Kentucky Div., Horsemen's Benev. & Protective Ass'n, Inc. v. Turfway Park Racing Ass'n, Inc.
| Decision Date | 06 April 1994 |
| Docket Number | No. 93-6425,93-6425 |
| Citation | 20 F.3d 1406 |
| Parties | KENTUCKY DIVISION, HORSEMEN'S BENEVOLENT & PROTECTIVE ASSOCIATION, INC., Plaintiff-Appellant, Kentucky Thoroughbred Association, Inc., Intervening Plaintiff, v. TURFWAY PARK RACING ASSOCIATION, INC.; Rockingham Venture, Inc.; Douglas Racing Corporation, d/b/a Ak-Sar-Ben; Bensalem Racing Association, d/b/a Philadelphia Park; and Dakota Race Management, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Douglas L. McSwain (argued and briefed), Don Siler Sturgill, Katherine M. Coleman, Sturgill, Turner & Truitt, Lexington, KY, for plaintiff-appellant.
Douglas N. Letter (argued and briefed), Dept. of Justice, Appellate Staff, Civ. Div., Washington, DC, for intervenor.
Charles H. Deters, Thomas W. Bosse (argued and briefed), Deters, Benzinger & Lavelle, Covington, KY, for Turfway Park Racing Ass'n, Inc.
James A. Philpott, Jr., Lexington, KY, for Rockingham Venture, Inc.
Charles H. Deters, Deters, Benzinger & Lavelle, Covington, KY, for Douglas Racing Corp., Bensalem Racing Ass'n, Dakota Race Management.
Richard E. Plymale, Patrick W. Madden (briefed), Brown, Todd & Heyburn, Lexington, KY, for amicus curiae Thoroughbred Owners and Breeders Ass'n.
Bruce H. Schneider (briefed), William A. Rome, Stroock & Stroock & Lavan, New York City, for amicus curiae Jockeys Guild, Inc.
Before: KENNEDY and GUY, Circuit Judges; and CONTIE, Senior Circuit Judge.
The Kentucky Division, Horsemen's Benevolent & Protective Association, Inc., appeals the district court's September 20, 1993 Opinion and Order 1 declaring the Interstate Horseracing Act of 1978, 15 U.S.C. Secs. 3001-3007, unconstitutional. We reverse and remand for the following reasons.
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 Horseracing Act of 1978 (the "Act"), 15 U.S.C. Secs. 3001-3007, 2 which governs interstate 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 entities 3 that had received the simulcasts and had accepted wagers on Turfway Park's races. The KHBPA, citing 15 U.S.C. Secs. 3005 4 and 3006 5, 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. Sec. 3006(b) ().
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. Sec. 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 advertisement 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. Sec. 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. Sec. 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 Sec. 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, Sec. 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. Sec. 3002(12). Does this mean owners and trainers who merely belong to a horsemen's group? Or can Turfway, as it has tried to do by various means, solicit proxies or consents [directly] from a horsemen's group's members....
The difficulties listed are not speculative. The parties have already argued in open court about who is "represented" by the horsemen's associations who are the plaintiffs in this matter. Turfway has already solicited owners and trainers for individual consents to simulcasting. It has also attempted to insert in its race entries and stall applications consents to simulcasting, as a kind of contract of adhesion.
....
The above list of ambiguities in the statute shows that neither the court nor the parties have any way of knowing how the statute should be applied in the context of an ongoing dispute between Turfway and the Horsemen, which is essentially an acrimonious strike. The statute does not inform ordinary people (or even experts) what conduct is required or prohibited although they are exposed to heavy penalties for violating it. In the present context it leads to continuing litigation and, since its enforcement has been given over to private parties, to arbitrary enforcement. Furthermore the statutes are not designed for application in a situation where a track does not have an agreement with a horsemen's group in advance of the meet. The statute is impossible to apply with certainty on a day-to-day basis in the context of an ongoing dispute. To try to make it more definite by interpretation is pure guesswork. Accordingly, the court must hold that it is void for vagueness.
Substantive due process requires that a statute have a rational relationship to a legitimate legislative goal....
....
Here, Congress' announced goal is the promotion of horseracing, especially the preservation of small tracks, while protecting the interests of horsemen and the public. Providing a private party with an absolute veto over the simulcasting, without any standards to guide it, virtually assures that the statute will be applied, not to achieve Congress' goal, but for selfish...
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