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HISA Rules Back in Force Nationwide After Appeals Court Ruling

A temporary “administrative stay” ruling issued Wednesday night by a panel of three judges from the United States Court of Appeals for the Fifth Circuit means that “pending further consideration,” Horseracing Integrity and Safety Act Authority (HISA) rules are back in effect nationwide.

The Aug. 3 court order trumps a preliminary injunction issued July 26 by a lower U.S. District Court (Western District of Louisiana) judge that had halted the HISA rules in Louisiana and West Virginia pending the outcome of an underlying lawsuit in that court.

In that June 29 civil case, the HISA Authority, the Federal Trade Commission (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 Administrative Procedure Act (APA), which governs the process by which federal agencies develop and issue regulations.

The plaintiffs are 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.

The Aug. 3 temporary ruling at the Appeals Court level didn't state a specific timetable for how long it might be in effect.

In addition to setting aside the injunction pertaining to the HISA rules, the stay from the Appeals Court will also put a hold on the lower court making any sort of ruling on a dispute over the wording in the injunction itself.

Plaintiffs and defendants have different interpretations of whether the geographic scope of the injunction applied to entities in just Louisiana and West Virginia or also included all Guild-member jockeys, regardless of where they ride. The defendants had asked the lower court to issue a clarification.

In support of its request that the Appeals Court stay the lower court's injunction, the FTC defendants wrote in an Aug. 1 filing that, “Both the government and the public will be irreparably harmed if the district court's preliminary injunction setting aside the Commission's regulatory program in its entirety in two States remains in effect until this Court resolves this appeal on the merits.

“The Commission's regulations, particularly the approximately five dozen rules addressing racetrack safety, are designed to protect and promote the health of horses, jockeys, and other horseracing participants. The district court's order eliminates those protections, impeding the Commission's ability to accomplish the Act's public purpose and threatening the very harms the regulations are aimed at preventing.”

The FTC filing continued: “The district court's order, entered three weeks after the Commission and Authority began implementing the Commission's regulations, also threatens to sow confusion within the horseracing industry with respect to the rules governing horse races, undermining the Commission's and Congress's interest in a uniform and predictable set of rules governing the conduct of horseracing. Conversely, any harm to plaintiffs from a stay will be slight, if it exists at all.”

In opposition to the motion to stay, the plaintiffs disagreed in an Aug. 3 Appeals Court filing:

“The irreparable harm Plaintiffs would suffer from a stay puts the public interest and balance of harms beyond doubt. Any harm to Defendants' nonexistent interest in furthering an illegal regulatory scheme is easily outweighed by Plaintiffs' irreparable harms,” the plaintiffs wrote.

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Three Jockeys to Become Test for Contested HISA Enforcement

The legal rabbit hole deepened on Tuesday in one of four lawsuits designed to derail the Horseracing Integrity and Safety Act Authority (HISA), pulling jockeys Drayden Van Dyke, Miguel Vazquez and Edwin Gonzalez into the fray as plaintiffs alleged new harms resulting from rule enforcement they believe is in contempt of a court order.

Plaintiffs led by Louisiana, West Virginia, and the Jockeys' Guild moved for a federal judge to issue an immediate order to enforce its July 26 injunction to keep Guild-member jockeys from being subject to HISA rules nationwide. The plaintiffs also want 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.”

A series of filings Aug. 2 in United States District Court (Western District of Louisiana) centers on different interpretations the two sides have regarding what Judge Terry Doughty meant when he wrote in that July 26 injunction 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 the judge's words apply 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 steadfastly 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. For example, many jockeys are not Guild members, such that different rules would apply to jockeys riding in the same race.”

Separately, the defendants have made a formal motion asking for a clarification of the wording in the injunction, but the court docket indicates the judge might not offer one until next week, unless Doughty opts to expedite the matter.

And beyond that, the defendants' appeal of their turned-down request to put a stay on the entirety of the July 26 preliminary injunction is headed for the Fifth Circuit Court of Appeals.

