Motion sought to dismiss HBPA's lawsuit over HISA

LEXINGTON, Ky. – The defendants in a lawsuit seeking to invalidate the Horseracing Integrity and Safety Authority have filed a motion to dismiss the action, contending that the plaintiffs have no standing in the case and that the lawsuit fails “to state a claim on the merits.”

The motion, filed on April 30 in the U.S. District Court for the Northern District of Texas by attorneys at the Washington, D.C., law firm Akin Gump Strauss Hauer & Feld LLP, argues that the lawsuit’s claims regarding violations of constitutional clauses against delegating regulatory authority to private companies are not valid, citing a number of cases decided in federal courts over the past 50 years.

The Horseracing Integrity and Safety Authority was created by the passage of an omnibus spending bill late in 2020 that included its enabling legislation. Under the bill, the authority was created as a private, non-profit entity that would be responsible for setting nationwide standards for medication and anti-doping policies, along with a set of “safety standards.” The authority would be overseen by the Federal Trade Commission.

The motion to dismiss cites the oversight of the FTC as being critical to the argument countering the lawsuit’s contentions of violations of the Constitution’s non-delegation clause.

“No proposed rule or modification may take effect under HISA unless the FTC independently adopts it following notice and public comment,” the motion states. “And any final Authority decision to impose sanctions – the range of which must also be approved by the FTC after notice-and-comment — shall be subject to de novo review by an administrative law judge appointed by the FTC, and further de novo review by the commissioners” of the authority.

The motion to dismiss further states that the plaintiffs in the lawsuit, which include the National Horsemen’s Benevolent and Protective Association and a number of its state affiliates, have misinterpreted sections of the legislation creating the authority and allowing a nominating committee to select the member of its board and committees.

“If anything, plaintiffs read the statutory scheme backwards: HISA imposes restrictions on the nominating committee, rather than delegating powers to it.”

Prior to the legislation passing, Akin Gump were hired by supporters of the legislation to vet the bill for possible constitutional violations, in anticipation of challenges being mounted by opponents of the effort. Lawyers at the firm have contended that the statutory scheme promulgated by the legislation is akin to those creating the Securities and Exchange Commission and FINRA, a financial oversight agency that oversees U.S. broker-dealers.

While the National HBPA lawsuit was the first to challenge the authority, a separate but highly similar suit was filed last week by the states of Oklahoma and West Virginia, joined by their racing commissions and organizations representing Standardbreds and Quarter Horses. The second lawsuit made the same contentions as the first, while also contending that the establishment of the authority would unfairly “force” states to “spend time and resources to help the authority carry out a federal regulatory program.”

The nominating committee of the authority has been expected for weeks to announce a board of directors for the organization, but that announcement has been delayed. The motion to dismiss hints at the reason for that delay, in saying that the plaintiffs lack standing and are unable to prove any harm because the authority “still lacks permanent board members and remains largely in the organizational phase,” and that it has not yet “developed any proposed standards for the FTC even to evaluate.”