Congress Blocks Slaughter of Horses in United States (Again)

The resumption of commercial horse slaughter in the United States was blocked on Friday, January 17, when President Obama signed a congressional budget bill that removed funding for USDA inspection of horse slaughter plants. This action on the part of Congress and the President effectively takes horse slaughter in this country off the table for now.

A similar federal budget measure passed in 2006 shuttered the industry in 2007. Money for federal inspections of horse meat was restored in 2011, and several proposed plants have received USDA permits. However, court orders in suits brought by animal rights activists and others have stopped any horse slaughter plants from opening.

The latest of these lawsuits is a suit in New Mexico state court brought by New Mexico Attorney General Gary King. King sued Valley Meat Co., a permit holder who wished to convert its former beef slaughterhouse into an equine processing plant, after the U.S. Court of Appeals for the 10th Circuit ruled that Valley Meat could commence slaughter operations. That suit is still pending. 

Blair Dunn, attorney for Valley Meat and another plant in Missouri, told news sources, “I don’t see them opening now. No matter what, they are not going to violate the law.” However, Dunn says Valley Meat will continue to wage a legal fight to convert its cattle processing plant to the slaughtering of horses.  According to Dunn, the federal move to withhold money for meat inspections could cause U.S. trade violations.  Valley Meat is also trying to disqualify Judge Matthew Wilson, the New Mexico district judge presiding over the state court suit, because of comments posted by horse slaughter opponents on a Facebook page for the judge’s election campaign.

Related Posts:

10th Circuit Allows Horse Slaughter Plants to Commence Operations

Humane Society, et al File Appeal after Federal Judge Dismisses Horse Slaughter Suit

Federal Court Blocks Horse Slaughter at Two Plants

10th Circuit Allows Horse Slaughter Plants to Commence Operations

In an order dated December 13, 2013, a copy of which can be downloaded here, the United States Court of Appeals for the Tenth Circuit denied an emergency motion for injunction pending appeal filed by the Humane Society of the United States (HSUS) and other animal rights groups. The motion sought to halt horse slaughter operations at three U.S. plants pending the final resolution of the animal rights groups’ appeal.

The HSUS and other animal rights groups had originally filed suit in New Mexico federal court seeking to permanently enjoin officials from the United States Department of Agriculture (USDA) and the Food Safety Inspection Service (FSIS) from carrying out federal meat inspections at three horse slaughter facilities. The district court entered a temporary restraining order that halted slaughter operations while the merits of the case could be decided. Ultimately, the district court rejected the arguments of the animal rights groups, denied their request for permanent injunctive relief, and dismissed their case with prejudice.

The animal rights groups appealed the case to the 10th Circuit court of appeals, and sought an emergency injunction staying horse slaughter operations until the appeal could be heard. The 10th Circuit denied the animal rights groups’ motion, holding that the animal rights groups failed to establish a likelihood of success on appeal or irreparable harm to the plaintiffs. 

Horse slaughter operations may now commence under the trial court’s decision, even though the merits of that decision are currently being considered by the 10th Circuit. Operations may continue indefinitely unless and until the 10th Circuit, after considering full merits briefing and oral argument, ultimately ends up siding with the animal rights groups.

Related Posts:

Humane Society, et al File Appeal after Federal Judge Dismisses Horse Slaughter Suit

Federal Court Blocks Horse Slaughter at Two Plants

Case Information: Front Range Equine Rescue, et al v. Tom Vilsack, et al, Cause No. 1:13-cv-00639-MCA-RHS (D.N.M. Nov. 1, 2013); Front Range Equine Rescue, et al v. Tom Vilsack, et al, Cause No. 13-2187 (10th Cir.)

Humane Society, et al File Appeal after Federal Judge Dismisses Horse Slaughter Suit

As discussed in this prior post, the Humane Society of the United States and a variety of other groups and individuals brought suit to permanently enjoin the slaughter of horses at two plants that had been granted Food Safety Inspection Service permits. 

On November 1, 2013, after originally granting a temporary injunction staying operations at the plants, U.S. District Judge Christina Armijo denied the plaintiffs’ request for permanent injunction and dismissed the lawsuit with prejudice. A copy of the court’s Memorandum Opinion and Order can be downloaded here. Accordingly, the temporary injunction previously issued by the court expired, allowing horse slaughter operations to commence at the plants who had been issued permits.

