The American Quarter Horse Association (AQHA) has failed to convince a Texas court to support its effort to ban cloned horses and their offspring from being the registration of cloned horses in the organization’s breed registry.
In a verdict rendered on July 28, a 10-person jury in the U.S. District Court for the Northern District of Texas, Amarillo Division, ruled in favor of the plaintiffs, Abraham & Veneklasen Joint Venture et al. in their antitrust suit against AQHA. The plaintiffs alleged 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. However, while the jury determined that the AQHA’s attempted ban had violated antitrust laws, it awarded no damages to the plaintiffs despite the latters’ demand for $5.7 million dollars in damages at trial.
As we reported here July 10, in April 2012, Jason Abraham of Canadian, Texas, and two of his related companies, Abraham & Veneklasen Joint Venture and Abraham Equine Inc., and Gregg Veneklasen of Amarillo, had filed a lawsuit against the AQHA in the United States District Court for the Northern District of Texas in Amarillo, seeking to force the association to repeal its Rule 227(a) (now Rule REG106.1) prohibiting cloned horses and their offspring to be eligible for registration with AQHA. As noted above, the plaintiffs had also sought monetary damages.
The plaintiffs contention was that Rule 227 created significant competitive disadvantages to AQHA members who own cloned horses and their offspring, as well as to competition and to consumers, that denial of registration impaired a non-registered horse’s ability to compete effectively with registered horses and protected registered Quarter Horses from having to compete with quality unregistered horses, restricted competition and benefits registered horse owners at the expense of owners of cloned Quarter Horses and their offspring. They alleged that the AQHA was knowingly using its monopoly power to preclude and bar competitive entry into the market, and that its “illegal and unreasonable refusal to register Plaintiffs’ Quarter Horses has and will continue to inflict severe competitive handicap on Plaintiffs and preclude Plaintiffs’ entry into the market for high quality registered Quarter Horses.”
At the trial, the AQHA and its legal team argued that a decision favoring the plaintiffs would open the way for cloned horses to compete in AQHA sanctioned races in the U.S. and elsewhere, and defended the AQHA board of directors’ right, acting on behalf of the membership, to decide whether horses produced by cloning ought to be eligible for registration, asserting that the lawsuit was an attempt to force AQHA to register clones against the wishes of the general membership.
The AQHA’s stated position was that when people with shared interests, goals and values come together to form a voluntary private association to serve a common purpose, the members have a right to determine the rules for their association, and that setting rules around registering American Quarter Horses and defining the American Quarter Horse breed is key to what AQHA does, noting that AQHA registration rules have always required that only horses resulting from the breeding of a mother and a father (the joining of an egg and a sperm) are eligible for registration.
However, the jury was unconvinced, and decided in favor of the plaintiffs. US District Judge Mary Lou Robinson ruled on Monday that the AQHA is obliged to include cloned horses in their registry, which will, among other things, allow cloned quarter horses to race against naturally bred horses, making the AQHA the first American horse breeding group to register cloned animals. However, the jury awarded no damages’ and Judge Robinson denied the plaintiffs’ request that the AQHA pay their $900,000 attorney fees.
“We are deeply disappointed by the outcome of this trial,” said AQHA Executive Vice President Don Treadway, Jr in a statement. “It continues to be our position that our rule prohibiting the registration of clones and their offspring is both reasonable and lawful…. 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,”
“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” commented AQHA President Johne Dobbs.
For their part, the plaintiffs’ attorney http://abcnews.go.com/US/t/story/judge-tells-quarter-horse-group-accept-clones-19940783?ref=commented to the Associated Press that they are “thrilled” with the court’s decision, adding that: “It is definitely time.”
Cloning in this context refers to taking tissue cells from a horse — even from a dead horse — and injecting it into an egg to make a copy of that horse. The AQHA contends that clones don’t have parents, and that cloning is not equivalent to breeding, observing that a number of other breed registries, including the Jockey Club and the American Kennel Club, do not register clones, and that a survey of the AQHA membership showed that an overwhelming 86% of the members oppose cloned horses being registered with AQHA, that since the first cloning proposal in 2008 not a single AQHA member attending the convention membership business meeting has spoken or voted at such meeting in favor of registering clones or their offspring and not a single member of the Board of Directors attending the final Board meeting has spoken or voted at such meeting in favor of registering clones or their offspring.
Arguing that when people buy a registered American Quarter Horse, they expect AQHA to be able to tell them exactly who a horse’s mother and father are, the AQHA affirms that since its inception in 1940, American Quarter Horse breeders have been in the business of working to make each generation of horses better than the generation before, and that it is a fundamental, shared belief among the overwhelming majority of AQHA members that the art and science of breeding is the way to improve the breed, arguing that cloning doesn’t improve the breed but rather just makes “Xerox copies” of the same horses, and has the potential to intensify narrowing of the gene pool resulting in the worsening of known and unknown genetic diseases or the creation of new genetic diseases. The AQHA concedes that the process of collecting an egg and a sperm and combining them has been accepted by association members for quite some time, but that the concept of creating a new horse by harvesting a cell from a horse’s skin or other body part and replicating the horse through cloning remains a concept most members reject.