Confused yet? There's more. This case is only one of four lawsuits initiated at the federal level this year to keep HISA rules from going into effect nationwide. The first two got tossed out by judges but are in the process of being appealed. The fourth just got filed on Monday in a Texas court.

According to Tuesday's filings, Guild-member jockeys Van Dyke, Vazquez and Gonzalez are just the first three jockeys that the plaintiffs believe are being harmed by the allegedly contemptuous enforcement of HISA safety rules.

“Though the ink has not yet dried on this Court's order preliminarily enjoining Defendants from enforcing HISA's unlawful rules, some Defendants have already decided that they need not follow the Order,” the filing stated. “[D]espite the Order's plain text, the Authority Defendants continue to implement and enforce the enjoined rules against members of Plaintiff Jockeys' Guild.”

According to the filings, on July 27, one day after the allegedly unclear order was issued, a HISA spokesperson stated that “HISA will continue to enforce its rules in all applicable jurisdictions, with the exception of Louisiana and West Virginia. Outside of those states, the court order applies only to the five individuals specifically named in the case.”

And on July 29, the filings stated, the California Horse Racing Board (CHRB) put out an advisory that stated, “Unless and until a federal court clarifies an earlier ruling by indicating otherwise, the CHRB will continue to honor its agreement with HISA by enforcing HISA safety rules, including the rules covering use of the riding crop, as the CHRB has been doing since HISA rules went into effect on July 1.”

Then on July 30, Del Mar stewards issued a ruling against Van Dyke for his use of the riding crop in a July 29 race that they deemed to be in violation of HISA Rule 2280, imposing a $250 fine and one-day suspension.

“The suspension is set to preclude Mr. Van Dyke from racing on Aug. 6, but he must confirm participation on Aug. 3 for that race day,” Tuesday's filing stated. “To be clear, Mr. Van Dyke is a member of Plaintiff Jockeys' Guild and thus Defendants are enjoined from implementing and enforcing the enjoined Racetrack Safety Rules against Mr. Van Dyke.”

The filing continued: “Compounding this problem, over the weekend, Plaintiffs were informed that the HISA stewards at Gulfstream Park in Hallandale, Florida plan to issue multiple rulings against members of Plaintiff Jockeys' Guild for similar violations.”

For actions during July 31 races, the filing stated, “HISA stewards intend to issue written rulings on Aug. 5 against Miguel Vazquez [for] a violation of enjoined HISA Rule 2280 that prohibits a jockey from raising his wrist above a certain point before striking a horse with his riding crop; and Edwin Gonzalez for a violation of enjoined HISA Rule 2280 for a different riding crop violation.”

Both Gulfstream jockeys are expected to receive fines of $250 each, one-day suspensions, and points to escalate penalties for subsequent violations.

“Through these continued enforcement actions, the Authority Defendants thus have made clear that they seek to enforce enjoined rules against Plaintiffs' members throughout the country outside of Louisiana and West Virginia,” the plaintiffs' filing stated.

The plaintiffs are asking the judge to award compensatory damages to cover the allegedly lost purse earnings that the above three riders will incur, plus a “coercive fine of $250 per day for each day any points assessed…as a result of HISA's contempt are not purged from their records.”

The Guild-backed plaintiffs also want those damages to apply to any other Guild members who get subsequently penalized while this issue is contested in the courts.

With regard to how the judge might rule in his clarification of the injunction, the plaintiffs noted in court documents that “nearly 50 years of Supreme Court case law” is on their side, because precedents confirm that “members of associations are entitled to the benefits that their associations obtain in litigation.”

In the overall lawsuit, the HISA Authority, the Federal Trade Commission, and board members and overseers of both entities are alleged to have violated the Fourth, Seventh and Tenth Amendments to the Constitution, plus the Administrative Procedure Act (APA), which governs the process by which federal agencies develop and issue regulations. An adverse ruling against the defendants could mean a reopening of public commentary periods and a rewrite of all existing and in-the-pipeline HISA rules.

