KHBPA Files Counterclaim in CDI Lawsuit

KHBPA Files Counterclaim in CDI Lawsuit
Photo: Anne M. Eberhardt/Blood-Horse Publications
The Kentucky Horsemen’s Benevolent and Protective Association has formally filed a counterclaim in the federal antitrust lawsuit brought by Churchill Downs Inc. and affiliates, and has joined with other defendants asking for their dismissal from the case.

The KHBPA, which is one of several entities and individuals named as defendants in the suit, cites damages of at least $5 million allegedly related to unpaid revenues from the racetrack company’s advance deposit wagering enterprise, and for the “retaliatory” 20% purse cut implemented during the recent Churchill Downs Spring/Summer meet.

In answering charges of illegal collusion and price-fixing by the defendants -- which also includes the Kentucky Thoroughbred Association, the Thoroughbred Horsemen’s Group, and various affiliated officers -- the KHBPA claims CDI breached terms of its 2006 contract by not paying an estimated $3 million in revenues on wagers made through since the ADW was launched in May 2007.

The counterclaim, which was filed July 28 in the U.S. District Court divisional court in Louisville, Ky., also said CDI owes Kentucky horsemen at least $2 million in underpaid purses and damages for races run in the first two weeks after the cut was implemented, and before the meet’s final condition books were published to reflect the adjustment. Damages for races run under the final condition books would be sought for “economic injury” in amounts to be determined.

“CDI’s action to withhold 20% from purse award payouts during the underpayment period was a wrongful and intentional exercise of dominion and control over the horsemen’s account for CDI’s own benefit and not for the benefit of Kentucky horsemen,” the pleading claims.

Further, the filing claims “continuing damage is irreparable, incapable of sufficient calculation and cannot be adequately remedied at law and accordingly warrants an award against CDI of permanent injunctive relief … to enjoin and forever prohibit it from continuing any and all of the above-described course of conduct.”

CDI spokesman Kevin Flanery said the company declined comment, choosing instead to let the company’s court filings speak for themselves. In its complaints, which at first included Florida horsemen, CDI claims certain horsemen groups and individuals have violated the federal Sherman Antitrust Act by conspiring to have the Thoroughbred Horsemen’s Group negotiate on their behalf. The THG, which deems itself a broker in negotiations, is a national collective of 18 horsemen’s associations.

Kentucky horsemen’s associations and affiliated individuals were added to the lawsuit in May.

Citing various case law, the THG, the KHBPA, and the KTA all filed separate motions to dismiss. In them, the defendants claim the Interstate Horse Racing Act authorizes horsemen’s groups to grant consent for the signal distribution of a track, and thus, overrules antitrust standards.

“Congress intended to give horsemen the right to protect their interests; it would be inconsistent with that Congressional goal to let the antitrust laws deprive horsemen of that right,” a pleading from the THG said. “Thus, there is no question that each individual horsemen’s group’s independent decision to withhold consent for the transmission of signals to certain ADWs is immune from antitrust liability.”

A preliminary version of the counterclaim was attached as reference but not formally entered in a previous filing with the court in June. At that time, the defendants asked the court for a temporary injunction to overturn the purse cut, a request that was later denied.

Steven B. Loy, a Lexington attorney representing the KTA, said the group reserves the right to file its own counterclaim if necessary, and seek economic damages for its members.

“The KTA filed its motion to dismiss and are confident we will prevail,” he said. “In the unlikely event that it is not granted, the KTA has the option of filing a counterclaim.”

Attempts to gather additional comment from attorneys affiliated with the defendants were unsuccessful.

Several original defendants, including the Florida HBPA, were dismissed from the lawsuit after agreements were reached on a purse contract and future slots revenue for Calder Race Course, which CDI owns.

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