Jury Finds AQHA Clone Ban Violates Antitrust Laws

**This article is not a substitute for the advice of an attorney.**

Last week a federal jury found that an AQHA rule prohibiting registration of cloned horses violated state and federal antitrust laws.  The AQHA has announced that it will appeal this decision.

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The AQHA Rule REG 106.1

The AQHA is the world’s largest equine breed registry and membership organization, having more than 5 million registered horses and over 280,000 members.  The AQHA allows registration of quarter horses that are conceived by live cover, artificial insemination, and embryo transfer.  In 2004, however, the AQHA implemented Rule 227 (the rule has since been re-numbered as Rule REG106.1), which prohibits registration of “horses produced by any cloning process” including “any method by which the genetic material of an unfertilized egg or an embryo is removed and replaced by genetic material taken from another organism, added to/with genetic material from another organism or otherwise modified by any means in order to produce a live foal.”   Under the rule, both cloned horses and their offspring are banned from the AQHA registry.

The Lawsuit

In April, 2012, two plaintiffs–an Amarillo veterinarian and a panhandle rancher–filed suit in federal court challenging AQHA Rule REG 106.1.  The plaintiffs own horses that are clones or offsprings of clone.  The offspring have one registered AQHA parent and the other parent is a clone of an AQHA registered horse.

The lawsuit alleges that the AQHA rule violates the federal Sherman Antitrust Act and the Texas Free Enterprise and Antitrust Act of 1983.  Both acts prohibit the monopolization of any part of trade or commerce.  Plaintiffs explain that the AQHA enjoys a place of “prominence, dominance and market power” in the quarter horse market and provide numerous examples, including that numerous races are limited to AQHA registered animals, that AQHA registered horses are found in all 50 states and in more than eighty other countries.  Plaintiffs claim that Rule REG 106.1 denies cloned horses the ability to complete effectively with registered horses and protects registered horses from having to compete with unregistered horses, which benefits registered horse owners at the expense of owners of cloned quarter horses.  Plaintiffs claimed injuries including a 70-80% diminished value of their horses because of the AQHA’s refusal to register their cloned horses, and claim that this also harms the public by inflating the value of registered horses.

The plaintiffs sought both monetary damages and a permanent injunction against the AQHA to prohibit the enforcement of Rule REG 106.1.

The Jury Verdict and Upcoming Appeal

On July 30, 2013, a 10 person federal jury panel seated in Amarillo found that the American Quarter Horse Association rule that prohibits cloned horses from registering in the AQHA violates both state and federal antitrust laws.  The jury refused, however, to award plaintiffs any of the millions of dollars in monetary damages requested.  The AQHA has announced that it intends to appeal this decision after a unanimous vote by the organization’s Executive Committee.

How Could This Impact Other Animals?

If the decision is upheld, it could lead to similar lawsuits against other animal organizations with similar rules, including the American Paint Horse Association and the American Kennel Club, both of which currently exclude cloned animals.

9 Responses to Jury Finds AQHA Clone Ban Violates Antitrust Laws

  1. Debra Mitchell says:

    If the membership of the organization has voted against allowing cloned animals to be registered, how can a court make them register cloned animals?

  2. tdowell says:

    Debra–That is the exact question that the AQHA has been asking. The way that this lawsuit fits under the antitrust laws is that the plaintiff’s argued that the AQHA created a monopoly and restraint on competition and trade. This argument likely would not work against other smaller organizations, but given the facts surrounding the number of AQHA membership, the number of races/shows/benefits only available to AQHA members, etc. made them a good target for an antitrust lawsuit. These statutes apply to prohibit even private organizations from creating a monopoly and restraining competition.

  3. james dowkey says:

    Ok if AQHA has to register clones. Then any clone or offspring or horse breed to clone can not be shown in AQHA CLASS. As a member of AQHA I think the two people who sued should be banned from AQHA.

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  5. Ryan says:

    This seems like an overreaching application of the antitrust law and a backdoor way to have cloned horses allowed into the AQHA. The real issue is not whether a monopoly has been created, but whether it is right to clone horses and to compete those horses against naturally bred horses. I hope the AQHA issues the papers with CLONED written across them. The same way the MVD issues a title for a salvaged vehicle.
    Do you think the AQHA appeal has a chance? And do you think they’ll actually have to pay the $900,000?

  6. tdowell says:

    Ryan–I learned a long time ago never to try and predict what a court will do on appeal. The AQHA has vowed to fight the ruling and certainly will appeal, but beyond that it is hard to predict anything else.

    As for the attorney fees, federal law allows the prevailing party in an anti-trust suit to recover the costs of litigation, including attorney fees. In fact, it mandates that they do so. “In any action under this section in which the plaintiff substantially prevails, the court shall award the cost of suit, including a reasonable attorney’s fee, to such plaintiff.” Most of the time, courts will review claimed attorney fees and wind up decreasing the amount of the award on the grounds that the initial amount sought is not “reasonable.” So while it is likely that the plaintiffs’ will not receive the full $900,000 that they claim, if the verdict is sustained on appeal they will be entitled to the amount of attorney fees and costs that the trial court deems “reasonable.”

    Thank you for your comment!

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  9. SLSayles says:

    Here is what I wonder as I research this issue…based on the information given here, it appears that this ruling opens another, even more onerous door–unregistered horses include MUCH more than clones. Does this mean we’ll have to open registered shows, races, etc., to other breeds? To grade horses? Did the plaintiffs in this case give their approach enough thought? How does this do anything but harm AQHA?

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