Injunction Halts HISA Rules, But Only in Louisiana and West Virginia

The plaintiff states of Louisiana and West Virginia won a preliminary injunction in federal court Tuesday that will keep the Horseracing Integrity and Safety Act (HISA) Authority's rules from being implemented in those two states until a lawsuit challenging the constitutionality of HISA gets decided in full.

“This court believes the threatened harm to Plaintiffs outweighs any harm that may result to the Defendants and that a preliminary injunction will not undermine the public interest,” wrote Judge Terry Doughty of U.S. District Court (Western District of Louisiana).

“This Court is only ruling on the adoption of the rules by HISA, not the constitutionality of the Act,” Doughty was quick to add.

“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,” Doughty wrote.

The defendants, who consist of the HISA Authority, the Federal Trade Commission (FTC), and board members and overseers of both entities, are alleged in the June 29 suit to have violated the Fourth, Seventh and Tenth Amendments to the U.S. Constitution, plus the Administrative Procedure Act (APA), which governs the process by which federal agencies develop and issue regulations.

Lisa Lazarus, the chief executive officer of the HISA Authority, told TDN in an emailed statement that read, in part, “[Tuesday's] ruling from the Western District of Louisiana relates only to the FTC rules, is limited in geographic scope to Louisiana and West Virginia…and does not question HISA's constitutionality or validity. The Authority remains focused on implementing the Racetrack Safety program and drafting Anti-Doping and Medication Control rules for implementation in January 2023….

“The reality is that the majority of racing participants support the Authority's mission to protect those who play by the rules and hold those who fail to do so accountable in order to keep our equine and human athletes safe and the competition fair. The immense collaboration with state racing commissions, stewards, veterinarians, racetracks, trainers, and other horsemen that has taken place to date is evidence of this support, and we intend to continue to fulfill our mandate and work to make the industry safer,” Lazarus continued.

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 that it was imperative to obtain an injunction before the case winds its way through the legal system, lest they be exposed to the alleged harms of the rules. These types of federal court cases can often linger in the legal system for years without resolution.

In a 28-page memorandum explaining his ruling, Doughty noted that two civil suits attempting to get HISA struck down based on alleged unconstitutionality have already failed in federal courts and are currently pending appeal, and that those suits shared some common plaintiffs with the case that is now before his court.

But a key difference, Doughty wrote, is that, “This suit is the third attempt at stopping enforcement of HISA but the first to address the legality of the rules enacted.”

Doughty wrote that he first had to determine whether his court has judicial power to hear this case under the doctrine of “standing.” A federal court has judicial power only where a plaintiff has demonstrated that it 1) suffered an injury in fact; 2) is fairly traceable to the challenged conduct of the defendant, and 3) is likely to be redressed by a favorable decision. The party invoking federal jurisdiction has the burden of establishing those three elements.

Once the first phase of rules (covering racetrack safety, enforcement, and financial assessment methodology) went into effect July 1, Doughty wrote “All Plaintiffs allege they will suffer injuries 'in the form of vast destruction of the horseracing industry through individual penalties and systematic changes to the longstanding regulatory structure and revenue model. They argue that there will be financial costs so great that numerous participants will be driven out of business if the rules are enforced.”

On the other side, Doughty wrote, “Defendants argue there is no injury to Plaintiffs because 1) none of the alleged injuries have 'transpired over the two weeks in which the rules have already been in effect'; 2) the harms are self-inflicted under the rules; 3) there is not a challenge to the Act's scope; 4) the injuries derive from the Act enacted by Congress itself, not any of the implemented rules, and 5) the mere apprehension or fear of future harm does not establish a concrete injury.”

Doughty reconciled those conflicting viewpoints this way: “The applicable time period under this element is not whether the injury has occurred since the implementation of the rules, but whether it was imminent at the time the complaint was filed. While Defendants' argument that the injuries have not occurred and that the private Plaintiffs' fear of future injury might go to the success on the merits, they do not negate Plaintiffs' standing. Plaintiffs are challenging the legality of government action and are objects of said action. All Plaintiffs are participants in the horseracing industry, making them directly affected by regulation actions.”

Doughty wrote that the “fairly traceable” link requirement was straightforwardly accomplished by the plaintiffs.

“Here, there is an obvious link between the HISA rules and Plaintiffs' alleged injuries,” Doughty wrote. “All the above alleged injuries are 'fairly traceable' to the rules enacted thus far by HISA and the FTC.”

The plaintiffs also had to prove the “redressability element of standing,” which requires demonstrating “a substantial likelihood” that the requested relief will remedy the alleged injury.

“Because Plaintiffs are challenging the legality of government action in the form of HISA and the FTC approving and implementing rules, Plaintiffs have demonstrated a substantial likelihood that the requested relief would remedy the alleged injuries in fact,” Doughty wrote. “If Plaintiffs are successful in having the HISA rules declared invalid, this would redress their alleged injuries.”

At a later point in the memorandum, Doughty wrote that “Obtaining a preliminary injunction is an 'extraordinary and drastic remedy'” that a movant is only entitled to if four factors are established.

They are: 1) a substantial likelihood of success on the merits; 2) the movant is likely to suffer irreparable harm without preliminary relief; 3) the possible injury to the movant outweighs the possible harm to the other party, and 4) an injunction is in the public interest.

“Plaintiffs have satisfied all four elements required for a preliminary injunction to be issued. After considering all factors, this Court has determined that a preliminary injunction shall be issued by Plaintiffs against the Defendants,” Doughty wrote.

The injunction shall be in effect, Doughty wrote, “pending the final resolution of this case,” adding that the final ruling could extend all the way up to an appeal before the United States Supreme Court.