The parties appeared before Judge Robinson on Monday to argue the issues of the plaintiffs’ claims for attorney fees and for equitable relief in the form of an injunction requiring AQHA to register clones and their offspring. In addition to the legal fees request, the plaintiffs sought an injunction requiring the unconditional registration of clones and their offspring in the AQHA registry.
At the conclusion of the hearing, Judge Robinson announced that she would enter an injunction requiring AQHA to register clones and their offspring, and instructed the parties to confer and determine if any agreements concerning what rules would be necessary for this relief were needed, and to file any briefs no later than Wednesday August 14.
Regarding the attorney fees, the Judge rendered no ruling, further instructing the plaintiffs to produce all attorney fee billing statements by the end of the day and ordering that the AQHA enter any briefs on the subject of plaintiffs’ requested award of attorney fees by August 14, 2013. she also ordered the plaintiffs to submit proposed findings of fact and conclusions of law by the August 14 deadline as well.
“As announced on August 1, and referenced in its August 9 Brief on Equitable Relief and Attorney Fees, AQHA will continue to take any and all necessary legal action in seeking to have the verdict of the jury and any judgment entered by the Court in favor of plaintiffs reversed,” affirmed the AQHA’s Don Treadway, adding: “AQHA will continue to fight for its members’ rights.”
The AQHA statement also says it is expected that following the entry of a judgment in favor of plaintiffs AQHA will proceed with filing a Motion for Judgment as a Matter of Law in which AQHA will request the Court enter a take nothing judgment in favor of AQHA based upon their contention that the jury’s verdict was not supported by the evidence entered at trial.
Counsel for AQHA urged the court to deny the plaintiffs’ requests and to enter judgment as a matter of law in favor of AQHA due to plaintiffs’ alleged:
– Failure to establish the existence of a conspiracy to prohibit registration of clones and their offspring;
– Failure to establish the existence of a properly defined antitrust market consisting of “elite” Quarter Horses;
– Failure to establish that Rule REG106.1 has caused any harm to the alleged market through a constraint on the supply of “elite” Quarter Horses;
– Failure to establish that Rule REG106.1 constitutes an unreasonable restrain on trade, such that the anticompetitive effects of the rule outweigh the legitimate justifications for the rule;
– Failure to establish that AQHA possesses monopoly power in the alleged market; and
failure to establish that Rule REG106.1 constitutes exclusionary conduct that is inconsistent with competition on the merits and that has the potential for making a significant contribution to AQHA’s monopoly power.
Counsel for AQHA further argued that to the extent the plaintiffs were entitled to any injunctive relief, which AQHA denied, then such relief should be limited to only the registration of cloned mares, and more specifically that any equitable relief be limited so as to only allow for the registration of cloned mares that are free of genetic diseases and that such clones be listed in a Clone Supplement for breeding purposes only.
AQHA counsel additionally argued that for parentage verification purposes, the mitochondrial DNA profile of the clone must be different than the mitochondrial DNA profile of the original mare and all other previously registered clones of the same mare. Finally, AQHA counsel argued that the registration of the offspring of clones and their descendants be listed in either a Clone Numbered Registry or Clone Appendix registry as determined by AQHA and its members and Stud Book Committee, and that AQHA should retain the authority to craft whatever rules necessary for dealing with the registration of clones as opposed to the plaintiffs’ request for an extensive set of new rules dealing with the clone registration issue.
With respect to attorneys’ fees, AQHA’s attorney argued that the court should deny plaintiffs’ request for fees because plaintiffs had not produced legally sufficient evidence at trial to establish an antitrust violation. Further, the jury in its verdict awarded no damages to the plaintiffs. Therefore, should the Court decide to award attorneys’ fees then such award should be significantly reduced in keeping with the jury’s award of no damages.
A motion is due no later than 28 days following the entry of a signed final judgment by the Court. Should the court not grant AQHA’s Motion for Judgment as a Matter of Law, then AQHA says it will file a notice of appeal thus beginning the appellate process. AQHA will continue to update its membership and directors with developments in the case.
You can find more information about the cloning lawsuit on the AQHA the Cloning Lawsuit Resources pages:
The text of ABRAHAM & VENEKLASEN JOINT VENTURE, ABRAHAM EQUINE, INC. and JASON ABRAHAM Plaintiffs, v. AMERICAN QUARTER HORSE ASSOCIATION Defendant is available here:
More information can be found here: