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Analysis of Brooks, Bulletproof complaint against USTA

February 24, 2010
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Steve Kallas, a New York attorney, longtime Standardbred owner, and correspondent for The Horseman and Fair World magazine who is covering the  trial of David Brooks, offers his analysis of the complaint in Jeffrey Brooks and Bulletproof Enterprises v. the United States Trotting Association et al. 

On Feb. 18, 2010, plaintiffs Jeffrey Brooks (brother of David Brooks) and Bulletproof Enterprises, Inc. (hereafter “Bulletproof,” owner of harness horses that won over $12 million in purses in 2009) filed a federal lawsuit against The United States Trotting Association (“USTA”) and other defendants in federal court in the Southern District of New York.

As many are aware, Jeffrey Brooks’s brother, David Brooks, is currently on trial in a federal court in Central Islip, New York (the Eastern District of New York).  David Brooks, a major owner in harness racing in the past, is charged in a 21-count federal indictment with securities fraud, income tax evasion and other claims. Part of the case against David Brooks is that he paid out millions of dollars through companies, such as DHB Industries, Inc., to pay for his horse operation. 

In the last month, the Ontario Racing Commission barred Jeffrey Brooks, other Brooks family members, and Bulletproof from racing horses in Canada. Shortly thereafter, the United States Trotting Association did the same thing and the New York State Racing and Wagering Board (“The Board” or “The New York Board”) followed suit.
 
As a result, Plaintiffs Jeffrey Brooks and Bulletproof filed this federal lawsuit alleging four causes of action.  Of course, the allegations in the complaint against these five defendants are just that: allegations. To date, nothing has been proven in a court of law.

THE DEFENDANTS

There are five named defendants. Defendant USTA is obviously the national licensing body for harness racing in the United States. Defendant Michael Tanner, according to the complaint, is the USTA’s executive vice president who, on Feb. 2, 2010, signed and issued a “Notice of Ruling” from the USTA that essentially prohibited plaintiffs from racing harness horses in the United States.

There are three defendants who are being sued both individually and in their professional capacity with the New York State Racing and Wagering Board. Defendant John Sabini is described as the chairman of the Board and defendants Daniel Hogan and John Simoni are described as members of the Board. Interestingly, the New York Board itself is not listed as a defendant in this matter.

THE FACTS

As partially described above, the facts are, essentially, that plaintiffs Jeffrey Brooks and Bulletproof have been barred from racing and even selling harness horses in the United States by defendant USTA and, in New York, by defendants who are members of the New York Board. As noted in the complaint, this effectively shuts down Bulletproof as a potential profit-making enterprise. The plaintiffs, in their suit, describe the barring of the plaintiffs from racing horses as “a classic case of guilt by association,” as plaintiff Jeffrey Brooks is the brother of David Brooks, who is being prosecuted out on Long Island.

The complaint points out that all of this was done without any notice or opportunity for plaintiffs to be heard before either the USTA or the New York Board. Indeed, after the filing of this complaint, the USTA issued a stay of its own ruling and there will be a hearing for the plaintiffs before the USTA which is presently scheduled for March 20.

THE FOUR CAUSES OF ACTION

THE FIRST CLAIM

The first claim is a section 1983 civil rights claim against defendants Sabini, Hogan and Simoni of the New York Board. It is the only claim against the New York Board defendants. It alleges that these defendants “have abridged Plaintiffs privileges as citizens of the United States, and have deprived Plaintiffs of their property, without an opportunity to be heard at a meaningful time and a meaningful manner in violation of the Fourteenth Amendment to the Constitution of the United States.”

This first claim seeks estimated damages in the amount of at least $36 million and a permanent injunction against these three defendants from interfering with plaintiffs’ rights to, essentially, race and sell harness horses.

THE SECOND CLAIM

The second claim is, essentially, an antitrust claim against defendants USTA and Michael Tanner, that is, that these defendants “acted in concert” to “effectively exclude Plaintiffs from the harness racing industry.” The result of these actions, according to the complaint, “is to significantly lessen competition” at all harness racing facilities in the U.S. and Canada, “for the benefit of the other officers, directors and members of the USTA and the business enterprises with which they are affiliated.”

This second claim seeks damages in the amount of at least $36 million (which, by statute, can be tripled to at least $108 million) and a permanent injunction against the USTA from interfering with the plaintiffs exercise of their rights pursuant to their licenses.

THE THIRD CLAIM

The third claim is also an antitrust claim against defendants USTA and Tanner for not allowing the plaintiffs to transfer any of their horses (that is, the USTA won’t issue a new registration so that the new owners can race their new horses.). According to the complaint, as a result of refusing to accept such transfers, the defendants “have effectively prevented any such transfers by Plaintiffs, effectively lessening the competition in the sale of pacing and trotting horses in interstate and international commerce.”  This conduct, according to the complaint, “constitutes a concerted refusal by the officers, directors and members of the USTA to deal with Plaintiffs.”

This third claim seeks damages in the amount of at least $36 million (which, by statute, can be tripled to at least $108 million) and a permanent injunction against the USTA from interfering with the Plaintiffs ability to transfer their horses.

THE FOURTH CLAIM

The fourth and final claim is for “tortiously interference with business advantage” against defendants USTA and Tanner. In essence, this claim is that these defendants “tortuously interfered, and continue to interfere, with Plaintiffs future business advantage of agreements with USTA licensed harness racing facilities (including, but not limited to, Yonkers Raceway) to enter pacing and trotting races at those tracks, or in any way dispose of their assets by future sale.”  The complaint states that, on February 3, plaintiffs attempted to enter horses to race at both Yonkers and Monticello.  The trainers of those respective horses were told that plaintiffs could not race in New York.

According to the complaint, this action “was intentional and willful for the purpose of benefiting the officers, directors and members of the USTA … by eliminating a major competitor and making much more of the purse money available to Plaintiffs’ competitors.”

This fourth claim seeks damages in the amount of at least $36 million and also seeks punitive damages of $100 million.

WHAT HAPPENS NEXT?

The five defendants presumably have retained counsel and are probably weighing their options.  At a minimum, defendants will be required to either file an answer or make motions against the validity of the complaint. They may also seek to transfer this case to another jurisdiction, although, since members of the New York State Racing and Wagering Board are involved and entries were rejected at Yonkers Raceway, which is in the Southern District of New York, it would seem that the case will remain with Judge Alvin Hellerstein, the Southern District judge to whom it was assigned.  

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