PLAINTIFFS’ ORIGINAL COMPLAINT
Plaintiffs, ABRAHAM & VENEKLASEN JOINT VENTURE, ABRAHAM
EQUINE, INC. and JASON ABRAHAM (collectively “Plaintiffs”) file their Original
Complaint against the AMERICAN QUARTER HORSE ASSOCIATION (“AQHA”
hereafter), Defendant, and would respectfully show the Court the following:
1. Plaintiff, ABRAHAM & VENEKLASEN JOINT VENTURE, a joint
venture comprised of Jason Abraham and Gregg Veneklasen, DVM, resides and has its
principal place of business in this judicial district.
2. Plaintiff ABRAHAM EQUINE, INC., a Texas corporation, resides and has
its principal place of business in this judicial district.
3. Plaintiff, JASON ABRAHAM is an individual who is a citizen of the State
of Texas residing in this judicial district.
4. Defendant, AMERICAN QUARTER HORSE ASSOCIATION is a nonprofit
Texas organization with its principal place of business at 1600 Quarter Horse
Drive, Amarillo, Texas 79104, and may be served by serving its registered agent Don
Treadway at 1600 Quarter Horse Drive, Amarillo, Texas 79014.
JURISDICTION & VENUE
5. This suit for private enforcement of §2 of the Sherman Antitrust Act (15
U.S.C. §2) is brought under §4 and §16 of the Clayton Act (15 U.S.C. §15 and §26).
This Court has jurisdiction of this suit under 28 U.S.C. §1337.
6. Plaintiffs also seek relief under the Texas Free Enterprise and Antitrust Act
of 1983, Tex. Bus. & Comm. Code §§15.01 et seq. This Court has jurisdiction of
Plaintiffs’ state law claims under the doctrine of pendant jurisdiction as set out in United
Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).
7. Venue in the Northern District of Texas, Amarillo Division, is proper under
15 U.S.C. §§15, 22, and 26 and under 28 U.S.C. §1391 (b). Defendant resides in and maintains
its principal place of business in this judicial district. A substantial part of the
events or omissions giving rise to Plaintiffs’ claims occurred in this judicial district. The
interstate and foreign trade and commerce described in this complaint is being carried on,
at least in part, within this District.
SHERMAN ANTITRUST ACT, CLAYTON ACT, AND
TEXAS FREE ENTERPRISE AND ANTITRUST ACT OF 1983
which provides in part that “[ e ]very person who shall monopolize, or attempt to monopolize,or combine or conspire with any other person or person to monopolize any
part of the trade or commerce among the several states, or with foreign nations, shall be
deemed guilty of … ”
9. Plaintiffs seek damages from AQHA under §4 of the Clayton Act (15
U.S.C. §15) which provides in part that “[a]ny person who shall be injured in his business
or property by reason of anything forbidden in the antitrust laws may sue therefore . .
and recover threefold the damages by him sustained, and the cost of the suit, including a
reasonable attorney’s fee.”
10. Plaintiffs seek a permanent injunction, under § 16 of the Clayton Act (15
U.S.C. §26) which provides in part that: “[a]ny person, finn, corporation, or association
shall be entitled to sue for and have injunctive relief . . . against threatened loss or
damage by a violation of the antitrust laws … ”
11. Plaintiffs seek relief under Tex. Bus. & Comm. Code §15.05(b) which
provides that “[i]t is unlawful for any person to monopolize, attempt to monopolize, or
conspire to monopolize any part of trade or commerce.”
12. Plaintiffs seek damages under Tex. Bus. & Comm. Code. §15.2l(a) for the
Defendants’ violations of Tex. Bus. & Comm. Code §15.05(b).
13. Plaintiffs seek a permanent injunction under Tex. Bus. & Comm. Code
§ 15.21 (b) to restrain, enjoin and prohibit further violations by the Defendantof Tex. Bus. & Comm. Code §15.05(b).
