How Is It That Leagues Are Still Fighting The State On NJ Sports Betting?

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NJ sports betting

Somehow nearly two years after the fall of PASPA, New Jersey and sports leagues are still in court.

The major American sports leagues (MLBNFLNHLNBA, and NCAA) recently filed a petition for certiorari in the still “ongoing” New Jersey sports betting case.

Fear not, however: this does not threaten the expansion of sports betting nationwide. Instead, it centers on fees and the bond that was posted by the sports leagues when the District Court in 2014 granted a temporary restraining order.

What is happening with NJ sports betting case?

The remaining parties to the case are the quintet of sports organizations and the New Jersey Thoroughbred Horsemen’s Association.

Following the sports leagues filing suit against the Garden State and their co-defendants in New Jersey District Court, the leagues were required under Federal Rule of Civil Procedure 65(c) to post a bond to secure the injunction.

Rule 65(c) says:

The court may issue a preliminary injunction or a temporary restraining order only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained. The United States, its officers, and its agencies are not required to give security.

The New Jersey Horsemen’s Association is seeking millions of dollars from the leagues stemming from being “wrongfully enjoined” in the lawsuit.

Two questions for the US Supreme Court

  1. Whether a party was “wrongfully enjoined” under Federal Rule of Civil Procedure 65(c) when the district court confirmed via the grant of a permanent injunction that its entry of a temporary restraining order was correct under then-applicable law.
  2. Whether a district court retains its full equitable discretion to deny recovery on a Rule 65(c) injunction bond.

A bit more background

This case centers on the temporary restraining order (TRO) that was granted in 2014, otherwise known as the start of the Christie II litigation.

The sports leagues posted an initial $1.7 million bond to cover the first two-week period of the TRO. It then posted an additional $1.7 million bond to cover an extension of the temporary order.

After briefing and arguments (which you may recall the leagues won at the District Court,) the TRO was converted into a permanent injunction. This remained in place until the Supreme Court’s decision in May 2018 struck down PASPA.

The Third Circuit again?

The Third Circuit Court of Appeals held in favor of the Horsemen, stating the Supreme Court’s decision in Murphy meant that the Horsemen had been wrongfully enjoined in the lawsuit. 

In other words, because New Jersey and the Horsemen prevailed, the Court argued that they should be entitled to the bond.

The sports leagues argue that this decision conflicts with various other Circuit Court of Appeals across the country. They contend that the District Court’s finding was not what the Supreme Court inevitably struck down and the leagues should, therefore, retain the bond.

The crux of the leagues’ argument

The sports leagues argue that a bond is:

… Not designed to serve as security against the risk that a district court’s final judgment may be reversed. It, instead, secures only against the risk that the district court itself may, upon full and final consideration of the merits, conclude that its view of the merits at the preliminary stage was mistaken.

Effectively, the leagues are arguing that the Third Circuit has misconstrued the language of rule 65(c).

The same tired arguments again

Once again, the leagues have elected to revisit the evidence that they raised during the Murphy case, arguing:

Penalizing parties for seeking temporary injunctive relief that they had a legal right to seek based on extant precedent creates terrible incentives for our judicial system. A party with a clear legal entitlement to stop conduct causing it irreparable injury should not have to weigh the possibility that it might face millions of dollars in damages at the end of the litigation should the law that gives it that right be declared invalid.

Of course, here, the “irreparable injury” being caused was legal, regulated sports gambling. It is something that in less than two years since the Supreme Court decision has not to be demonstrable in the least.

Instead, the sports leagues have embraced regulated sports gambling (perhaps the NCAA being an exception.)

What to make of this?

As you may recall from the Murphy case, a petition for certiorari is rarely granted. However, as the petitioner leagues point out here, there does appear to be something of a Circuit Court split with regards to this issue.

In a scope much broader than this case, there are huge implications for civil litigation and TRO bonds. For those reasons, this case may have a slightly better chance of the Supreme Court granting certiorari.

The Supreme Court follows the rule of four, which means that four justices need to vote to hear the case. 

Coronavirus delays for High Court

Obviously, with the spread of the coronavirus, we are in unprecedented times. The Supreme Court has suspended oral arguments while we cope with the pandemic, and it would not be out of the question for it to extend some other timelines. 

The next step will be a brief in opposition (or not, as the Horsemen are not under an obligation to respond), which is due 30 days after the date of filing. Still, extensions even under normal circumstances are relatively routine.

The good news is that the case is not going to impact the legalization of sports wagering, but it is worth tracking, in no small part, because of the significance of the money for the Horsemen.