In Advance of HISA Appeals, Court Date, Two Sides Hone Arguments

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HISA CEO Lisa Lazarus | Carley Storm

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In advance of oral arguments scheduled Aug. 30 in the United States Court of Appeals for the Fifth Circuit, the two sides involved in the injunction appeal brought by the Horseracing Integrity and Safety Act Authority (HISA) have filed legal briefs that they hope will sway the court to their side of the case.

Both HISA and the Federal Trade Commission (FTC) are defendants in an underlying lawsuit led by the states of Louisiana and West Virginia, plus the Jockeys' Guild, that alleges unconstitutionality and federal rulemaking procedure violations regarding HISA's initial framework of regulations that went into effect July 1.

At issue in the appeal is whether a lower court (U.S. District Court, Western District of Louisiana) erred in preliminarily enjoining HISA regulations that were purportedly harming the plaintiffs. The issuance of that preliminary injunction favored the plaintiffs, but HISA and the FTC appealed it to the higher court.

The Appeals Court then ordered Aug. 8 that with the exception of three specifically contested HISA rules, HISA's legal authority would once again be valid in the two plaintiff states until that court heard oral arguments on the appeal. What happens in the Appeals Court will affect other actions in the lower court related to the underlying lawsuit.

“The district court had jurisdiction over Plaintiffs' claims,” stated an Aug. 19 brief filed by the plaintiffs. “The district court correctly concluded that Plaintiffs have standing because enforcing HISA's rules will inflict direct economic harm on each category of Plaintiff. Beyond that, the Plaintiff States are entitled to special solicitude, and HISA's rules inflict injuries on the States' sovereign, quasi-sovereign, and pecuniary interests.”

The plaintiffs' brief continued: “On the merits, multiple independent and valid grounds support the preliminary injunction. The HISA rules unlawfully dispensed with the requisite notice-and-comment period. Defendants' failure to provide for adequate notice and comment was not harmless given the significant changes these rules bring about for Plaintiffs, their members, and their citizens who raised substantive concerns that the FTC failed to take into account when it rubberstamped HISA's proffered rules…

“Beyond that, the district court correctly identified substantive flaws with each challenged series of rules–ways that HISA's rules clearly exceed its statutory authority–further amplifying the harms that warrant injunctive relief.

“Finally, the equitable factors support the preliminary injunction because the States cannot recoup their economic losses through an ordinary damages action [and] the public interest lies in ensuring that a private corporation is not unlawfully wielding federal power to implement a regulatory framework unauthorized by federal law.”

Not so, claimed the defendants in their Aug. 23 reply brief.

“Plaintiffs' response falls woefully short of justifying the district court's blunderbuss remedy–a preliminary injunction halting enforcement of all regulations promulgated under HISA at the time Plaintiffs brought this suit,” the defendants stated.

The defendants continued: “For each and every issue, Plaintiffs fail to so much as address critical defects highlighted by Defendants–presumably because they have no meritorious response. Plaintiffs do not even try to meet their burden to show actual and imminent harm for every rule they seek to enjoin, including the three specific rules that both sets of Defendants explained do not present any controversy.

“On the merits, Plaintiffs gloss over the gaping holes in the district court's plainly erroneous notice-and-comment analysis [and] lob a litany of misleading assertions on the assessment methodology…. Plaintiffs offer no meaningful response to the serious countervailing harms the order inflicts on Defendants and the public interest.

“These fatal flaws, independently or taken together, compel reversal of the extraordinary preliminary injunction in its entirety,” the defendants' brief summed up.

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