Struggle Ahead For NJ Horsemen In $150M Lawsuit Vs. Sports Leagues

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New Jersey’s thoroughbred horsemen’s association may have run into a brick wall in its efforts to unseal eight-year-old depositions from commissioners of the NFL, MLB, and other major sports organizations in the original sports betting case won by the state.

In filings published late Friday, attorneys for the leagues made one newly plausible argument — and buttressed it with far more.

First, the easy part.

Earlier this month, the sports organizations filed a motion with the U.S. Supreme Court seeking an overturning of a 2019 Third Circuit Court of Appeals ruling that vacated a lower court decision dismissing the horsemen’s claims for up to $150 million in damages.

The case effectively is a sequel to the six-year legal battle that ended with that same Supreme Court siding with New Jersey’s claim that a 1992 federal law banning most sports betting in the U.S. was unconstitutional.

The horsemen sued in 2014 in an effort to move forward on sports betting at Monmouth Park, and now they have returned to court seeking compensation from the leagues for lost revenue from 2014 until 2018, when the Supreme Court opened the floodgates for sports betting in any state that wants it (and many do).

The point made by the leagues is that if the Supreme Court a) accepts the case and then b) overturns the ruling, then time-consuming discovery now will prove to have been a waste of everyone’s time.

The leagues also point to conflicting rulings in different district circuit courts on how much discretion such a court has to deny recovery of a temporary restraining order bond — which in this case was $3.4 million for a four-week period before a lower-court judge sided with the leagues. The same judge in 2019 denied the horsemen any of that money.

Such a conflict is a common reason for the Supreme Court to intervene — and the leagues also note “the Supreme Court’s prior interest and involvement in this litigation.”

The leagues also point out that a “stay” delaying any discovery does not harm the horsemen; the sportsbooks already are offering all the sports betting they can find.

Let’s do the horsemen a favor

Attorneys for the leagues also offered a novel additional angle:

“If anything, continuing to hold discovery in abeyance benefits [the horsemen]  for the same reason that it benefits the Sports Organizations: [the horsemen]  likely will save time and expense devoted to discovery that could be moot in whole or in part. For example, all of the discovery of [the horsemen]  and its fact witnesses and purported expert concerning calculations of actual damages during the 28-day TRO period would prove wasteful if the Supreme Court concludes that [the horsemen’s organization]  was not ‘wrongfully enjoined.’”

Another aspect of the new filing is that the leagues say that the horsemen agreed to stipulations in May 2018, when they filed their $150 million lawsuit just 10 days after the Supreme Court ruled.

“In 2018, shortly after New Jersey Thoroughbred Horsemen’s Association, Inc. (NJTHA) filed the pending Motion for Judgment on Injunction Bond and Damages, the parties agreed that no discovery in connection with that motion would take place until the Court resolved three threshold legal issues: (1) whether NJTHA was ‘wrongfully enjoined’ as a matter of law; (2) whether NJTHA was summarily entitled to the full $3.4 million bond amount as a matter of law (without having to prove its actual damages through subsequent proceedings); and (3) whether NJTHA’s claim for ‘bad faith’ damages of nearly $150 million should be dismissed as a matter of law.

“Despite the fact that not all of those threshold legal issues have been resolved, NJTHA served broad discovery on the Sports Organizations in clear violation of the Stipulation and Order. Even if NJTHA had properly sought a modification of the Stipulation and Order instead of simply ignoring it, it could not have carried its substantial burden to demonstrate the requisite’good cause’ for any such modification.

“To the contrary, the same rationale underlying the Stipulation and Order in 2018 — the avoidance of potentially unnecessary discovery — applies with equal force today. Accordingly, the Sports Organizations request that the Court enforce the Case Stipulation and Order, reject NJTHA’s attempt to serve discovery, and rule on the remaining threshold legal questions, which already have been briefed.”

The second and third prongs, the leagues say, have yet to be resolved.

Too much paperwork?

The leagues also protest the extent of the discovery filings by the horsemen.

“On December 19, 2019, NJTHA served the Sports Organizations with five sets of document requests and ten notices of deposition (the “Requests”) — one set of document requests and two deposition notices for each of the five Plaintiffs, including depositions of each Sports Organizations’ Commissioner and/or President who were previously deposed in Christie I.

“All of the Requests related solely to NJTHA’s ‘bad faith’ claim. In propounding these burdensome Requests, NJTHA failed even to acknowledge, let alone comply with, the Stipulation and Order [from 2018]. When the Sports Organizations informed NJTHA that they intended to seek a Protective Order, NJTHA responded with the baseless arguments that the Stipulation and Order had somehow been vacated by the Third Circuit’s certified judgment, and that the Sports Organizations had waived any challenge to NJTHA’s damages calculations.”

The leagues don’t fare nearly as well, at least from a layman’s standpoint, in another aspect of the filing. Back in 2013, the horsemen claimed to the Third Circuit court that the sports organizations were guilty of “hypocrisy” and “unclean hands” because of their promotion of fantasy sports and their holding of events in sites such as Las Vegas and London where sports betting was legal.

In this filing, the leagues still claim that the horsemen “falsely contend that the Sports Organizations did not face any risk whatsoever of injury from the expansion of state-sponsored sports gambling.

“This Court noted that, among other evidence, congressional studies, consumer surveys, and the fact that the State of New Jersey exempted its own colleges from legal sports gambling all demonstrated the threat of potential harm posed by New Jersey’s sports gambling proposal.”

Of course, sports betting is now legal in more than a dozen states — and before the worldwide pandemic hit, there seemed to be zero evidence of harm to any sports organization from that development.

Photo by Lano Lan / Shutterstock.com

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John Brennan

John Brennan has covered NJ and NY sports business and gaming since 2002 and was a Pulitzer Prize Finalist in 2008, while reporting for The Bergen County Record.

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