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Jamgotchian v. Indiana Horse Racing Commission

United States District Court, S.D. Indiana, Indianapolis Division

September 20, 2017

JERRY JAMGOTCHIAN, et al., Plaintiffs,


          Hon. William T. Lawrence, Judge.

         This 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.

         I. BACKGROUND

         The 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.

         A 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.

         Indiana, 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 race meet.”[1]

         Section 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.[2]

         Plaintiff 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.

         On 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.


         The Plaintiffs claim that the “claiming jail” established by Section 4(h) violates the dormant Commerce Clause and seek declaratory and injunctive relief.

         The 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).

         When a 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).

         Accordingly, 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 ...

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