Volume V of VIII 996
1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS 2 AMARILLO DIVISION
3 ABRAHAM & VENEKLASEN JOINT § 4 VENTURE, ABRAHAM EQUINE, § INC., and JASON ABRAHAM, § 5 § Plaintiffs, § 6 § VS. § CASE NO. 2:12-CV-103-J 7 § AMERICAN QUARTER HORSE § 8 ASSOCIATION, § § 9 Defendant. §
10 ======11 CIVIL TRIAL BY JURY 12
13 JULY 23, 2013
14 VOLUME V OF VIII 15
16 (Pages 996 - 1239)
17 ======
18
19 On the 16th, 17th, 18th, 19th, 22nd, 23rd, 24th, 25th,
20 26th, 29th, and 30th days of July 2013, a Civil Trial by Jury
21 in the above-entitled and numbered cause came on to be heard
22 before the Honorable Mary Lou Robinson, United States District
23 Judge for the Northern District of Texas, presiding and a jury.
24
25 Proceedings reported by mechanical stenography; transcript produced by computer.
Stacy Mayes Morrison Official Court Reporter T r i a l I n d e x 997
1 VOLUME V (PAGES 996 - 1239)
2
3 PROCEEDINGS FOR JULY 23, 2013
4 PAGE
5 CAPTION...... 996
6 TRIAL INDEX...... 997
7 EXHIBIT INDEX...... 998
8 APPEARANCES...... 999
9 PROCEEDINGS FOR JULY 23, 2013...... 1000
10 COURT'S INSTRUCTIONS TO JURY ON TAKING NOTES ...... 1000
11
12
13 PLAINTIFFS' EVIDENCE (CONTINUED)
14 WITNESSES: DIRECT CROSS REDIRECT RECROSS VOIR DIRE 15 CHRISTOPHER PFLAUM 1002 1011 1028 16 (CONTINUED)
17
18 ABRAHAM EQUINE, INC. RESTS...... 1039
19 ABRAHAM & VENEKLASEN JOINT VENTURE RESTS...... 1039
20 JASON ABRAHAM RESTS...... 1039
21 DEFENDANT'S JUDGMENT AS A MATTER OF LAW...... 1039
22 DEFENDANT'S MOTION OVERRULED...... 1040
23
24
25
Stacy Mayes Morrison Official Court Reporter T r i a l I n d e x 998
1 VOLUME V (CONTINUED)
2 (PAGES 996 - 1239)
3
4
5 DEFENDANT'S EVIDENCE
6 WITNESSES: DIRECT CROSS REDIRECT RECROSS VOIR DIRE 7 FRANK MERRILL 1040 1102 1133 1134 8 1136
9 JOAN SCHROEDER 1145 1163 1166 1168 1171 1171 10 JEFF TEBOW 1173 1211 1230 1236 11
12 REPORTER'S CERTIFICATE...... 1239 13
14
15
16
17 IDENTIFICATION OF PLAINTIFFS' EXHIBITS
18 NO. DESCRIPTION OFFERED ADMITTED 19
20 145 TOP TWENTY SALES REPORT FOR THE 2011QUARTER HORSE YEARLING SALE HELD AT HERITAGE PLACE 1235 1236 21 146 TOP TWENTY SALES REPORT FOR THE 2010 WINTER 22 MIXED SALE HELD AT HERITAGE, JANUARY 14-16, 2010 1235 1236 23 147 CHART MS. STONE DREW FROM MR. TEBOW'S 24 TESTIMONY 1235 1235
25
Stacy Mayes Morrison Official Court Reporter Appearances 999
1 A-P-P-E-A-R-A-N-C-E-S
2
3 FOR PLAINTIFF, ABRAHAM & MS. NANCY J. STONE VENEKLASEN JOINT VENTURE: Law Office of Nancy J. Stone 4 Attorney at Law 320 S. Polk St., Suite 820 5 Amarillo, Texas 79101
6 FOR PLAINTIFF, ABRAHAM MR. SAMUEL L. STEIN 7 EQUINE, INC.: Law Office of Sam L. Stein, PLLC Attorney at Law 8 305 S. Grand Avenue P.O. Box 223 9 Cherokee, Oklahoma 73728
10 FOR PLAINTIFF, JASON MR. RONALD D. NICKUM 11 ABRAHAM: Law Office of Ronald D. Nickum Attorney at Law 12 P.O. Box 1889 Amarillo, Texas 79105-1889 13 AND 14 MR. BRIAN E. ROBISON 15 GIBSON, DUNN & CRUTCHER, LLP Attorneys at Law 16 2100 McKinney Ave., Suite 1100 Dallas, Texas 75201 17
18 FOR THE DEFENDANT: MR. W. WADE ARNOLD and 19 MR. MICHAEL H. LOFTIN and MS. AUTUM LEIGH WHITE 20 Underwood Law Firm Attorneys at Law 21 500 S. Taylor, Suite 1200 Amarillo, Texas 79101 22
23 COURT REPORTER: MS. STACY MAYES MORRISON 24 Official Court Reporter 205 E. 5th, LB #F13263 25 Amarillo, Texas 79101 (806) 672-6219
Stacy Mayes Morrison Official Court Reporter Discussion on Jury Taking Notes (Out of Jury's Presence) 1000
1 PROCEEDINGS FOR JULY 23, 2013
2 (The following took place in open court with all parties
3 present, but without the jury.)
4 MORNING SESSION
5 THE COURT: Some of the jurors have inquired about
6 whether -- after they're in recess when they're in the jury
7 room, if they can make notes on what they've heard during the
8 trial.
9 Now, I do not think that's advisable, because
10 there's the likelihood of their discussing the case early in
11 the case and deliberating, but I propose to tell them that
12 they can take notes in the courtroom so long as they do not
13 refer to them in the presence of the other jurors and do not
14 discuss them with the other jurors until they're finally
15 deliberating.
16 Is there any objection to that procedure?
17 MR. LOFTIN: No objection from Defendant, Your
18 Honor.
19 MR. NICKUM: No objection.
20 THE COURT: You can bring the jury in. And we'll
21 have notepads for them, so --
22 MS. STONE: And they'll -- Judge, will they leave
23 their notepads -- they'll leave their notes here at night? Is
24 that what I understand?
25 THE COURT: Pardon me?
Stacy Mayes Morrison Official Court Reporter Court's Instructions to Jury On Taking Notes 1001
1 MS. STONE: They'll leave their notes. They won't
2 take them with them when they leave the courthouse?
3 THE COURT: Are you asking that that be done?
4 MS. STONE: Yes, Your Honor.
5 THE COURT: Is that --
6 MR. LOFTIN: I think that would be fine, Your Honor.
7 Ms. Stone is just asking if they not take their notes out of
8 the -- away from the courthouse.
9 THE COURT: Don't take them out of the courtroom?
10 MR. LOFTIN: I think that's a good idea.
11 THE COURT: All right. Bring the jury in.
12 (The jury returned to the courtroom, and the following
13 took place in open court with the jury and all parties
14 present.)
15 COURT'S INSTRUCTIONS TO JURY ON TAKING NOTES
16 THE COURT: Well, you can go ahead and take the
17 stand.
18 It's my understanding that some of the jurors had
19 inquired about whether they could make notes during recess as
20 an aid to remembering the testimony. The answer to that
21 question is no, but you can take notes during the trial itself
22 so long as you do not take the notes up to the jury room.
23 Now, remember, you cannot discuss any part of the
24 case even when you're all together in the jury room until the
25 case is all over. So you can take notes, but you must leave
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Cross--Mr. Loftin) (Defendant AQHA) 1002
1 the notes in your seat in the courtroom when you go upstairs.
2 And the clerk has notes in case -- notepads in case someone
3 wants to take notes.
4 (Courtroom clerk hands out notepads to jury.)
5 THE COURT: Now, I'll give you further instructions
6 when you finally get the charge, and, of course, you can -- at
7 that time when you go to the jury room to deliberate, you can
8 take your notepad with you, but do not rely on what another
9 person has put on their notepads at that time.
10 So, as I say, you can take notes in the courtroom,
11 leave them in the courtroom when you go upstairs. Do not
12 discuss the case or what's in your notes when you are in the
13 jury room until you finally deliberate.
14 You may proceed.
15 MR. LOFTIN: May it please the Court, Counsel?
16 CHRISTOPHER PFLAUM (CONTINUED),
17 having been previously duly sworn, testified as follows:
18 CROSS EXAMINATION (RESUMED)
19 BY MR. LOFTIN:
20 Q. Let me begin by apologizing for a misstatement I made
21 yesterday. The $4,000 horse that won the Rainbow Derby last
22 weekend was, in fact, sold as a stallion, but later gelded.
23 So as a race winner, he was a gelding, and I referred to him
24 as a stallion, and I apologize for that.
25 I'd like to talk to you about the three-million-dollar
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Cross--Mr. Loftin) (Defendant AQHA) 1003
1 mistake.
2 A. Yes, sir.
3 MR. LOFTIN: Rhonda, if you don't mind, would you
4 pull up Exhibits No. -- Plaintiffs' Exhibits 137 and 138 that
5 were admitted in evidence yesterday.
6 Q. (By Mr. Loftin) Now, the mistake of $3,000,000 is
7 actually more than the claimed damages on Plaintiffs'
8 Exhibit 137, correct?
9 A. Yes.
10 Q. Okay. Now, you began working on this case shortly after
11 the lawsuit was filed in April of last year?
12 A. Yeah. About then, yes.
13 Q. Okay. And part of what you did was, in November of last
14 year, you prepared a rather lengthy report explaining your
15 opinions and the basis for them so that we, the Defendant,
16 could understand your opinions and the basis for them, correct?
17 A. Correct.
18 Q. And one of things you discussed in that first report was
19 damages, what damages are the Plaintiffs claiming, correct?
20 A. Yes.
21 Q. And one of the elements of damages in particular that you
22 discussed was the semen sales or stud fees. I can -- those
23 two terms mean the same thing, don't they?
24 A. They do.
25 Q. Okay. I think I'll use stud fees. Okay?
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Cross--Mr. Loftin) (Defendant AQHA) 1004
1 A. Okay.
2 Q. So, in talking about the income you claimed the
3 Plaintiffs had lost by reason of stud fees for Nic, the clone
4 of Reminic --
5 Are you with me?
6 A. Yes.
7 Q. -- you assumed a stud fee of $5,000, correct?
8 A. Correct.
9 MR. LOFTIN: Rhonda, would you mind pulling up that
10 page of the report. This is not in evidence. I just want to
11 use it to refresh --
12 MR. STEIN: No objection.
13 MR. LOFTIN: Okay. Can you bring up the --
14 Q. (By Mr. Loftin) So what you said --
15 MR. LOFTIN: What's that page number, Rhonda,
16 please?
17 MS. BRASHEARS: This is Page 38.
18 A. It's Page 38.
19 Q. (By Mr. Loftin) Okay. Thank you. What you said on
20 Page 38 was, using 100 breedings a year, the loss of revenue
21 would be $1,000,000, so that works out to a $5,000 stud fee,
22 does it not?
23 A. Yes, 100 a year, two years.
24 MR. LOFTIN: And if you'd turn to the next page,
25 Rhonda, please.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Cross--Mr. Loftin) (Defendant AQHA) 1005
1 Q. (By Mr. Loftin) And, on the table, you prepared -- you
2 put the same figure down, the one million based on 5,000 for
3 each stud fee.
4 A. For two years, correct.
5 Q. Correct. So then when we --
6 MR. LOFTIN: If we can go back to 137.
7 MS. BRASHEARS: Sorry.
8 MR. LOFTIN: That's okay. You're a lot better at it
9 than I would be.
10 (Laughter.)
11 Q. (By Mr. Loftin) Okay. So -- and one more time, with
12 137, the figure changes, I believe, because another season of
13 stud fees has been added, but you still are using $5,000?
14 A. Correct.
15 Q. And then, yesterday, you said you had made a mistake, and
16 based on that mistake, the damages increased by a full
17 $3,000,000?
18 A. Correct.
19 Q. And the way we get that $3,000,000 is, rather than a
20 $5,000 stud fee, the stud fee suddenly increases to 15,000 per
21 breeding?
22 A. Correct.
23 Q. Okay. And the first -- at least the first any of us saw
24 that on our side was last week.
25 A. Okay.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Cross--Mr. Loftin) (Defendant AQHA) 1006
1 Q. Okay. All right. Let me visit with you a little bit
2 about another area you addressed in your first report.
3 You said that it was important to understand how the
4 marketplace would view clones and their offspring?
5 A. Yes.
6 Q. Okay. And, in order to form an opinion in your report,
7 you said you interviewed some folks with the cattle industry,
8 correct?
9 A. Yes, I did.
10 Q. And you interviewed the general manager of a bovine
11 cloning company, Bovance?
12 A. Yes, sir.
13 Q. Now, Bovance had some affiliation, does it not, with
14 ViaGen, the company that has the cloning patent?
15 A. Yes. I believe ViaGen bought Bovance a year or two ago.
16 I don't remember exactly when.
17 Q. Okay. So now Bovance is a part of ViaGen?
18 A. Yes.
19 Q. And then you spoke with a gentleman up in Canada that's
20 in the rodeo bucking broncs?
21 A. Mr. Alexander, yes.
22 Q. And then you spoke with Katherine [sic] McNulty?
23 A. Yes.
24 Q. And she's the lady that owns and operates Replica Farms?
25 A. Yes, sir.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Cross--Mr. Loftin) (Defendant AQHA) 1007
1 Q. And they're -- and Replica Farms is an authorized agent
2 of ViaGen, is it not?
3 A. That, I don't know, but if they're doing that work, they
4 must be.
5 Q. Okay. Now, did you go to any -- you've told the jury
6 about the Quarter Horse auctions that take place every year
7 and particularly the yearling sales.
8 A. Yes, sir.
9 Q. At Heritage Place and Ruidoso and Louisiana and a
10 different place in Texas. Did you go to any of those auctions
11 where they sell yearlings?
12 A. No.
13 Q. And so you haven't visited with the folks that actually
14 go to those auctions to purchase yearlings and ask them what
15 their attitudes would be concerning clones and their
16 offspring, have you? You haven't done that?
17 A. I haven't gone to an auction, no.
18 Q. Okay. Well, that's where you would find a lot of people
19 interested in buying -- and there's particular auctions where
20 that people want to buy an elite Quarter Horse attend,
21 correct?
22 A. Yes.
23 Q. You haven't gone to those auctions?
24 A. I have not.
25 Q. Now, Jason Abraham has the financial resources to compete
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Cross--Mr. Loftin) (Defendant AQHA) 1008
1 in this elite market you've described without using cloning,
2 if that was -- if that were his desire; is that correct?
3 A. I believe so.
4 Q. Okay. Don't have any reason to think otherwise?
5 A. I do not.
6 Q. He has a large ranch?
7 A. Yes.
8 Q. And he has facilities at the ranch for training horses
9 and that sort of thing?
10 A. I haven't been to the ranch, but I presume he does.
11 Q. Now, you've talked about the American Quarter Horse
12 Association monopoly?
13 A. Yes.
14 Q. Okay. Now, the association began registering horses back
15 in 1940.
16 A. Correct. It basically defined the breed back then.
17 Q. Okay. And has registered -- we heard several times, has
18 registered over six million horses in the seventy-some-odd
19 years since, correct?
20 A. Okay. I'm -- yeah, something like that.
21 Q. Okay. Well -- and has a large membership?
22 A. A little over a quarter million, I believe.
23 Q. I think it's maybe 280,000.
24 A. I think I've seen that number.
25 Q. Okay. And when you asked -- and there's not any other
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Cross--Mr. Loftin) (Defendant AQHA) 1009
1 breed registry for American Quarter Horses, is there?
2 A. No.
3 Q. Okay. And you -- as part of learning about this
4 industry, you asked folks, "Why is it important to have your
5 horse registered with the American Quarter Horse Association?"
6 Am I correct when I say that their uniform response was:
7 "That AQHA registration provides credibility to the horse and
8 to the breeder"?
9 A. That's correct.
10 Q. So do you agree with me that the association has done a
11 good job of building a registry that people can rely on?
12 A. People -- yeah, I think the registry is reliable. I
13 mean, you hear stories about this and that, that maybe there
14 might be some problems here and there, but, generally, yes,
15 the association has done a good job in building the breed and
16 keeping the records.
17 Q. And you don't claim there's anything wrong with the
18 association working hard over the years to build this registry
19 and to be the only registry for American Quarter Horses, do
20 you?
21 A. No. I mean, if you gain your monopoly through legitimate
22 means, by doing a good job, then the -- it's not a violation
23 of the antitrust laws, as far as I know as a non-lawyer.
24 Q. Right. And so you're -- and you're -- other than some
25 stories you may have heard over the years, as far as you know,
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Cross--Mr. Loftin) (Defendant AQHA) 1010
1 the American Quarter Horse Association has done a good job of
2 building a registry that people rely on to give credibility to
3 the horses registered and the owner of the horse that
4 registered it?
5 A. As far as I know, as somebody that's not in the industry,
6 yes, the AQHA registry is respected.
7 Q. Now, we've talked about genetics, and I think you talked
8 about sires versus dams.
9 If a popular sire breeds a hundred mares in a year, more
10 or less, half of those offspring -- more or less half of the
11 foals are going to be fillies, correct?