On November 1, 2013, the Humane Society of the United States, et al, appealed the case to the Tenth Circuit Court of Appeals, and moved for a temporary stay of Judge Armijo’s Memorandum Opinion and Order. On November 4, 2013, the Tenth Circuit temporarily stayed the district court's Memorandum Opinion and Order, to allow the court "adequate time to consider the matter.” The Tenth Circuit’s order can be downloaded here

Until the Tenth Circuit acts, the horse slaughter plants currently holding permits cannot commence operations. 

Valley Meat Company’s attorney, Blair Dunn, told The Horse that death threats had been made against Valley Meat Company’s owners.

Case InformationFront Range Equine Rescue, et al v. Tom Vilsack, et al, Cause No. 1:13-cv-00639-MCA-RHS (D.N.M. Nov. 1, 2013); Front Range Equine Rescue, et al v. Tom Vilsack, et al, Cause No. 13-2187 (10th Cir.)

Federal Judge Rules Twinspires.com Cannot Accept Bets from Texas

The United States District Court of the Western District of Texas (Austin Division) recently held that Churchill Downs subsidiary website, Twinspires.com, is prohibited from accepting wagers from persons living in Texas.

Churchill Downs brought action against the Texas Racing Commission seeking a declaration that the Texas Racing Act’s in-person requirement, under which only a person inside the enclosure where a race meeting was authorized may wager on a race, violated the dormant Commerce Clause. The dormant Commerce Clause precludes states from enacting laws or regulations that excessively burden interstate commerce. 

The Texas Racing Commission is a state agency charged with enforcing the statutory and regulatory provisions of the Texas Racing Act. Churchill Downs moved for permanent injunction to prevent the Texas Racing Commission from enforcing the Act to prohibit Texans from placing wagers on Twinspires.com. The in-person requirement has been on the books in Texas since 1986.  Nevertheless, Twinspires.com continued to accept wagers from Texans through its website.

The court, Judge James R. Nowlin, presiding, found that the Act did not violate the dormant Commerce Clause and entered judgment for the Texas Racing Commission. With respect to the legitimate state interests furthered by the in-person requirement, Judge Nowlin remarked,

[E]very regulatory challenge that gambling has always posed to the state has been made that much more daunting by the advent of the internet. Gambling has always been addictive, but before the internet, at least the addicts had to go to the trouble of driving somewhere to place his bet. The internet allows the addict to get his fix 24/7/365, all without leaving the comfort of his own home . . . Along the same lines, underage patrons looking to get in on the action have always tried to evade detection with fake IDs and the like, but with the advent of the internet, all they need to place a bet is Dad’s credit card and date of birth . . . Finally, gambling—especially horse racing—has always attracted crooked individuals hoping to clean their money. With the advent of the internet, though, criminal elements are better able to hide behind the anonymity afforded by the computer screen.”

Churchill Downs has appealed this case to 5th Circuit Court of Appeals.

Case InformationChurchill Downs, Inc. v. Trout, No. 1:12-CV-00880-JRN, 2013 WL 5799694 (W.D. Texas Sept. 23, 2013).

Court Will Enter Injunction Forcing AQHA to Register Clones & Their Offspring

On August 12, 2013, an evidentiary hearing was held on Plaintiffs’ request for attorneys’ fees and for injunctive relief that would require the AQHA to register clones and their offspring. 

Following the hearing, U.S. District Judge Mary Lou Robinson informed counsel that she would grant an injunction requiring the AQHA to register horses produced by cloning and their offspring.

On August 14, 2013, the court entered an order (which can be accessed here) setting forth specific changes and additions to AQHA rules and regulations, which, according to the order, the judge is considering for inclusion in the injunction. The order requires that any objections to the proposed rule changes be submitted by noon on August 19, 2013.

The court has not yet ruled on Plaintiffs’ request for nearly $900,000 in attorneys’ fees. The court ordered the Plaintiffs to furnish their billing statements to AQHA, and also ordered AQHA to file any objection to the request for attorney’s fees, by August 14, 2013. A copy of AQHA’s objection to Plaintiffs’ attorneys’ fees, filed yesterday, can be found here.  

AQHA’s primary objection to Plaintiffs’ fee request is the fact that the jury did not award any damages to Plaintiffs. Plaintiffs had sought $5.7 million in damages and sought to treble those damages under the antitrust laws for a total of $17.1 million. However, the jury awarded Plaintiffs zero damages.

At this point, the court has not yet entered final judgment in favor of Plaintiffs. According to this press release, AQHA will file a Motion for Judgment as a Matter of Law after entry of final judgment. In that motion, AQHA will request that the Court enter a take nothing judgment in favor of AQHA based on the fact that the jury’s verdict was not supported by the evidence. Should the court not grant AQHA’s motion, AQHA will file a notice of appeal thereby starting the appellate process.

