New Eng. Horsemen's Benevolent & Protective Ass'n, Inc. v. Mass. Thoroughbred Horsemen's Ass'n, Inc.

Citation210 F.Supp.3d 270
Decision Date28 September 2016
Docket NumberCivil Action No. 16-11079-FDS
Parties NEW ENGLAND HORSEMEN'S BENEVOLENT AND PROTECTIVE ASSOCIATION, INC., Plaintiff, v. MASSACHUSETTS THOROUGHBRED HORSEMEN'S ASSOCIATION, INC. and Middleborough Agricultrual Society, Defendants.
CourtU.S. District Court — District of Massachusetts

Neil D. Raphael, Raphael LLC, Boston, MA, for Plaintiff.

Robert G. Scarano, Law Offices of Robert G. Scarano, Tewksbury, MA, Nicholas M. O'Donnell, Sullivan & Worcester LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS TO DISMISS

SAYLOR, United States District Judge

This action arises out of an alleged violation of the Interstate Horseracing Act. Plaintiff New England Horsemen's Benevolent and Protective Association alleges that defendants Massachusetts Thoroughbred Horsemen's Association and Middleborough Agricultural Society violated the Interstate Horseracing Act by entering into a "purse agreement" under which defendants agreed to permit simulcasting of, and interstate off-track betting on, races hosted by Middleborough Agricultural Society at Brockton Fairgrounds racetrack. Plaintiff contends that it, and not the Massachusetts Thoroughbred Horsemen's Association, is the only group authorized by the Interstate Horseracing Act to enter into such agreements.

Defendants have moved to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). Defendants contend that plaintiff has failed to allege an actual violation of the Interstate Horseracing Act—that is, has failed to allege that any party has accepted interstate off-track wagers without first obtaining the proper consent—and that therefore the complaint does not present a federal question sufficient to confer subject-matter jurisdiction and has failed to state a claim upon which relief can be granted.

For the reasons set forth below, the motions to dismiss will be granted.

I. Background
A. The Interstate Horseracing Act

The Interstate Horseracing Act of 1978 (the "IHA"), 15 U.S.C. § 3004(a), regulates interstate off-track wagering on horseracing. In passing the IHA, "Congress recognized that the unrestricted proliferation of off-track wagering would hurt the horseracing industry by decreasing attendance at racetracks which, in turn, would reduce the number of horses needed to compete and the number of individuals employed in the industry." Kentucky Div., Horsemen's Benev. & Protective Ass'n, Inc. v. Turfway Park Racing Ass'n, Inc. , 20 F.3d 1406, 1414 (6th Cir. 1994). The IHA regulates, but does not prohibit, interstate off-track wagering by "balancing the interests of the horseracing industry against those of the interstate off-track wagering industry." Id. Congress thus sought to support both the horseracing and interstate off-track wagering industries, but to do so in a relatively narrow way that otherwise left states in control of gambling within their borders. See id. ; 15 U.S.C. § 3001.

The IHA enlists the horseracing industry itself to help regulate the growth of interstate off-track wagering, Kentucky Div. Horsemen's Benev . & Protective Ass'n , 20 F.3d at 1414, and to ensure that horsemen are compensated for their role in enabling off-track betting, Churchill Downs, Inc. v. Thoroughbred Horsemen's Group, LLC , 605 F.Supp.2d 870, 882 (W.D. Ky. 2009). To this end, the IHA prohibits off-track betting systems1 from accepting interstate off-track wagers absent the consent of (1) "the host racing association,"2 (2) "the host racing commission,"3 and (3) "the off-track racing commission."4 15 U.S.C. § 3004(a). However, a host racing association cannot provide its consent unless it first has a written agreement with "the horsemen's group" that sets forth the terms and conditions for the distribution of off-track betting revenues. 15 U.S.C. § 3004(a)(1)(A). "Horsemen's group" is defined, "with reference to the applicable host racing association," as "the 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).

B. Factual Background

The facts are set forth as alleged in the complaint.

The New England Horsemen's Benevolent and Protective Association, Inc. ("NEHBPA") is a Massachusetts non-profit corporation that represents Massachusetts horsemen in contract negotiations with Massachusetts racetracks. (Compl. ¶¶ 2, 17). As stated in its bylaws, the purpose of the NEHBPA is to "advocate[ ] in the best interests and property rights of the horsemen" on issues such as "purse monies; purse contracts; sale of live racing signal; ... inter-track wagering contracts and fees; off-track betting contracts and fees; ... safety, repair and improvement of all racetrack facilities; and all other matters of interest that may affect horsemen." (Id. ¶ 17). NEHBPA has been the sole representative of Massachusetts horsemen since its incorporation in 1992. (Id. ¶ 16). It has approximately 826 members. (Id. ).