14. The American Quarter Horse Association (“AQHA”), located in Amarillo, Texas, is the
world’s largest equine breed registry and membership organization. AQHA
has registered more than 5 million horses since its inception in 1940. As AQHA
represents, it “was formed and exists for the purpose of collecting, recording and
preserving the pedigrees of Quarter Horses, and stimulating and regulating matters which
pertain to the history, breeding, exhibition, publicity, racing or improvement of the
Quarter Horse breed.” Among other things, AQHA’s mission is to “record and preserve
the pedigrees of the American Quarter Horse while maintaining the integrity of the
breed.” AQHA’s Policy Statement, “THE WELFARE OF THE AMERICAN QUARTER
HORSE” provides that:
AQHA international headquarters in Amarillo, Texas, issues and maintains
the pedigrees and registration records of all American Quarter Horses, and
oversees various programs and incentives – including races, shows,
recreational activities and supporting sponsorships – that promote
America’s oldest distinct breed of horse. AQHA provides beneficial
services for its members that enhance and encourage American Quarter
Horse ownership and participation, and strives to generate growth of
AQHA membership via the marketing, promotion, advertising and publicity
of the American Quarter Horse.
15. According to AQHA, its “Official Handbook of Rules and Regulations” is
updated yearly after “undergoing careful scrutiny by AQHA.” In recent decades
advancements in breeding technologies have necessitated AQHA to change its rules and
regulations of registration and to allow the registration of horses that would not have been
eligible for registration under prior rules. The rules of the past that required “live cover”
(the physical breeding of a stallion and a mare) were changed to allow the registration of
horses that were the result of artificial insemination and subsequently to allow the
registration of horses produced by even more advanced technology. When the technology
was developed to preserve semen, AQHA changed its rules to allow the
registration of horses that were the result of the impregnation of mares with semen that
had been shipped hundreds or thousands of miles from the point of collection from a
stallion and subsequently to allow for the use of frozen semen years after the death of the
stallion. In 2002, AQHA settled a lawsuit and as a result, changed the rule that precluded
the registration of more than one offspring per mare per year thereby allowing for the
registration of more than one offspring per mare per year produced through multiple
embryo transplants. AQHA has also approved and allows the registration of identical
twins and horses that are the result of Intracytoplasmic Spenn Injection (“ICSI”). ICSI
utilizes the same procedure and equipment as used in Somatic Cell Nuclear Transfer
technology (also referred to as “cloning” or “nuclear transfer”). In every instance these
breeding technologies have been accepted in the industry and approved by AQHA.
16. As with each of the foregoing breeding technologies, Somatic Cell Nuclear
Transfer technology is both legal and safe. The Food and Drug Administration (“FDA”)
conducted an intensive evaluation of Somatic Cell Nuclear Transfer technology for food
safety and animal health and concluded that meat and milk from cow, pig, and goat
clones and their offspring are as safe to eat as foods from conventionally produced
livestock. The National Academies of Science has found that animal clones would have
“increased genetic merit for increased food production, disease resistance, and
reproductive efficiency.” Recognizing that cloning helps to spread the best genetics
throughout a herd some livestock associations have been allowing it for many years.
17. As modern breeding technologies were implemented so were parentage verification
technologies and as a result, AQHA maintains a DNA registry. Modem
DNA testing and AQHA’s registry further its mission to “record and preserve the
pedigrees of the American Quarter Horse while maintaining the integrity of the breed.”
Through DNA testing AQHA can determine and verify parentage, including of the
Quarter Horses made the basis of this suit.
18. In 2004, with knowledge that modem breeding technology had progressed
to a stage that there was success in nuclear transfer (cloning) of horses, AHQA
implemented the following rule:
227. HORSES NOT ELIGIBLE FOR REGISTRATION
(a) Horses produced by any cloning process are not eligible for registration.
Cloning is defined as 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
19. Somatic Cell Nuclear Transfer (“SCNT”) also known as “cloning” is
nothing more than an assisted reproductive technique, similar to in vitro fertilization and
artificial insemination used widely in animal reproduction. The nucleus of a body cell (a
cell that is not a sperm or an egg) is removed from an AQHA registered Quarter Horse,
inserted into an egg cell and developed into an embryo that is then transferred to a
recipient mare. There is no genetic manipulation of the animal; no genes are added,
taken away or manipulated. A clone is a genetic twin of the original animal. The
offspring of clones are NOT clones. These animals are bred and born in traditional ways.