12 A. Correct.
13 Q. And they have -- at least part of their genetic makeup is
14 going to be the genetics of their father?
15 A. Yes.
16 Q. Who is a popular sire because he has great genetics?
17 A. Yes.
18 Q. And so, you know, when we have these popular sires, as we
19 do, for instance, in racing and cutting that are breeding a
20 lot of mares, we're passing down those genetics to their
21 daughters, correct?
22 A. Correct.
23 Q. Okay. Now, you say that the Quarter Horse Association is
24 limiting the supply of elite horses, correct?
25 A. Correct.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1011
1 Q. Okay. Is there any breeding technique, breeding
2 technique that is not allowed by the American Quarter Horse
3 Association?
4 A. Other than breeding to a cloned animal, no.
5 MR. LOFTIN: Okay. Thank you.
6 REDIRECT EXAMINATION
7 BY MR. STEIN:
8 Q. Dr. Pflaum, you recall Mr. Loftin asking you questions
9 yesterday about these two recent racing events which these
10 supposedly non-elite horses won these large purses?
11 A. Yes, sir.
12 Q. And he mentioned a couple of horses by name, one of them
13 Wicked Courage who had won the recent Rainbow Derby at Ruidoso
14 Downs. Do you remember that?
15 A. I do.
16 Q. Have you had a chance to perhaps research the bloodlines
17 and other data of this horse, Wicked Courage?
18 A. Yes, I have.
19 Q. What have you found, or what have you learned that you
20 would like to relate to the jury?
21 A. Well, Wicked Courage has some top blood going back a few
22 generations, but we put the metrics into our model, because I
23 hear $4,000 and I went, "Now, wait a second."
24 Q. You say the metric. What are you talking about?
25 A. Well, if you remember, or if you put up the slide where I
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1012
1 had all of those coefficients of that equation, and so I put
2 this horse, and the other one he mentioned, into my equation,
3 and said: "Well, what does my equation predict its price
4 would be?"
5 MR. STEIN: Let's pull up No. 24.
6 Q. (By Mr. Stein) Is this what you're talking about?
7 A. Yes. That says, yes, racing yearling.
8 Q. This is the racing yearling sales by ranks.
9 A. Okay. So the constant is, I think that says $4,000 or
10 forty --
11 Q. 4301.
12 A. 4301. So my model can't predict anything that's --
13 anything less than 4301, because that's the constant.
14 But if we look at Wicked --
15 Q. Wicked Courage.
16 A. -- Courage, we see that only one -- oh, let me see. One
17 or two. Two of the metrics come in.
18 Q. What do you mean by that?
19 A. Well, his grandsire was ranked and was ranked in the top
20 twenty-five.
21 Q. Okay. What about his sire?
22 A. No. No, his sire --
23 Q. Freshman sire, what we call a freshman sire?
24 A. Well, his -- let's see. Captain Courage -- I'm sorry,
25 there's more than that. There's three metrics.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1013
1 Grandsire was ranked. Grandsire was in the top
2 twenty-five, and, in fact, the grandsire was in the top ten.
3 His sire is kind of interesting. His sire was called a
4 freshman sire, and he was born in 2005. Do some research; you
5 see that his first crop who's now come to the track are doing
6 really well. Now, his sire is described in Q-Racing as
7 royally bred. His sire is by Mr. Jess Perry, who is the top
8 leading sire of racehorses out of Corona Chick, who died last
9 month, but is the all-time leading mare producing racehorses.
10 Q. Well, these sound like really elite horses that are in
11 this Wicked Courage's pedigree. So what are you telling us?
12 A. Oh, sure. On the dam's side, on the mother's side,
13 Wicked Pamela, which turned out to be a so-so mare, she hasn't
14 done very great, but she's by Dash For Cash, who's another top
15 all-time sire, one of the great racing Quarter breds in
16 history.
17 So the reason -- our model predicted he would sell for
18 $7,300 -- $301.
19 Q. Well, I don't understand how this model could predict a
20 $7,000 horse when you just told us about all of these great
21 individuals in his pedigree.
22 A. Because the model -- well, because if you look at the
23 ratings on the model, if you look at the coefficients, the
24 most important things are what did the sire do and what did
25 the mare do. These other things, going back to the next
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1014
1 generation, are not as heavily weighted.
2 Now, maybe if I were trying to predict something else,
3 like how a horse might do racing, I might go back further, but
4 if I want to explain the selling price of a yearling, its
5 sire and dam are the most heavily weighted.
6 And so our model actually -- I mean, it sold for 4,000.
7 The fellow did get a bargain, but this was not a horse that
8 would have sold for a lot of money. We wouldn't have
9 predicted it to --
10 Q. At the time --
11 A. -- sell for a lot of money.
12 Q. At the time this horse sold, was his sire -- did his sire
13 have any producing money-earners?
14 A. No, this is his first crop.
15 Q. So, at the time this horse sold, was his sire and dam
16 non-elite?
17 A. Yes. His dam is still non-elite, but his sire now,
18 because of what his -- the get have done this year, is going
19 to be -- now become an elite sire, because his babies have won
20 well over a million dollars in their first year. So, I mean,
21 this is -- this is going to be a good sire.
22 Q. You mentioned yesterday, in response to some of Mr.
23 Loftin's questions, that your model is from this side looking
24 forward as opposed to trying to come around and use hindsight.
25 Do you recall that?
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1015
1 A. Right. I mean, statistical models are estimated based on
2 historical data. I mean, you're trying to figure out what a
3 price is going to be here and whether a horse is going to be
4 elite, and you want to -- you look at historical data to do
5 that on pedigree.
6 Q. So, given the data that your little model predicted, if
7 we were to have done that, if we would have calculated what
8 you did last night, the evening before Wicked Courage sold at
9 the sale --
10 A. Yes.
11 Q. -- two or three years ago, did it hit?
12 A. As I said, he -- he would have sold for -- my model would
13 have predicted he would have sold for $7,300, and that his
14 chance of being elite about two percent.
15 Q. So does this confirm what you've told the jury yesterday
16 about your statistics and math confirming your opinions as to
17 the elite American registered Quarter Horse?
18 A. Yes. The science appears to work.
19 Q. Okay. Who bred Wicked Courage?
20 A. Burnett Ranches.
21 Q. We've heard the name Glenn Blodgett in this case.
22 A. Well, Dr. Blodgett is the manager -- well, there's two
23 managers. He's one of the managers of the Burnett Ranch,
24 which is also frequently called Four Sixes, one of the top
25 operations in the United States.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1016
1 Q. What is the significance of the fact that this horse was
2 gelded?
3 A. Well, it was gelded by Mr. —— I believe, what's his name
4 —— Mr. Smith who bought him, because he thought he didn't have
5 a horse that was going to have a lot of value as a sire. I
6 mean, based on the bloodlines, you wouldn't think he'd have a
7 lot of value as a sire.
8 He might be like Refrigerator. Great on the track, kind
9 of bolt-out-of-the-blue genetically, but wouldn't have
10 expected him, given his pedigree, to be a stud horse.
11 Q. And Refrigerator was a running horse, won a lot of money,
12 but he was gelded?
13 A. He was.
14 Q. All right. Now, then, let's talk about the next one that
15 Mr. Loftin mentioned yesterday, and this is the horse that won
16 the Heritage Place Futurity. Do you recall --
17 A. Big Biz Perry.
18 Q. Big Biz Perry is what I -- yeah. Tell us about what
19 your -- what you did with respect to studying that horse's
20 pedigree and plugging him into your regression model.
21 A. Well, he was a bargain, but not as big a bargain maybe as
22 one might think. We estimated that he would have sold for
23 $29,000. He sold --
24 Q. And he sold for how much actually?
25 A. Twenty.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1017
1 Q. So you were -- you were right in the ballpark there?
2 A. Yes. And we estimated that the probability of him
3 hitting that elite group was forty-one percent, and he was in
4 kind of that transition area. At 29,000, he would have been.
5 At 20,000, he's a little bit to the right of it.
6 So the model again, it worked. It came really close.
7 Q. And, again, you would be looking at this model if you
8 would like the night before the horse sale as opposed to three
9 years later after they've started running the races?
10 A. Right. If we had looked at this horse when it came up
11 for sale, we would have advised the buyer, this horse is
12 worth, according to our model, $29,000.
13 Now, maybe it would go for higher or lower at the sale,
14 but, certainly, if it was going for lower, the model would
15 tell you to buy it.
16 Q. All right. Now, this line of questioning yesterday by
17 Mr. Loftin started when he was asking you, if -- well, what
18 happens when this Wicked Courage or Big Biz Perry actually
19 fall below one of the rankings or one of your low -- remember
20 when he was talking about the clusters?
21 A. Yes.
22 Q. Okay. Tell us what the cluster analysis is and how that
23 pertains to this model, this statistical model that you've
24 testified to.
25 A. We ran two statistical models. One predicts price, and
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1018
1 that's the hedonic linear regression model.
2 Q. We talked about that yesterday?
3 A. We talked about that yesterday.
4 Q. Okay.
5 A. The second model we ran, which is called the logistic
6 regression model.
7 Q. Okay.
8 A. And a logistic is, if you put things into groups, or it's
9 a yes/no kind of question, tries to predict the probability of
10 it being a yes.
11 Q. All right. Do we have a slide that would help explain
12 that?
13 A. We have a slide of the output, yes.
14 Q. Okay.
15 MR. STEIN: Let's put up -- we're back to Exhibit
16 92, but let's put up Slide 22.
17 Q. (By Mr. Stein) And is this what you're talking about?
18 A. That's the cluster. So you want me to explain cluster
19 for --
20 Q. Yeah, that's where we're at.
21 A. Okay. Cluster analysis is a numerical technique; it's
22 not a statistical. I guess you could call it statistical, but
23 it's really a numerical analysis.
24 If you have two groups of things, you predict there are
25 two groups of things, or three, or four, what a cluster tries
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1019
1 to do is, it says: Okay. Let me look at the averages of the
2 groups, and then let me look at the dispersion around the
3 averages. In other words, is everything close to the average?
4 Do we have a tight distribution, or is it a spread-out
5 distribution?
6 What a cluster tries to do is, find the groups that have
7 the maximum difference between their averages and the minimum
8 dispersion around their averages. In other words, it tries to
9 find groups that are far apart and tied together, as best it
10 can. And it just cranks; it's an algorithm. It just cranks
11 until it does that.
12 Q. So if we look at your top cluster, your top tier, it has
13 an average price for that top tier of a little over 60,000,
14 with a range of thirty-five to four thirty-five.
15 And I believe it was the $35,000 number that Mr. Loftin
16 was asking you about, because Wicked Courage fell way below
17 that.
18 Now, now that we know that he only sold for 4,000 --
19 A. Yes.
20 Q. -- now that we know that your model predicted him to only
21 bring 7300 --
22 A. That's my other model, yes.
23 Q. -- is he in the top tier?
24 A. No.
25 Q. So the cluster analysis that you did and your formula
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1020
1 that predicts these horses confirm that this horse really is
2 not an elite yearling when he sold?
3 A. Well, he didn't sell at an elite price, and the logit
4 model, not the cluster, the logit --
5 Q. Uh-huh.
6 A. -- predicted that he would not be elite, and he wasn't.
7 Q. All right. And this --
8 A. Not even close. The model predicts two-percent
9 probability that he would be elite, which pretty close to
10 zero.
11 Q. Once in awhile, you've got these guys that just come out
12 of the gate and exceed our expectations?
13 A. Refrigerator, Cigar, in the Thoroughbred arena, yeah, it
14 happens.
15 Q. Does it mean that what you've done is flawed or wrong?
16 A. No. I would submit that I was right. My model works.
17 Q. And this -- and this actually established it? It
18 actually reconfirmed in your mind?
19 A. Yes. You know, I -- we hadn't ever done this with a
20 model before. We knew it did what it did statistically, but
21 we never tried to use it to predict anything.
22 And Mr. Loftin, you know, brought up a couple of horses,
23 so, last night, my assistant and I went back, and we ran the
24 model, and it worked.
25 Q. All right. Now, I want to pull up one more slide.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1021
1 MR. STEIN: Let's pull up No. 9.
2 Q. (By Mr. Stein) Mr. Loftin asked you yesterday questions
3 about how few -- how few elite registered Quarter Horses there
4 are.
5 Now, even though the market for these elite registered
6 Quarter Horses may be small of the total Quarter Horse
7 population, is it small from a dollars' perspective?
8 A. No, it's not. It's a pretty good -- it's a good size
9 market from a dollar perspective, because these horses ——
10 well, look at the averages —— they sell for so much more than
11 the others do.
12 Q. So from a total dollar volume, there's -- there's a
13 higher -- higher average total dollars?
14 A. You know, it's -- I never did the calculation of what
15 percent of the total dollar value of the market they
16 represent, but if you look at the differences in the price,
17 they represent significant dollars.
18 And then go beyond there and look at what these horses
19 do. These are the horses that are at the racetrack, that are
20 at the cutting arena, and, you know, racing is over a
21 hundred -- Quarter Horse racing is over a-hundred-million-
22 dollar-a-year business in purses alone. You bring in all the
23 rest, and you've got hundreds of million of dollars in Quarter
24 Horse racing.
25 So these horses sell for a lot of money, and they have a
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1022
1 lot of influence on the Quarter Horse business and the Quarter
2 Horse sport.
3 Q. So, given the fact that we're dealing with few numbers
4 but large dollars, do you still have the opinion that AQHA's
5 ban on the registration of clones and their offspring has
6 substantially contributed to AQHA's monopoly power?
7 A. Yes, because these are the horses that really matter in
8 terms of people relating to Quarter Horses.
9 Q. All right. If clones and their offspring were registered
10 and the prices of horses in the elite market dropped, then
11 would more people be able to afford and enter that elite
12 market and compete against the few people and breeders that
13 are in that market now?
14 A. Yes. I mean, it still wouldn't be cheap. You know, it's
15 not -- the average guy is not going to compete at the elite
16 levels, but two things would happen. More people of modest
17 wealth but still wealthy people could get into this. But you
18 would also expect the prices of the lesser horses to fall.
19 So let's talk about the fellow who, it's called
20 weekending, you know, local cutting tournaments. And now, you
21 know, he -- you know, a reasonably successful farmer, he's
22 going to think two or three times about buying one of these
23 horses, but if prices fall, he'll be able to buy a better
24 horse, and those weekend events will be at a higher level; it
25 will be more fun for everyone.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1023
1 Q. So it's not like the smaller guy or the mid-level guy
2 necessarily wants to enter the elite market, there's just
3 going to be more of these good-quality horses available for
4 the mid-level competitors?
5 A. Right. You'd expect the prices —— (coughs), excuse me ——
6 to be -- go down across the board.
7 Q. All right. Now, yesterday, Mr. Loftin also asked you
8 whether there were two different elite markets, one for the
9 racers and one for the cutters. Do you remember that
10 testimony?
11 A. Yes.
12 Q. Explain to the jury what you mean when you're talking
13 about, "Well, I looked at this from the cutting standpoint,
14 and I looked at this from the racing standpoint."
15 From an economic perspective, tell us what you're -- what
16 you've actually arrived at in your conclusions as to this
17 elite market.
18 A. Well, they're different types of competitions, and so the
19 horses are actually -- if you just look at them, they're quite
20 different.
21 Racing horses are quite large. Cutters are small, not
22 small, but they're smaller. A racing horse could be sixteen
23 hands high, that's four-and-a-half inches per hand; whereas, a
24 cutter might be fourteen, fourteen-and-a-half-inch-hands high.
25 Some of the grade cutters are even smaller than that.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1024
1 So you have different competitive events, but they're
2 still Quarter Horses; they're still AQHA registered, and so
3 AQHA controls them.
4 Now, some economists might say: "Well, okay, we have the
5 market for elite registered Quarter Horses, and we have two
6 submarkets or three submarkets," as many as -- competitions as
7 there are, because, though, they're -- cutters and reiners
8 come from similar bloodlines, and track racers and barrel
9 racers come from similar -- they don't cross much between
10 those two groups. They're different kinds of horses.
11 So you might say there are submarkets, but they're still
12 elite registered Quarter Horses, and they still fall under the
13 purview of the AQHA.
14 Q. Because we're dealing with Quarter Horses as the breed?
15 A. Right, Quarter Horses are the breed.
16 Q. And we're dealing with the AQHA who is the only game in
17 town with respect to that breed?
18 A. Right.
19 Q. Now, you mentioned just a moment ago today, in response
20 to Mr. Pflaum's [sic] questions, about, well, a monopoly that
21 is not illegal versus a monopoly that is using its power
22 unlawfully.
23 Now, are all monopolies wrongful? Is it wrong to have a
24 monopoly?
25 A. No.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1025
1 Q. What's wrong about a monopoly, or what can be wrong about
2 a monopoly, as we see in this case?
3 A. Well, if you have a monopoly because you simply did a
4 better job than everybody else so everybody wants to buy from
5 you because your price quality, et cetera, is attractive, no
6 one is being hurt.
7 If you have a monopoly because you have a patent, well,
8 your monopoly, what we call, rents or excess profits are the
9 reward for the research you did to get that patent. So, in
10 this country, we encourage a monopoly for a limited period of
11 time through our patent laws or our copyright laws for an
12 author. You can't go out and reprint somebody's book because
13 that's their work product. So there are monopolies that are
14 perfectly proper.
