Churchill Downs Seeks Dismissal of Gamblers' KY Lawsuit

A lawsuit filed in state court in Louisville, Ky., by bettors allegedly wronged by the outcome of the 2021 Kentucky Derby Presented by Woodford Reserve (G1) at Churchill Downs has been removed to federal court and is now facing a motion to dismiss.

Churchill Downs, named as a defendant in the suit along with trainer Bob Baffert, filed the motion March 22. Plaintiffs in the case, led by Anthony Mattera, seek class-action status and millions of dollars in damages for losing tickets that did not have Baffert-trained Medina Spirit as the winner of the Derby. They want compensation from Churchill and Baffert following Medina Spirit's subsequent disqualification after test results showed him having the corticosteroid betamethasone in his system on race day. 

Although Mandaloun , second across the wire, was declared by stewards last month as the winner of the Kentucky Derby, that ruling did not alter official payoffs—standard procedure for disqualifications involving medication violations.

The complaint, filed by Louisville attorney Will Nefzger on behalf of 19 bettors, alleges 32 previous medication violations against Baffert and claims, among other things, Churchill Downs was negligent in allowing Baffert to enter Medina Spirit in the Derby, and that Churchill should have conducted pre-race drug testing that presumably would have shown Medina Spirit was out of compliance with regulations.

Baffert's attorneys said earlier this year that pre-Derby treatment records show Medina Spirit was prescribed Otomax, a betamethasone valerate-containing ointment, which they said was to treat a skin condition the colt had.

Churchill argues that plaintiffs' claims, mostly grounded in common law theories of negligence, breach of contract, and unjust enrichment, cannot prevail when their rights are governed by state statutes and regulations that bar common law claims.

After pointing out that stewards, not Churchill Downs, decided the order of finish of the race, triggering pari-mutuel payoffs, the motion cites as dispositive the "rule of finality" set out in Kentucky Administrative Regulations and a case decided in 1990 by the United States Sixth Circuit Court of Appeals, White v. Turfway Park Racing Association. In short, says Churchill Downs, a bettor cannot cash bets outside the governing regulations.

In the motion signed by Jeff Moad of Stites and Harbison, Churchill also contests the complaint:

• As conjecture and hypothetical, the supposition that the horses that followed Medina Spirit across the finish line in the Derby would have finished in the same order had Medina Spirit not run.
• As ignoring a state statute, KRS 230.760, granting a racing licensee immunity from damages for exercising its duties and discretion in the absence of bad faith, malice, or improper motive.
• Because it assumes a contract that does not exist between Churchill and bettors that would compensate bettors based on an order of finish changed after the race was declared official.
• In that the facts of the case do not fit the elements of the Kentucky Consumer Protection Act, and
• Because its claim of unjust enrichment does not take into account that Churchill Downs did not unjustly retain any benefit from the transactions that followed the Derby.

A case substantially the same was filed by attorney Nefzger months ago, but it was well before stewards disqualified Medina Spirit. That case was voluntarily dismissed.

According to court records, a similar suit filed by Michael Beychok and others against Baffert in a New Jersey federal court is pending a decision on Baffert's motion to dismiss after being briefed by the parties.