20. Somatic Cell Nuclear Transfer is the most recent evolution of selective breeding,
providing owners with a powerful tool for breeding their best stock. Cloning is
the ONLY assisted reproductive technique that can minimize or eliminate genetic disease
– a problem that has plagued Quarter Horses. At least nine equine diseases have been
linked to genetic mutations. Nuclear transfer will significantly reduce the chance of all
genetic diseases including two of the most widespread major genetic diseases,
Hyperkalemic Periodic Paralysis (“HYPP”), a muscle disorder that can cause tremors or
paralysis in Quarter Horses and Hereditary Equine Regional Dermal Asthenia
(“HERDA”), a debilitating condition marked by hyperextensive skin that causes a horse
to literally shed its skin. HYPP has been traced to Impressive, the Quarter Horse sire of
most winning halter horses. By May of 2008 there had been over 350,000 Impressive
descendants registered with AQHA. HERDA is linked to Poco Bueno, one of the most
famous and most influential sires in AQHA history. Hundreds of thousands of Quarter
Horses trace their lineage back to this legendary sire; his pedigree can be found in many
of the world’s top cutting and cow horses.
21. These two diseases, HYPP and HERDA, are examples of “Popular Sire
Effect” (or Popular Stud/Sire Syndrome) which occurs when an animal with desirable
attributes is bred repeatedly. This can cause unknown undesirable genetic traits in the
stud to spread rapidly within the gene pool. It can also reduce genetic diversity by the
exclusion of other males. While the Impressive and Poco Bueno pedigrees have
produced many exceptional horses and champions, the concentrated gene pool with the
detrimental recessives they carry has been devastating to owners of their descendants.
Too much breeding to one horse will give the gene pool an extraordinary dose of his
genes including whatever detrimental recessives he may carry, to be uncovered in later
generations, causing future breed-related genetic diseases through what is known as
“Founder Effect.” AQHA recognizes the hann done by Founder Effect and attempts to
limit or ameliorate that hann. Somatic Cell Nuclear Transfer is the best tool available to
deal with popular sire syndrome and eliminate Founder Effect. Somatic Cell Nuclear
Transfer technology will play a significant role in reducing genetic diseases and
diversifying and broadening the pool of “clean horses” available to consumers.
22. The vast majority of cloned horses are world champions in their particular
sports. These champions were cloned not to have them repeat in their performance, but
to be used as breeding animals and the clones will improve the health and quality of the
breed. Through cloning, a genetically identical horse now can stand as a breeding animal
and provide offspring that will further enhance the breed. Cloning also provides the
option to produce offspring from genetically clean superior horses that cannot reproduce:
a) mares or stallions that died young or before recognition of their valuable genes or that
can no longer produce, and b) horses that were gelded and proved themselves to be
superior perfonners would be given the opportunity to pass on their genetics. Breeding
the best possible stock improves the over-all health and disease resistance of animal
populations. Cloning can also be used to help breed horses that are immune to disease.
23. Since at least 2006 there have been rule change proposals made by AQHA
members seeking a change to Rule 227 to allow for the registration of DNA confinned
Quarter Horses that were the result of somatic-cell nuclear transfer (“SCNT”), a
laboratory technique for creating a clone embryo with a donor nucleus. AQHA has
repeatedly “postponed” any decision on the proposed rule change and until March, 2012
continued to consider allowing the registration of the offspring of clones. As evidenced
by Exhibit A, attached hereto and incorporated herein by reference, on February 23, 2012
the AQHA staff made a proposal to the Stud Book and Registration Committee
(“SBRC”) and the Executive Committee for changing the rules to allow the registration
of the offspring of clones. Upon information and belief, the then existing members of the
Executive Committee were in favor of the proposed rule change, but when it was
presented at the AQHA Convention meeting on March 10, 2012, a SBRC member who is
an influential breeder and past president of AQHA, reportedly objected. Through the use
of intimidating remarks and references to the immorality of cloning as a reproductive
tool, he threatened that “AQHA will allow cloning over my dead body,” all the while
making further references to the anti-competitive affect of AQHA refusing to register
clones and the offspring of clones. Such statements included that he did not want “six of
them” around. Following this tirade, he moved to take no action on the proposed rule
change and the debate was over. AQHA continues to refuse to register Quarter Horses
that are the result of cloning, as well as their offspring, as is evident by Exhibit B,
attached hereto and incorporated herein by reference.