15 The problem is, that if one uses one's monopoly in a way
16 to hurt the market or to prevent competitors from coming into
17 the market, or something else that violates the integrity of
18 the market and causes consumers to pay higher prices for no
19 good reason, then that becomes typically -- and I'm a
20 economist, not a lawyer, but that's the sort of thing that the
21 antitrust laws are designed to prevent, and that's an improper
22 use —— we sometimes call it predatory behavior —— it's
23 improper use of monopoly power.
24 Q. Then why not then just go out and start a new registry
25 and just directly compete with AQHA and say, "We now have a
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1026
1 DNA or a clone registry"?
2 A. Because the barrier -- what's called the barrier to
3 entry, let's call it, into the Quarter Horse registry market
4 is virtually insurmountable. As Mr. Loftin said, AQHA has
5 been doing this for seventy years. They're -- I don't mean it
6 in a pejorative sense, but they're entrenched. They've got
7 it. They've got the registry. And that registry, as, again,
8 Mr. Loftin and I were discussing, is well recognized and
9 respected.
10 Well, if you try to start a new registry, why -- who
11 would come to you, and would it be well recognized in the --
12 and respected coming out of the box?
13 And it's different than if -- let's say it's a
14 manufactured good. Go back to our widgets, and the widget is
15 not patented, and we have a fellow with a widget monopoly.
16 I'm going to go and compete with him, and I've got a better
17 idea how to make a better widget. So I go out, and I make my
18 better widget. And, lo and behold, the market says this is a
19 better widget. There's no barrier to me making widgets and
20 selling widgets. If I make a better one, the market is going
21 to come to me.
22 But let's say that this guy who's got the widget monopoly
23 cuts a deal with the supplier of this special plastic that I
24 need to make -- I need to use to make a widget.
25 Q. Okay.
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Redirect--Mr. Stein) (Plaintiff Abraham Equine, Inc.) 1027
1 A. And he says to this supplier, "If you want to do business
2 with me, you'd better not do business with him because I've
3 got the market, and I'm a monopolist." Well, that's an abuse
4 of his monopoly power. He's used his monopoly power to
5 exclude me from the widget market. And that's illegal.
6 Q. Now, then, let's move that into the horse market. We
7 have -- prior to 2002, prior to when multiple embryos could be
8 registered, we had, as a competitor, the DNA -- the National
9 DNA Registry. Tell us what happened there when all at once
10 multiple embryos could be registered.
11 A. Two things, a couple of things interesting about the
12 National DNA. One, it really never took off, but it kind of
13 took off, because the multiple embryos wouldn't be registered.
14 As soon as the AQHA decided that they would register multiple
15 embryos, the DNA Registry completely went away. It collapsed.
16 The lady who started it lost all of her investment, and
17 everything else.
18 Q. Now, could a horse with a DNA paper or a clone paper from
19 this competing registry go race in an AQHA-approved racing
20 event?
21 A. No, because the racing commissions recognize the
22 registry -- the AQHA as the registrar of Quarter Horses. And
23 if you're not registered with the AQHA, you can't race, which
24 means, if you wanted to get into that registry market, compete
25 with the AQHA, you'd have to get all of these state racing
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Recross--Mr. Loftin) (Defendant AQHA) 1028
1 commissions to approve you also, so that your registered
2 horses could compete against their registered horses.
3 Q. So, even though these clones and the offspring of clones
4 might be the better widget, they still can't enter the market
5 for AQHA-approved events, true?
6 A. True.
7 MR. STEIN: That's all the questions I have.
8 RECROSS EXAMINATION
9 BY MR. LOFTIN:
10 Q. Dr. Pflaum, I'd like to talk to you a little bit about
11 auctions.
12 A. Okay.
13 Q. The yearling auctions that we've talked about where the
14 Heritage Place -- we'll use Heritage Place Racing Horse
15 Auction, about a thousand horses we've said come to be sold,
16 and, you know, hundreds of buyers come to buy, correct?
17 A. Correct.
18 Q. And I don't want to be too -- or maybe I enjoy being
19 philosophical, but I heard somewhere that every viewpoint is a
20 view from a point.
21 So, in an auction, we've got the sellers. Am I correct
22 that what they'd like to do is get the best price they can for
23 their yearling?
24 A. Yes.
25 Q. So your model is designed -- this isn't why you created
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Recross--Mr. Loftin) (Defendant AQHA) 1029
1 it, but you were talking to counsel here, and you said, "You
2 know, what my model does, one thing it does is predict the
3 sales price."
4 A. That's what's on the left-hand side of the equation,
5 correct.
6 Q. And it predicts the sale price?
7 A. Correct.
8 Q. Explanatory val -- explanatory variables are useful in
9 predicting a sales price?
10 A. Correct.
11 Q. And that was -- that's a result of lots of economic work
12 you did, correct?
13 A. Statistical work, correct.
14 Q. And so if I'm -- if I'm a seller, you know, gosh, I'd
15 like to know ahead of time, as best I can tell, what I'm
16 likely to sell my horse for. It would just be interesting to
17 know, and maybe if I see that your model is really good, it
18 can help me inform my future decisions about how much money to
19 spend on breeding, right?
20 A. Well, I'd probably build a much bigger model for that and
21 a little bit different type of model.
22 Q. All I'm really saying is, if you're selling a horse, you
23 want to get as much as you can for it?
24 A. Oh, yes.
25 Q. Okay. Now, if you're buying a horse in this relevant
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Recross--Mr. Loftin) (Defendant AQHA) 1030
1 product market, that's the next thing I want to talk about.
2 So that's a different viewpoint, correct?
3 A. Correct.
4 Q. And you've told me from your very first report that
5 the -- what makes this market unique is, that there's no
6 substitute for winning, for winning the big race. That's the
7 product that people want. They want a horse that can win the
8 big race, win in the show ring in cutting, and bring the
9 income and the prestige that goes with that.
10 A. And they want the breeding value of the animal, because,
11 as Mr. Abraham and others have testified, you make more money
12 breeding than you do showing or racing.
13 Q. Well, I guess I didn't ask my question well, because
14 that's money you get, right?
15 A. That's absolutely true.
16 Q. So let me try it again. What the buyer that goes to that
17 auction is looking for, he wants to buy a horse that's going
18 to go out and fulfill his dream of winning a major futurity or
19 a derby or a world championship or a major futurity in
20 cutting. You know, he's going to -- he wants the brass ring
21 that's going to bring him earnings, prestige, and then he's
22 got a breeding animal if it's not a gelding, correct?
23 A. And if it's got good bloodlines.
24 Q. Okay. Or -- okay. Now, does it hurt a buyer's feelings
25 if they get that horse for a non-elite price?
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Recross--Mr. Loftin) (Defendant AQHA) 1031
1 A. Oh, I'm sure it doesn't hurt his feelings, no.
2 Q. So the owner -- I think it's Mr. Smith owns Wicked
3 Courage, who's won nine races in a row.
4 A. Yes, terrific horse.
5 Q. And, even to get in the derby he won last week, my
6 understanding is -- I've already made one mistake, but my
7 understanding is, you have to go through a series of trials
8 where they whittle down all these horses that want to get in
9 the big race, kind of like the Olympic trials.
10 So they run a series of trial races, and the -- I think
11 it's -- I can't remember how many times it is, but a limited
12 number of horses that have the lowest times, they're in the
13 big race?
14 A. Correct.
15 Q. So he got in the big race, and he won it. And there's
16 one more big derby over in New Mexico, and if he wins that, he
17 will have won the Triple Crown of racing?
18 A. He will have, yeah. It's an amazing story.
19 Q. And Big Biz Perry, $20,000, is, you know, well below your
20 $35,000 line of demarcation.
21 A. Sure.
22 Q. But you could have told the breeder, "You're probably not
23 going to get 35,000 or more at auction for this price [sic]."
24 You're -- I say you could have told the breeder. Your work,
25 your statistical analysis would have suggested to the breeder
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Recross--Mr. Loftin) (Defendant AQHA) 1032
1 that, if he was hoping to get 35,000 or more for Big Biz
2 Perry, he was probably going to be disappointed.
3 A. Yes.
4 Q. But, on the other hand, the buyer who saw something in
5 that horse that other people didn't see, you know, he's not
6 disappointed at all.
7 A. No, if -- no, I would have advised him that, if he could
8 get the horse for the price that my model estimated, that was
9 a good price. And he got it for less. He should be very
10 happy.
11 Q. And, you know, you looked at the pedigree of Wicked
12 Courage and told us some things about him, and you looked at
13 the pedigree of Big Biz Perry.
14 Now, what you haven't done -- I'm not suggesting you'd
15 have the time to do it, but you haven't -- here's this line of
16 demarcation, $35,000, and you're saying that the
17 characteristics of the horses below it for the most part are
18 that they're non-elite?
19 A. Right, they don't have certain genetic characteristics.
20 Q. All right. What you haven't done is go through one
21 pedigree at a time for, you know, a $30,000 horse, a $25,000
22 horse, a $20,000 horse, a $17,000, $500 horse, and seen:
23 Well, how did those horses do? Did they earn 100,000? Did
24 they earn 500,000?
25 That's not something you made an effort to do?
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Recross--Mr. Loftin) (Defendant AQHA) 1033
1 A. No, it's not. I'm trying to predict the price they'd
2 sell at at auction. I'm not trying to predict their
3 performance on the track or ring. That's a whole different
4 type of modeling.
5 Q. But you've been around -- I think you follow
6 Thoroughbreds more than Quarter Horses historically maybe,
7 huh?
8 A. That's what, you know, I grew up with.
9 Q. But you know that every horseman or woman that goes to an
10 auction, somewhere in the back of their mind, is thinking, you
11 know, this -- this horse I'm going to buy may be the one that
12 fulfills the dream; this one could be the surprise.
13 So the buyer is looking for the horse that's going to
14 win; the seller's looking for the best price. They've got two
15 different viewpoints, right?
16 A. Supply curve and demand curve.
17 Q. Okay.
18 MR. LOFTIN: Now, Rhonda, if you would, please,
19 could you pull up Plaintiffs' Exhibit 92, the first page of
20 it. And that's been admitted into evidence, Your Honor.
21 Q. (By Mr. Loftin) All right. So the big circle is all the
22 registered Quarter Horses in a year, correct?
23 A. Correct.
24 Q. And, you know, it's pretty hard to see. I don't think I
25 can really see at all. There's a fairly small circle, "sold
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Recross--Mr. Loftin) (Defendant AQHA) 1034
1 at major sales."
2 A. With a green -- that's a blue -- it's a --
3 MR. LOFTIN: There we go.
4 THE WITNESS: There you go.
5 MR. LOFTIN: Thank you, Rhonda, very much.
6 Q. (By Mr. Loftin) It's still a little hard to see, but you
7 see it there. And that's -- that's these major auctions,
8 Heritage Place?
9 A. Right, right here.
10 (Ms. Brashears enlarges exhibit.)
11 MR. LOFTIN: Good job. Thank you.
12 Q. (By Mr. Loftin) And then the tiny dot --
13 A. Right there.
14 Q. -- is "elite registered Quarter Horses," and that's both
15 colts, fillies and -- well, no, it's not. It's colts,
16 fillies, stallions, mares, geldings. It's not limited, is it,
17 or is it?
18 A. Well, no, there, we're talking about yearlings sold at
19 auction.
20 Q. Oh, that doesn't include the mares and the stallions?
21 A. No, no. We're talking about the offspring.
22 Q. How many of these elite proven mares are there in America
23 right now?
24 A. This is just what I've heard and read. I mean, I haven't
25 gone to study it, but people will say, oh, perhaps there's
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Recross--Mr. Loftin) (Defendant AQHA) 1035
1 fifty blue-hen mares out there, and then there's several times
2 that of very good mares, so there's a few hundred, I would
3 think.
4 Q. That's just kind of a ballpark estimate?
5 A. It's a ballpark.
6 Q. Okay. Now, again, what really matters in the end -- I
7 know breeding rights follow winning. Okay? I'm not leaving
8 that out, but you got to -- with a -- let's just use a racing
9 stallion.
10 With a racing stallion, if you're going to command large
11 stud fees, the first step in the process of getting there is
12 to win a lot of money, win hopefully a major race or two,
13 right?
14 A. At least a couple. In fact, it's interesting, these
15 horses we're talking about -- just bear with me for a moment
16 while I get --
17 Okay. Captain Courage, who is royally bred, he was never
18 campaigned very hard, but he did win some horses [sic] -- win
19 some races, but he wasn't like Ochoa that won millions of
20 dollars or anything like that.
21 Q. And, even with a mare, we've talked about how mares
22 sometimes don't have a very distinguished performance record,
23 but they become great producers, correct?
24 A. Yes, that's correct.
25 Q. But still you would like to have your mare at least
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Recross--Mr. Loftin) (Defendant AQHA) 1036
1 perform reasonably well?
2 A. The legendary mares did for the most part.
3 Q. Okay. Now, performance -- I mean, you pick the best
4 horse you can at that auction, but you also -- a couple of
5 times, people have said it's all genetics.
6 Now, you know, isn't the trainer important? Isn't the
7 rider important? Isn't the ranch you pick to raise your
8 horse? Aren't all of those things important?
9 A. Sure. And I think, in my testimony, I talked about
10 what's called the Brown Shoe Factors in antitrust, and I
11 pointed out that these people were raised -- these horses,
12 excuse me, were generally bred in the concentrated operations
13 owned by top people. And if you looked beyond that, they were
14 trained by top people; they used the top jockeys to race them
15 or the top riders, like the Phil Rapps of the world, if
16 they're cutters in the arena, so absolutely.
17 Q. Okay. Just two more things. First of all, one of the
18 things you talked about in your report is, this is a separate
19 market because there's unique production facilities. Do you
20 remember that?
21 A. Yes.
22 Q. Now, these major breeders that sell horses at auction,
23 typically, they have horses that sell well above $35,000, but
24 they have a number of horses that sell below $35,000 in the
25 racing --
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Recross--Mr. Loftin) (Defendant AQHA) 1037
1 A. Sure.
2 Q. Yes. All right. Finally, now, there is a separate
3 relevant product market in the cutting discipline, correct?
4 A. It's -- I would say it's a submarket of the elite
5 registered Quarter Horse market, yes.
6 MR. LOFTIN: Rhonda, would you pull up Page 114,
7 please.
8 Q. (By Mr. Loftin) You remember when I had the opportunity
9 to take your deposition?
10 A. Yes.
11 Q. And you've given many depositions?
12 A. I have.
13 Q. Taken the oath many times, haven't you? Taken the oath
14 to tell the truth many times?
15 A. Yes.
16 Q. And each time, you've done your best to tell the truth,
17 have you not?
18 A. Yes.
19 Q. And you understand that, you know, Defense Counsel or
20 Plaintiff -- the attorney on the other side is relying on you
21 to give truthful, accurate answers, correct?
22 A. Correct.
23 Q. And so back when I took your deposition, I asked: "Is
24 there a separate relevant product market in the cutting
25 discipline, for example?"
Stacy Mayes Morrison Official Court Reporter Christopher Pflaum (Recross--Mr. Loftin) (Defendant AQHA) 1038
1 And you answered?
2 A. Yes.
3 Q. Well, I mean, how did you answer it then?
4 A. Yes, I answered then.
5 Q. I think your answer was separate from what -- I'm sorry,
6 I'm just -- you and I are at different places, like, who's on
7 first base.
8 I'm just having -- I wanted you to read your answer.
9 I asked you: "Is there a separate relevant product
10 market in the cutting discipline, for example?"
11 And your answer was: "Separate from what?" Correct?
12 A. Yes.
13 Q. Okay. And then I said: "From the relevant product
14 market in the racing discipline?"
15 And then your answer was: "Yes."
16 A. Yes.
17 Q. All right.
18 MR. LOFTIN: Thank you.
19 MR. STEIN: We have nothing further, Your Honor, of
20 this witness.
21 THE COURT: May the witness be excused altogether?
22 MR. LOFTIN: He may.
23 THE COURT: Counsel?
24 MR. STEIN: You understand that we may call this
25 witness as a rebuttal witness.
Stacy Mayes Morrison Official Court Reporter Defendant's Judgment as a Matter of Law Bench Conference 1039
1 THE COURT: All right. You're not excused as a
2 witness, but you're permitted to remain in the courtroom.
3 (Witness leaves the stand.)
4 MR. STEIN: All right. Your Honor, at this time, on
5 behalf of Abraham Equine, Inc., we rest.
6 MS. STONE: On behalf of Abraham & Veneklasen Joint
7 Venture, we rest.
8 MR. NICKUM: On behalf of Jason Abraham, we rest.
9 MR. LOFTIN: Your Honor, we -- Your Honor, we have
10 one matter we need to take up outside the presence of the
11 jury, please.
12 THE COURT: Will it be short?
13 MR. LOFTIN: I think it will be.
14 THE COURT: Well, just approach the bench then.
15 (The following took place at the bench and outside the
16 hearing of open court.)
17 MS. WHITE: Your Honor, at this time, the Defendant
18 moves for Judgment as a Matter of Law, and we have a brief
19 prepared, or we're happy to do oral argument, if you prefer.
20 THE COURT: Why don't you just hand me the brief.
21 MS. WHITE: Sure.
22 (Pause.)
23 THE COURT: Have you furnished her a copy?
24 MS. STONE: Yes, we just got it --
25 MS. WHITE: Yes, Your Honor.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1040
1 MS. STONE: -- at the same time.
2 THE COURT: All right. I'll overrule your motion.
3 MS. WHITE: Thank you, Your Honor.
4 (The following took place in the hearing of open court.)
5 DEFENDANT'S EVIDENCE
6 THE COURT: Call your witness.
7 MR. LOFTIN: Call Frank Merrill.
8 (Pause.)
9 THE COURT: The clerk will administer the oath.
10 (The witness was sworn by the courtroom clerk.)
11 THE WITNESS: (To the Jury) Good morning.
12 FRANK MERRILL,
13 having been first duly sworn, testified as follows:
14 DIRECT EXAMINATION
15 BY MR. ARNOLD:
16 Q. Good morning, Mr. Merrill. How are you doing today?
17 A. Good morning.
18 Q. I know you and I have met several times, but go ahead and
19 introduce yourself to the jury, if you would, please.
20 A. I'm Frank Merrill from Poolville, Texas.
21 Q. I've got to admit, I don't know where Poolville, Texas
22 is. Go ahead and tell the jury where --
23 A. It's a wide spot on the road on 920 north of Weatherford,
24 Texas, about -- about twenty miles north of Weatherford.
25 Q. Are you a married man?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1041
1 A. Yes.
2 Q. Tell me a little about your family.
3 A. I have a wife, Robin. We've been married thirty-eight
4 years, and we have three children. McKenzie is the oldest,
5 she's thirty-six. My daughter, Megan, who's thirty-two, and
6 my son, Tyler, who's thirty. And I have two grandchildren who
7 are three and one.
8 Q. Where do your kids live, Mr. Merrill?
9 A. They live in Poolville, but McKenzie lives in Dallas.
10 Q. The kids -- well, let me ask you about the whole family.
11 Is your whole family involved in the Quarter Horse show
12 business?
13 A. Yes, sir.
14 Q. Tell the jury what your family's involvement is. In
15 other words, what disciplines do y'all like to go to and
16 compete in, things like that?
17 A. Well, our family, through history, has competed in a lot
18 of disciplines, but, currently, all the kids and their spouses
19 are involved in the cutting horse industry.
20 Q. Do the kids own horses of their own?
21 A. Yes.
22 Q. Tell the jury just a little about the kind of horses that
23 your kids own.
24 A. Well, they're competitive cutting horses. They breed and
25 raise those horses. They buy and sell those horses. And they
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1042
1 train those horses.
2 Q. Now, there's been some testimony before the Court that
3 there's an elite market in the Quarter Horse business, and
4 there's also an elite market in the racing business, and that
5 elite market, roughly speaking, includes horses that --
6 yearlings that sell for $35,000 all the way up to a
7 half-million dollars.
8 Are any of the kids' horses that you've described, are
9 they in that elite market?
10 A. That they have raised or sold?
11 Q. Yes, sir.
12 A. They have over time, on several occasions, had the
13 fortune to sell yearlings for in excess of that, but, by and
14 large, most of their horses sell for less than that.
15 Q. Now, you or your wife, do y'all own any horses?
16 A. We have two broodmares. One gelding that's a
17 four-year-old competitive cutting horse, and two weanlings and
18 two yearlings.
19 Q. Now, let me get this straight. You and your wife only
20 own two mares?
21 A. That's correct.
22 Q. How many stallions do y'all own?
23 A. We own no stallions.
24 Q. You and your wife only own two horses together, and
25 that's it?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1043
1 A. That's all. Well, no, two broodmares.
2 Q. Okay.
3 A. That produced two yearlings that have two weanlings that
4 are at their side.
5 Q. Now --
6 A. Haven't been weaned yet.
7 Q. -- there's also been some testimony, in fact, some of
8 your deposition testimony was read into the record earlier in
9 the trial, and there was some discussion about a place that
10 you used to have called Windward Stud; is that the right name?
11 A. Yes, sir.
12 Q. All right. Now, before I get to that, I want to -- I
13 want to go back much further in time, if I can, Mr. Merrill.
14 Did you grow up in Texas?
15 A. No. I grew up in Michigan.
16 Q. How the heck did you end up down here in Texas?
17 A. Well, there wasn't a whole lot of horse activity in the
18 little town of Fremont that I grew up in, so I really wanted
19 to be a horseman ever since I can remember. So I moved to
20 Texas where I thought I had a better chance to learn the
21 business.
22 Q. Where did you develop a love for horses? When did that
23 come along in your life?
24 A. I'm not sure. My mother claims that the first words out
25 of my mouth were "horse," instead of momma or dada.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1044
1 (Laughter.)
2 Q. (By Mr. Arnold) All the way back to when you were a
3 little kid, huh?
4 A. Yeah.
5 Q. All right. So just you -- I don't need you to go blow by
6 blow, but give the jury a little history on your experience in
7 the horse business.
8 I mean, you've had a love for horses ever since you were
9 a little kid. Did that progress further and further?
10 A. Yes, it did. Some would say I was foolish to quit
11 college with only one semester to finish to get my degree, but
12 I wanted to be a horseman so badly that I did just that.
13 And I moved to Gainesville, Texas when I was twenty years
14 old, studied under two noted horsemen, George Tyler, and
15 Matlock Rose for two years.
16 And then I moved down to Purcell, Oklahoma where I made
17 my home for the last four years before moving to Poolville.
18 And, in 1971, I became partners and worked for a man named
19 Jerry Wells. We owned a stallion named Boston Mac that I
20 became a partner in, and then I subsequently bought the rest
21 of the controlling interest in, and moved him to a farm that I
22 was building called Windward Stud, which was about a mile and
23 a half away from Jerry's ranch.
24 Then we -- from there, I established a commercial
25 breeding farm in 1973, stood our first two stallions, and then
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1045
1 married Robin in 1975. And, as only good fortune would have
2 it, we attracted more and more stallions, gravitated towards
3 the racing industry, but always had some performance horses
4 and cow horses or cutting horses, stallions.
5 Now, these horses, these studs were owned by other
6 people, and we provided a service. We were a service
7 organization. Windward Stud was a commercial breeding farm
8 much like a commercial dairy.
9 Q. Mr. Merrill, let me -- let me ask you a little more in
10 detail about that. So were you the owner of Windward Stud?
11 A. Yes, sir.
12 Q. Together with your wife?
13 A. (Laughs.) Originally, I was the original owner, and then
14 Robin came to live with me, and I conveyed fifty percent to
15 her.
16 Q. Probably a smart decision on your part.
17 A. Yeah, it was.
18 Q. Okay.
19 A. Thank you.
20 Q. All right. So when you became the owner of Windward
21 Stud, that was all the way back in the seventies?
22 A. Yes, uh-huh, 1973.
23 Q. Now, you were discussing being a commercial breeding
24 operation, but you also said something about a lot of people
25 would bring their studs there, so I'm a little confused.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1046
1 Tell the jury how many horses Windward Stud owned versus
2 how many horses were being stabled there for other purposes.
3 A. Well, our -- my wife and I owned very few horses in
4 comparison to the amount of horses that we managed and we
5 bred.
6 At one time, we had twenty-two stallions that we stood in
7 one year, managed those horses, and then, over the span of
8 forty years, probably bred over 25,000 mares. Those mares
9 were not owned by us. Those were outside mares. People bring
10 those mares to the stallions, and we -- we would breed them.
11 Q. Now, as the business -- well, how long did the business
12 last there at Windward Stud, Mr. Merrill?
13 A. From 1972, was the year I established it, to 2003 under
14 my ownership.
15 Q. All right.
16 A. I'm sorry, 2006.
17 Q. Okay. 2006?
18 A. Yes.
19 Q. So tell us what happened with respect to Windward Stud in
20 2006.
21 A. Well, in 2003, we had a dispersal sale. Robin and I had
22 decided -- the kids had all moved to Texas. We had decided
23 that it was time to get out of the commercial breeding
24 business and stop managing everybody's studs and going through
25 the hassle of breeding season, that we would have just late
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1047
1 nights, very little sleep, and a lot of hard work, so --
2 Q. And that was -- that was in 2003 that y'all sold all of
3 your interest in Windward Stud and got out of the --
4 A. No, only the equipment and the horses. We didn't put the
5 real estate in the auction.
6 Q. So you still owned the land that the farm sat on?
7 A. Yes.
8 Q. All right. And did you stay on as an employee with the
9 new owners that you had sold to?
10 A. Well, it took us three years to get the ranch sold after
11 2003, but then, in 2006, the Cowan family from Montana, who
12 had an interest in the same type of horses that Robin and I
13 did, bought the property, and we became salaried employees.
14 Q. All right. What kind of operation -- what was the name
15 of the Montana family that bought it?
16 A. Cowan, C-O-W-A-N.
17 Q. Okay. Now, when the Cowans bought it, what kind of
18 operation were they running on -- on the Windward Stud place?
19 A. The same as what we were doing, not a commercial breeding
20 farm, but they had a group of broodmares, and they were
21 breeders. They came from Montana, as I said. They had bred a
22 lot of ranch horses up there, and their main emphasis was the
23 cow/calf operation where they ran approximately 4500 head of
24 mother cows.
25 Q. All right. Now, you said you were on salary, you and
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1048
1 your wife were on salary at that point?
2 A. Yes, sir.
3 Q. And you said that their operation was mainly cow/calf
4 operation?
5 A. In Montana.
6 Q. Okay. What about at Windward Stud? When you were on
7 salary working for them, you said they weren't doing
8 commercial breeding, but they were doing breeding. And what I
9 want to know is, was it breeding mostly of cow/calf or ranch
10 horses?
11 A. No, both ranch horses and competitive cutting horses, or
12 cow horses, reining cow horses.
13 Q. Okay.
14 A. Some roping horses.
15 Q. Did you and your wife have any ownership interests, or
16 did y'all get any commissions based on the amount of money
17 that any of the Cowans' horses sold for?
18 A. No, sir.
19 Q. At any time, did you ever get a commission on any of the
20 horses that they sold?
21 A. No.
22 Q. What about, if they had a horse that competed in an event
23 and won money, would you get a percentage of that or your wife
24 get a percentage of that?
25 A. No, we wouldn't.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1049
1 Q. So you were strictly salary?
2 A. That's correct.
3 Q. Now, take us from 2006 when the Cowans bought the place,
4 how long did you and your wife stay on as hired employees?
5 A. Six years.
6 Q. All the way up until about 2012?
7 A. Yes, sir.
8 Q. And that whole time were you working for salary?
9 A. Yes, sir.
10 Q. And your wife as well?
11 A. Yes, sir.
12 Q. Now, what happened in 2012 in terms of the change in your
13 work history?
14 A. Oh, we decided to move on, to move to Poolville. And, in
15 the course of the move, another family, who I had built and
16 constructed a breeding farm that was very close to Windward
17 Stud in Norman, Oklahoma, had lost the -- she had lost her
18 husband, who was a leading breeder in the running Quarter
19 Horse business, and she got wind of our move.
20 Robin and I had already signed a contract on a
21 horse [sic] —— a horse —— a house in Poolville, and then in --
22 right in the midst of that, a lady named Mrs. Moore got me by
23 the ear and said, "Not so fast, Frank; you're too valuable to
24 our operation; would you please manage it, and go to work for
25 us."
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1050
1 Q. And that was -- go to work for -- what was the name of
2 that entity?
3 A. Bob Moore Farms.
4 Q. All right. Now, is that where you currently work?
5 A. Yes, sir.
6 Q. And you've been working there since, I think you told me,
7 November of 2012?
8 A. Yes, sir.
9 Q. Hadn't been quite a year yet then?
10 A. No, sir.
11 Q. How are you liking that?
12 A. Well, so far, so good.
13 Q. Are you on straight salary with Bob Moore Farms?
14 A. Yes, I am.
15 Q. Do you get any commissions or any incentive bonuses or
16 performance bonuses, anything like that?
17 A. No, sir.
18 Q. Now, what type of operations do you oversee for Bob Moore
19 Farms? Tell the jury just kind of what things you do in your
20 job at Bob Moore Farms.
21 A. Well, there's -- I'm what's known as general manager,
22 group manager of Bob Moore Farms Group.
23 Bob Moore Farms comprises five different entities. One
24 is Bob Moore Farms itself. Then they have a polo club. The
25 family started a very well-known polo club in Norman, Oklahoma
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1051
1 called Broad Acres Polo Club. There's also a 1400-acre farm,
2 and that's called Norman Farm Lands, LLC. There's a small
3 commercial property on Highway 9 just north -- or just south
4 of the farm, and we call that H-9 or Highway 9, LLC. And I
5 manage that property as well.
6 The family also owns a twenty-five-percent interest in
7 the Heritage Place Auction Company in Oklahoma City, and I
8 oversee that as well.
9 Q. All right. Now, the Heritage Place auction facility,
10 that's where we've heard that a lot of yearling sales take
11 place; is that right?
12 A. Yes, sir.
13 Q. Now, with respect to your job duties at Bob Moore Farms,
14 would it be fair to say that some of them involve the horse
15 world and some of them don't?
16 A. Yes. Some of it is just plain farming and cutting hay
17 and baling hay, managing the facility. There are a lot of
18 barns and -- well, there's a polo club, polo barns, horse
19 barns, and just a multitude of utility sheds, and then, of
20 course, the equipment that is necessary to run a farm of that
21 size. So there's a lot more than just the horses to take care
22 of.
23 Q. Now, does Bob Moore Farms or any part of Bob Moore Farms,
24 do they sell any yearlings or any horses?
25 A. Yes, sir. It's a commercial breeding farm.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1052
1 Q. And what disciplines are those horses -- where do they
2 fall in?
3 A. Racing, Quarter Horse racing.
4 Q. Now, again, do you -- do you help facilitate the sale of
5 those horses?
6 A. Well, I hope I do (laughs).
7 Q. But do you get any interest, you personally, any
8 financial interest out of the sale of any of the horses from
9 Bob Moore Farms?
10 A. No, sir.
11 Q. Let me talk to you a little about your involvement with
12 the American Quarter Horse Association. Okay?
13 A. Okay.
14 Q. When did you first become a member; do you remember?
15 A. I probably became a member when I got my first horse when
16 I was -- my first American Quarter Horse, when I was ten or
17 eleven years old, so that would have been in 1958.
18 Q. So you've been a member of the association since 1958,
19 somewhere in there?
20 A. Yes, sir.
21 Q. Have you been a proud member during that time?
22 A. Yes, sir.
23 Q. What does the association mean to you?
24 A. Well, I was raised in it. I raised my family in it. My
25 wife was raised in it. It's our whole life.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1053
1 Q. Every weekend, away from the home competing in events,
2 things like that?
3 A. Yes.
4 Q. With the whole family?
5 A. Yes, sir.
6 Q. I want to talk a little bit about your involvement in
7 AQHA, not just as a member, but through service on committees
8 or boards or things like that.
9 Let's start with, do you recall, when was the first time
10 you ever were appointed to a committee, a standing committee
11 of the association?
12 A. In 1977.
13 Q. And do you remember what committee that was?
14 A. The Show and Contest Committee.
15 Q. Tell the jury what the Show and Contest Committee does.
16 A. Well, it has the auspices over the shows and the contests
17 that are conducted by the American Quarter Horse Association
18 during the course of the year.
19 Q. Have you served on other committees during your time as a
20 member of AQHA?
21 A. Yes, sir.
22 Q. Tell the jury what other committees you've served on over
23 your years as a member.
24 A. Public Information and Membership, Public Policy, Racing,
25 the Racing Council, Stud Book and Registration Committee,
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1054
1 Investment Oversight, and Finance.
2 Q. Now, you've also served as a member of the Executive
3 Committee; is that correct?
4 A. Oh, that's correct.
5 Q. Tell the jury -- let me back up. Before I ask you about
6 the Executive Committee, I want to ask you about service on a
7 standing committee.
8 And I think there's been testimony that currently there
9 may be twelve standing committees in the association. Does
10 that sound about right?
11 A. It sounds about right.
12 Q. And there's probably been more than that at various times
13 in the history of the association?
14 A. No. I think we have more standing committees now than
15 we've ever had.
16 Q. Okay. Now, if somebody wants to serve on a committee,
17 what do they need to do? How does one get on a committee?
18 A. Well, usually, the process starts by becoming involved at
19 the convention level. And every year, AQHA has an annual
20 convention at different cities across the United States in the
21 first week in March.
22 And the way to get involved is to become an attendee at
23 that convention to introduce yourself to those people who are
24 directors, Executive Committee members, past presidents, and
25 committee people, members of the committee, so that you --
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1055
1 they become accustomed to your awareness, your intellect, and
2 what you might offer on any of our standing committees.
3 Q. Now, would it be your opinion that, if you want to be
4 involved as a member in the association, that it would be
5 important to attend the annual conventions?
6 A. Well, yes, it's important, depending on how active and
7 involved you are with the horse.
8 Q. And, with respect to attendance at committees -- or,
9 excuse me, at conventions, do you and your family often attend
10 the conventions?
11 A. Yes, sir, every year.
12 Q. Can you even remember the last time you didn't attend a
13 convention?
14 A. No, I can't.
15 Q. Going all the way back to when you were a kid?
16 A. 1970 is the first convention I ever attended.
17 Q. And you think you've been to every single convention
18 since?
