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Judge Halts Anti-HISA Suit in Louisiana Pending Outcome of HBPA Case in U.S. Appeals Court

A federal judge has stayed a 14-month-old lawsuit initiated by the states of Louisiana and West Virginia that is trying to wipe out the Horseracing Integrity and Safety Act (HISA) via alleged constitutional violations, ordering the case to be “administratively terminated” until the United States Fifth Circuit Court of Appeals makes a ruling in a separate suit in which the Horsemen's Benevolent and Protective Association (HBPA) is also alleging HISA is unconstitutional.

However, U.S. District Court (Western District of Louisiana) Chief Judge Terry Doughty wrote in his Sept. 14 ruling that, “This Order shall not be considered a dismissal or disposition of this matter,” and that he was halting the case while the Fifth Circuit decision played out “without prejudice to the right of the parties to reopen the proceedings.”

This means the plaintiffs (the two states are joined by the Louisiana racing commission, the Louisiana HBPA, the Louisiana Thoroughbred Breeders Association, West Virginia's racing commission, and five individuals regulated as “covered persons” under HISA) and the defendants (the HISA Authority, the Federal Trade Commission [FTC], plus overseers of both entities) must now await the decision–likely to be issued months from now–that will result from the Fifth Circuit oral arguments scheduled Oct. 4.

In 2 1/2 weeks, the National HBPA and 12 of its affiliates will be trying to prove claims that the 2022 rewrite of the HISA law remains “patently unconstitutional,” and that the Authority overseeing the sport “is basically a private police department” whose sweeping powers equate to “oligarchic tyranny.”

The HISA Authority and the FTC will go into those same arguments backed by a lower court's opinion issued in May that ruled HISA is indeed constitutional, because “Congress cured the unconstitutional aspects of HISA's original approach.”

It's also on the judicial record that the U.S. Court of Appeals for the Sixth Circuit upheld the constitutionality of HISA back in March.

One day prior to Judge Doughty's ruling, Magistrate Judge David Ayo wrote in a report that recommended staying the Louisiana case that the multiple, overlapping anti-HISA lawsuits currently swirling in the court system are clogging federal dockets.

“After an exhaustive review of the landscape of suits challenging the Act, this Court concludes that [an amended complaint the plaintiffs had filed] is the result of deliberate strategy” that equated to “an abuse of procedure and an impermissible use of judicial resources,” Judge Ayo wrote in his Sept. 13 report.

The original lawsuit in this case was filed June 29, 2022, alleging that HISA violates the Fourth, Seventh and Tenth Amendments to the U.S. Constitution, plus the Administrative Procedure Act, which governs the process by which federal agencies develop and issue regulations.

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HBPA: ‘Best Of Both Worlds’ For HISA Is ‘Worst Of All Worlds’ For Horsemen

With oral arguments in the United States Court of Appeals for the Fifth Circuit now five weeks away, the National Horsemen's Benevolent and Protective Association (NHBPA) filed a legal brief Aug. 25 underscoring that the Horseracing Integrity and Safety Act (HISA) Authority unconstitutionally “wants the best of both worlds” by allegedly portraying itself as both a governmental body or a private organization “depending on which suits its interests on any individual argument.”

“Sometimes [the Authority] wants to be like a government entity, with the power to compel registration, collect mandatory fees, conduct searches, draw blood and urine samples, and impose sanctions with 'the force of federal law,'” stated the 36-page brief filed Friday by the NHBPA and 12 of its affiliates.

“Other times it wants to be a private business league, choosing its own board, running its own corporate affairs, and exempt from the Appointments and Appropriations clauses, the Freedom of Information Act, etc…” the brief continued.

This purported dual nature of the Authority, the NHBPA alleged, “exposes the overall flaw” by which the 2022 rewrite of the HISA law should be struck down.

“Nothing could be more unfair or inequitable than to have a regulator with all the powers of government but exempt from all the democratic accountability and safeguards for liberty imposed on government,” the NHBPA's filing stated.

“The best of both worlds for the Authority is the worst of all worlds for horsemen,” the NHBPA's filing asserted.

The Fifth Circuit oral arguments scheduled for the first week in October represent the latest attempt by the NHBPA to derail the HISA law via an underlying lawsuit that has persisted in the federal court system for nearly 2 ½ years.

In addition to the HISA Authority, personnel from the Federal Trade Commission (FTC) are defendants in that suit.

Back on Aug. 4, the Authority defendants filed their own brief that told the court the continued legal attacks by the NHBPA are futile because “Congress, the Executive, and all three federal courts that have considered the amended Act have reached the same conclusion: HISA is now constitutional…

“Appellants' scattershot attempts to invalidate the Act on other grounds come up short, too,” the Authority's brief continued.