25. Plaintiffs own clones and/or the offspring of clones. The offspring have: a)
one parent that is a Quarter Horse registered with AQHA; and, 2) one parent that is a
clone of a Quarter Horse registered with AQHA that was produced using the SNCT
method of breeding. Without exception, DNA tests confinn that Plaintiffs’ horses are
Quarter Horses; their DNA confinns that they are the offspring of the clone of an AQHA
registered Quarter Horse and an AQHA registered Quarter Horse. But for Rule 227 and
Defendant’s unlawful enforcement of it, the horses that Plaintiffs seek to register would
be eligible for registration with the American Quarter Horse Association.
25. Plaintiffs assert that Rule 227 and Defendant’s enforcement of it a) is an
abuse of Defendant’s monopoly in the market for high quality registered Quarter Horses;
b) has an adverse effect on competition; c) is without reasonable business justification;
and, d) has caused and continues to cause damages to Plaintiffs.
26. The relevant product market in this suit is the market for high quality
registered Quarter Horses. Competition in the market for high quality registered Quarter
Horses is conducted nationwide.
27. AQHA’s prominence, dominance and market power in the market for high
quality registered Quarter Horses is evidenced by the following:
a. Persons organizing shows and races find it necessary to restrict
participation to animals on the register of AQHA and to restrict entitlement
to show or judge animals shown by others at these shows or races to
individuals who have been admitted to membership and are in good
standing as members of the AQHA.
b. It has approximately 8,000 sanctioned races each year with purses
that, for example, totaled $129,282,575 in 2011.
c. AQHA registered Quarter Horses are found in fifty states,
throughout Canada and Mexico, and in more than eighty countries.
d. In order for a rider to compete in the events that the AQHA holds
each year, her horse must be registered as an American Quarter Horse with
e. The American Quarter Horse Association has many state affiliates,
including Alabama Quarter Horse Association (“QHA”), Alaska State
QHA, Arizona QHA, Arkansas QHA, Pacific Coast QHA, Rocky Mountain
QHA, Connecticut QHA, Delaware QHA, Florida QHA, Georgia QHA,
Hawaii QHA, Idaoh QHA, Illinois QHA, Indiana QHA, Iowa QHA,
Kansas QHA, Kentucky QHA, Louisiana QHA, Maine QHA, Maryland
State QHA, Massachusetts QHA, Michigan QHA, Minnesota QHA,
Mississippi QHA, Missouri QHA, Montana QHA, Nebraska QHA, Nevada
QHA, New Hampshire QHA, New Jersey QHA, New Mexico QHA,
Empire State QHA, North Carolina QHA, North Dakota QHA, Ohio QHA,
Oklahoma QHA, Oregon QHA, Pennsylvania QHA, South Carolina QHA,
South Dakota QHA, Tennessee QHA, Texas QHA, Utah QHA, Vermont
QHA, Virginia QHA, Washington State QHA, West Virginia QHA,
Wisconsin QHA, and Wyoming QHA.
f. In addition, there exist several provincial racing affiliates that are
affiliated with the American Quarter Horse Association, including: Alberta
QHRA, Northwest Quarter Horse Breeders, Quarter Racing Owners of
Ontario, and Saskatchewan Speed Horse Association.
