United States District Court, S.D. Indiana, Indianapolis Division
ENTRY ON MOTIONS FOR SUMMARY JUDGMENT
William T. Lawrence, Judge.
cause is before the Court on the parties' cross-motions
for summary judgment (Dkt. Nos. 16, 32). The motions are
fully briefed and the Court, being duly advised,
GRANTS the Plaintiffs' motion and
DENIES the Defendants' motion for the
reasons set forth below.
relevant facts in this case are undisputed, and the parties
agree that the resolution hinges on issues of law. A claiming
race is “a race in which any horse starting may be
claimed (purchased for a designated amount).” 71 Ind.
Admin. Code 1.5-1-21. In other words, each horse in a given
race can be claimed-or purchased-for an amount that is posted
before the race. The person who wants to claim the horse must
do so at least fifteen minutes before the race's post
time. Any prize money goes to the previous owner. Each horse
in a particular race posts for roughly the same price, which
dissuades owners from entering strong horses to compete
against a weaker field because they risk losing a horse for
less than it is worth. This leveling of the field helps to
ensure interesting, competitive races and fosters greater
excitement for the local horse racing market. Through
claiming races, owners have an effective way of buying and
selling horses, while racetracks enjoy a consistent stable of
horses to race. More races of better quality leads to higher
gambling revenues and a stronger industry.
claiming race typically consists of six to nine horses. In
2016, there were approximately 494 claiming races in Indiana,
and 144 of these races involved a claiming price of $20, 000
or higher. A licensed owner may claim any horse that races in
a claiming race, but a person cannot claim his own horse or
any horse in which the person has a financial or beneficial
interest as an owner or trainer.
like other states, has implemented rules to regulate claiming
races, including 71 Ind. Admin. Code 6.5-1-4. Section 4(h)
establishes what is colloquially known as “claiming
jail, ” which is a temporary limitation on where owners
may race newly claimed horses: “No horse claimed out of
a claiming race shall race outside of the state of Indiana
for a period of sixty (60) days without the permission of the
stewards and racing secretary, or until the conclusion of the
4(h) has been interpreted by the stewards and the Indiana
racing secretary as prohibiting the racing of a claimed horse
outside the state of Indiana for a period of sixty days or
until the conclusion of the race meet, whichever is less.
Additionally, Section 4(h) allows horses claimed in Indiana
to be raced outside of Indiana within sixty days if the
Indiana stewards and the racing secretary grant permission to
the owner who claimed the horse. Such permission has been
granted on occasion in the past, but only to allow claimed
horses to race in stakes races.
Jerry Jamgotchian owns more than fifty thoroughbred horses
throughout the country. On June 17, 2016, Jamgotchian claimed
the horse Majestic Angel for $25, 000 in a claiming race at
Indiana Grand in Shelbyville, Indiana. Jamgotchian then
entered Majestic Angel into a July 17, 2016, race at
Mountaineer Racetrack in Chester, West Virginia. Shortly
after that race, Indiana steward Tim Day became aware that
Jamgotchian had raced Majestic Angel in West Virginia. Day
informed the West Virginia stewards that Majestic Angel was
not cleared to race outside Indiana because it had been fewer
than sixty days since Majestic Angel was claimed in an
Indiana claiming race and Majestic Angel had not been granted
permission by the Indiana stewards and the racing secretary.
August 3, 2016, Jamgotchian claimed the horse Found a Diamond
in a claiming race at the Indiana Grand Racetrack. On August
11, 2016, Jamgotchian claimed the horse Tiz Dyna in a
claiming race at the Indiana Grand Racetrack. On August 26,
2016, Jamgotchian called the Indiana stewards seeking
permission to run Found a Diamond and Tiz Dyna in a
non-stakes race outside of Indiana. Each horse was still in
claiming jail, as Jamgotchian had not had either for sixty
days. The Indiana stewards denied Jamgotchian's request.
Plaintiffs claim that the “claiming jail”
established by Section 4(h) violates the dormant Commerce
Clause and seek declaratory and injunctive relief.
Commerce Clause gives Congress the power to regulate commerce
“among the several States.” U.S. Const. art. I,
§ 8, cl. 3; see Gibbons v. Ogden, 22 U.S. 1, 9
Wheat. 1, 6 L.Ed. 23 (1824); Willson v. Black Bird Creek
Marsh Co., 27 U.S. 245, 2 Pet. 245 (1829). While the
clause expressly grants power to Congress, it also has an
implicit or “dormant” dimension: “Although
the Clause thus speaks in terms of powers bestowed upon
Congress, the Court long has recognized that it also limits
the power of the States to erect barriers against interstate
trade.” Lewis v. BT Inv. Managers, Inc., 447
U.S. 27, 35 (1980).
state directly regulates interstate commerce, it
“exceeds the inherent limits of the enacting
State's authority and is invalid regardless of whether
the statute's extraterritorial reach was intended by the
legislature.” Healy v. Beer Inst., Inc., 491
U.S. 324, 336 (1989). Courts primarily have been concerned
with state regulations that “‘benefit in-state
economic interests by burdening out-of-state competitors,
'” or so-called “‘economic
protectionism.'” Dep't of Revenue of Ky. v.
Davis, 553 U.S. 328, 337-38 (2008) (quoting New
Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273-74
(1988)). “Discriminatory laws motivated by
‘simple economic protectionism' are subject to a
‘virtually per se rule of
invalidity.'” United Haulers Ass'n, Inc. v.
Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330,
338 (2007) (quoting Philadelphia v. New Jersey, 437
U.S. 617, 624 (1978)). “[O]nce a state law is shown to
discriminate against interstate commerce either on its face
or in practical effect, the burden falls on the State to
demonstrate both that the statute serves a legitimate local
purpose, and that this purpose could not be served as well by
available nondiscriminatory means.” Maine v.
Taylor, 477 U.S. 131, 138 (1986) (internal quotation
marks and citations omitted).
the Court first must determine whether Section 4(h)
discriminates against interstate commerce. Oregon Waste
Systems, Inc. v. Dep't of Envtl. Quality of Oregon,
511 U.S. 93, 99 (1994). In this context,
“‘discrimination' simply means differential
treatment of in-state and out-of-state economic interests
that benefits the former and burdens the latter. If a
restriction on commerce is discriminatory, it is virtually
per se invalid.” Id. (citations
omitted). The Court finds that, on its face, Section 4(h)
discriminates against out-of-state racetracks. By prohibiting
horses claimed in Indiana from racing outside of Indiana for
a certain period ...