The NHBPA's Aug. 25 filing swatted back at those claims, citing a legal precedent that stated “it is a central tenet of liberty that the government may not…allow private individuals to regulate other private individuals.”

As the NHBPA put it, “That is now what happens every day in horseracing. The district court must be reversed, and the Act declared unconstitutional, again.”

The first time the HBPA plaintiffs attempted to challenge the original 2020 version of the HISA statute in federal court, on Mar. 15, 2021, the suit was dismissed, on March 31, 2022.

The HBPA plaintiffs then appealed, leading to the above-referenced Fifth Circuit Court reversal on Nov. 18, 2022, that remanded the case back to the lower court. In the interim, an amended version of HISA got passed by Congress and was signed into law by President Joe Biden on Dec. 29, 2022.

On May 4, 2023, the lower court deemed that the new version of HISA was constitutional because the rewrite of the law fixed the problems the Fifth Circuit had identified.

The HBPA plaintiffs then swiftly filed another appeal back to the Fifth Circuit, which is where the case stands now.

“The FTC and the Authority continue to tie themselves in knots trying to get around two obvious problems: the Act, even as revised, does not allow the FTC to amend or modify rules when they are proposed by the Authority,” the NHBPA's Aug. 25 filing stated. “And the Act, even as revised, still requires the FTC to approve rules written by the Authority on a consistency basis, which this Court held to be a violation of the private non-delegation doctrine.”

The NHBPA alleged in its filing that the Authority and the FTC's “solution to a lack of public accountability is to find an additional way to eliminate public accountability, making matters worse.”

The NHBPA's filing warned of dire ramifications to society in general if the Fifth Circuit doesn't declare the recently amended HISA law unconstitutional.

“If this Court ratifies this law, we will see more and more of our democracy slip away as Congress increasingly turns to this convenient charade of private self-regulatory corporations to govern entire industries,” the NHBPA's filing stated.

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NYRA, State Want Dismissal Of ‘Meritless’ Lawsuit To Block Belmont Renovation

The New York Racing Association (NYRA) and the state of New York asked the Supreme Court of New York Aug. 18 to dismiss a lawsuit filed by two residents that is attempting to block the $455 million state loan to NYRA that will renovate Belmont Park.

In addition, both the state and NYRA want to quash a motion for preliminary injunction that the plaintiffs initiated back on June 22 to try to halt any state money for the project from flowing to NYRA.

The Belmont renovation was approved back in May when the final New York state budget for fiscal year 2024 included the funding.

Belmont was last significantly updated in 1968, and the current, long-planned refurbishment is being undertaken with an eye toward consolidating all of NYRA's racing at Belmont and Saratoga Race Course, with the state-owned Aqueduct Racetrack property to eventually be sold.

“NYRA's motion to dismiss should be granted, the Court should issue a judgment in favor of Defendants declaring that the Belmont Legislation is constitutional, and the Complaint should be dismissed in its entirety and with prejudice,” stated a memorandum of law that NYRA filed with the court Friday.

“As Plaintiffs claim fails as a matter of law and is not likely to succeed on the merits, and as the challenged appropriation to NYRA serves an important public interest and Plaintiffs cannot establish irreparable harm, or that the equities weigh in their favor, Plaintiffs' motion for a preliminary injunction should be denied,” the NYRA filing continued.

The plaintiffs, Jannette Patterson and John Di Leonardo, each identified themselves in the initial complaint as a “citizen taxpayer of the State of New York who has paid, and is paying, New York State income and sales taxes.” They have asked for a judgment declaring that the state's loan to NYRA “would be an illegal and unconstitutional expenditure, misappropriation, misapplication, or disbursement of State funds.”

The defendants are the State of New York, the New York State Assembly, the New York State Senate, Governor Kathy Hochul, state comptroller Thomas P. DiNapoli, and NYRA.

NYRA's 30-page memorandum stated that the two plaintiffs “contend that the 'plain language' of the Gift and Loan Clause bars the State from appropriating any funds to NYRA.”

The Plaintiffs, however, are wrong “for at least two reasons,” NYRA argued.

“First, Plaintiffs' insistence upon a strict construction of the Gift and Loan Clause betrays an untenable, ostrich-like approach to settled law. Although one would not know it from Plaintiffs' papers, the Court of Appeals long ago ruled that the expenditure of public funds to a private entity is permissible under the Gift and Loan Clause if such expenditure serves a public purpose,” the filing continued.