g. There are also several racing affiliates of the American Quarter
Horse Association: Alabama Quarter Horse Racing Association (“QHRA”),
Arizona QHRA, Pacific Coast QHRA, Rocky Mountain QHA, Florida
QHRA, Georgia QHRA, Idaho QHA, Illinois QHRA, QHRA of Indiana,
Iowa QHRA, Kansas QHRA, Kentucky QHA, Louisiana QH Breeders
Association, Great Lakes QHA, Minnesota QHRA, New Mexico Horse
Breeders Association, North Dakota QHRA, Ohio QHRA, Oklahoma
QHRA, Oregon QHRA, South Dakota QHA, Texas QHA, Utah QHA,
Northern Racing QHA, and Wyoming All Breeds Association.
h. There are several international affiliates of the American Quarter
Horse Association, which are as follows: Argentine QHA, Australian QHA,
Austrian QHA, Belgian QHA, Brazilian QHA, AQHA – UK, Colwnbian
QHA, Costa Rica QHA, Czech QHA, Danish QHA, Dominican Republic
QHA, Dutch QHA, Finnish QHA, French QHA, German QHA, Hungarian
QHA, Irish QHA, Isreal QHA, Italian QHA, Japan QHA, Quarter Horse
Association of Luxembourg, Mexican QHA, New Zealand QHA,
Norwegian QHA, Panama QHA, Paraguayan QHA, Polish QHA, Slovak
QHA, Slovenian QHA, South African QHA, Swedish QHA, Swiss QHA,
AQHA-UK, Uruguayan QHA, and Venezuelan QHA.
i. Corporate sponsors and partners of AQHA have included American
Airlines, Bank of America, Bayer Corporation, Breyer, Centaur HTP®,
FedEx, Fencing Systems, Cowboy Tack, Drysdale Western Store, Ford
Motor Co., Cargill, Inc., GMC, Justin Boot Company, John Deere, Liberty
Mutual, Markel Insurance Company, MBNA®, MCI WorldCom, MD
Enterprises, Montana Silversmiths, Pfizer, Pro Line Western, Professional’s
Choice, Resistol Hats, Rio Vista Products, Sooner Trailer Manufacturing,
Tex Tan Western Leather Company, and Wrangler Jeans and Shirts.
j. AQHA approves 2,600-2,700 shows per year and honors members
with prestigious awards in its youth, amateur, and open divisions.
k. The American Quarter Horse Association also has many programs
and benefits that evidence its interstate and international influence,
including Breeder Referral Program, Wrangler Star Program, Incentive
Fund, Horseback Riding Program, MBNA® Quarter Horse Racing
Challenge, Best of America’s Horse, Ambassadors Program, Cash Bonus
Program (with Ford), Leveling Program, Ride Program, AQHA Trail Ride
Series, AQHA Ranching Heritage Breeders, AQHA Ranching Heritage
Challenge and the AQHA Young Horse Development Project.
l. American Quarter Horse Association also publishes magazines
including America’s Horse and The Quarter Horse Journal and The
Quarter Racing Journal.
m. Debuting in 1993, the MBNA America Quarter Racing Challenge is
a program developed by AQHA that became the sport’s richest event
offering $2,500,000 a year in purses and bonus awards. This challenge is a
series of sixty-six ( 66) races run in ten regions at race tracks across the
United States, Canada and Mexico. It paid purses totaling $39,000,000
during its first thirteen (13) years.
n. As a member of AQHA, a person will be eligible to compete in
AQHA events, but only AQHA registered Quarter Horses are eligible.
o. AQHA Incentive Fund Program is a multi-million dollar awards
programs that pays bonuses for enrolled stallions and their foals. In 2011
the Incentive Fund distributed over $2,700,000 to nominators and
nominated horse owners when horses earned points at AQHA approved
events. Not only is enrollment in the Incentive Fund potentially lucrative to
owners, it increases the worth of the pedigree and the individual horses.
