Kentucky Division, Horsemen's Benevolent & Protective Ass'n v. Turfway Park Racing Ass'n

20 F.3d 1406
CourtCourt of Appeals for the Sixth Circuit
DecidedApril 6, 1994
DocketNo. 93-6425
StatusPublished
Cited by34 cases

This text of 20 F.3d 1406 (Kentucky Division, Horsemen's Benevolent & Protective Ass'n v. Turfway Park Racing Ass'n) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kentucky Division, Horsemen's Benevolent & Protective Ass'n v. Turfway Park Racing Ass'n, 20 F.3d 1406 (6th Cir. 1994).

Opinion

CONTIE, Senior Circuit Judge.

The Kentucky Division, Horsemen’s Benevolent & Protective Association, Inc., appeals the district court’s September 20, 1993 Opinion and Order1 declaring the Interstate Horseracing Act of 1978, 15 U.S.C. §§ 3001-3007, unconstitutional. We reverse and remand for the following reasons.

I.

Plaintiff-appellant Kentucky Division, Horsemen’s Benevolent & Protective Association, Inc. (“KHBPA”), is a not-for-profit trade association of thoroughbred racehorse owners and trainers that race in Kentucky. Intervenor Kentucky Thoroughbred Association, Inc. (“KTA”), serves a similar function. The KHBPA and the KTA (collectively “the Horsemen”) represent their members at Kentucky racetracks by, inter alia, negotiating racing contracts.

Defendant-appellee Turfway Park Racing Association, Inc. (“Turfway Park”), operates a thoroughbred racetrack in Kentucky. Though Turfway Park and the Horsemen attempted to negotiate the terms and conditions governing racing at Turfway Park, their most recent contract (a three-year agreement) expired on April 30, 1992 when Turfway Park refused to increase the percentage of revenues derived from interstate off-track wagering to be distributed to the Horsemen’s “purses.” The Horsemen, in turn, sought to strengthen their bargaining position by refusing to consent to interstate off-track wagering on races being run at Turfway Park as required by the Interstate Horseraeing Act of 1978 (the “Act”), 15 U.S.C. §§ 3001-3007,2 which governs inter[1409]*1409state wagering on horseracing. Turfway Park, in retaliation, sought to obtain the required consent directly from the individual racehorse owners by inserting a paragraph in its entry form which conditioned entry in a race on the racehorse owner’s consent to interstate off-track wagering. Turfway Park’s races were then broadcast to several out-of-state facilities where off-track wagers were placed.

The KHBPA thereafter initiated this action seeking damages and injunctive relief against Turfway Park and several out-of-state entities3 that had received the simulcasts and had accepted wagers on Turfway Park’s races. The KHBPA, citing 15 U.S.C. §§ 30054 and 30065, claimed that Turfway Park and the other defendants had violated the Act by accepting interstate off-track wagers on Turfway Park’s races without the KHBPA’s consent. The KTA subsequently intervened pursuant to 15 U.S.C. § 3006(b) (“In any civil action under this section, the host State, the host racing association and horsemen’s group, if not a party, shall be permitted to intervene as a matter of right.”).

Turfway Park, in turn, filed a counterclaim against the Horsemen and a third party complaint against various associations claiming, inter alia, that the conduct of these entities “restrain[ed] competition in the presentation of thoroughbred horseracing and wagering” in violation of the Sherman Antitrust Act, 15 U.S.C. § 1 et seq., and tortiously interfered with its business relations. Turfway Park also challenged the constitutionality of the Act.

On September 20, 1993, the district court found the Act to be “an invalid restriction on commercial speech in violation of the First Amendment, as well as fatally vague and irrational ... in violation of substantive due process.” 832 F.Supp. at 1098. Specifically, the district court found that:

Turfway’s simulcasting of its races invites patrons of out-of-state tracks to bet on Turfway’s races. Commercial transactions occur when these patrons place such bets. The simulcasts also act as an implied ad[1410]*1410vertisement for the quality of the track and its racing as well as an implied invitation to the viewers to patronize Turfway if they are in the Northern Kentucky/Cincinnati area. Therefore, the simulcasts constitute commercial speech, and the Act allows it to be prohibited whenever one of the designated parties withholds consent.
This court must, albeit reluctantly, hold that the means chosen by Congress are not “narrowly tailored to achieve [the] desired objective[s].” Therefore, the Act is an invalid restriction on commercial speech.
The statutory scheme prohibits interstate simulcasting unless the track at which the race is being run (the “host” track) has “a written agreement with the horsemen’s group....” 15 U.S.C. § 3004(a)(1)(A). This seems fairly straightforward. The trouble arises when one looks to the definition of “horsemen’s group”: “[T]he group which represents the majority of owners and trainers racing there, for the races subject to the interstate off-track wager on any racing day.” 15 U.S.C. § 3002(12). This definition may be workable in a situation where, as apparently presumed by Congress, a horsemen’s association has reached an agreement with the host track in advance of the racing meet. It falls apart, however, when the unhappy scenario exists, as it does here, that there are two horsemen’s groups — rivals of each other and both at loggerheads with the track— and numerous owners and trainers unaffiliated with either group....
First, the statute is self-contradictory in that § 3004(b) contemplates, as does the legislative history, that the consent of the horsemen’s group will be obtained in the regular contractual process. However, § 3002 requires the identification of the relevant horsemen’s group representing the majority of owners and trainers on each racing day.
Second, the statute is vague as to what it means by “owner.” Some horses have many owners — some of which are partnerships, corporations or unincorporated consortia. ...
Third, the largest horsemen’s group represents only 55% of owners eligible to race. Therefore, the possibility exists that on “any racing day” no horsemen’s group will represent a majority of the owners and trainers....
Fourth, the parties have stipulated that entries to a race are usually closed 48 hours in advance. Scratches usually occur by 4 p.m. of the day prior to the race; however, emergency scratches are possible up to post time. What if a scratch changes the election result for that racing day?
Lastly, what is the meaning of “represent?” It seems like a simple word, but it has already caused the court considerable difficulty in trying to preside over this dispute. The statute gives a veto to the horsemen’s group which “represents the majority of owners and trainers” on “any racing day.” 15 U.S.C. § 3002(12).

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Bluebook (online)
20 F.3d 1406, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kentucky-division-horsemens-benevolent-protective-assn-v-turfway-park-ca6-1994.