Louisiana Horsemen's Benevolent and Protective Association

HISA Authority Challenges ‘Piggyback’ Strategy in Amended Louisiana Lawsuit

The recently amended federal lawsuit spearheaded by the state of Louisiana against the Horseracing Integrity and Safety Act (HISA) Authority and the Federal Trade Commission (FTC) is facing a new challenge from the HISA Authority defendants, who filed a Mar. 6 motion to strike the latest version of the complaint based on allegations that the plaintiffs are “improperly” attempting to use federal rules of civil procedure to turn the case to their advantage.

The chief beef in the HISA Authority's Mar. 6 “motion to strike” filed in U.S. District Court (Western District of Louisiana) centers on the addition of an expanded slate of new plaintiffs to the lawsuit initially filed on June 29, 2022.

The plaintiffs had amended that complaint on Feb. 6, 2023, and changes to the lawsuit included the addition of 14 new individual Horsemen's Benevolent and Protective Association (HBPA) affiliates, plus a wide swath of states, racing commissions, and individual racetracks.

“Plaintiffs, having obtained a preliminary injunction from this Court that redresses their alleged harms, now seek to add a 'vast number of organizations' and States as new plaintiffs in a blatant attempt to 'extend the injunction nationwide,'” the HISA Authority's Monday filing stated.

These new plaintiffs, the HISA Authority's motion stated, “have already been litigating challenges to HISA in other federal courts for almost two years. Plaintiffs' gamesmanship is transparent. Their tactic? To use [federal civil procedure rules] to dodge [the legal] standard that dooms the pending intervention motion these same would-be parties previously filed now that the Court has issued a preliminary injunction in Plaintiffs' favor.”

The HISA Authority's motion continued: “Their strategy? To use the geographic 'range, literally from coast-to-coast,' of the new parties as justification for a shotgun request that the Court 'extend the injunctive relief currently in effect to provide nationwide relief.' Their end goal? To dismantle nationwide regulatory reforms that Congress recently amended and reaffirmed after the Fifth Circuit's opinion reinstating the preliminary injunction.

“Allowing the would-be parties–representing thousands of industry members from across the country–to piggyback on the favorable relief Plaintiffs already secured would undermine principles of justice, encourage forum shopping, prejudice Defendants, and set a dangerous precedent for future litigants looking to parlay any single plaintiff's preliminary win into an expansive nationwide class action that topples congressionally mandated regulations before any briefing on dispositive motions.”

That outcome, the HISA Authority argued, “is particularly unwarranted given that a prior stay order entered by the Fifth Circuit and intervening administrative actions by the FTC (on top of Congress's recent amendment reinforcing its commitment to the HISA regime) cast substantial doubt on the continued viability of the claims underlying the preliminary injunction presently in effect.”

The HISA Authority summed up: “The Court should strike Plaintiffs' amended complaint-at least as to the addition of the 'vast number' of new parties seeking to expand the existing relief into a nationwide preliminary injunction.”

The plaintiffs, back on Feb. 6, articulated the revised version of the lawsuit this way:

“This First Amended Complaint seeks to prevent HISA from continuing to exercise 'unchecked government power' through its FTC-approved rules or any other rules that the FTC may approve now that the Fifth Circuit has issued its mandate [in a separate, but related, case headed by the National HBPA].

“The broad collection of plaintiffs from around the country further justifies Plaintiffs' request for nationwide injunctive relief herein,” the plaintiffs' amended complaint continued.

“And this Court has already recognized that the challenged HISA rules offend the Administrative Procedure Act and HISA's statutory authority,” the plaintiffs stated.

“The Fifth Circuit has further cemented the rightfulness of that decision by rejecting Defendants' appeal of the preliminary injunction order and denying Defendants' requests for additional appellate review in this case that came after Congress tweaked the HISA Act, just as the Fifth Circuit did in [the National HBPA appeal],” the plaintiffs' amended complaint stated.

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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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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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