“Moreover, the Court of Appeals and the Third Department have upheld financing arrangements for the construction and operation of sports venues and facilities that serve a public purpose, notwithstanding the co-existence of an incidental private benefit. Thus, the appropriation to NYRA authorized by the Belmont Legislation cannot be equated to an impermissible gift or loan under [the New York state constitution.],” the filing stated.

“Second, although at one point in their Complaint Plaintiffs correctly describe NYRA as a 'not-for-profit corporation that has the exclusive franchise to operate' Belmont Park, they otherwise refer to, and analyze, NYRA as though it is a run-of-the-mill 'private corporation' for purposes of the Gift and Loan Clause. In doing so, Plaintiffs yet again fail to reference, or even acknowledge, case law from both State and federal courts that uniformly holds that NYRA-as a State-franchisee that operates racing facilities owned by the State on public property pursuant to statute and regulation-is a 'state actor,'” the filing continued.

“In this regard, the funds received by NYRA will be used to renovate public property and facilities owned by the State. Put simply, NYRA-as a 'state actor'-is not the type of 'private corporation' that the Gift and Loan Clause was intended to cover,” the filing stated.

A separate Aug. 18 memorandum filed by the New York Attorney General's office on behalf of the state government defendants told the court that “Plaintiffs are not entitled to a preliminary injunction because they cannot make the required showing of irreparable harm. Plaintiffs urge the Court to maintain the status quo and halt the disbursement of funds so that their constitutional argument may be heard. But Plaintiffs' constitutional argument is meritless and there is no valid basis for the Court to preliminarily enjoin the Challenged Appropriation…”

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Two Taxpayers Sue to Block $455m Loan to Rebuild Belmont

Two New York residents sued the state, its governing bodies, elected officials, and the New York Racing Association (NYRA) on Thursday in an attempt to block the recently announced $455-million loan to renovate Belmont Park.

“This case is about the State of New York's unconstitutional appropriation of taxpayer funds by loaning nearly half a billion dollars to NYRA, all while turning a blind eye to NYRA's past two decades of financial mismanagement, malfeasance and scandal, and, more importantly, ignoring the State's Constitutional prohibition against providing State monies–whether by loan or by grant–to private corporations like NYRA,” stated the June 22 complaint filed in the Supreme Court of the State of New York.

The plaintiffs, who each identify themselves in the filing as a “citizen taxpayer of the State of New York who has paid, and is paying, New York State income and sales taxes,” want a judgment declaring that the state's loan “would be an illegal and unconstitutional expenditure, misappropriation, misapplication, or disbursement of State funds.”

The plaintiffs are also demanding an order “enjoining the State of New York and the Office of the New York State Comptroller from disbursing funds to or in aid of NYRA, and enjoining NYRA from receiving any State funds.”

The complaint continued: “If some or all of the State's funds have already been disbursed to or in aid of NYRA, [plaintiffs want] an order requiring restitution to the State of those funds pursuant to State Finance Law.”

The plaintiffs are Jannette Patterson and John Di Leonardo. The defendants are the State of New York, the New York State Assembly, the New York State Senate, Governor Kathy Hochul, state comptroller Thomas P. DiNapoli, and NYRA.

“The constitutionality of the State's appropriation is a definite, concrete, and substantial legal controversy that requires judicial intervention,” the lawsuit stated.

“The construction of a new Belmont Park will create thousands of jobs, generate billions in economic activity and secure the future of thoroughbred racing in New York State. Governor Hochul and both houses of the legislature recognize the importance of this transformational project to both Long Island and New York State, and that's exactly why the project was included in the FY2024 budget,” said NYRA's Vice President of Communications, Patrick McKenna.

The lawsuit was announced by People for the Ethical Treatment of Animals, though it was unclear what their connection to the lawsuit was.

“Organizations like PETA are philosophically opposed to horse racing and make no secret of their desire to end the sport. New Yorkers reject PETA's extreme agenda by attending, watching and wagering on horse racing in record numbers. As we look forward to the modernization of Belmont Park, and the opening of the summer meet at historic Saratoga Race Course on July 13, this ridiculous lawsuit is a meritless attack on a sport that supports New York families in every corner of the state.”

When the 2024 state budget was approved and publicly announced May 1, it greenlighted a decades-in-the-making plan to construct a revamped Belmont Park that would serve as the year-round downstate home of New York racing. The current 1.25-million square-foot structure, last renovated in 1968, is to be replaced with a roughly 275,000 square-foot facility featuring modern amenities and hospitality offerings.

“The transformation of Belmont Park will secure the future of Thoroughbred racing in New York State, create thousands of good jobs and drive tourism to Long Island and the region for decades to come,” said NYRA's president and chief executive officer, David O'Rourke, at the time the loan was included in the budget.

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