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Mulling HISA Injunction, Judge Says No to Lengthy Hearing

After receiving back-and-forth written briefs from both parties on whether or not to impose a preliminary injunction that would halt the Horseracing Integrity and Safety Act (HISA) Authority's rules until a lawsuit challenging them gets decided in full, the judge in charge of the case on Friday denied a request by the plaintiffs to hold a potentially lengthy in-person hearing to debate the issue any further.

The plaintiffs, led by the states of Louisiana and West Virginia, plus the Jockeys' Guild and various Louisiana-based “covered persons” under HISA rules, had told the judge Thursday that it was imperative to allow them to plead their case for an injunction in person.

The plaintiffs wrote in a July 21 court document that they were prepared to produce at least 10 witnesses to testify to the “extreme level of disruption that the HISA rules are inflicting on the States, racing commissions, industry, and its participants.”

That witness list consisted of Louisiana-based horsemen's group and racing commission executives, plus racing officials, veterinarians, owners, trainers, jockeys, a state steward, and two Jockeys' Guild representatives. Some of the proposed witnesses were also plaintiffs in the case.

Judge Terry Doughty of U.S. District Court (Western District of Louisiana) wasn't persuaded that he needed to hear all of that testimony before making up his mind. Writing in a July 22 order, he stated that his pending decision on whether or not to grant a preliminary injunction will be based solely on the written pleadings.

The defendants, who consist of the HISA Authority, the Federal Trade Commission (FTC), and board members and overseers of both entities, are alleged to have violated the Fourth, Seventh and Tenth Amendments to the United States Constitution, plus the Administrative Procedure Act (APA), which governs the process by which federal agencies develop and issue regulations.

The defendants have already survived the plaintiffs' motion for a temporary restraining order that accompanied the original lawsuit. That complaint got filed two days before the July 1 effective date for the first phase of HISA's new rules that are now in effect nationwide.

At that time, Doughty wrote that “issuing a temporary restraining order regarding an Act of Congress would be inappropriate.” But he added that the asked-for preliminary injunction could still be a possibility.

The preliminary injunction question the judge must now decide is fundamentally different, but it still has the potential to halt HISA's rules like a temporary restraining order would have.

A temporary restraining order is generally an “emergency” type of injunction to ward off immediate harm, and it has an expiration date. A preliminary injunction, on the other hand, is often used to restrain a party from taking a certain action while a case is pending, and it usually remains in force until the case gets settled in its entirety.

On July 15, the HISA-led defendants wrote in a filing opposing the injunction that, “The vast majority of stakeholders in the horseracing industry recognize the need for uniform regulations and are cooperating with the Authority and the FTC to ensure a smooth transition to this new congressionally mandated regime. But a small contingent of outliers, including Plaintiffs, have long opposed the Act on policy grounds and are growing increasingly desperate in their attempts to thwart its implementation.”

Not so, responded the plaintiffs in their July 22 filing:

“The facts on the ground further expose the flaws in Defendants' description of the horseracing industry since July 1, when HISA's rules took effect. The industry is in chaos because of HISA's hastily adopted and imprudent regulatory scheme. The FTC shares blame for this chaos because it failed to provide proper oversight of a private, nonprofit corporation's takeover-by-regulation of the horseracing industry; its token consideration and rubberstamp approval of HISA's rules fall far short of the substantive and procedural consideration required,” the document stated.

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New Lawsuit Aims to Halt HISA On Eve of Implementation

The states of Louisiana and West Virginia are at the forefront of a new federal lawsuit filed late Wednesday that seeks to block the Horseracing Integrity and Safety Act (HISA) from going into effect when the clock strikes midnight on Friday.

The defendants, who consist of the HISA Authority, the Federal Trade Commission (FTC), and board members and overseers of both entities, have allegedly violated the Fourth, Seventh and Tenth Amendments to the United States Constitution, plus the Administrative Procedure Act (APA), which governs the process by which federal agencies develop and issue regulations, according to a series of June 29 filings in U.S. District Court (Western District of Louisiana).

