborative dialogue with everyone in the industry who comes to us in good faith,” Lazarus said.

“Specifically, I will soon be creating several advisory groups, including a horsemen's group, to enhance engaging with stakeholders to ensure we are delivering the best programs to the industry,” Lazarus said.

“We will continue to refine the racetrack safety rules,” Lazarus said. “Future rules will fill in gaps, clarify ambiguities.”

A transition to a new and permanent website will hopefully ease some of the concerns from industry participants who have complained about the user interface when registering with HISA.

The rollout of the Anti-Doping and Medication Control Program (ADMC) is HISA's next high-profile endeavor.

“We've made significant progress on the ADMC program,” Lazarus said. “In recent weeks we have developed and refined, with input from hundreds of racing stakeholders, a comprehensive set of rules. These will be submitted to the FTC this coming week for implementation in January 2023.”

Lazarus continued: “We are building a seasoned, world-class team that will implement the first national anti-doping program in horse racing, with uniform testing and uniform sanctions. It will be tough, but it will be fair. And in time, horses will be able to complete with the comfort of knowing they will not be beaten by someone who is cheating.”

Beyond that, Lazarus explained, “We also see a future where we can marry anti-doping investigations and intelligence with a robust capability that will be deployed nationally in both in- and out-of-competition testing.”

Lazarus also gave an update on HISA's participation levels.

“We are now six weeks into the implementation of the racetrack safety rules. To date we have registered 34,000 horses and 28,000 people. And more importantly, in my view, 90% of horses, jockeys, and trainers that are competing are registered. And if you take the state of Louisiana out of the picture, we're at 95%, because the majority of our non-registered participants are located in Louisiana.

“We've reached voluntary agreements to implement HISA rules in 17 state racing commissions out of a total of 21 that HISA currently governs,” Lazarus added.

HISA is in the process of hiring a national medical director to support tracks nationwide with jockey safety and health protocols, and has already facilitated and paid for concussion testing for riders at 10 tracks, Lazarus said.

“Jockey welfare alongside equine welfare is a major priority for HISA,” Lazarus said.

But the topic of jockey welfare brought up another ironic twist, at least from Janney's perspective.

“If I were a jockey, I'd be very excited about [HISA's safeguards for riders],” Janney said. “But apparently, they're not. Upping the ante, [the Guild] joined with [other plaintiffs in the Louisiana lawsuit] in adding a charge of contempt. It's outrageous. The jockeys are wasting their time and are hurting our sport. I hope they will come to realize that.”

Janney continued: “HISA is a once-in-a-lifetime chance to grow the sport through increased integrity and enhanced safety of horse and rider. This business isn't the same as it was 10, 20, 30 years ago. We all know it. And we now understand the economics… Folks, it's time to get together on HISA. It's good for the sport. HISA is legal. HISA is here to stay.”

Lazarus also concluded her presentation with a plea for unity.

“I don't mean that we are going to agree on every single rule. But I mean that we unify around the governing principle, the core principle, that we need to speak with one voice,” Lazarus said.

“HISA, as I sit here today and address you, is not perfect. And as you know, it is still a work in progress. But I'm incredibly proud of the work done by our small team under the very tight time frame set by Congress and the legislation.

“We have one industry and one chance. Let's have vigorous debate about what the rules should be. Let's never forget that our real adversaries are the bad actors who tarnish our sport, anyone who is cavalier about horse welfare, and those who want to shut down horse racing for good.”

“It's been only six weeks since we have launched HISA. Give us some time. Give us some grace. This effort to enhance the safety and integrity of racing is so important. And if it fails, we all fail. And if it succeeds, we all succeed. It's really that simple,” Lazarus said.

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HISA: Guild’s Claim of Contempt ‘Fails the Straight-Face Test’

Defending itself against contempt-of-court allegations for purportedly violating an under-dispute preliminary injunction order by imposing riding infraction penalties upon Jockeys' Guild members nationwide, the Horseracing Integrity and Safety Act Authority (HISA) fired back in federal court Tuesday with a filing that stated the plaintiffs' argument “fails the straight-face test.”

