Could Peace Be At Hand Between NJ Horsemen And Sports Leagues?

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A $150 million lawsuit filed by New Jersey’s thoroughbred horsemen against five major sports organizations effectively has become a sequel to the six-year sports betting saga that led to a landmark U.S. Supreme Court decision.

But there are indications that this version that launched in mid-2018 might get settled before final judgment is rendered.

On Monday, an attorney for the NCAA, NFL, MLB, NHL, and NBA informed a federal court judge that the parties had agreed to modest delays in a pair of deadlines.

So instead of today as the day for notifying the court “whether we are going to mediate or seek a settlement conference,” that deadline is pushed back to Feb. 19. A second deadline — on when the leagues would indicate if they will seek a “stay” — has moved from this Friday to Feb. 26.

While the filing is just one page, there are a couple of intriguing notes here.

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The horsemen make their case

The two sides — who at times have warred with each other — had a teleconference with federal judge Lois H. Goodman on Jan. 28.

Then this past Friday afternoon, according to leagues’ attorney Anthony Dreyer, the horsemen provided “certain materials” that Dreyer says “may impact the parties’ settlement positions.”

“Plaintiffs are reviewing those materials, and request the additional time to determine whether the information is complete and to evaluate whether the Court’s involvement in settlement discussions is likely to be worthwhile,” Dreyer added.

One possibility here is that the horsemen offered further details on their methodology that proves the $150 million of lost revenues from sports betting from November 2014, when the horsemen were prevented from launching sports betting at Monmouth Park, until June 2018, when the Supreme Court’s vacating of a 26-year-old federal law paved the way for any state to offer the Vegas-style gambling.

Just as Governor Chris Christie persisted after suffering losses in court, the horsemen initially were hit with an adverse ruling in their bid to collect either the $3.4 million bond posted by the leagues in 2014 or subsequent damages. But once again, the tables turned — this time at the U.S. Third Circuit Court of Appeals, which in September vacated that lower court decision.

The case — decided by a 2-1 margin, as were two rulings by that court in the original sports betting saga — was bounced back to U.S. District Court, where the two sides have squabbled over the extent of discovery and other legal procedures.

Plot twist?

There is another scenario here, however: The sports leagues’ attorneys have noted that they are still considering whether to appeal that Third Circuit ruling to the Supreme Court, just as New Jersey did in the original sports betting case.

That would be a longshot, of course — but such a motion could freeze the horsemen in their tracks at the District Court level, an attorney familiar with the case told NJ Online Gambling. The “motion to stay” and the motion to the Supreme Court could come simultaneously, and there would be no point in moving forward until the Court shows its hand, the attorney said.

That means that if there has been any settlement figure offered by the leagues, the horsemen would have to consider whether to take the “bird in the hand.” Even if the Supreme Court, as expected, declines to take the case, it could take six months or more before the Court so decides.

And even then, it would just send things back to today’s situation.

These possibilities seem to raise the stakes for both sides. If the leagues are impressed by the “materials” — which could include a deeper explanation of how the horsemen arrived at the $150 million damages figure — then they might see substantial risk.

But if they are not, they may be inclined to simply take their chances with the Supreme Court, and then presumably the district court later this year.

There is another angle, however, that the leagues have to weigh. The horsemen have formally sought to obtain the unredacted versions of the 2014 depositions of high-ranking executives for each plaintiff.

The leagues have protested, insisting there basically are “state secrets” involved that would cause grievous harm if revealed. But when the leagues first filed their sports betting lawsuit in 2012, they signed off on a note that “no documents will be sealed in this case due to the case being of public import.” That could make it difficult for them to prevail on that front now that that case is over.

Furthermore, Florida State sports law professor Ryan Rodenberg has concluded that there is ample precedent for the depositions to be fully unsealed.

What a judge said

In her majority ruling in September, Judge Marjorie Rendell pondered the ramifications of that ruling that the horsemen were improperly prevented from offering sports betting:

“The entire concept of ‘wrongfully enjoined’ envisions a look back from the ultimate conclusion of the case: Should the enjoined party have been permitted to do what it was prevented from doing? Thus, whether a party was wrongfully enjoined depends upon the final judgment on the merits.

“Did it turn out that [the horsemen]  had the right all along to do what they were enjoined from doing? There is no way that the answer to that question could be ‘no.’”

That sounds like one nod to the horsemen in favor of substantial damages. So both sides have a lot to think about in the next two weeks.

Photo by Dragon Images / 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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