Many Options Remain in HISA Constitutionality Cases

A ruling Nov. 18 by a federal court of appeals finding the Horseracing Integrity and Safety Act facially unconstitutional may not turn the horse racing world upside down anytime soon, and the ultimate outcome of the ruling could face more scrutiny than a dead heat in the Kentucky Derby.

Proceedings at the higher levels of the nation's judicial system move with deliberation. Depending on what happens, it's possible a resolution of the HISA case could take months while moving through a variety of channels. The Fifth Circuit's invalidation of a federal law establishing a new regulatory program is a call of considerable weight, and one that has the potential for much more scrutiny.

The opinion holding HISA unconstitutional cannot take effect unless and until a creature called a mandate is issued by the Fifth Circuit. All sources agree the earliest that can happen is Jan. 10, 2023.

Among the options held by HISA and the Federal Trade Commission, an agency of the United States government, are a motion for reconsideration by the three-judge panel that made the ruling, but it's highly unlikely this approach would do anything other than buy a little time.

Another approach would be to ask for what's called an en banc review of the case by the entire group of judges sitting on the Fifth Circuit. There's plenty of time to do that before Jan. 10, and if the request is granted, the mandate would not take effect while an en banc review is pending. The en banc review would essentially restart the process that began after Judge James Wesley Hendrix of the U.S. District Court for the Northern District of Texas declared HISA constitutional. It is his decision that was reversed by the Fifth Circuit three-judge panel.

If and when a mandate is about to be entered by the Fifth Circuit, attorneys for HISA and the FTC have the option to ask the U.S. Supreme Court to enter a stay order pending review by the high court. If granted, that would brake the Fifth Circuit's ruling.

Another source of scrutiny for the constitutionality of HISA is the Sixth Circuit Court of Appeals based in Cincinnati, which is considering an appeal of a ruling finding HISA constitutional made in U.S. District Court for the Eastern District of Kentucky by Judge Joseph Hood. Oral arguments are set for Dec. 7.

Hood found that the HISA legislation allows the FTC sufficient "authority and surveillance" over the Authority to ensure that it functions as a private entity that is subordinate to the FTC, and not the other way around, in the rule-making process. Hendrix essentially made the same type of ruling as Hood. The Fifth Circuit said Congress got the cart before the horse, making HISA the entity with "the whip hand."

Should the Sixth Circuit side with Hood, and should the Fifth Circuit not change its position, the conflicting rulings would set up a classic situation in which two circuit courts of appeal with different outcomes on the same legal issue place the U.S. Supreme Court in position to, essentially, break the tie.

Other scenarios are possible. Both circuits could eventually rule the same way. The Supreme Court might or might not review those outcomes.

While these matters make their way through the courts, it's possible that the enabling legislation could be revisited to cure the defects identified by the Fifth Circuit's interpretation of the legislation. While some may see that option as unlikely in a divided Congress, the original legislation had backing from both sides of the aisle.

The saying that politics makes strange bedfellows may never be truer than in this case, as evidenced by the various political backgrounds of some of the players.

Hendrix was nominated to his seat on the district court in Texas by former President Donald Trump and confirmed by the Senate. Before that, Hendrix was also nominated by former President Barack Obama, but the nomination stalled in committee. The decision striking down HISA was penned by a conservative, Judge Stuart Kyle Duncan, who was nominated to the court by Trump. HISA was passed by the U.S. House of Representatives and Senate with support from both sides of the political aisle and signed into law by Trump.

Overall, the Fifth Circuit, which is based in New Orleans, has a conservative makeup if viewed through the lens of the presidents who nominated them before they were approved by the U.S. Senate.

The court's website lists 25 sitting judges, nine of whom are on senior status. The judges on senior status retain the same rights and privileges as the other judges if they carry at least a 25-percent caseload.

Of the 16 judges not on senior status, two were nominated by Ronald Reagan, two by Bill Clinton, four by George W. Bush, two by Obama and six by Trump. Of the nine senior judges, Jimmy Carter nominated one, Reagan four, George H.W. Bush two, Clinton one, and George W. Bush one. It's unclear to what extent senior judges participate in en banc decisions.

Regardless of where HISA stands after this is all said and done, there are numerous twists, turns, and outcomes that can occur in the coming months.