19 A. I think I've missed one.
20 Q. Now, if a person wants to serve on a particular
21 committee, can they voice that to people on the Board of
22 Directors or even to Executive Committee members that they
23 have met at convention, things like that?
24 A. Sure. If you want to serve on a committee, the -- then
25 after becoming acquainted with those people that are directors
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1056
1 and past presidents, Executive Committee members, one would
2 write a letter to the president, the standing president that
3 year, and ask for an appointment to a committee.
4 And usually what is required, to give three different
5 committees that you would like to serve on in order of
6 priority, first, second, or third.
7 Q. Now, how does one -- how does a member become a director?
8 How does one go from being a member to being on the Board of
9 Directors?
10 A. Usually, you become involved at the affiliate level or
11 the state level. And you would go through the normal process
12 on the state level as it compares to the national AQHA level.
13 You have a Board of Directors on the state level. Like
14 let's just take Texas Quarter Horse Association. They have a
15 president. They have a group of officers. They have a set of
16 bylaws. They have directors, and they have various committees
17 that sort of mirror AQHA.
18 So, after spending the time necessary to become well
19 versed at the political process and the things that you need
20 to understand about that and your involvement with the horse
21 in any or every discipline, your peers will then recognize you
22 as being worthwhile, energetic, and enthusiastic, and elect
23 you to the Board of Directors when an opening comes up at the
24 Texas Quarter Horse level.
25 Q. So the directors -- we've heard testimony that there's as
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1057
1 many as 300 directors, maybe even more than that, and I know
2 that some of those are at-large or past presidents, things
3 like that, but there's -- there are several hundred people
4 that comprise the Board of Directors, correct?
5 A. That is correct.
6 Q. And, if I'm understanding your testimony, those people
7 are kind of like state -- or legislators from across the
8 country who serve in Congress in Washington; they represent an
9 area of the country, or even, with the association, outside
10 the country, correct?
11 A. That's correct.
12 Q. Now, are the directors expected just to vote their own
13 personal interests, or are they there to represent the
14 interests of their area?
15 A. They're there to represent the wants and desires of their
16 rep -- their constituency in their particular state or
17 affiliate.
18 Q. And if a -- if a particular area doesn't like the job
19 that their director or directors are doing, can they be voted
20 off the Board of Directors?
21 A. Yes, they can.
22 Q. Has that happened in the history of AQHA?
23 A. Yes, it has.
24 Q. More often than once?
25 A. Yes, it has.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1058
1 Q. And what happens if you miss two conventions in a row as
2 a director?
3 A. Well, then you're removed from the Board of Directors.
4 You've taken yourself off.
5 Q. Now, I want to talk a little about what we're here in
6 this courtroom in the lawsuit, and that is Rule 227(a). Do
7 you know about Rule 227(a)?
8 A. Yes, sir.
9 Q. I think there's been testimony that Rule 227(a) was
10 recommended by the Stud Book and Registration Committee in
11 2003. Does that sound correct?
12 A. Yes, sir.
13 MR. ARNOLD: And, Rhonda, go ahead and pull up
14 Defendant's Exhibit No. 99, which has been admitted. Okay.
15 Can you blow up Item No. 2 there, please.
16 Q. (By Mr. Arnold) All right. Now, you can see from the
17 top there -- is this a -- first of all, is this a committee
18 report? What is this?
19 A. Yes. This is a report that was given to the convention,
20 the general membership meeting.
21 Q. Mr. Russell -- Mr. Merrill, I may be able to help you.
22 There should be a book up there that says "Defendant's
23 Exhibits" on it.
24 A. Okay.
25 Q. And, if you want to turn to 99, you may be able to see it
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1059
1 a little better than up there on the screen.
2 (Pause.)
3 Q. (By Mr. Arnold) Did I get you the right one, or --
4 A. No.
5 MR. ARNOLD: Your Honor, may I approach the witness
6 just briefly?
7 THE COURT: You may.
8 MR. ARNOLD: Thank you.
9 THE COURT: Well, let's go ahead and recess for
10 fifteen minutes.
11 And, Ladies and Gentlemen of the Jury, you're in
12 recess for fifteen minutes. Be back in the jury room ready to
13 come in the courtroom in fifteen minutes. Remember to leave
14 your notepads here in the courtroom.
15 (There was a recess taken; after which, the following
16 took place in open court with the jury and all parties
17 present.)
18 MR. ARNOLD: May it please the Court?
19 Q. (By Mr. Arnold) Mr. Merrill, I was asking you about the
20 2003 Stud Book and Registration Committee Report. First of
21 all, were you on the Stud Book and Registration Committee in
22 2003?
23 A. Yes, sir.
24 Q. And do you recall -- Mr. Pierce testified earlier in this
25 trial that the issue of cloning was on the Stud Book and
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1060
1 Registration agenda that year. Do you recall that?
2 A. Yes, sir.
3 Q. Do you know why it was on the agenda? In other words,
4 what had prompted it to be put on the agenda for discussion?
5 (Pause.)
6 Q. (By Mr. Arnold) Was that the first news of a horse
7 actually being cloned that year, somewhere around there?
8 A. Perhaps. I really don't know whether a member generated
9 that request, or it was generated by the Executive Committee
10 or staff. I'm not sure.
11 Q. And is that something that happens from time to time;
12 that the staff or the Executive Committee will actually place
13 something on the agenda just for discussion just so the Stud
14 Book and Registration Committee can be looking at that topic
15 or issue?
16 A. Yes, sir.
17 Q. Now, with respect to Rule 227 —— and, of course, 227(a)
18 is what eventually got passed —— but do you see the language
19 there where the Stud Book Committee recommended that Rule 227
20 be amended, and I'm not going to read all of that language,
21 but do you see that there?
22 A. Yes, I do.
23 Q. And do you know where that language came from? In other
24 words, where did the Stud Book Committee get the language for
25 Rule 227(a)?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1061
1 A. We took it verbatim, plagiarized almost, if you will, the
2 Jockey Club rule that pertains to the same thing.
3 Q. And had the Jockey Club passed the identical rule
4 regarding cloning prior to the Stud Book and -- or prior to
5 the 2003 convention?
6 A. Yes, sir.
7 Q. Now, I want to -- well, let me ask you this first: So is
8 it your understanding that Rule 227, the amendment that -- did
9 that go to the membership first after y'all made this
10 recommendation?
11 A. Yes, it did.
12 Q. And do you recall any discussion on it at the membership
13 meeting in 2003?
14 A. There was none.
15 Q. So the recommendation was accepted by the membership?
16 A. Yes.
17 Q. All right. Was it then presented to the board?
18 A. Yes, it was. Right after that, that general membership
19 meeting was -- the reports were taken to the directors'
20 luncheon.
21 Q. Okay. And what was the board's action on this
22 recommendation by the Stud Book Committee?
23 A. They also approved it.
24 Q. Now, 227(a), is it your understanding that it is
25 basically a prohibition on the registration of clones or their
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1062
1 offspring?
2 A. Yes, it is.
3 Q. Now, prior to the amendment of Rule 227(a), has a clone
4 ever been eligible, or an offspring of a clone ever been
5 eligible, for registration with the American Quarter Horse
6 Association?
7 A. No, sir.
8 Q. Explain to the jury why, even prior to this rule, a clone
9 or its offspring has never been eligible for registration with
10 the association.
11 A. Well, first of all, prior -- prior to this rule, none has
12 ever been presented for registration in front of the registrar
13 or our registration office.
14 Q. And, if a horse is to be registered, do our rules require
15 it to have a registered sire and a registered dam?
16 A. Yes, they do.
17 Q. Now, if a clone doesn't have a registered sire and a
18 registered dam and wasn't capable of being registered under
19 our rules, why did the Stud Book Committee put in place Rule
20 227 back in 2003?
21 A. I think to be emphatic about how they felt and about how
22 the Board of Directors felt on this particular subject.
23 Q. Now, we've talked a little about the 2003 rule and how it
24 goes through the process of the committee recommendation, then
25 the membership vote, and then the Board of Directors' vote.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1063
1 Is that how all actions that come out of the Stud Book
2 and Registration Committee are addressed?
3 A. Yes, it is.
4 Q. If somebody wants to -- let me back up. Each of the
5 twelve standing committees at the association have different
6 duties and different functions; would that be a fair
7 statement?
8 A. Yes, it would be.
9 Q. And what is the role of the Stud Book and Registration
10 Committee within the association?
11 A. The Stud Book and Registration Committee is responsible
12 for the rules regarding registration, any and all rules
13 regarding registration.
14 Q. Now, the Executive Committee -- and I didn't talk about
15 this. We're fixing to. You served on the Executive
16 Committee, have you not?
17 A. Yes, sir.
18 Q. And this jury's already heard that you, at one time, were
19 president of the association, just like Ms. Johne Dobbs is
20 currently, correct?
21 A. That's correct.
22 Q. Now, the Executive Committee has a lot of authority
23 within the association; would that be a fair statement?
24 A. Yes, it would.
25 Q. What are the two things that the Executive Committee
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1064
1 cannot change within the association? Can they change a
2 bylaw?
3 A. Not without the Board of Directors' approval, and they
4 can't change or modify a rule adopted by the Stud Book and
5 Registration Committee that's also been approved by the Board
6 of Directors.
7 Q. So only the Board of Directors has the authority to
8 change bylaws or rules of registration?
9 A. That's correct.
10 Q. All right. In the typical process, if a person wants to
11 change a rule of registration, when do they have to submit a
12 rule-change proposal; do you know?
13 A. Yes, I do. On or before December 31st of the year prior
14 to the convention.
15 Q. Now, I think the evidence shows in this case that there
16 was a rule-change proposal presented by a lawyer by the name
17 of Ernest Cannon from down by Houston, and that his proposal,
18 the very first one regarding a request that the cloning --
19 that clones be allowed for registration, that that rule
20 proposal was made in December of 2007 or sometime prior to the
21 end of 2007. Does that sound correct to you?
22 A. Yes, sir.
23 Q. Now, do you know Mr. Cannon?
24 A. Yes, I do.
25 Q. And were you aware -- at the time that that rule-change
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1065
1 proposal was submitted, were you aware that it had been
2 submitted?
3 A. Yes, I was.
4 Q. Were you on the Executive Committee at that time?
5 A. I was.
6 Q. When did you first go on the Executive Committee; do you
7 recall?
8 A. In 2003.
9 Q. And there's been some confusion, or at least amongst the
10 lawyers, about when you say you went on in 2003, does that
11 mean after the convention you started, or you were on it
12 during the 2003 convention?
13 A. No. I was immediately after the convention in 2000 --
14 March of 2003, and then I served all the way through until the
15 end of the convention in 2008.
16 Q. Okay. Now --
17 A. Uh -- yes, 2008.
18 Q. Is that right?
19 A. Right.
20 Q. All right. So you were on the committee, the Stud Book
21 Committee in 2003 when the committee recommended the amendment
22 to Rule 227(a), correct?
23 A. That's correct.
24 Q. And then at the end of the convention in 2003, you then
25 went on the Executive Committee?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1066
1 A. That's correct.
2 Q. Now, how does one get appointed to the Executive
3 Committee, Mr. Merrill?
4 A. Well, at that point in time, a past president makes your
5 nomination to the Nominating Committee that the Executive
6 Committee nominates; the committee's nominated by the
7 Executive Committee. And they come back to the Board of
8 Directors with their nominee. Anyone from the Board of
9 Directors at that point in time can also nominate someone
10 else.
11 Q. And, as a matter of fact, the Board of Directors has that
12 right to nominate someone other than the person that was out
13 of the Nominations Committee, correct?
14 A. That's correct.
15 Q. As a matter of fact, is that how Johne Dobbs got on the
16 Executive Committee?
17 A. It is.
18 Q. She was nominated by somebody from the floor, somebody on
19 the Board of Directors?
20 A. That's correct.
21 Q. And that's how she got on the Executive Committee?
22 A. Yes, it is.
23 Q. Now, you went on the Executive Committee beginning at the
24 end of the 2003 convention, correct?
25 A. Yes.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1067
1 Q. And that lasted all the way up until through the 2008
2 convention; is that right?
3 A. That's correct.
4 Q. Were you president in the -- during the 2008 convention
5 year?
6 A. Yes, I was. Well, up until the end of the convention,
7 yes.
8 Q. Correct. Now, as president, are you an ex officio member
9 of all the committees that are meeting during the convention?
10 A. I am.
11 Q. Going back to the Ernest Cannon proposal, it was
12 submitted prior to the end of 2007. I think you testified you
13 were aware when it was submitted or the proposal was made,
14 correct?
15 A. Yes.
16 Q. Was it something that you felt you wanted to be up to
17 speed on and to be knowledgeable about? I mean, was it
18 something of interest to you?
19 A. Absolutely.
20 Q. Why is that?
21 A. Well, I -- it was a departure from our rules of
22 registration, and it was a very controversial issue that I
23 thought, and agreed with many of my constituents, that needed
24 addressing and needed to be studied very carefully.
25 Q. All right. Now, at the 2008 convention, you were
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1068
1 president, but you were not on the Stud Book Committee; is
2 that right?
3 A. Say that again.
4 Q. In the 2008 convention, you were not on the Stud Book
5 Committee, but you were president of the association?
6 A. That's correct.
7 Q. Did you attend the Stud Book and Registration Committee
8 when this rule-change proposal of Mr. Cannon's was presented?
9 A. I did.
10 Q. Do you recall anything in particular about your
11 attendance at that meeting?
12 A. No. I just sat in a chair and listened.
13 Q. Now, do you recall who spoke in favor of the rule-change
14 proposal?
15 Let me -- let me just run through some names. Mr.
16 Russell, was he there?
17 A. Yes.
18 Q. Had you ever met Mr. Russell prior to that convention?
19 A. Yes, I had.
20 Q. When had you met Mr. Russell?
21 A. I don't know the first time. Probably was the first time
22 Blake came to one of our conventions.
23 Q. Well, if the testimony is that that was the first
24 convention that he ever went to, would that be the first time
25 you met him?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1069
1 A. Yes, it would.
2 Q. Okay. Have you met him several times since?
3 A. Yes, I have.
4 Q. All right. Were either Jason or Gregg at the 2008
5 convention? I don't think they were, but --
6 A. No.
7 Q. All right.
8 A. They weren't there.
9 Q. Now, what about Michael Holley. He was an attorney
10 for --
11 A. Yes.
12 Q. -- Ernest Cannon. Was he there?
13 A. Yes, he was.
14 Q. All right. Do you recall specifically who spoke in favor
15 of the rule proposal in 2008?
16 A. Well, Blake Russell did.
17 Q. And what about Mr. Holley; do you recall him speaking?
18 A. I'm not sure that I do. I'm not sure I saw him testify
19 in front of the committee, no.
20 Q. All right. Now, Mr. Russell has previously testified
21 that the Stud Book Committee has always treated him with
22 respect each time he's appeared before the committee.
23 Would that be your recollection of how he was treated in
24 2008 by the Stud Book Committee?
25 A. I have nothing -- no reason to believe otherwise.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1070
1 Q. Did you ask specific questions yourself of Mr. Russell
2 regarding the proposal to allow for the registration of
3 clones?
4 A. You mean officially in the meeting?
5 Q. Yes, sir.
6 A. I don't think I did, but I might have. I think it would
7 have been out of order for me to do so.
8 Q. Now, was the -- what was the action of the committee in
9 2008? What was their recommendation, if you recall?
10 A. In 2008?
11 Q. Yes, sir.
12 A. It was to continue on with the rule as stated, 227, to
13 not allow the registration of clones.
14 Q. Did you recall or do you know, did the staff of AQHA
15 eventually put together a panel of scientists to present
16 additional study and information to the Stud Book Committee at
17 an October 2008 meeting in Amarillo?
18 A. Yes.
19 Q. Were you in attendance at that meeting?
20 A. Yes, I was.
21 Q. Why were you at that meeting in 2008?
22 A. Because immediately after being on the Executive -- or
23 coming off the Executive Committee and fulfilling my
24 presidency in 2000 -- at the end of the convention 2008, I was
25 placed on the Stud Book and Registration Committee.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1071
1 Q. So when the 2008 convention ended and your presidency
2 ended, you were then placed back on the Stud Book and
3 Registration Committee?
4 A. That's correct.
5 Q. So you were at the October 2008 meeting as a Stud Book
6 and Registration member?
7 A. Yes, I was.
8 Q. Now, Mr. Russell testified earlier that the scientists on
9 the panel that were presented to the Stud Book in October
10 of 2008 were very well -- were very fair and balanced, and
11 that there was a robust discussion of the cloning issue. Is
12 that the way you recall it?
13 A. Yes, I do.
14 Q. Was there some information -- well, let me ask you this:
15 Did you find the meeting informative?
16 A. Very.
17 Q. Why is that? Tell the jury.
18 A. Well, we had just about everybody -- every expert,
19 including Blake, I believe, there on the subject of clones,
20 and it was a very informative meeting, and I think every
21 member of the Stud Book and Registration Committee learned a
22 great deal.
23 Q. Did you have any discussions with Blake Russell directly
24 at that October 2008 meeting?
25 A. You mean informally?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1072
1 Q. Yes, sir. Not before the committee, but just one-on-one
2 or anything like that?