At issue is the still-disputed nature of the wording in a July 26 injunction order out of United States District Court (Western District of Louisiana), which stated that HISA rules would be enjoined in two plaintiff states until a June 29 lawsuit got decided in that court, while also noting that, “The geographic scope of the injunction shall be limited to the states of Louisiana and West Virginia, and as to all Plaintiffs in this proceeding.”

The plaintiffs–most specifically, the Guild–believe that last line of the judge's words applies to “all of the members of the Jockeys' Guild, regardless of the U.S. jurisdiction in which the jockey is riding.”

The HISA defendants have maintained that individual members of the Guild are clearly not plaintiffs in the lawsuit, and to consider them that way “would wreak havoc on the sport.”

HISA had asked the court to provide a clarification of the wording, but had first appealed the preliminary injunction to the Fifth Circuit Court of Appeals, which resulted in a stay being issued.

Now it appears as if the lodging of that appeal means no clarification will be forthcoming until the Fifth Circuit Court decides the matter it has been asked to consider, as per a separate order handed down early Tuesday evening by the district court.

“Because the Defendants have filed a Notice of Appeal before filing the Motion for Clarification of Preliminary Injunction Order, this Court does not have jurisdiction to clarify the Preliminary Injunction,” the Aug. 9 district court order stated. “The filing of a notice of appeal confers jurisdiction on the Court of Appeals and divests this Court over their aspects of the case as it rests before the Court of Appeals. Once jurisdiction has divested, this Court may not take any action that would alter the status of the case as it rests before the Court of Appeals.”

On Aug. 2 the plaintiffs, led by the states of Louisiana, West Virginia, and the Guild, had moved for a federal judge to issue an immediate order to enforce its injunction to keep Guild-member jockeys from being subject to HISA rules nationwide.

The plaintiffs also wanted the judge to make the HISA defendants explain to the court why they should not be held in contempt for “flagrantly violating this Court's injunction within a mere four days after this Court entered it.”

The Aug. 9 filing by HISA painted that dispute in a different light.

“Plaintiffs' contempt motion is beyond the pale,” is how the HISA filing started off.

“For starters, the Fifth Circuit has now stayed the preliminary injunction (PI) Order in substantial part, including as it relates to the riding-crop rules and other safety regulations that form the basis of Plaintiffs' motion,” the filing continued.

“In any event, until the Fifth Circuit's stay, the Authority complied fully with the PI Order as written. Indeed, the Authority's affirmative steps (out of an abundance of caution) to clarify the scope of the injunction contradict any suggestion that the Authority willfully flouted the Court's PI Order.”

The HISA filing continued: “The Authority complied fully with the PI Order even before the Fifth Circuit's stay orders. Plaintiffs do not contend that the Authority continued to enforce the enjoined HISA rules in either Louisiana or West Virginia (against anyone), or that the Authority continued to enforce the enjoined HISA rules against any actual Plaintiff (anywhere). And as the Authority has explained, the individual members of Plaintiff Jockeys' Guild (and other 'association plaintiffs') are not themselves 'Plaintiffs' to which the PI Order is expressly limited.

“There is good reason that the Order does not extend to all of Plaintiffs' thousands of individual members nationwide: That would transform the Court's limited preliminary injunction into the sort of expansive nationwide injunction that the Supreme Court and Fifth Circuit have sharply criticized, and it would wreak havoc on horseracing in every racing state [because some] jockeys would be subject to less protective rules (or perhaps no rules at all), while others remain subject to HISA rules.

“That is untenable,” the HISA filing summed up. “Yet Plaintiffs have offered no response to those critical legal and practical realities.”

In the Aug. 2 filing by the plaintiffs, three Guild-member jockeys (the California-based Drayden Van Dyke, plus Florida-based Edwin Gonzalez and Miguel Vasquez) were alleged to be plaintiffs who purportedly suffered new harms resulting from HISA's whip-rule enforcement that the Guild believed to be in contempt of the injunction order.

