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NJTHA, US Sports Leagues Continue PASPA Damages Legal Battle

The appellate battle between the New Jersey Thoroughbred Horsemens Association Inc. (NJTHA) and the five prominent US sports associations that battled for years to keep the US’s long-running “PASPA” ban against legalized sports betting in place continued this week with the sports leagues’ latest filing asserting they owe no damages to the NJTHA. The leagues also reiterated their lower-court claim that even though PASPA (The Professional and Amateur Sports Protection Act) was later declared unconstitutional, it was still the law of the land.

At stake is as much as $150 million that the NJTHA, the parent entity of New Jersey’s Monmouth Park Raceway, seeks in compensatory and punitive damages from the leagues for its claims of being wrongfully enjoined (prohibited) from offering sports betting at Monmouth Park. The enjoinder went into effect via a temporary restraining order in October of 2014 and was replaced by a permanent injunction 28 days later when US District Court Judge Michael Shipp ruled in New Jersey’s favor.

The $150 million sought by the NJTHA consists of two components: a $3.4 million performance bond put up by the leagues against possible damages inflicted to Monmouth Park while the TRO was in effect, and the remainder of the $150 as continuing damages from late 2014 until PASPA was ruled unconstitutional last year. Among other disputes, the leagues have specifically not accepted the methodology used to calculate those extra damages in the event the leagues are found liable.

Judge Shipp last year again ruled in favor of the five sports leagues — the National Football League (NFL), Major League Baseball (MLB), the National Basketball Association (NBA), the National Hockey League (NHL), and the National Collegiate Athletic Association (NCAA) — in denying, last November, the NJTHA’s initial claim for damages. By and large, this was expected: Despite being a US District of New Jersey district judge, Shipp was viewed as being very sympathetic to the viewpoints of the NFL and the other leagues. Shipp’s brother, Marcel, played for eight seasons as a running back in the NFL, then received assistance from an NFL minority-outreach program for training as an assistant coach once his playing career ended. Marcel Shipp last coached in 2016 for the NY Jets and in 2018 saw domestic-violence charges against him dropped in connection with an incident in Arizona.)

Given Judge Shipp’s near-predetermined decision favoring the leagues, the NJTHA immediately announced its plans to appeal. That US Third Circuit appeal was launched earlier this year, and last month counsel submitted a 69-page filing outlining the major claims, most importantly that several of the sports associations’ top officials lied under oath, and that the leagues tacitly acted in ways that favored legalized sports betting if associated revenue stream went their way.

The league’s response, itself hefty at 46 pages, is a counterattack against the NJTHA’s claims. The leagues rely heavily on Judge Shipp’s lower-court reasoning, writing: “In its decision here, the district court correctly concluded that, in light of the binding precedent by this Court that PASPA was constitutional at the time of the TRO, NJTHA had not been ‘wrongfully enjoined’ within the meaning of [the applicable enjoinder rule].”

The leagues’ response also leans heavily on the constitutionality issue regarding PASPA. In the original “Christie I” case, lower courts upheld PASPA’s constitutionality, and the issue never made it to the US Supreme Court until the “Christie II” case slightly reframed the issue four year later. The NJTHA’s issue is that since PASPA was nullified, then the NJTHA and Monmouth Park are entitled to damages from the first efforts by the league to block New Jersey’s legalization efforts — that is, in 2014.

The leagues claim otherwise. This paragraph from the latest filing sums up the leagues’ viewpoint on the constitutionality issue:

“… the district court acted well within its broad discretion in finding that good reason existed to deny recovery on the bond. Even where an injunction is erroneously entered, the enjoined party is not automatically entitled to recover its costs and damages on the bond. Rather, the district court must consider and evaluate a full range of factors, including the plaintiff’s good faith and any changes in the law since the issuance of the TRO, when determining whether, in the exercise of its discretion, to award the prevailing party costs and damages on an injunction bond. Under the circumstances in this case, which include a change in the law of this Circuit more than three years after the issuance of the TRO, the district court did not abuse its discretion in denying NJTHA any recovery on the bond.”

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