Churchill Sues Guild, Cuts Off Contributions

Churchill Downs Inc. has cut off its voluntary financial contributions to the Jockeys' Guild and has sued the organization over what it believes were violations of federal and state law when jockeys opted not to ride last fall at Churchill Downs and Hoosier Park.

CDI filed the suit March 3 in U.S. District Court in western Kentucky. The company is seeking injunctions to restrain and prohibit the Guild from "boycott and price-fixing activities," according to a release.

The lawsuit claims the Guild orchestrated walkouts by jockeys at Churchill Downs Nov. 7 and Hoosier Park Nov. 12. CDI, which believes the action was aimed at disrupting business, is seeking damages given the financial impact of the jockeys' action at Churchill at Hoosier Park.

"Since the November incidents, it has become evident that the Guild orchestrated these boycott activities as a means to hurt our business," CDI chief operating officer Andy Skehan said in the release. "We believe the evidence will compel the court to declare such activities illegal and provide CDI and its operations injunctive relief to prevent future boycotts.

"We are hopeful that the course of action we've announced will provide assurances ahead of our upcoming meets and send a clear message to the current Guild management that its irresponsible activities are illegal and not in the best interests of its member jockeys or the industry."

In a March 3 statement, the Guild, through spokesman Eric Banks, denied orchestrating the walkouts at the two CDI-owned racetracks. Banks said the Guild could have a further response to the lawsuit in the near future.

The 23-page suit says the court has jurisdiction over the matter because of alleged violations of the Sherman Antitrust Act. It also references a Kentucky regulation that deals with boycotts and price-fixing.

Skehan said jockeys are private contractors and not employees of CDI or any of its operations. As independent contractors, they cannot by law boycott or conduct activities to disrupt business, he said.

CDI said evidence of violations of the law include the following activities by the Guild and its representatives relating to the November incidents: Interfering with the operations of CDI and its subsidiaries, encouraging or coercing others not to provide jockey services, and advising Guild members to engage in activities prohibited by anti-trust laws.

"Churchill has suffered, suffers, and is threatened with continuing to suffer, immediate and irreparable injury unless the court issues preliminary and permanent injunctive relief prohibiting the Guild, its officers, agents, employees, members, and all person acting in concert with it, from continuing to violate (state and federal laws)," the lawsuit says.

During a March 3 teleconference with the media, Skehan said one impetus for the lawsuit is "rumors and other information" that suggest the potential for more walkouts. Churchill is home to the Kentucky Derby, which this year is scheduled for May 7.

"Certainly, looking to the future is a reason we're doing this," Skehan said.

CDI racetrack and other Thoroughbred Racing Associations-member tracks in total pay the Guild about $2.2 million a year as compensation for media rights under an oral contract. CDI pays about $375,000 a year.

Churchill Downs president Steve Sexton last December asked for an accounting of how the money is spent, and a week later the TRA made the same request. They haven't received an answer. The money can be used as the Guild sees fit, though when the Guild and TRA had a written contract, it was used for supplemental on-track accident insurance for jockeys.

"We need to be certain that moneys contributed on behalf of jockeys are spent on behalf of jockeys," Skehan said. "Since the Guild cannot or will not explain where this money is going, we are withholding this funding and exploring possibilities for redirecting it in a manner that would be beneficial to the jockeys. We also have a fiduciary responsibility to our shareholders, and as such it would be imprudent to continue funding an organization that is acting illegally to harm our business."

The Churchill and Hoosier walkouts apparently were designed to send a message to the racing industry that the $100,000 maximum benefit for on-track injuries suffered by jockeys isn't sufficient. CDI and other racing associations are looking to increase the maximum to $1 million.

Skehan said CDI would redirect the $375,000 to benefit jockeys. "One avenue we're looking at it is to take that money and offset the cost of an increase in the accident policy to cover riders at tracks," he said.

Skehan also said CDI is attempting to improve its relationship with jockeys, not create discord. "This is an issue we have with Guild management," he said. "We don't believe Guild management is acting in the best interest of the membership."

View full text of Churchill Downs filing here.