Enrollment in the Incentive Fund is a valuable marketing tool for owners of
registered Quarter Horses.
p. The AQHA World Championship Show is the pinnacle event for
owners and exhibitors, who must qualify for the event by earning a
predetermined number of points to compete in each class, with more than
$2,600,000 paid in prize money in ninety-four (94) events in 2011.
q. The AQHA Breeder Referral Program helps members find stallion
services for their mares, embryo transfers and shipped semen services, as
well as stabling, mare care and foaling services.
r. AQHA races are held in the following states: Arizona, California,
Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan,
Minnesota, Montana, Nevada, New Mexico, North Dakota, Ohio,
Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, and
Wyoming. In addition, AQHA registered horses race in Mexico and
s. AQHA reports assets as of September 30, 2011 of $93,096,880.
28. By controlling registration, AQHA controls the supply of high quality
registered Quarter Horses. AQHA has sufficient market power to restrict competition
and decrease output. Specifically, the restriction limits the supply of registered horses
thereby driving up the price and injuring consumers. AQHA covers every state in the
nation and many other countries and significantly affects interstate commerce.
29. Rule 227 of the American Quarter Horse Association Rules & Regulations,
which prohibits the registration of any horses produced by the cloning process, violates
Section 2 of the Sherman Antitrust Act (15 U.S.C. §2) and Section 15.05(a) of the Texas
Free Enterprise and Antitrust Act of 1983 (Tex. Bus. & Comm. Code §15.05(a)).
30. Rule 227 precludes competition and inhibits Plaintiffs’ efforts to compete
by establishing unnecessary barriers to entry into the market.
31. AQHA possesses monopoly power over high quality registered Quarter
Horses and has abused that power through the enforcement of Rule 227. AQHA’s abuse
of its monopoly power causes there to be fewer high quality registered Quarter Horses.
32. Denial of registration has grave economic consequences to horse owners.
The Rule 227 restrictions limit the supply of high quality registered Quarter Horses and
thereby drive up prices and hann competition and consumers. With the power to control
output is the power to control price.
33. Rule 227 violates the antitrust laws because it lacks sufficient grounding to
meet the competitive needs of AQHA and/or because it is broader than necessary to
accomplish any legitimate objective of AQHA or its members.
34. Rule 227 creates significant competitive disadvantages to AQHA members
who own cloned horses and their offspring, as well as to competition and to consumers.
Denial of registration impairs a non-registered horse’s ability to compete effectively with
registered horses and protects registered Quarter Horses from having to compete with
quality unregistered horses. This restricts competition and benefits registered horse
owners at the expense of owners of cloned Quarter Horses and their offspring. The harm
to the members that own clones and their offspring is the mirror image of the benefits to
other members. Registered Quarter Horses get wide exposure to numerous potential
buyers that is not available for members owning clones and their offspring. Buyers and
sellers of clones and their offspring are also harmed by unjustified exclusions.
35. AQHA knows that by refusing to register Plaintiffs’ Quarter Horses, that it
forecloses competition by Plaintiffs. AQHA is knowingly using its monopoly power to
preclude and bar competitive entry into the market.
36. AQHA’s illegal and unreasonable refusal to register Plaintiffs’ Quarter
Horses has and will continue to inflict severe competitive handicap on Plaintiffs and
preclude Plaintiffs’ entry into the market for high quality registered Quarter Horses.
ANTITRUST INJURY AND THE NEED FOR INJUNCTIVE RELIEF
37. The above-referenced conduct of AQHA, in the absence of permanent
injunctive relief, will solidify AQHA’s monopoly in the market for high quality registered
Quarter Horses and will continue to restrict supply.
38. Specifically, the above-referenced conduct of AQHA, in the absence of
permanent injunctive relief, will have the following effects, among others:
a. Competition in the market for high quality registered Quarter Horses
will continue to be restricted, suppressed and restrained.
b. Owners and purchasers of high quality registered Quarter Horses
will continue to be deprived of the benefits of cloning, which include
the propagation of superior animals, the ability to breed around or
minimize the chance of genetic disease and the potential
improvement of the breed.
c. Purchasers and owners of high quality registered Quarter Horses will
be denied the ability to choose horses produced through the cloning
process and their offspring.
d. Purchasers of high quality registered Quarter Horses will be
deprived of free and open competition, and the prices will be higher
than they would be with competition from cloning.
e. Few, if any, options will be available for reproduction of outstanding
horses that are unable to breed (i.e., geldings that prove themselves
to be superior horses and both mares and stallions that died young or
are no longer able to breed).
f. Owners and purchasers of high quality unregistered Quarter Horses
will continue to be deprived of the benefits of the exposure for their
horses that owners of high quality registered Quarter Horses enjoy.
g.Consumers will be denied the genetic benefits of the propagation
of superior, genetically clean horses.