“The regulatory power that Congress purported to delegate to HISA is breathtaking in scope, covering virtually all aspects of horseracing,” the complaint states. “HISA claims power to adopt rules governing doping, medication control, and racetrack safety. It claims power to investigate violations of its rules by issuing and enforcing subpoenas. After investigating alleged violations, it claims to then be able to act as judge in its own cases and adjudicate alleged violations of its rules.

“If that's not enough, HISA claims power to bring civil actions in federal court in response to known or anticipated violations of its regulations. And for those it deems guilty of disobeying its commands, HISA claims disciplinary power to issue sanctions up to and including lifetime bans from horseracing, disgorgement of purses, and monetary fines and penalties.

“Since the scope of HISA's purported regulatory authority extends to virtually all activities related to horseracing, it's not surprising that HISA likewise claims authority to regulate nearly all persons associated with the horseracing industry. Specifically, HISA claims power to regulate trainers, owners, breeders, jockeys, racetracks, veterinarians [and] others licensed by a state racing commission, and agents of any of those persons.

“Despite purporting to exercise this breathtakingly broad federal regulatory power over all activities and persons related to horseracing, HISA is unaccountable to any political actor. No federal official can remove the members of HISA's Board of Directors. The Act thus delegates to a private body the full coercive power of the federal government while simultaneously insulating it completely from political accountability,” the complaint states.

The plaintiffs want “expedited consideration” from a federal judge to keep the first phase of HISA's “substantively and procedurally deficient rules” from going into effect July 1.

“Congress's efforts to federalize horseracing regulations through a private entity like HISA suffer from a host of constitutional problems,” the complaint states.

“Just this week, four U.S. Senators wrote to [HISA executives] to question whether the FTC is providing adequate oversight of HISA, whether Congress should extend HISA's statutory deadlines, and why HISA decided to delay implementation of some rules but not others,” the complaint states.

HISA has already gotten two lawsuits dismissed that alleged unconstitutionality, although an appeal is underway in one case and expected in the other. On Mar. 31, a federal judge in Texas threw out a complaint initiated one year ago by the National Horsemen's Benevolent and Protective Association (NHBPA). On June 3, a federal judge in Kentucky tossed a similar suit in which Louisiana and West Virginia were also plaintiffs, ruling that HISA's enforcement powers were indeed lawful.

This time around, the plaintiffs are the state of Louisiana, its racing commission, the Louisiana HBPA, 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.

Lisa Lazarus, the HISA chief executive whose name tops the list of individual defendants, did not respond to a Thursday morning query for comment prior to the breaking-news deadline for this story.

The plaintiffs want a federal court to provide declaratory judgments that assert 1) the FTC exceeded its statutory authority by approving each of the HISA rules; 2) the HISA rules are arbitrary and capricious under the APA; 3) HISA's enforcement rule violates the Fourth and Seventh Amendments, and 4) the HISA rules are procedurally invalid under the APA because the FTC failed to promulgate them through proper notice-and-comment rulemaking procedures.

The suit also asks for declaratory judgment and a permanent injunction finding the HISA rules invalid and setting them aside, plus a temporary restraining order and an injunction prohibiting HISA or the FTC from taking any actions based on the HISA rules currently in place.

HISA's funding is a key issue that comes under question in the lawsuit.

“A private, politically unaccountable entity with breathtaking regulatory power over an entire industry requires significant funding to carry out its work,” the complaint states. “HISA, however, is not funded by Congress. Instead, Congress forced the responsibility of funding HISA onto the States. The Act forces States to choose either to fund HISA with money from the State treasury (or racing commission) or-if a State refuses–HISA intends to assess fees to the racetracks, which will undoubtedly be passed on to participants in that State's racing industry…

“As things stand today, the FTC has finally approved only three sets of regulations from this private, unfunded, politically unaccountable entity known as HISA. Those three sets of final rules cover 1) racetrack safety, 2) HISA enforcement proceedings, and 3) HISA's methods for assessing and collecting funds. All three sets of final rules will wreak havoc on the racing industry within a matter of days. And all three sets must be preliminarily and permanently enjoined because they suffer from fatal flaws under the APA Act or contradict constitutional guarantees,” the complaint states.

