By T. D. Thornton
A federal judge in Kentucky has dismissed the class-action lawsuit against trainer Bob Baffert and Churchill Downs, Inc. (CDI), that was initiated by a group of horseplayers who alleged negligence, breach of contract, and unjust enrichment because their losing pari-mutuel bets on the 2021 GI Kentucky Derby weren't honored as winners after Medina Spirit (Protonico) tested positive for and was subsequently disqualified for a betamethasone overage.
The July 20 order tossing the case out of United States District Court, Western District of Kentucky (Louisville Division), could have ramifications on a similar class-action suit brought by bettors against Baffert in New Jersey.
On July 26, Baffert's attorney in the New Jersey case, W. Craig Robertson III, notified the judge there of Kentucky's “supplemental authority in support of” his client's pending motion to dismiss the New Jersey suit.
“Identical to this case, the [federal complaint in Kentucky] was commenced by a purported class of aggrieved gamblers against the Baffert Defendants asserting claims connected to pari-mutuel payouts from the 2021 Kentucky Derby,” Robertson wrote in his letter to the judge presiding over the two-year-old case in U. S. District Court of New Jersey.
“The Western District of Kentucky dismissed those claims as a matter of law,” Robertson continued. “Specifically, the Court held that Kentucky's Rules of Racing govern all bets placed on the Kentucky Derby and because the Rules are clear that all payouts are final based on official race-day results, aggrieved gamblers have no injury at law and no viable cause of action even if race results are later altered.
“Similarly here, [Baffert seeks] dismissal of the case before Your Honor due to a lack of cognizable injury, whether under the RICO statute or otherwise,” Robertson wrote.
The Kentucky class-action plaintiffs were led by Anthony Mattera.
Baffert and CDI–an odd legal couple on the same side of the courtroom given their history of litigation over Baffert's banishment from CDI's tracks–were co-defendants in the Kentucky case because they were both alleged to be “negligent in their care of Medina Spirit and his entry” into the Derby.
In his July 20 Kentucky court order, Judge David Hale wrote that he didn't buy the negligence argument.
“Even assuming that [Baffert and Churchill Downs] owed Plaintiffs a legally cognizable duty and breached that duty,” the plaintiffs failed to adequately allege what is known as “but-for” causation, Hale wrote. They also didn't claim “reasonably certain” damages.
“And such failure is fatal to any negligence claim,” Hale wrote. “Plaintiffs' complaint is devoid of any facts showing that but for [Baffert's] alleged negligence, their alleged injury would not have occurred.”
Hale wrote that the plaintiffs themselves even conceded that “the stewards' official order of finish listed Medina Spirit as the winner of the Kentucky Derby.”
The judge also noted that “Churchill Downs distributed the pari-mutuel payouts accordingly. Under applicable state law, the fact that Medina Spirit was disqualified as the winner of the Kentucky Derby–nine months after the race–had no impact on the pari-mutuel payouts.
“Thus, Plaintiffs cannot show breach of contract or resulting damages,” Hale wrote.
“Because Plaintiffs have both failed to adequately plead two essential elements of a breach-of-contract claim and alleged facts that plead the claim out of court, the claim will be dismissed,” Hale wrote.
In the ongoing New Jersey case, the class-action plaintiffs are led by Michael Beychok, the winner of the 2012 National Horseplayers Championship.
The New Jersey lawsuit was filed four days after Baffert's disclosure that Medina Spirit had tested positive for betamethasone after winning the May 1, 2021 Derby.
The class members of the suit alleged that they had been “cheated out of their property” because they placed wagers on other horses and betting combinations that would have paid off had “the drugged horse” not won the Derby. (Unlike the Kentucky case, CDI is not named as a defendant in New Jersey).
Robertson, in Baffert's defense, has asserted in previously field court documents that the plaintiffs' claims fail as a matter of law.
“Among other reasons, this is because the rules of racing provide that pari-mutuel wagering is unaffected by any disqualification,” Robertson wrote.
“Plaintiffs' argument that a disqualification somehow creates a compensable injury has been addressed and roundly rejected [in precedent cases],” Robertson wrote. “[T]he case law could not be more clear that, among other things, gamblers with gambling losses are simply not within the class of individuals those laws are designed to protect.”
Medina Spirit's disqualification appeal is still awaiting a final Kentucky Horse Racing Commission (KHRC) adjudication. That DQ, plus an appeal of the $7,500 fine and a 90-day suspension that Baffert has already served but wants expunged from his record, were all affirmed in their entirety by a hearing officer on May 26, 2023. But that recommended order upholding the penalties still has to be voted upon by the full KHRC board.
Not a subscriber? Click here to sign up for the daily PDF or alerts.
