An appeals court has overturned a ruling that requires the American Quarter Horse Association (AQHA) to accept the registration of clones and their offspring.
The US Court of Appeals for the Fifth Circuit ruled in favor of the association after it launched a challenge to the original lower court ruling, which dates back 18 months.
The case has been monitored by many horse-breed associations, which, like the AQHA, have similar bans in place on the registration of clones.
The appeal centered on an August, 2013, ruling by US District Judge Mary Lou Robinson in which the association was ordered to immediately start accepting the registration of clones.
It followed a jury’s finding in a case heard in Texas that the association’s ban on registering clones violated state and federal antitrust laws.
The pair behind the push to allow the registration of clones are rancher Jason Abraham and veterinarian Gregg Veneklasen.
They took the association to court seeking the repeal of Rule REG106.1 to allow cloned quarter horses and their offspring to be registered, thus enabling them to compete.
A 10-person jury ruled in favor of Abraham and Veneklasen, but awarded no damages. The pair had sought up to $US5 million.
The association, with a membership of more than 270,000, was not required to accept the registration of clones pending the outcome of its appeal.
The Fifth Circuit’s opinion, in reversing the lower court ruling this week, found that Abraham and Veneklasen’s claims against the AQHA failed because their evidence did not prove a conspiracy to restrain trade.
The AQHA was not a competitor in the allegedly relevant market for elite quarter horses, the court ruled.
“We always knew our case was sound,” AQHA executive vice president Don Treadway said.
“Obviously, this decision lifts a huge burden from the shoulders of our association, and we are relieved to finally have a judgment in our favor.
“We have not yet had time to fully absorb the written opinion of the appellate court, but we are grateful for our legal system and for the tremendous support we continue to receive from our valued members and, of course, our employees.”
The AQHA argued in the appeal that the courts should recognize a private association’s right to adopt, administer, and interpret its own rules without judicial intervention.
It argued that Abraham and Veneklasen failed to establish the existence of a conspiracy to prohibit registration of clones and their offspring; failed to establish the existence of a properly defined antitrust market consisting of “elite” quarter horses; failed to establish that the rule in question had caused any harm to the alleged market through a constraint on the supply of elite quarter horses; and failed to establish that the rule constituted an unreasonable restraint on trade.
The three-judge appeals court panel, in its ruling, noted that the AQHA Board adopted the rule which declared cloned horses ineligible for AQHA breed registration at its annual convention in 2003.
Between 2008 and 2013, the AQHA received four requests to change the rule, two of which were made by plaintiffs.
The plaintiffs contended that members of the Stud Book and Registration Committee conspired with the AQHA to prevent cloned horses from being registered as American quarter horses, thus excluded their horses from the market for “elite quarter horses”.
Influential members of the committee were alleged by the plaintiffs to have tainted the committee’s deliberations because their personal economic interests would be harmed by competition with cloned horses, especially in breeding and racing.
The plaintiffs articulated a plausible motive for anticompetitive activity, the court ruled, but the principal questions on appeal were whether they proved an actual conspiracy to restrain trade or illegal monopolization by the AQHA of breed registration for the “elite quarter horse”.
The plaintiffs had produced only circumstantial evidence in their bid to prove a conspiracy, the court said.
The court found that reasonable jurors, in sum, could not draw any inference of conspiracy from the evidence presented, because it neither tended to exclude the possibility of independent action, nor suggested the existence of any conspiracy at all.
On the question of a monopoly, the court ruled that the claim failed as a matter of law because the AQHA was not in fact a competitor in the allegedly relevant market for elite quarter horses.