The suit alleges that when a first batch of HISA rules got approved in March and April, the FTC provided only a 14-day public comment period, far shorter than the typical 30 or 60 days. The complaint purports that this is an “unlawful pattern,” and that the FTC “ignored commentators who identified that HISA's rules for assessing fees are contrary to law because HISA bases assessments on purse size and racing starts but the Act limits the assessment methodology solely to race starts, with no mention of purse size.”

With specific respect to Louisiana, the suit states that “it is unclear how HISA will collect monies from racetracks and covered persons because Louisiana law makes clear that the Louisiana State Racing Commission must ensure pari-mutuel wagering revenue is distributed in a particular manner-namely, that 'fifty percent of [specific proceeds] shall be distributed by such track licensee as purses' and the remaining fifty percent 'shall be distributed by such track licensee as purses.'”

The complaint states that its “most pressing” concerns have to do with an expected spate of scratches come Friday if “covered persons” aren't properly registered with HISA.

“At recent meetings, Defendant Lazarus claimed that HISA will attempt to scratch horses associated with covered persons who refuse to register with HISA or otherwise seek to disqualify horses post-race associated with unregistered personnel,” the complaint states.

“If HISA is allowed to enforce this punitive system, it will strip jockeys, owners, trainers, and all individuals involved in the horseracing industry of their economic interests in race purses-which are not set by HISA-and call the integrity of the entire industry into question.”

As far as the Jockeys' Guild is concerned, the “one-size-fits-none crop rule” is a chief beef.

“This is a major change from Louisiana's incoming rule, for instance, which will likewise limit the use of the crop to six overhand strokes but permits the use of underhand strikes at different junctures in a race, which is critical to the integrity of the race and participant safety,” the complaint states.

“Indeed, the FTC and HISA chose not to consider problems with state-specific concerns that were raised during the comment period and instead arbitrarily issued a rule without addressing comments criticizing that rule,” the complaint states. “The FTC's failure to meaningfully respond to these comments on the crop rule makes the rule arbitrary and capricious.”

The Fourth Amendment allegedly comes into play because a HISA rule “subjects covered persons, including the Individual Plaintiffs, to searches and seizures by HISA without prior approval by a judge or magistrate. This constitutes a per se violation of the Fourth Amendment,” the complaint states.

The Seventh Amendment allegations refer to HISA's ability to seek civil penalties from covered persons. “HISA enforcement actions under these rules that successfully obtain civil penalties will deprive aggrieved parties of their property rights and economic interests without providing aggrieved parties the right to a jury trial. The Enforcement Rule thus violates the Seventh Amendment's guarantee of a jury trial,” the complaint states.

The Tenth Amendment, which stipulates that the federal government only has powers that are specifically delegated in the Constitution, isn't directly addressed in the complaint. But the plaintiffs allege a violation of it in their separate request for a restraining order and injunction.

Later Thursday, Doug Daniels DVM, National HPBA President and Chairman of the Board, said, “We agree integrity, safety and uniformity in horse racing are of great importance, but we also believe getting each of these addressed in a lawful and proper manner is of paramount importance. Horsemen and horsewomen from coast to coast as well as United States Senators Grassley, Manchin, Ernst and Kennedy are asking for this implementation to be delayed and thus far it has gone on deaf ears.

“Now it has become necessary to request this court decide if HISA is ready for its roll-out. The participants are clearly saying the answer is 'no'–the implementation and the regulations are not ready as they stand today. We applaud Louisiana Attorney General Jeff Landry and the other plaintiffs who are demanding answers for everyone in the industry.”

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