AQHA Settles Embryo Transfer Lawsuit

The American Quarter Horse Association has eliminated all restrictions regarding the registration of foals produced through embryo transfer as part of an out-of-court settlement with a coalition of breeders.

For a couple of years, the AQHA has been fighting a lawsuit that claimed a rule limiting the registration of embryo transfer foals to one per mare per year violated Texas free trade laws. The case went to trial June 3 in Amarillo before District Court Judge Pat Pirtle, who had already ruled twice that the rule violated state antitrust law. A trial was still required to determine what damages the breeders incurred.

Robert Garner, an attorney representing cutting horse breeder Kay Floyd and a half dozen other breeders, introduced evidence that his clients' lost between $9.5 million and $10 million in the value of their horses and another $3 million in profits because of the embryo transfer rule.

"If the court determined the rule was wrong and done intentionally, that amount would have been trebled," Garner said. "Bill Brewer (AQHA executive vice president) said on the stand they had acted knowingly and intentionally. Their intention was to enforce the rule."

Tom Persechino, AQHA director of marketing, said the settlement was in the best interest of the organization, its members, and the breeders' coalition.

"Judge Pirtle said the rule violated antitrust laws, but never required us to change it," said Persechino. "If we had continued through the trial, they could have won their damage money and still not been able to register their horses. We didn't want to lose millions in damages and they wanted to register their horses, so we decided to do what we both wanted."

As part of the settlement, the AQHA agreed to pay $550,000 in attorney fees and lifted all restrictions on embryo transfer-related registrations effective immediately. The elimination of the ban also is retroactive, meaning all foals bred through embryo transfer since the AQHA began registering embryo transfer foal in 1980.

Garner estimates that about 3,000 horses that had been prohibited are now eligible for registration.

While the AQHA usually assesses penalties for horses that are registered after they turn a year old, those penalties will be waived for the now-eligible embryo transfer foals, according to Persechino.

"The judge formally signs the order in July," Persechino said. "We are advising people that if they have an embryo transfer foal, and it meets all other rules of registration, to send their paperwork to the AQHA. Once the legal end is worked out, then we will process the registrations."

The settlement is expected to have a profound affect on other breed registries that have adopted similar restrictions on embryo transfer, specifically the Arabian Horse Registry, American Paint Horse Association, Appaloosa Horse Club, and the American Saddlebred Horse Association.

"You will see some other organizations amending their rules," Garner said. "I have some paint horse clients who have been watching this closely."

The AQHA case may also open the door for changes at The Jockey Club, which bans both artificial insemination and embryo transfer in Thoroughbreds. A Pennsylvania palomino Thoroughbred breeder has said she is proceeding with a lawsuit against The Jockey Club on the grounds that its ban on artificial insemination is a violation of free trade.

Bob Curran Jr., vice president of corporate communications for The Jockey Club, said the cases are fundamentally different.

The AQHA case was not about whether embryo transfer should be allowed or not, the organization had already endorsed the rule. The case, instead, was about how that rule should be administered.

"The AQHA rules were different from The Jockey Club's eligibility rules," Curran said. "As a result, we cannot comment on the purposes of the AQHA rules or whether they raised any legitimate legal concerns."

Curran reiterated that The Jockey Club's rules protect the integrity of the breed to define the product the Thoroughbred industry offers and ensure it will be able to continue to provide that traditional high-quality racing product for generations to come.

About the Author

Eric Mitchell

Eric Mitchell is a Editorial Director and Editor-in-Chief The Blood-Horse magazine.

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