3 A. I'm sure I have. I don't recall what we said to each
4 other, but --
5 Q. Did you have any profanity-laced discussions with Blake
6 Russell at the October 2008 meeting?
7 A. No, sir.
8 Q. Now, after the 2008 presentation by the experts and
9 scientists in Amarillo, I believe the testimony has been, and
10 the evidence has been, that there was a cloning forum that was
11 put on by AQHA staff prior to the Stud Book and Registration
12 Committee meeting at the 2009 convention. Does that sound
13 right?
14 A. Yes, it does.
15 Q. Were you in attendance at the cloning forum that was put
16 on?
17 A. I was.
18 Q. And I believe the testimony was that there were anywhere
19 from four to five hundred members that were attending that
20 cloning forum?
21 A. Yes. The room was full.
22 Q. And, I mean, we're talking about, what, a huge conference
23 room?
24 A. It was a banquet room.
25 Q. And, again, were many of the same scientists that had
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1073
1 spoken in October of 2008, were they also panelists at the
2 cloning forum in March of 2009?
3 A. Yes, they were.
4 Q. Was Mr. Russell also one of the panelists?
5 A. Yes.
6 Q. And was there quite a bit of discussion and questions
7 from the membership that were at the cloning forum?
8 A. Yes, there were.
9 Q. Do you recall personally offering any questions or
10 comments at the forum, not at the Stud Book meeting, but at
11 the forum?
12 A. I don't believe I did.
13 Q. What was your impression of the information that was
14 brought forward at the cloning forum by the panelists?
15 A. Well, I felt like no one left a stone unturned, and up to
16 that point, all the experts divulged as much information as
17 they themselves knew and explained it to the rest of us laymen
18 horsemen, I'll say, so that we could understand it.
19 Q. Have you, in all of your years of attending AQHA
20 conventions, ever seen that kind of attendance at a function
21 like the forum?
22 Has there ever been anything like it where you had 500
23 members of the people that attended the convention going to
24 this one special event?
25 A. You mean in the -- in an informative sense or --
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1074
1 Q. Yes, sir.
2 A. -- or --
3 Q. No, exactly. In an educational --
4 A. No, that's --
5 Q. -- forum.
6 A. -- probably the largest of that type that I'd ever been
7 witness to.
8 Q. Was your impression that the membership was very
9 interested in the subject in terms of how it impacted the
10 association?
11 A. Yes, I would.
12 Q. Now, in 2009, after the cloning forum, the Stud Book and
13 Registration Committee met once again —— is that right —— on
14 the proposal that Ernest Cannon had submitted back in 2007?
15 A. Yes.
16 Q. And you were on the Stud Book and Registration Committee
17 in 2009, correct?
18 A. I went off in -- I think I was on in 2009, but I went off
19 right after that. I think that's the way it --
20 Q. I believe you're correct, and I'm going to get to that.
21 A. Okay.
22 Q. So, in 2009, do you recall what the action of the Stud
23 Book Committee was with respect to Mr. Cannon's rule-change
24 proposal?
25 A. Yes. We denied the request.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1075
1 Q. Did y'all set up a Task Force, or did you put together a
2 Task Force?
3 A. Yes, we did.
4 Q. And I believe the earlier evidence has been, or the
5 testimony has been, that there were four areas that the Task
6 Force was looking into. One was the effect of cloning on
7 genetic diseases. One was how a -- the registration of -- or
8 if the rule were changed, how that would affect other rules,
9 whether or not the parent verification problem could be
10 solved, and then, finally, what was the sentiment of the
11 membership on that particular subject. Is that what you
12 recall?
13 A. Yes.
14 Q. Did you ask to serve on any of the subcommittees of the
15 Task Force?
16 A. I was appointed on the subcommittee that had to do with
17 surveying the membership.
18 Q. And do you think you asked to be on that one, or do you
19 recall?
20 A. I don't recall if I asked or I was appointed, one of the
21 two.
22 Q. And was that something that was important to you, the
23 membership sentiment on this rule-change proposal to allow
24 clones into the registry?
25 A. That perhaps is one of the most important.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1076
1 Q. Why?
2 A. Well, we always want to be cognizant of what our members
3 require and what their druthers are, if you will, what they'd
4 like to see happen.
5 It's not just about what the Executive Committee wants,
6 or the Board of Directors, or the Stud Book and Registration
7 Committee. We represent the membership, so it was very
8 important for me to know how the membership felt.
9 Q. Now, after the 2009 -- well, let me go back to the Task
10 Force. So you served on the membership sentiment
11 subcommittee; is that correct?
12 A. That's correct.
13 Q. And did y'all have any face-to-face meetings, or did
14 y'all have any conference calls, or what went on with respect
15 to your particular subcommittee on membership sentiment?
16 A. Well, we had several conference calls. I don't remember
17 a face-to-face meeting before we came up with what our
18 question would be to the membership and how we would canvass
19 the membership, how many -- in other words, how would we
20 arrive at a random sampling of the membership across all
21 disciplines and represent each type of horse that we raise
22 that's used for different purposes, and the various dynamics
23 that we have in our membership, so that we would have a proper
24 representation across the board.
25 Q. Now, there's been evidence that the outcome of that
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1077
1 survey was that over eighty-six percent of the members who
2 responded were not in favor of the registration of clones. Is
3 that what you recall?
4 A. Yes, I do.
5 Q. Now, there's also been some evidence in this case that
6 the -- as you were describing, the survey itself was sent out
7 to a representative sampling of the members of the
8 association, and, in that representative sample, the evidence
9 has been that there are approximately thirteen percent of the
10 people that the survey went to that were breeders.
11 Let me ask you: With respect to the association itself,
12 I believe the evidence has been that we currently have over
13 280,000 members. Does that sound about right?
14 A. That's correct.
15 Q. And, if the evidence were -- or would it surprise you if,
16 of those 280,000-plus members, that roughly thirteen percent
17 of those members might identify themselves as breeders?
18 A. No, it wouldn't.
19 Q. So that sounds about right to you?
20 A. Yes, sir.
21 Q. Now, if there's a rule of registration, is that a rule
22 that only breeders should be allowed to make a decision on, or
23 do all the members of the association have a right to voice
24 their opinion and to make a vote on registration rules?
25 A. Any member who pays his membership on an annual basis has
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1078
1 that right to voice his or her opinion on any issue that comes
2 before the AQHA.
3 Q. Well, why shouldn't registration rules be limited to only
4 breeders being allowed to vote on them or have an interest in
5 them?
6 A. Well, that's just the way AQHA works. Every member has
7 an equal right to their opinion and how they feel.
8 Q. Now, after the -- after the Task Force findings were
9 completed, they were presented, I believe the evidence has
10 shown, to the 2010 Stud Book and Registration Committee.
11 Now, you were not on the 2010 Stud Book and Registration
12 Committee, were you?
13 A. No.
14 Q. What had happened between 19 -- or 2009 up until 2010?
15 How come you were no longer on the Stud Book?
16 A. Well, a rule was -- we have a rule in place that
17 eliminates any one person or one director from serving on two
18 standing committees. At that time, I was on the Stud Book and
19 Registration Committee and the Investment Oversight Committee.
20 Well, the Investment Oversight Committee was not
21 considered a standing committee, so I could serve on both of
22 those committees. And they met at completely different times.
23 The Executive Committee in place at that time decided
24 that the Investment Oversight Committee should be called,
25 after that point, the Finance Committee, and it should be a
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1079
1 standing committee. And so I was forced to make a decision
2 between Finance and Stud Book and Registration.
3 And I was asked by several of my peers, who I had a great
4 deal of respect for, to remain on the Finance Committee, so I
5 had to resign from the Stud Book and Registration Committee.
6 Q. And that was prior to the 2010 convention?
7 A. That's correct.
8 Q. All right. The evidence presented thus far in this case
9 is that the Ernest Cannon rule proposal to allow for the
10 registration of clones was denied for the very first time at
11 the 2010 convention.
12 Is it your testimony you weren't even on the Stud Book
13 when they made that recommendation to deny the rule?
14 A. That's correct.
15 Q. Did you have any involvement with the Stud Book Committee
16 in 2010 in denying that rule?
17 A. No, I didn't.
18 Q. The evidence also shows that, in 2010 and 2011 -- excuse
19 me, 2010, you were not on the Stud Book, right?
20 A. That's correct.
21 Q. And that was the first year that the Cannon proposal was
22 denied?
23 A. That's correct.
24 Q. All right. Were you on the Stud Book Committee in 2011
25 when, I believe it was, Mr. Russell's rule-change proposal was
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1080
1 presented to the committee?
2 A. No, I wasn't.
3 Q. Were you aware that it had been submitted?
4 A. Yes, I was.
5 Q. Did you attend the 2011 Stud Book Committee meeting?
6 A. I don't know whether I did or I didn't. I probably -- if
7 I didn't have a conflict with other committee meetings, I
8 probably would have, yes.
9 Q. All right. But did you have the opportunity to vote on
10 that proposal if you weren't on the committee that year?
11 A. No, no.
12 Q. Did you speak with any of the committee members about the
13 proposal in 2011, to your recollection?
14 A. I can't recall.
15 Q. What committee were you serving on in 2011?
16 A. Finance Committee.
17 Q. Still the same one?
18 A. Yes, sir.
19 Q. Now, I believe the evidence shows that, in 2011, Mr.
20 Russell's rule-change proposal was also denied. Is that your
21 recollection as well?
22 A. Yes, it is.
23 Q. Now, 2012, that's the year that Gregg Veneklasen, Dr.
24 Veneklasen, presented his rule-change proposal.
25 Were you now back on the Stud Book Committee in 2012?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1081
1 A. Yes, I was.
2 Q. And tell us how that came about. In other words, why
3 were you now back on the committee?
4 A. Well, because I was taken off of the Finance Committee,
5 and so I had -- I was asked by the Executive Committee
6 presently serving in that capacity where I wanted to serve,
7 what would be my first choice, and so I said I'd like to be
8 back on Stud Book and Registration.
9 Q. Do you feel like the Stud Book and Registration is an
10 important committee any more so than any of the other standing
11 committees?
12 A. Does it have more importance?
13 Q. Yes.
14 A. I don't know. Those other standing committees are very
15 important. I don't know that it's any more important than --
16 than another.
17 Q. Okay. Now, when you went back on -- well, let me back
18 up. I don't think I asked you this earlier in the testimony,
19 and I want to go over it just a little.
20 With respect to the Stud Book Committee itself, are the
21 members on the Stud Book, are they appointed by the Executive
22 Committee, or do you know?
23 A. Yes, they are.
24 Q. How does that come about? How does the Executive
25 Committee decide which people should go on and off the Stud
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1082
1 Book Committee? Explain that to the jury, if you would,
2 please.
3 A. Well, after every convention, if you want to change the
4 committee that you're on, then, as a director now, you're
5 required to send a letter to the president requesting a
6 committee change, and/or a new member would do the same thing,
7 and he or she would write a letter to the president, send it
8 to Amarillo requesting an appointment to any one of the
9 standing committees. And if you wanted to serve on Stud Book
10 and that was your first priority, well, that's how you would
11 answer that letter.
12 Q. And so the -- so the Executive Committee doesn't just vet
13 people for the Stud Book. They do the same thing for all the
14 committees?
15 A. Yes, they do.
16 Q. And did you ever appoint people to the Stud Book
17 Committee when you were on the Executive Committee?
18 A. Yes, I did.
19 Q. Who were some of the people that you appointed; do you
20 recall or not?
21 A. No, I don't.
22 Q. All right. Going back -- going back to 2012 again,
23 you're now back on the Stud Book and Registration Committee,
24 and that was Dr. Veneklasen's rule-change proposal year.
25 Do you recall who came and spoke in favor of Dr.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1083
1 Veneklasen's rule-change proposal?
2 A. Jason Abraham did, and I believe Blake Russell again was
3 there.
4 Q. All right. Did Dr. Veneklasen come to the convention
5 that year?
6 A. Oh, yes, certainly he was there.
7 Q. And did he speak before the committee, or do you recall?
8 A. Yes, he did.
9 Q. With respect to the committee's -- ultimately, I believe
10 the evidence is, as you've testified, that the committee
11 denied that rule-change proposal.
12 What I want to ask you though is, was there a discussion
13 about the proposal itself among the committee?
14 A. Yes.
15 Q. If there's been testimony to this jury that, when the
16 proposal was made, that there was an immediate vote and
17 everybody voted against it without any discussion, would that
18 be accurate in your memory?
19 MS. STONE: Objection, leading.
20 THE COURT: Sustained.
21 Q. (By Mr. Arnold) Was there a discussion by the committee
22 prior to voting on the rule-change proposal?
23 A. Yes, there was.
24 Q. Was it more than just a cursory discussion?
25 A. Yes, it was.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1084
1 MS. STONE: Objection, leading.
2 THE COURT: Overruled.
3 Q. (By Mr. Arnold) Was there a -- were there questions by
4 the committee members during the discussion?
5 A. Yes, there were.
6 Q. Including yourself?
7 A. Yes.
8 Q. I want to ask you at this point real quickly, do you
9 personally know Dr. Veneklasen outside of this lawsuit?
10 A. Yes, I do.
11 Q. Tell the jury your relationship with Dr. Veneklasen.
12 A. Well, I consider Gregg a friend of mine. He's done
13 veterinarian services. In fact, he saved a horse's life for
14 me one summer when we were out here showing our cutting horses
15 at the West Texas Futurity.
16 Q. There's been some testimony that he's a fine
17 veterinarian, that he's got a great reputation. What do you
18 think about that?
19 A. I have no reason to refute that.
20 Q. What about Jason Abraham; do you know him personally
21 outside this litigation?
22 A. Not as well as I know Gregg, a casual acquaintance, I'd
23 say, of Jason.
24 Q. Had any problems with Jason personally at all?
25 A. None whatsoever.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1085
1 Q. In 2012 -- let me back up. There's also been evidence ——
2 in fact, I think it was through your own deposition, Mr.
3 Merrill —— that at one time or another, you've made the
4 statement that the AQHA or the association will allow cloning
5 over your dead body.
6 Is that true? Did you say that?
7 A. Yes, it is.
8 Q. Tell the jury why you made that statement.
9 A. Well, I used it as a figure of speech obviously,
10 (laughs), but -- and I'm sorry that so much import has been
11 made over that, but it really speaks to the passion that I
12 have for this particular rule.
13 Q. And I want to stop you right there. In 2012 -- let me
14 back up. 2008, the very first time it came up, you weren't on
15 the committee, correct?
16 A. That's correct.
17 Q. 2009, the committee voted to form a Task Force. You were
18 on the committee then, correct?
19 A. Yes.
20 Q. 2011, you weren't on the committee?
21 A. No.
22 Q. And 2012 was your first time to be back on the committee?
23 A. That's correct.
24 Q. And Dr. Veneklasen's rule was voted down by the
25 committee?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1086
1 A. Yes, it was.
2 Q. All right. Tell this jury why you personally voted
3 against the rule-change proposal which would have allowed --
4 and I can't remember the specifics of Dr. Veneklasen's
5 rule-change proposal, but it would have been -- or would have
6 allowed for some variation of the registration of clones and
7 their offspring. Tell this jury why you voted against it.
8 A. Well, first of all, we had no way to parentage-verify the
9 registration of a clone.
10 Up to that point -- Gregg's proposal actually asked for
11 us to register the offspring of a clone, and I made the
12 statement that: "We've never done that before in our entire
13 history. We've never registered a horse that didn't have a
14 registered sire and a registered dam and have a breeder's
15 certificate that accompanied that registration, properly
16 filled out by the person that owned the mare and the person
17 that owned the stallion." So it was a complete departure from
18 our registration rules.
19 There was also some -- parentage verification was most
20 important. Another reason, that I thought cloning --
21 registering clones at that time would have further narrowed an
22 already narrow gene pool, because people would -- breeders
23 would be more attracted to that purported outstanding clone
24 rather than to seek new genetics to try to -- to try to raise
25 a better horse than had been previously raised in subsequent
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1087
1 years.
2 But -- so the other thing is simply a moral conviction
3 that I've always had, that that really tells you that I'm
4 against it from a moral aspect.
5 Q. Are those the reasons why you voted, you personally voted
6 to deny the rule-change proposal of Dr. Veneklasen?
7 A. Yes.
8 Q. And, in 2013, just this last March in Houston, were you
9 again on the committee when Jason Abraham's rule-change
10 proposal was presented?
11 A. Yes, I was.
12 Q. And did you again vote against that rule-change proposal?
13 A. Yes, I did.
14 Q. And were -- the reasons that you had personally for
15 voting against that rule-change proposal, had they changed
16 any?
17 A. Not one bit.
18 Q. Had any new evidence been presented to you that solved
19 the parent verification problem?
20 A. None whatsoever, sir.
21 Q. Had any evidence been presented to you that assured you
22 that, if cloning were allowed in the registry, that there
23 would be no genetic problems or narrowing of the gene pool?
24 A. No.
25 Q. Had there been anything to you that presented to you in
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1088
1 the way of evidence or testimony or comments from any members
2 that overcame your moral objections to the registration of
3 clones?
4 A. No.
5 Q. Mr. Merrill, whether clones are allowed to be registered,
6 even if this Court imposes a rule on the association for the
7 registry of clones or their offspring, will that impact you
8 financially in one way whatsoever?
9 A. None whatsoever, sir.
10 Q. Why?
11 A. Well, I simply don't have or compete at a level where a
12 clone might be used. I certainly don't have enough money to
13 clone a horse. And since I'm morally against that and the
14 parentage verification aspects, I just -- I would choose not
15 to be involved.
16 Q. Mr. Merrill, I want to go over some of your fellow Stud
17 Book Committee members with you.
18 MR. ARNOLD: Rhonda, if you would pull up
19 Defendant's Exhibit No. 125, which has already been admitted,
20 Your Honor.
21 And let's start with -- let's start with 2012, if we
22 can please, Rhonda. Can you blow it up just a little more.
23 THE WITNESS: You're going to have to do it a little
24 more. Can you do it a little more. I can't see it.
25 THE COURT: You probably have it in the book there.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1089
1 MR. ARNOLD: Yeah, let me -- I tell you what, just
2 leave it up there like that, and, Autum, if you could pull me
3 our Exhibit No. 125 right there.
4 Your Honor, if I might approach the witness real
5 quickly?
6 THE COURT: Yes, sir.
7 (Exhibit enlarged on screen.)
8 THE WITNESS: I can see that.
9 (Mr. Arnold/Ms. Stone sotto-voce conference.)
10 MR. ARNOLD: Oh, okay. Ms. Stone informs me that
11 it's the same as Plaintiffs' Exhibit No. 29, so I'll let you
12 look at that. It's the same list.
13 THE WITNESS: Well, I can see it now.
14 MR. ARNOLD: Can you? Okay. Great.
15 Q. (By Mr. Arnold) All right. I want to ask you about
16 these people one by one.
17 Now, this is -- these are the people that were on the
18 Stud Book Committee meeting -- or, excuse me, on the Stud Book
19 with you in 2012, which was the first year that you were on
20 the committee when the rule-change proposal was denied,
21 correct?
22 A. Yes.
23 Q. All right. Sandy Arledge. Do you know Sandy?
24 A. Very well.
25 Q. Is she retired, or is she still in business?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1090
1 A. No, she's retired.
2 Q. How old a lady is she?
3 A. I think she's about my age, about sixty-five.
4 Q. Okay. And, as a matter of fact, I think she just got
5 elected to the Executive Committee; is that right?
6 A. That's correct.
7 Q. But she doesn't breed horses, commercially or otherwise,
8 right now?
9 A. No, sir.
10 Q. All right. What about Robert Blakeman; do you know him?
11 A. Yes, very well.
12 Q. Tell the jury about Robert Blakeman.
13 A. Bob's just got a few horses. He doesn't compete as much,
14 if any, like he did before. He never competed with very many
15 horses, just a few. He's had the pleasure of owning a few --
16 a few good horses.
17 Q. How old a gentleman is Mr. Blakeman?
18 A. I would assume he's around seventy.
19 Q. Based on your knowledge of Mr. Blakeman, would he be
20 impacted financially if the association changed its rule to
21 allow for the registration of clones or their offspring?
22 MS. STONE: I need to object. That calls for
23 speculation.
24 THE COURT: Sustained.
25 Q. (By Mr. Arnold) Do you know about Mr. Blakeman's
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1091
1 business operation?
2 A. Yes.
3 Q. Does he have one?
4 A. No.
5 Q. Is he retired?
6 A. Yes.
7 Q. Glenn Blodgett. This jury has heard some about Dr.
8 Blodgett. Tell the jury, do you know Dr. Blodgett?
9 A. Yes, I do.
10 Q. What does he do?
11 A. He manages The Four Sixes Ranch.
12 Q. The Four Sixes Ranch is a huge operation, isn't it?
13 A. Yes, it is.
14 Q. Does he personally own any of the horses out there?
15 A. Not to my knowledge.
16 Q. Jim Brinkman. Do you know Mr. Brinkman?
17 A. Very well.
18 Q. Tell us about Mr. Brinkman.
19 A. Jim's a third-generation rancher/breeder from up in
20 Ericson, Nebraska.
21 Q. Does he breed ranch horses?
22 A. Yes, he does.
23 Q. Does he breed any racehorses?
24 A. No.
25 Q. Does he breed any cutting horses?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1092
1 A. No, he doesn't.
2 Q. Rob Brown. Who's Mr. Brown?
3 A. He's a past president that serves on the Stud Book and
4 Registration Committee and a longtime rancher/breeder from
5 Throckmorton, Texas.
6 Q. Does Mr. Brown breed ranch horses?
7 A. Yes, he does.
8 Q. Does he breed racehorses?
9 A. No.
10 Q. Cutting horses?
11 A. No.
12 Q. How old a man is Mr. Brown?
13 A. Mr. Brown is around eighty.
14 Q. Eighty years old?
15 A. (Witness nods head.)
16 Q. Laurel Beth Wachtel. I don't know if I pronounced that
17 right.
18 A. You did.
19 Q. What about her; do you know her?
20 A. Yes.
21 Q. What does she do for a living?
22 A. Laurel shows horses.
23 Q. All right. When you say "show horses," what do you mean
24 by that?
25 A. She shows horses in Arizona. She and her husband have a
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1093
1 small training operation, and she competes in the cow horse
2 and some of the other, trail, western riding, pleasure, some
3 of the horse show events.
4 Q. Does she compete in cutting events?
5 A. No, she doesn't.
6 Q. What about racehorses; does she own any racehorses or
7 does she breed any racehorses?
8 A. No, she doesn't.
9 Q. James Eller, III. Do you know Mr. Eller?
10 A. Very well.
11 Q. Tell us about Mr. Eller.
12 A. Jimmy manages Granada Farms, which is a commercial
13 breeding farm in South Texas, and --
14 Q. Does Mr. Eller -- go ahead. I'm sorry.
15 A. No. I mean, that's all I have to say about Jimmy.
16 Q. All right. Mr. Eller's operation down in South Texas,
17 does he -- does that operation --
18 Well, let me back up. Did you say he owns Granada Farms
19 or he manages it?
20 A. Well, I think he owns it.
21 Q. All right. Do they breed cutting horses?
22 A. No, they don't.
23 Q. Do they breed racehorses?
24 A. Yes.
25 Q. What about Bill Englund; do you know Mr. Englund?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1094
1 A. Yes. Bill's a past president of the American Quarter
2 Horse Association.
3 Q. How old is --
4 A. He lives in Arizona. He's retired.
5 Q. How old is he?
6 A. I'm guessing he's -- well, I think he's seventy-five.
7 Q. Does he run any commercial breeding operations for
8 cutting horses or elite racing horses?
9 A. No, he doesn't.
10 Q. Glen Gabel. Tell us about Mr. Gabel.
11 A. Glen's from Canada, and Glen announces. He's a show
12 announcer and a ring steward, a professional ring steward.
13 Q. Does he breed elite cutting horses or racehorses?
14 A. No, he doesn't.
15 Q. Does he breed any horses?
16 A. I don't know that he even owns a horse.
17 Q. And, yet, he's on the Stud Book and Registration
18 Committee?
19 A. Yes.
20 Q. Tyler Graham. Tell us about Mr. Graham.
21 A. Tyler is -- Tyler is involved in the racehorse industry.
22 He and his grandfather, Charlie Graham, own a
23 twenty-five-percent interest in the Heritage Place. Tyler is
24 the president of Heritage Place, Incorporated.
25 Q. And let me ask you real quick about Heritage Place,
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1095
1 because we've heard a lot about that. Is that -- would you
2 call it an auction house, or what's the best way to describe
3 what Heritage Place is?
4 A. It's a commercial auction house devoted strictly for the
5 equine.
6 Q. All right. And I believe this jury is going to hear some
7 testimony from Jeff Tebow later, maybe even today. Tell us
8 who Mr. Tebow is.
9 A. He's the general manager of the Heritage Place.
10 Q. And what are his job duties, if you know, with respect to
11 Heritage Place?
12 A. Well, managing not only the facility, but as well as
13 organizing, collecting, and putting on sales throughout the
14 year.
15 Q. Now, does Heritage Place actually own horses, or are they
16 just selling them?
17 A. They're just selling. They're acting as a sales agent or
18 a broker, if you will.
19 Q. So the more people that come to them that want to sell
20 horses and the more people that want to buy horses and the
21 more money they want to buy horses for, is that how Heritage
22 Place makes their money?
23 A. Yes. They work on a commission basis.
24 Q. So they want to sell more horses rather than fewer
25 horses?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1096
1 A. That's correct.
2 Q. And they want to sell more expensive horses rather than
3 less expensive horses?
4 A. Yes, they do.
5 Q. James Helzer. Tell us about Mr. Helzer. We've heard his
6 name a few times.
7 A. Jim is a past president of the American Quarter Horse
8 Association, served with me on the Executive Committee, and he
9 has several commercial breeding farms, one in Texas and one in
10 Oklahoma, and they're devoted strictly to the Quarter Horse
11 and Thoroughbred industries.
12 Q. Do you -- are you aware of Mr. Helzer's views on a
13 rule-change proposal which would allow for the registration of
14 clones or their offspring?
15 A. Yes, I am.
16 Q. What is that view of Mr. Helzer?
17 A. He doesn't want to have or allow registration of clones.
18 Q. I didn't ask you this, but, with respect to your opinions
19 on why you're not in favor of the registration of clones or
20 their offspring, we've heard Dr. Veneklasen and Jason both
21 testify that they're passionate in favor of cloning and in
22 favor of the registration of clones.
23 I want to ask you: Are you passionate in your views that
24 cloning or the registration of clones is not right for the
25 association?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1097
1 A. Yes, I am.
2 Q. Why? Why are you so passionate about it?
3 A. Well, gosh, this goes way back, Wade. I -- I was raised
4 in this industry. I was raised by some of the greatest
5 horsemen that we have. They're all gone.
6 I was mentored by many past presidents. I worked for
7 past presidents grooming, selling their horses. I was in and
8 around all of those people that had to do with running the
9 AQHA for all of these many years since 1958. It goes way back
10 to J. Ernest Browning, who was the president in 1958.
11 Very honestly, I heard their voices and their -- and
12 intuitively felt that none of them would like to have anything
13 to do with the registration of clones.
14 Q. Let me ask you a question, Mr. Merrill. Are you against
15 cloning, or are you just against the registration of clones in
16 our association?
17 A. Just simply the registration of clones in our
18 association. It's a free country, and you can do whatever you
19 want to, as far as I'm concerned.
20 It's just not a healthy situation for us in the AQHA to
21 register those clones.
22 Q. Now, you know there's some owners of clones out there,
23 including the Plaintiffs, who differ with you on that opinion,
24 correct?
25 A. Yes, yes.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1098
1 Q. And one of the people that we heard from yesterday was a
2 gentleman by the name of David Brown, and I believe he
3 testified that he owns a clone of Doc Serendipity that he
4 calls "the clone." Do you know David Brown?
5 A. Very well.
6 Q. He was very kind to you, and he said that he respected
7 you and admired you. What's your opinion of David Brown?
8 A. Well, I have the same respect and admiration for David.
9 He's --
10 Q. How long have you --
11 A. -- been a friend of mine for many, many years.
12 Q. How did y'all get to meet?
13 A. Well, through the horses. Seems to be the common
14 denominator on just about everybody's relationship in the
15 equine industry.
16 Q. Mr. Brown testified yesterday that he's in favor of the
17 Plaintiffs' efforts to get this rule-change proposal forced on
18 AQHA.
19 Knowing that, do you still have conversations with Mr.
20 Brown?
21 A. Absolutely.
22 Q. Are y'all still friends?
23 A. Yes.
24 Q. Do y'all still talk?
25 A. Sure.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1099
1 Q. Let me ask you a couple of other names. Do you know
2 Lindy Burch?
3 A. Yes, I do, very well.
4 Q. Tell the jury who Lindy Burch is.
5 A. Lindy's a very, very close friend. She's almost like a
6 sister. She rides, trains, breeds, raises, buys and sells
7 cutting horses.
8 Q. She cloned one of her famous horses, didn't she?
9 A. Yes, she did.
10 Q. What was the name of the original horse?
11 A. Bet Your Blue Boons.
12 Q. When you found out that she had cloned that horse, did
13 you cut off any relations with her?
14 A. No, I didn't.
15 Q. Did you send her a nasty letter?
16 A. No, I didn't.
17 Q. Did you yell and scream at her?
18 A. No, I didn't. I knew better than that.
19 (Laughter.)
20 Q. (By Mr. Arnold) Phil Rapp is another name we've heard.
21 Phil Rapp is a what? Is he pretty famous in cutting circles?
22 A. He's the NCHA, National Cutting Horse Association's,
23 largest money-earner professional trainer.
24 Q. All-time?
25 A. Yes.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1100
1 Q. Is Phil Rapp a friend of yours?
2 A. Yes, very close.
3 Q. Give us a sense of how close of friends y'all are. I
4 mean, do y'all talk to each other all --
5 A. Well, we go to each other's birthday parties, and our
6 families enjoy each other's company. Whatever major thing
7 happens in our families, we try to share that with each other.
8 Q. Now, Mr. Rapp has ridden clones and their offspring, at
9 least I think I'm right about that, in various cutting horse
10 events, and -- well, I think just cutting, maybe other events,
11 but are you aware of that?
12 A. Yes.
13 Q. Did the fact that he competed with clones and offspring
14 of clones in cutting events, did that bother you at all?
15 A. No.
16 Q. Are you -- do you have any knowledge of whether or not
17 any of the clones or the offspring that he has ridden in
18 cutting events have been successful at all in competition?
19 A. No, none of them have been successful up to this point.
20 Q. In fact, is he even still riding any of them in cutting
21 events?
22 A. No, he's not.
23 Q. And is that because they weren't successful?
24 A. That's correct.
25 MS. STONE: Objection, calls for speculation.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Direct--Mr. Arnold) (Defendant AQHA) 1101
1 THE COURT: Sustained.
2 Q. (By Mr. Arnold) Mr. Merrill, I've had a busy pen trying
3 to write down all the words that have been used to describe
4 you in this trial, and I'm going to go through a few of them
5 and see if you agree or disagree. Okay?
6 A. Yes, sir.
7 Q. Are you loud?
8 A. I can be at times.
9 Q. Are you aggressive?
10 A. I'd call it passionate.
11 Q. Do you badger people?
12 A. No.
13 Q. Are you an angry person when it comes to the issue of the
14 registration of clones?
15 A. No, I'm not.
16 Q. Do you nag people?
17 A. No, I don't.
18 Q. Do you consider yourself a very dominant personality,
19 such that other people just can't exercise their own will?
20 A. No.
21 Q. Are you vociferous?
22 A. I don't know what vocifer -- vociferous means.
23 Q. Do you try to intimidate people?
24 A. No, I don't.
25 Q. Have you ever used extreme profanity in discussing the
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1102
1 issue of the registration of clones in our association?
2 A. No, sir.
3 Q. Are you hostile?
4 A. No.
5 Q. Do you believe that the registration of clones or their
6 offspring in our association would be good for the
7 association?
8 A. No, I don't.
9 Q. When I say the phrase "integrity of the breed," what does
10 that mean to you?
11 A. Integrity means verification. It means a certified, Good
12 Housekeeping seal of approval. And, without it, we really
13 have no breed, and we have no association. It's the most
14 important part of our mission statement, integrity.
15 Q. And is that something you're passionate about?
16 A. Very.
17 MR. ARNOLD: Your Honor, we'll pass the witness.
18 Thank you.
19 CROSS EXAMINATION
20 BY MS. STONE:
21 Q. Mr. Merrill, you're not trying to portray yourself to
22 this jury as some backyard breeder or owner of Quarter Horses,
23 are you?
24 A. No. No, ma'am.
25 Q. In fact, at various times, you've owned as many as 150 of
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1103
1 them, correct?
2 A. I don't think so.
3 Q. Okay. Do you recall when I asked you that question in
4 your deposition?
5 A. I don't, ma'am.
6 MS. STONE: Okay. May I approach the witness?
7 THE COURT: You may.
8 (Pause.)
9 Q. (By Ms. Stone) I apologize for not having another copy.
10 My question to you was: How --
11 MS. STONE: This is on Page 23, Line 8.
12 Q. (By Ms. Stone) My question --
13 A. I can see it.
14 Q. -- was: "How many was the most you ever owned at one
15 time?"
16 And your answer was?
17 A. "I'd say between 100 and 150."
18 Q. Okay. And this is a deposition that you gave on
19 November --
20 A. That's correct.
21 Q. -- November the 8th, 2012?
22 A. Uh-huh.
23 Q. Swore to tell the truth when you --
24 A. Yes, I did.
25 Q. Okay.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1104
1 A. I think that number is probably closer to 100 than 150,
2 but --
3 Q. And you also then signed the --
4 A. Yes. Yes, I did, ma'am.
5 Q. Signed again before a notary swearing that the answers
6 you gave were true?
7 A. Yes.
8 Q. You've also owned mares, correct?
9 A. Yes.
10 Q. Had your own brood -- band of broodmares that you bred?
11 A. Yes.
12 Q. Okay. And you, today, are still involved in the horse
13 business, are you not?
14 A. Yes, I am.
15 Q. Okay. In fact, you have a website, don't you?
16 A. Yes, we do.
17 Q. Okay. Is M5 Performance Bloodstock you?
18 A. Yes, it is, ma'am.
19 Q. Okay. And M5, I assume, is for Merrill five, because
20 there's five members of your family?
