A Horse of a Different Color: A Study of Color Bias, Anti-Trust, and Restraint of Trade Violations in the Equine Industry

Article excerpt

  I. INTRODUCTION

 II. THE TEXAS BUSINESS & COMMERCE CODE, ANTI-TRUST
     AND RESTRAINT OF TRADE LAWS IN THE UNITED
     STATES
     A. Fiduciary Duty
        1. Texas' Treatment of the Business Judgment Rule
     B. Restraint of Trade
        1. The Per Se Rule
        2. The Quick Look
        3. The Rule of Reason

III. THE FLOYD LAWSUIT
     A. FLOYD'S AFTER EFFECTS IN THE AQHA
     B. FLOYD'S IMPLICATIONS FOR THE AMERICAN PAINT
        HORSE ASSOCIATION
        1. The Business Judgment Rule
        2. Restraint of Trade

 IV. CONCLUSION

In 2000, Kay Floyd sued the American Quarter Horse Association (2) ("AQHA") as a result of a registration rule Floyd alleged discriminated against her economically. (3) She did not challenge the right of AQHA to create registration rules that maintained the integrity of the breed, but she challenged its right to prevent her from registering a horse born to two AQHA-registered parents that fit every registration criterion except one. (4) Floyd challenged AQHA's right to prevent her from registering a second pairing from the same parents because that foal was born through embryo transplant in the same year as a foal born through natural birth. (5)

Floyd brought suit under the restraint of trade provisions of the Texas Business & Commerce Code. (6) Those provisions comply with federal statutes against anti-trust and restraint of trade, and comply with the United States Supreme Court rulings concerning those topics. (7) The Texas lower court that heard Floyd's complaint agreed with her allegations and gave AQHA one of its few adverse rulings relating to the way it ran its business. (8) The result was a settlement with Floyd, registration of both her horses, and a change in multiple AQHA registration rules. (9)

This article examines Floyd, (10) its long-range effect on AQHA, (11) and the implications of the ruling on other voluntary or non-profit associations, both within and without the animal industry. (12) In particular, this article applies the principles of the Floyd ruling to the American Paint Horse Association. (13)

I. INTRODUCTION

The equine industry is a major player in the economic life of the United States. A recent study found equine-related activities contribute more than $102 billion each year to the U.S. economy, provide 1.4 million full-time jobs, include 9.2 million horses, involve 4.6 million Americans, and account for $1.9 billion in tax revenues each year. (14)

The United States animal industry comprises multiple animal registry associations that maintain bloodline records, provide official registration papers, and approve shows in which owners display their animals for points and resultant financial rewards. (15) The equine industry is largely self regulated by more than fifty equine associations active in North America, (16) including the AQHA (17) and the American Paint Horse Association ("APHA"). (18) This article examines those two equine associations in light of Floyd. (19)

The AQHA registered 135,787 horses in 2007, (20) claimed 345,905 members in 2007, (21) and approved over 3,000 horse shows and special events world-wide. (22) The APHA claimed more than 90,000 members in 2007, (23) approved almost 1,300 shows and special events worldwide, (24) and boasted approximately 7,200 members in its youth association. (25) While the APHA cannot claim to be the largest equine registry association, (26) it is large enough to have an economic impact on the industry and its members. Unfortunately for some APHA members--those owners of solid bred Paints--the Association has a negative economic impact. (27)

A Quarter Horse is considered a solid-color breed, (28) and AQHA traditionally refused to register horses it considered to have excessive white or those it considered to have no color pigment at all. (29) A Paint Horse is characterized by white spots or patches in various places on its body that distinguish a Paint from other horse breeds. …