Case Information: Abraham & Veneklasen Joint Venture, et al v. American Quarter Horse Association; Cause No. 2:12-CV-00103-J in the U.S. District Court for the Northern District of Texas (Amarillo Division)

Related Posts:

Federal Jury Rules Against AQHA in Cloning Suit

Federal Lawsuit Alleges AQHA Cloned Horse Registration Policy Violates Antitrust Law

Federal Court Blocks Horse Slaughter at Two Plants

On August 2, 2013, judge Christina Armijo of the United States District Court for the District of New Mexico in Albuquerque granted a 30-day temporary restraining order preventing the commencement of horse slaughter at two plants—Valley Meat Co. LLC in Roswell, New Mexico and Responsible Transportation in Sigourney, Iowa.

Earlier this summer, both of those plants had received Food Safety Inspection Services (FSIS) permits, which allow placement of USDA personnel at processing plants to carry out horsemeat inspections. Horse processing was slated to begin at both plants on August 5, 2013.

This would have been the first time horse slaughter had taken place in the U.S. since 2007, when a combination of court rulings and legislation caused the closure of the last two domestic processing plants operating in Illinois and Texas.

The lawsuit against the slaughter plants was brought by the Humane Society of the United States and other groups who oppose horse slaughter.

According to some sources, the court’s ruling was based on an allegedly flawed environmental review of one or both of the plants. Further, the court has reportedly prohibited USDA inspectors from further involvement with the plants. 

Arsonists set fire to Valley Meat Company’s plant on or around July 30, 2013, just before the plant was scheduled to commence operations. “They tried to burn the place down,” Valley Meat Co. owner Rick De Los Santos said in reference to opponents who have been making threats against the company over the past year.

A bond hearing is scheduled for today, whereby the court will determine the amount of money the plaintiffs must put up as a bond to cover the plants’ economic losses, in the event that plaintiffs lose the suit.

Federal Jury Rules Against AQHA in Cloning Suit

Today, a 10-person jury in the U.S. District Court for the Northern District of Texas, Amarillo Division ruled that AQHA Rule REG106.1, which prohibits the registration of cloned horses and their offspring in AQHA’s breed registry, violates federal and state anti-trust laws. The jury awarded no damages.

In a statement published today on AQHA’s website, AQHA Executive Vice President Don Treadway, Jr. said,

When individuals with shared interests, goals and values come together to form a voluntary association to serve a common purpose, the members have a right to determine the rules for their association. The wisdom of our membership –which is largely not in favor of the registration of clones and their offspring—has not been upheld by this verdict.

Whether nor not clones will be able to be registered with the AQHA in the foreseeable future is still up in the air. According to AQHA President Johne Dobbs,

We will meet with our legal counsel and executive committee regarding our appeal options in continuing to fight for our members’ rights and announce our decision in that regard in the near future.

The plainitffs in the case have requested injunctive relief, in which they have asked the court to order the AQHA to register their cloned horses.  They have also requested that the court order the AQHA to pay at least a portion of their legal fees.  A hearing on the injunctive relief and fees request has not yet been held.  The jury’s verdict has not been reduced to a final judgment, nor has the court issued an opinion in the case at this time.  

Case InformationAbraham & Veneklasen Joint Venture, et al v. American Quarter Horse Association; Cause No. 2:12-CV-00103-J in the U.S. District Court for the Northern District of Texas (Amarillo Division)

Related Post

Federal Lawsuit Alleges AQHA Cloned Horse Registration Policy Violates Antitrust Law

Court Affirms Judgment Allowing Boarders to Move Horses Due to Stable Employee's Smoking in Barn

On July 18, 2013, the Austin Court of Appeals issued a memorandum opinion affirming in part a trial court judgment which held that a stable employees’ smoking while working in the barn was a material breach of the boarding agreement, allowing several boarders to move out without notice.

After a boarder saw and photographed a stable employee smoking while working in the barn, several boarders removed their horses from the stable. They did not give 30 days notice before leaving, and did not pay for the month after removing their horses as prescribed by their boarding contract with the stable.

The court of appeals upheld the trial court’s decision that the employee’s smoking in the barn was a material breach of the agreement that excused the boarders from further compliance with the boarding contract. In its materiality analysis, the court pointed out that the stable owner agreed when testifying that her “sole job in taking in other’s animals for boarding is to give those animals a safe place to live,” and agreed that “fire is a danger to the care and safety of horses.” Further, the stable's barn rules, which were incorporated into the boarding contract by reference, included the statement, “No smoking in the barns”.  The smoking ban was included in a rule entitled “Safety”. The court found that this general prohibition banned everyone in the barn from smoking, not just the horse owners.