The Massachusetts Thoroughbred Horsemen's Association, Inc. ("MassTHA") was formed in 2015 by several members of NEHBPA who had unsuccessfully sought leadership positions in that organization's most recent elections. (Id. ¶¶ 16, 18). MassTHA has not, as of yet, held elections for executive officers or members of the Board of Directors. (Id. ¶ 19). Absent elections, William Lagorio leads MassTHA as its self-appointed president. (Id. ¶¶ 18, 19). The complaint alleges that MassTHA has few, if any, member horsemen who have consented to be represented by the organization. (Id. ¶ 4).

In 2015, the Middleborough Agricultural Society ("MAS") submitted an application to the Massachusetts Gaming Commission to run a fifteen-day live racing meet at the Brockton Fairgrounds racetrack in 2016. (Id. ¶ 23). The Brockton Fairgrounds track had not been used since 2001, when several thoroughbred horses were injured during a race. (Id. ¶ 9). The MAS application was granted. (Id. ¶ 25). The NEHBPA then sought to negotiate a purse agreement with MAS, hoping to reach an agreement that would include measures to ensure a safe meet at Brockton. (Id. ¶ 26).

According to the complaint, MAS refused to negotiate with NEHBPA. (Id. ). Instead, in early 2016, MAS entered into a purse agreement with MassTHA to conduct live thoroughbred racing at the Brockton Fairgrounds during 2016 and 2017. (Id. ¶ 5). The complaint alleges that MassTHA entered into the contract with MAS without any bargaining or advocacy on behalf of horsemen. (Id. ¶ 37). The contract allegedly fails to address multiple safety concerns with respect to the racetrack. (Id. ¶ 32). It also authorizes MAS to negotiate with simulcast and receiving facilities for the simulcasting of live races, and the conduct of off-track wagering on races, held at Brockton. (Id. ¶ 34). It further states that "MAS shall not be making any payments to MassTHA or the Horsemen" for any reason," presumably including the sharing of proceeds derived from any off-track wagering. (Id. ). Thus, all profits derived from any simulcasting and off-track wagering are to be retained by MAS. (Id. ¶ 35).

In order to race at Brockton, a horseman must sign and submit a stall application to MAS. The stall application states as follows:

By signing and submitting this stall Application the undersigned does hereby appoint the Massachusetts Thoroughbred Horsemen's Association, Inc. ("MassTHA") to act as its sole and exclusive representative for the purposes of negotiating and executing, or refusing to execute, with Middleborough Agricultural Society any and all contracts and agreements relating to Thoroughbred Racing at the Brockton Fairgrounds during the subject racing meeting ....

(Id. ¶ 44).

The complaint further alleges that MassTHA has published false statements about NEHBPA on its website. (Id. ¶ 21). The statements include accusations that NEHBPA does not legitimately represent Massachusetts horsemen, does not act in their best interests, and is diverting horserace development funds to out-of-state horsemen. (Id. ).

C. Procedural Background

Plaintiff NEHBPA filed the complaint in this action on June 9, 2016. The complaint alleges that MassTHA and MAS violated the IHA by authorizing simulcasts of, and interstate off-track wagering on, live races held at the Brockton Fairgrounds without the consent of the NEHBPA (Count One). NEHBPA contends that "[u]nder the IHA definition, until a race occurs at a racetrack and the majority of horsemen elect a different organization to represent their interests, the NEHBPA continues to represent the majority of horsemen who race in Massachusetts," (Compl. ¶ 53) and therefore it is the only horsemen's group that can consent to off-track wagering. (Id. ¶ 56). The complaint further seeks a declaratory judgment that NEHPBA is the sole and exclusive "horsemen's group," as defined in the IHA, authorized to negotiate on behalf of Massachusetts horsemen and to consent to simulcasting and off-track wagering (Count Two). The complaint also alleges two state-law violations: tortious interference with advantageous relations (Count Three) and defamation (Count Four).

Defendants have moved to dismiss the complaint. Defendant MassTHA has moved to dismiss Counts One and Two under Fed. R. Civ. P. 12(b)(1) for lack of subject-matter jurisdiction and under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. As to Counts Three and Four, MassTHA contends that the Court should decline to exercise supplemental jurisdiction pursuant to 28 U.S.C. § 1367. Defendant MAS has moved to dismiss the complaint in its entirety under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted.

II. Legal Standard

On a motion to dismiss, the Court "must assume the truth of all well-plead[ed] facts and give ... plaintiff the benefit of all reasonable inferences therefrom." Ruiz v. Bally Total Fitness Holding Corp. , 496 F.3d 1, 5 (1st Cir. 2007) (citing Rogan v. Menino , 175 F.3d 75, 77 (...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT