John G. Heyburn II, Chief Judge for U.S. District Court for the Western District of Kentucky, did not issue a statement following the hearing.
Douglas L. McSwain, an attorney who represents the Kentucky HBPA, said Heyburn told the two parties he believed they have begun consultations. The judge noted that after the Kentucky HBPA filed its legal claim on May 23, the parties talked about future purse structures during the days prior to Churchill Downs releasing the last two condition books for its meet that ends July 6, McSwain said.
McSwain, a partner in Lexington law firm Sturgill, Turner, Barker & Moloney, feels that Heyburn was “correct in that interpretation.”
But he said those consultations took place only after the Kentucky HBPA “was blindsided” by CDI’s May 9 announcement that it would cut Churchill Downs’ overnight purses 20%, beginning May 14.
CDI is pleased with Heyburn’s June 16 ruling that denies a preliminary injunction, said company spokesman Kevin Flannery.
“We will let the process and its issues proceed on their own legal merits,” Flannery said.
He said CDI is not commenting on purse cuts or other issues that are part of a suit in U.S. District Court in Louisville in which CDI and the Kentucky HBPA have filed counterclaims.
Any rulings Heyburn issues could have major impact on a racing industry dispute over revenue, especially the growing business of advance deposit wagering (ADW), that has the Kentucky HBPA and CDI in the center.
They are among horsemen and track owners in several states that have not signed 2008 contracts on purses and ADWs.
Horsemen in Kentucky and several other states have used authority under the Interstate Horseracing Act to prevent Churchill and several other tracks from sending their simulcast signals to ADWs.
The Kentucky HBPA is preventing Churchill from sending its signal to CDI-owned Calder Race Course in Miami Gardens, Fla. The Florida Horsemen’s Benevolent and Protective Association has not signed a 2008 purse contract with Calder.
The Kentucky and Florida HBPAs are among horsemen’s groups using the new Thoroughbred Horsemen’s Group to negotiate ADW contracts with CDI and other track owners.
Signal blackouts have led to significant 2008 overall handle declines at several tracks--including Churchill which on May 9 cited that decline in revenue as the primary reason for its purse cuts.
In its claim filed May 23, the Kentucky HPBA asked Heyburn for preliminary injunctions to require consultation before any purse cuts and for a restoration of purse money that Churchill Downs began reducing on May 14.
McSwain said that several days after a June 4 hearing, both sides agreed the Kentucky HBPA could seek damages if there is an underpayment in combined purses for Churchill Downs’ 2008 spring and fall meets. The fall meet will run from Oct. 26 to Nov. 29.
“That satisfies us,” McSwain said, even though Heyburn did not issue an injunction for restoration of purses.
The legal battle began April 24 when CDI, Calder and Churchill Downs Technology Initiatives Co. sued the THG, the Florida HBPA and the two groups’ officers and directors. The suit alleges they violated the Sherman Antitrust Act by attempting to nationally negotiate standardized ADW contracts.
CDI Technologies Initiatives incorporates CDI’s ADWs under the TwinSpires.com brand.
The plaintiffs asked for an injunction to dissolve the THG. They also are seeking an injunction to prohibit defendants from agreeing on uniform terms for sale of signals and from “boycotting racetracks and ADWs that do not comply with their demand.
On May 14, the CDI companies added the Kentucky HBPA, the Kentucky Thoroughbred Association and several of those organizations’ officers and directors as defendants.
The Kentucky HBPA’s May 23 counterclaim alleges that CDI has failed to pay it any portion of the wagering revenues earned by TwinSpires.com platforms in 2007 or 2008.
Kentucky horsemen maintain that CDI breached a contractual clause they say gives them the right to 50% of fees paid from wagering processed through telephone account outlets and other "electronic media." Their court filings estimate the figure not paid by CDI under terms of the agreement to be about $3 million.
The court has not ruled on CDI’s requests for injunctions or on the Kentucky horsemen’s claim regarding TwinSpires.com revenue.
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