The court reversed and remanded the remainder of the suit, which had to do with the stable owner's riding instructor agreement with Amber Ross. Ross had given riding lessons at the stables for the boarders involved in the suit who had left the barn with their horses. Ross’s lessons were covered by a written riding instructor agreement that required Ross to pay a fee when she taught a lesson at the stables. Ross did not pay the stable owner any fees for lessons conducted during March 2009, though there was evidence that Ross gave lessons during that month. The court of appeals reversed the trial court’s decision that Ross did not breach the riding instructor agreement, and remanded that portion of the case to the trial court to determine the amount of fees Ross owed to the stable owner.

Take Aways:  Owners of boarding stables should take care to ensure that all stable employees, as well as friends and guests of the stable ower, comply with all written rules and regulations prescribed by the stable.  If a stable employee or a guest or friend of the stable owner violates barn rules, boarders may be legally entitled to terminate their boarding contracts immediately under certain circumstances.  This may be true even if the stable's rules do not mention whether or not the stable owners are subject to the rules.

Case InformationRamaker v. Abbe, 2013 WL 3791491 (Tex. App.—Austin, Jul. 18, 2013)(mem. op.)

Guest Post: Sixth Circuit Affirms $65 Million Plaintiffs' Judgment in Case Involving Fraudulent Mare-Leasing Scheme

The latest case featuring ClassicStar and GeoStar’s mare-leasing scheme featured the defendants leasing out mares they didn’t own and leasing less-valuable quarter horses and misrepresenting them to be Thoroughbred mares. On July 18, 2013, the Sixth Circuit Court of Appeals affirmed a $65 million award to victims of the scheme. In re ClassicStar Mare Lease Litig., --- F.3d ---, 2013 WL 3476220 (6thCir. July 18, 2013). Guest blogger B. Paul Husband wrote about ClassicStar’s litigation with the IRS in 2011.

In the recent case, a group of investors sued the ClassicStar defendants in federal district court in Kentucky. They alleged that the defendants had violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”) by persuading them to invest in the mare-leasing program in order to profit from various tax deductions. They also asserted common-law fraud and breach-of-contract claims.

The basic tax concept was that investors would lease a breeding mare for a single season. The mare would be paired with a stallion for breeding purposes, and investors could keep any resulting foals. If investors kept their foals for at least two years before selling them, the sale would be taxed at the lower capital-gains tax rate.

The district court granted summary judgment for the plaintiffs, ruling that the undisputed facts established violations of the RICO statute, as well as fraud and breach of contract. The Sixth Circuit affirmed, noting that the investors did not know “that the assets which formed the basis of the touted tax deductions were dramatically undervalued and, in some cases, wholly fictitious.” 

The appellate court made the critical point that, “[a]lthough investors were repeatedly told that they were leasing actual horses, ClassicStar never owned anywhere near the number of horses purportedly being leased.” In other words, the defendants leased out horses they didn’t own or that didn’t exist. 

The court continued, “[t]o disguise the shortfall and convince investors that they were purchasing interests in actual horses, Defendants substituted less valuable quarter-horses for the Thoroughbreds that were supposed to be part of the packages, and in many cases, simply did not name the horses that investors believed they were purchasing.”

The Sixth Circuit affirmed the award of $49.4 million plus $15.6 million in prejudgment interest. The damages were three times the amount of the plaintiffs’ investments, as treble damages are available under the RICO statute. Collecting the judgment, however, may be complicated by ClassicStar’s bankruptcy and extensive other litigation against ClassicStar.

About the Author:   Toby Galloway is a partner in the Fort Worth office of Kelly Hart & Hallman LLP.  Before joining Kelly Hart, he served as an attorney for the United States Securities and Exchange Commission (the "SEC") for over 11 years.  Find Toby's full biography here.

Petition For Review Denied in Hilz v. Riedel

Today, the Supreme Court of Texas denied review in Hilz v. Riedel, a Fort Worth Court of Appeals decision reversing a summary judgment granted pursuant to Chapter 87 of the Texas Civil Practice & Remedies Code. 

As such, the Fort Worth Court of Appeals' opinion will stand and the case will proceed to trial on remand to the trial court.

A detailed discussion of the Fort Worth Court of Appeals' opinion is contained in this prior post.