by Karne Newburn

On July 30, 2013, a federal jury unanimously ruled against the American Quarter Horse Association (AQHA), the largest equine breed registry and membership organization, in Abraham & Veneklasen Joint Venture v. American Quarter Horse Association, 2-cv-0103 (N.D. Tex.).  The jury found AQHA guilty of conspiring to bar cloned horses from the organization’s horse registry, and monopolizing the U.S. market for high-quality registered Quarter Horses in violation of Sherman Act Sections 1 and 2, and analogous Texas state law.  The jury did not award any damages.

The plaintiffs are a rancher and a joint venture that breed cloned horses.  The plaintiffs sued AQHA over a 2004 AQHA rule that prohibits the registration of cloned horses and their offspring in AQHA’s breed registry.  Registration is an alleged prerequisite for participation in horse shows, races and other events.

The plaintiffs’ conspiracy claim alleged that particular AQHA officers or committee members influenced AQHA’s decision to ban cloned horses because they have a financial incentive to block competition from cloned horses in races and other events.  The plaintiffs’ monopolization claim alleged that AQHA monopolized or attempted to monopolize the market for “high quality registered Quarter Horses” in the United States by instituting and maintaining its rule prohibiting cloned horse registration.  The plaintiffs also alleged that their cloned horses are “virtually worthless” without AQHA registration.

AQHA announced on its website its intention to overturn the federal jury’s verdict on Thursday.  The announcement included the following comments made on Tuesday from AQHA Executive Vice President, Don Treadway, Jr.:

“We are deeply disappointed by the outcome of this trial.  It continues to be our position that our rule prohibiting the registration of clones and their offspring is both reasonable and lawful.  When individuals with shared interests, goals and values come together to form a voluntary association to serve a common purpose, the members have a right to determine the rules for their association. 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.”  

Post-trial proceedings will likely follow, including the determination of the scope of the injunctive relief requested.