39. As a direct and proximate result of AQHA’s conduct as described above,
Plaintiffs will suffer, in the absence of permanent injunctive relief, substantial injury to
their business, property, trade and reputation in amounts which are undetermined. The
injuries and damages being suffered by Plaintiffs increase daily and increase
exponentially as new foals are born. The Plaintiffs’ injuries include, but are not limited to
the diminished market value of the unregistered Quarter Horses. The market value of the
horses has been diminished between seventy percent (70%) and eighty percent (80%)
percent because of AQHA’s refusal to register them and thereby exclude them and their
offspring from competitions sanctioned by AQHA. This has a detrimental effect on the
public in general and the owners of clones and their offspring in particular and causes the
value of the registered horses to be inflated because of this output restriction. Rule 227
and its enforcement causes the market value of clones and their offspring to diminish for
at least the following reasons:
a. Unregistered Quarter Horses may not compete, race, be shown or
exhibited in any AQHA sanctioned events.
b. The offspring of unregistered Quarter Horses are not eligible to be
registered with the AQHA and may not compete in AQHA
c. Because of supply and demand the lucrative breeding opportunities
available for high quality registered Quarter Horse stallions and
mares are unavailable to their unregistered counterparts.
40. Rule 227 has a detrimental effect on consumers because the value of a
comparably bred registered horse is inflated. The rule has a detrimental effect on the
producers of cloned horses and their offspring because of the diminution in value of their
41. Refusing to register Plaintiffs’ horses without legitimate business reasons is
an attempt to exclude Plaintiffs and others from the market for high quality registered
Quarter Horses. AQHA’s Rule 227 is anti-competitive because it precludes cloning or
the breeding of cloned horses to produce high quality registered Quarter Horses thereby
restricting the output, resulting in higher prices and harm to consumers and competition.
42. Unless AQHA is restrained, enjoined and prohibited from enforcing Rule
227, it will continue to violate §2 of the Sherman Antitrust Act and §15.05 of the Texas
Business and Commerce Code.
43. Because Quarter Horses are at their marketing and competitive pnme
during their first few years of life, Plaintiffs will suffer immediate and ongoing harm as a
result of AQHA’s refusal to register their horses because they will have lost the
opportunity to realize the best price and the potential of the horses during the pendency of
this suit in violation of §2 of the Shennan Antitrust Act and §15.05 of the Texas Business
and Commerce Code, all to Plaintiffs’ great and irreparable injury and loss.
44. Entering orders requiring AQHA to register Plaintiffs’ horses will protect
competition and will not work undue hardship on AQHA.
45. The public interest will be served by preventing AQHA from abusing its
monopoly in the market for high quality registered Quarter Horses.
46. The irreparable injuries which Plaintiffs will suffer in the absence of
permanent injunctive relieve in this cause, and the benefits to the public which will result
from protecting competition in the market for high quality registered Quarter Horses,
entitle Plaintiffs to the injunctive relief sought.
COUNT ONE- MONOPOLIZATION
47. Plaintiffs reallege and incorporate herein by reference Paragraphs 1 through
46 of this Complaint.
48. By its conduct as described above, AQHA has deliberately used and is
continuing to use monopoly power in the market for high quality registered Quarter
Horses to exclude Plaintiffs and other competitors from the market and to restrict supply.
49. By its conduct as described above, AQHA has monopolized and is
monopolizing the market for high quality registered Quarter Horses.
50. The conduct of AQHA is in violation of §2 of the Shennan Antitrust Act.
COUNT TWO-ATTEMPT TO MONOPOLIZE
51. Plaintiffs reallege and incorporate herein by reference Paragraphs 1 through
50 of this Complaint.