But HISA's response on Tuesday pointed out that the first two of those jockeys have yet to avail themselves of HISA's process to request stays pending appeals, and the third was never even formally penalized for the whip infraction that the Guild had alluded to in the court filing last week.

“Those jockeys have not suffered concrete harm for other reasons, too,” the HISA filing stated. “For example, the cited infractions for jockey Drayden Van Dyke (resulting in a 1-day suspension and $250 fine) would have violated California's own (pre-HISA) crop rules, and resulted in an even greater penalty. And no adverse ruling was even issued against jockey Miguel Vasquez.”

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Appeals Court Revisits Some Elements of HISA Stay Order

A panel of three judges from the United States Court of Appeals for the Fifth Circuit issued a new, more fine-tuned order Monday in the Horseracing Integrity and Safety Act Authority (HISA) lawsuit that narrows the scope of an “administrative stay” that same court had issued five days earlier.

The Aug. 8 order now means that instead of the entire slate of HISA rules being re-activated in Louisiana and West Virginia (as per the Aug. 3 Appeals Court order that trumped a preliminary injunction issued July 26 by a lower U.S. District Court in Western Louisiana), three contested HISA rules will once again be off-limits from being enforced in those two plaintiff states, at least until “expedited” oral arguments are scheduled in front of the Appeals Court next month.

“The district court in granting the injunction that is the subject of the motion to stay ruled only

on the lawfulness of the rules and not on the constitutional issues raised which are pending before this court in another case,” the Aug. 8 order stated.

“The district court held that Plaintiffs had a strong likelihood of success on the following two claims: '1) The 14-day period for notice and comment for each set of approved rules was insufficient under the Administrative Procedure Act (APA) and 2) Several rules go beyond the statutory authority given to HISA and the Federal Trade Commission (FTC).'” The order stated. “We conclude that the stay elements are met with respect to the insufficiency of the 14-day period of notice.

“With respect to the second part of the ruling, the district court did not address the vast majority of the regulations at issue, instead concluding only that a few of the rules within the regulations exceeded the authority.”

The order continued: “Having considered those matters, we rule as follows: The motion to stay the district court's July 26, 2022, preliminary injunction is GRANTED in part and DENIED in part. We grant the motion to stay the injunction as to all of the regulations except for the following: Rules 8400 and 8510 and two provisions of Rule 2010.”

Rule 8400 establishes the Authority's power of access to records and places of business used in connection with Covered Horses and authorize the seizure of medications or other items that are in violation or suspected violation of Authority rules. The rules require Covered Persons to cooperate with the Authority in investigations, and they include the duty to respond truthfully to questions posed by investigators about a racing matter. Rule 8400 also authorizes the issuance of subpoenas and oaths to witnesses.

Rule 8510 is HISA's “Methodology for Determining Assessments” that fund the Authority.

The plaintiffs in the underlying June 29 lawsuit (the state of Louisiana, its racing commission, the Louisiana Horsemen's Benevolent and Protective Association, the Louisiana Thoroughbred Breeders Association, the Jockeys' Guild, the state of West Virginia, its racing commission, and five individuals regulated as “covered persons” under the HISA Act) have argued that using purses as part of that assessment calculation violates the enabling legislation.

The two provisions of Rule 2010 that now can't be enforced in the plaintiff states deal with the definitions section of the racetrack safety program, specifically “the date of the Horse's entry in a Covered Horserace” and “the date of the Horse's nomination for a Covered Horserace,” according to the Aug. 8 order.

The defendants (the HISA Authority, the FTC, and board members and overseers of both entities) are alleged to have violated the Fourth, Seventh and Tenth Amendments to the Constitution, plus the APA, which governs the process by which federal agencies develop and issue regulations.

But that underlying lawsuit can't move forward until the Appeals Court issues get legally resolved first.

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