52. By its conduct as described above, AQHA has intentionally attempted to
monopolize the market for high quality registered Quarter Horses.
53. There exists a dangerous probability that, in the absence of the relief
requested by Plaintiffs, AQHA will acquire and maintain an unlawful monopoly in
violation of §2 of the Sherman Antitrust Act.
COUNT THREE- VIOLATION OF
TEXAS BUSINESS AND COMMERCE CODE §15.05
54. Plaintiffs reallege and incorporate herein by reference Paragraphs 1 through
53 of this Complaint.
55. By its conduct as described above, AQHA has violated §15.05 of the Texas
Business and Commerce Code by monopolizing or attempting to monopolize a part of
trade or commerce.
COUNT FOUR-INJUNCTIVE RELIEF
56. Plaintiffs reallege and incorporate herein by reference Paragraphs 1 through
54 of this Complaint.
57. The above described violations by AQHA of §2 of the Sherman Antitrust
Act entitle Plaintiffs to injunctive relief, including a permanent injunction pursuant to § 16
of the Clayton Act.
58. The above described violations by AQHA of§ 15.05 of the Texas Business
and Commerce Code entitles Plaintiffs to injunctive relief, including a permanent
injunction pursuant to §15.21 of the Texas Business and Commerce Code §16 of the
59. AQHA’s continued enforcement of Rule 227 is an abuse of its monopoly
that places artificial and undue restraint on the production of high quality registered
Quarter Horses, thereby reducing available quantities of, and raising prices for, such
horses. This Court should therefore enjoin the continued enforcement of the rule or of
any other rule which denies registration on the basis of cloning.
60. Because of the great and irreparable harm that will be done to the Plaintiffs
and the public in the absence of relief, and the lack of harm to AQHA in the event such
relief is granted, the balance of equities weighs in favor of the Plaintiffs. Therefore,
Plaintiffs request that the Court grant all equitable relief, including a permanent
injunction prohibiting AQHA from enforcing Rule 227 or using it as a basis for
prohibiting the registration of cloned Quarter Horses or their offspring.
REQUEST FOR RELIEF
Plaintiffs respectfully request that the Court grant the following relief:
1. Issue a pennanent injunction restraining, enjoining, and prohibiting the
AQHA from continuing their illegal conduct and, more specifically, from engaging in
any of the following acts:
(a) Continuing to enforce Rule 227 and refusing to register Plaintiffs’
clones and offspring of clones;
(b) Any other action having the effect of refusing to register Plaintiffs’
clones and offspring of clones; and,
(c) Imposing upon the Plaintiff any other new and anti-competitive
limitations relating to the registration of clones or the offspring of
2. Issue a permanent injunction ordering AQHA to register Plaintiffs’ clones
and the offspring of clones.
3. Adjudge and decree that the acts of the Defendant as alleged in Counts One
and Two constitute the illegal maintenance and use of monopoly power or attempted
monopolization in violation of §2 of the Sherman Act and of § 15.05 of the Texas
Business and Commerce Code.
4. Award the Plaintiffs actual damages, including lost profits in the past and in
the future and the diminution in value on the horses, and treble the amount of damages
determined to have been sustained by them and enter a judgment in favor of Plaintiffs
against the Defendant, for such sum, together with all prejudgment and post-judgment
interest provided by law.
5. Order that the Plaintiffs recover from Defendant, the cost of this suit and all
reasonable attorneys’ fees incurred, such amounts to be fixed by the Court as required by
§§4 and 16 of the Clayton Act and §15.21(a)-(b) of the Texas Business and Commerce
6. Grant the Plaintiffs all other legal damages, and such other and further
relief, at law or in equity, to which the Plaintiffs may show themselves justly entitled.
ATTORNEY FOR PLAINTIFF, ABRAHAM &
VENEKLASEN JOINT VENTURE
Jury Finds for Plaintiffs
October 2015 Appeals court will not rehear petition for plaintiffs