21 A. That's correct.
22 Q. Okay. And you are -- in your website, you represent
23 that: "The Moore family has hired Frank to bring their
24 interests in Quarter racing back to the pinnacle it once
25 enjoyed," correct?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1105
1 A. Yes, ma'am.
2 Q. Okay. You, also, in your website, represent that you
3 have owned, managed or syndicated over 100 stallions and bred
4 and cared for over 25,000 mares, correct?
5 A. That's correct.
6 Q. Okay. And you, also, testify that the M5 -- that the
7 famous, famous M5 brand, that's your brand, correct?
8 A. Yes, ma'am.
9 Q. That's the brand for the horses that you own?
10 A. Yes, ma'am.
11 Q. Okay. The M5 brand, correct?
12 A. Yes, ma'am.
13 Q. Okay. And you, also, represent on your website that:
14 "Horses from the famous M5 brand have accumulated --"
15 Accumulated means acquired, correct?
16 A. Yes, ma'am.
17 Q. Okay. "Horses from the famous M5 brand have accumulated
18 many championships and titles in cutting, racing, halter, cow
19 horse, reining and roping," correct?
20 A. Yes, ma'am.
21 Q. Okay. And you, also, as you represent on your website
22 and as was discussed at your deposition, you have owned two
23 horses that are in the AQHA Hall of Fame?
24 A. Yes, I have.
25 Q. And, in your website, you also say: "That all the
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1106
1 Merrills have and remain heavily involved in the horse
2 industry, training, exhibiting, and racing registered American
3 Quarter Horses," correct?
4 A. We're not racing any ourselves.
5 MS. STONE: Okay. May I approach the witness?
6 THE COURT: You may.
7 (Pause.)
8 Q. (By Ms. Stone) You can identify this as pages from your
9 website?
10 A. Yes.
11 Q. Okay. And current as of recently? In fact, you have
12 pictures on there that were taken at the convention in 2013.
13 A. That's correct.
14 Q. Okay. And the last sentence here says: "All of the
15 Merrills and Millers --"
16 Miller is your daughter, correct?
17 A. Yes.
18 Q. "All the Merrills and Millers have and remain heavily
19 involved in the horse industry, training, exhibiting, and
20 racing registered American Quarter Horses."
21 A. We --
22 Q. Did I read that correctly?
23 A. Yes, you did.
24 Q. Thank you. Now, you work for Bob Moore Farms?
25 A. Yes, ma'am.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1107
1 Q. Okay. And Bob Moore Farms is in the racehorse business,
2 correct?
3 A. Yes.
4 Q. Has stallions?
5 A. Yes.
6 Q. Okay. In fact, it has -- how many stallions are there at
7 Bob Moore?
8 A. We stand five stallions right now.
9 Q. Okay. And how many horses are there there on the
10 facility?
11 A. Currently, today?
12 Q. Yes.
13 A. Probably about seventy-five.
14 Q. Okay. And they are all racing-bred horses, correct?
15 A. Yes, they are.
16 Q. And your purpose in being there, as is said on your
17 website, is to bring them back to the pinnacle of Quarter
18 Horse racing, correct?
19 A. Yes, ma'am.
20 Q. So you're still involved in the horse business, and
21 you're not trying to tell this jury anything else, are you,
22 sir?
23 A. No.
24 Q. Okay. And you still own -- you testified -- so you have
25 M -- what does M -- M5 Performance Bloodstock, what does it
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1108
1 do?
2 A. It's an entity that I have that appraises equine
3 livestock.
4 Q. Okay. In fact, you -- on your website, you represent
5 that you -- bloodstock consultation by Frank Merrill,
6 including certified equine appraiser, correct?
7 A. That's correct.
8 Q. Mating selections?
9 A. Yes.
10 Q. Agent for buyer or seller?
11 A. Yes.
12 Q. And that would include racing, correct?
13 A. Yes, ma'am.
14 Q. And also cutting?
15 A. Yes.
16 Q. Okay. Stallion promotion strategy?
17 A. Yes.
18 Q. Farm/ranch construction?
19 A. That's correct.
20 Q. And it also represents on here that you're a current
21 member of Board of Trustees of the USEF; is that correct?
22 A. That's correct.
23 Q. And what relationship does that have to the Olympics?
24 A. Well, it's the governing body for the United States
25 Olympic Team.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1109
1 Q. Okay. Now, on your website, you advertise that you have
2 some horses for sale, correct?
3 A. Yes, ma'am.
4 Q. Okay. And what horses do you have for sale?
5 A. Well, as I said, we have two -- all of our horses we own
6 are for sale. We have two broodmares, two yearlings, two
7 weanlings, and one four-year-old gelding.
8 Q. Okay. And you, also, on your website say that you have
9 for sale breedings for sale to Gallo —— and I'm sure I'll
10 butcher the name —— Gallo Del Ceeayo (phonetic).
11 A. That's Gallo Del Cielo.
12 Q. Okay. Do you have breedings for sale to that horse?
13 A. Currently, not now. I will next year, but the breeding
14 season is over with.
15 Q. Okay. Is that a stallion that you own?
16 A. No. I just -- I did own him at one time, but I retained
17 three breedings per year.
18 Q. Okay. And your daughter is married to a cutting horse
19 trainer, correct?
20 A. Yes, ma'am.
21 Q. A cutting horse trainer that, I believe, on your website,
22 you say is the best cutting horse trainer around?
23 A. Well, I think that's a father-in-law's perspective.
24 Q. All right. And you want to see your children succeed --
25 A. Sure, I do.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1110
1 Q. -- as we all do?
2 A. Yes, ma'am.
3 Q. Okay. Now, you are not nearly as assertive today in this
4 courtroom as you were when you told Don Treadway in October
5 of 2008, while you were on the Stud Book Committee that, "No
6 Judge, no Court, will tell our association how to register a
7 horse," are you, sir?
8 A. Well, I -- I don't recall -- I mean, I recall telling Don
9 that, but I don't know how assertive I was.
10 Q. Well, would you agree that you're more in control of your
11 emotions today than you were on those occasions when you said,
12 "AQHA will allow the registration of clones over my dead
13 body"?
14 A. Well --
15 Q. That's a pretty emotionally-charged statement, isn't it,
16 sir?
17 A. Well, yes, ma'am, but, I'm sorry, I beg to differ with
18 you. You've made much -- blown that way out of proportion.
19 And I'm certainly just as in control -- control of my emotions
20 today as I was then.
21 Q. Okay. Are you aware that Don Topliff, the dean from
22 Texas A&M, has testified that you would talk about your
23 opposition and your objection to cloning to anybody that would
24 listen?
25 A. If they asked me about my opinion, I would give it.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1111
1 Q. Well, David Brown wasn't asking your opinion after he
2 bought Doc's Serendipity, was he, sir?
3 A. I don't recall that he did or he didn't.
4 Q. Do you recall approaching him an hour or two after he
5 bought the clone of Doc's Serendipity at the futurity --
6 A. No.
7 Q. -- sale?
8 So you don't recall going up to him, accosting him,
9 approaching him, being aggressive towards him asking him: "So
10 I suppose you're going to sue us now since you bought the
11 clone of Doc's Serendipity"?
12 A. That's false, ma'am. I never treated David Brown that
13 way.
14 Q. So if he testified that you have, you're saying that he
15 was dishonest and he gave false testimony to this jury?
16 A. I'm sorry, but I've never been disrespectful to Mr.
17 Brown.
18 Q. According to a statement that -- you were recently
19 inducted into the AQHA Hall of Fame; is that right?
20 A. Yes, ma'am.
21 Q. Okay. And, according to statements that you made when
22 you were inducted into the AQHA Hall of Fame, you testified
23 that: "You had been front and center during many landmark
24 occurrences in the horse industry." Do you recall saying
25 that?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1112
1 A. Yes, I do.
2 Q. And you've been front and center in the opposition to
3 cloning for AQHA, haven't you, sir?
4 A. I've been on the Stud Book and Registration Committee
5 every -- for the last few years when we've decided what to do
6 about cloning, yes.
7 Q. And you have expressed your opposition with some vigor,
8 haven't you?
9 A. Passion, yes, ma'am.
10 Q. "Vigor" was the word you used when I took your
11 deposition, wasn't it, sir?
12 A. Well, if it was and it's written down there, ma'am, then
13 that's the word I used, yes.
14 Q. Okay. Now, in 2005 -- would you look at, please -- you
15 should have a notebook up there.
16 A. Called what, ma'am?
17 Q. It's Volume 1, Plaintiffs' Exhibits Volume 1.
18 A. In which tab?
19 Q. Tab No. 30.
20 A. Yes, ma'am.
21 Q. And this is a document that I asked you about at your
22 deposition; isn't that right, sir?
23 A. Yes, ma'am.
24 Q. And this is an e-mail dated 6/16/2005, correct?
25 A. Yes, it is, uh-huh.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1113
1 Q. Okay. And it appears to have been printed at least by
2 Jackie Payne. Do you know who Jackie Payne is?
3 A. Yes, I do.
4 Q. It's Don Treadway's assistant, correct?
5 A. That's correct.
6 Q. And she was Bill Brewer's assistant when he held the
7 position as executive vice president?
8 A. That's correct.
9 Q. Okay. And, apparently, this is referencing to -- it
10 says: "Bill, regarding Frank Merrill's comment about Bill
11 Freeman."
12 Who is Bill Freeman?
13 A. Bill Freeman's dead now, but one of the leading trainers
14 and riders in the NCHA history.
15 Q. Owned Smart Little Lena?
16 A. Yes, he did. Yes, ma'am.
17 Q. And he had Smart Little Lena cloned, correct?
18 A. Yes, he did.
19 Q. And you apparently had learned about it sometime prior to
20 the date of this e-mail, 6/16/2005, correct?
21 A. May I read this first --
22 Q. Certainly, please do.
23 A. -- before I answer?
24 (Pause.)
25 A. Okay. Now, could you ask the question again, ma'am?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1114
1 Q. (By Ms. Stone) Sure. Does this refresh your
2 recollection about a conversation that you placed to Jackie
3 Payne or to Bill Brewer at AQHA when you learned that Smart
4 Little Lena had been cloned?
5 A. Yes.
6 Q. Okay. And what was it that precipitated that call,
7 because you were -- excuse me, let me withdraw that and start
8 over.
9 And, at the time, you were concerned about AQHA
10 registered Quarter Horses being cloned; would that be correct?
11 A. I've always been concerned about that.
12 Q. Okay. And felt free to pick up the phone and discuss it
13 with the executive vice president of AQHA, whether it was Don
14 Treadway or Bill Brewer, correct?
15 A. Yes, ma'am.
16 Q. Now, your tenure -- we've seen -- on Exhibit No. 29 here,
17 the list of the Stud Book and Registration Committee members,
18 we've seen that it shows that you were on the Stud Book and
19 Registration Committee in 2003.
20 You had -- as you testified in your deposition, you had
21 previously been on the Stud Book and Registration Committee
22 before then, had you not?
23 A. Prior to 2003?
24 Q. Yes.
25 A. Yes, ma'am.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1115
1 Q. And I think you said you served seven or eight, eight or
2 nine years, something like that?
3 A. Yes, ma'am.
4 Q. Okay. So this -- you weren't just a newcomer to the Stud
5 Book and Registration Committee in 2003?
6 A. No, ma'am.
7 Q. Okay. Now, would you look, please, at -- let me hand
8 you --
9 (Ms. Stone/Mr. Arnold sotto-voce conference.)
10 Q. (By Ms. Stone) You testified, in response to one of Mr.
11 Arnold's questions, that cloning had been -- and banning
12 cloning had been -- was on the agenda for the Stud Book and
13 Registration Committee meeting in 2003. Do you recall that?
14 A. Yes --
15 MR. ARNOLD: Objection --
16 A. -- I do.
17 MR. ARNOLD: -- Your Honor. That's a
18 mischaracterization of the prior testimony. I didn't say
19 anything about banning cloning. I said the issue of cloning
20 was on the agenda.
21 MS. STONE: I'll withdraw it.
22 Q. (By Ms. Stone) Mr. Merrill, I'll ask that this
23 document -- it's called Stud Book and Registration Committee
24 2003 AQHA Convention Agenda --
25 MS. STONE: Third page number.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1116
1 Q. (By Ms. Stone) Can you identify -- and I'll represent to
2 you that this is in evidence as Defendant's Exhibit 149.
3 A. Yes, ma'am.
4 Q. And this is the agenda for the Stud Book and Registration
5 Committee Meeting, 2003 AQHA Convention Agenda, and ask if you
6 can read 16.
7 A. It says: "Discuss news articles/information regarding
8 cloning."
9 Q. And so that's the only thing that -- reference on the
10 agenda to cloning; would you agree with that?
11 A. I don't know. I haven't seen the rest of the agenda.
12 MS. STONE: May I approach the witness?
13 THE COURT: You may.
14 (Pause.)
15 A. Yes, I do.
16 Q. (By Ms. Stone) And, in fact, that's the only reference
17 on the 2003 agenda, correct?
18 A. That's correct.
19 MS. STONE: May I approach the --
20 THE COURT: All right. Ladies and Gentlemen of the
21 Jury, it's time for the noon recess. You'll be in recess at
22 this time until 1:30.
23 Be back in the jury room ready to come in the
24 courtroom at 1:30, and I'll remind you, once again, leave your
25 notebooks here in the courtroom.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1117
1 COURT SECURITY OFFICER: All rise.
2 (There was a recess taken; after which, the following
3 took place in open court with the jury and all parties
4 present.)
5 AFTERNOON SESSION
6 THE COURT: You may proceed.
7 Q. (By Ms. Stone) Mr. Merrill, you have previously owned
8 racehorses that were successful, correct?
9 A. Yes, ma'am.
10 Q. Okay. You won -- one mare that was third in All American
11 Futurity?
12 A. Yes, ma'am.
13 Q. And this was in 1978, I believe, something like that?
14 A. Yes, ma'am.
15 Q. And she made over $230,000; is that correct?
16 A. Yes, ma'am.
17 Q. Okay. You also had numerous stakes wins with numerous
18 horses, race wins, correct?
19 A. Yes, ma'am.
20 Q. Okay. You also, are you not -- you have personally won
21 multiple championships in the National Cutting Horse
22 Association?
23 A. Yes, ma'am.
24 Q. And you yourself personally have earned more than
25 $440,000 in cutting, non-pro cutting?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1118
1 A. Yes, ma'am.
2 Q. Have you also had trainers that rode your cutting horses
3 that earned money?
4 A. Yes, ma'am.
5 Q. Okay. And you are still currently today showing cutting
6 horses; is that right?
7 A. Well, not right now. I'm a little lame. I've got a knee
8 injury that's keeping me on the side, but, after I'm through
9 with that, I'll be back in the saddle.
10 Q. Okay. All right. And you also are currently still
11 breeding your mares; is that correct?
12 A. Yes, ma'am.
13 Q. Okay. Did you -- do you own a mare named Miss Tazwood?
14 A. No.
15 Q. Did you at one time?
16 A. Yes.
17 Q. Okay. Did you own her in 2012?
18 A. I can't be sure of the exact dates that I -- well, that
19 we owned her, Robin and I owned her together.
20 Q. She was bred -- do you recall that she was bred to
21 Metallic Cat, the horse of Alvin Fults that Dr. Veneklasen
22 does the work for for the 2012 season?
23 A. Yes, ma'am. I believe at that time she was owned by
24 Barbara Cowan.
25 MS. STONE: May I approach?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1119
1 THE COURT: You may.
2 Q. (By Ms. Stone) Can you identify that as a copy of a
3 breeding contract for Metallic Cat?
4 A. Yes, I do.
5 Q. And that's signed by your wife, correct?
6 A. Yes.
7 Q. On behalf of Frank and Robin Merrill, individually?
8 A. Yes, ma'am.
9 Q. Not on behalf of Cowan, correct?
10 A. No. But Mrs. Cowan bought her while that mare was in
11 foal to Metallic Cat.
12 Q. So sometime after she was bred? Sometime after she was
13 bred after 2/12/12, correct?
14 A. Yes.
15 Q. So within the last year, a year and a half at the most?
16 A. Yes, ma'am.
17 Q. Now, Mr. Merrill, you testified that the language for
18 Rule 223 was adopted from the Jockey Club rules; is that
19 correct?
20 A. Yes, ma'am.
21 Q. And is it -- or plag -- I think you even said plagiarized
22 from the Jockey Club, correct?
23 A. Yes, ma'am.
24 Q. Okay. And would you agree that the Jockey Club is one of
25 the only, if not the only, breed association that allows none
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1120
1 of the advanced assisted breeding techniques identified in
2 Exhibit No. 140?
3 A. Yes, ma'am.
4 Q. And, yet, even though AQHA had approved all of these
5 breeding techniques, they went back to the Jockey Club for the
6 language to preclude cloning?
7 A. Yes, ma'am.
8 Q. Now, you testified that you met Blake Russell at the 2008
9 convention. Don't you recall meeting Blake Russell at a
10 dinner with Lindy Burch in 2006?
11 A. No, I don't recall that.
12 Q. Okay. You don't recall Blake Russell coming to your
13 place to ride with Lindy Burch in 2006, and you were riding
14 too in the same arena?
15 A. At Windward Stud?
16 Q. Yes.
17 A. No, I don't.
18 Q. So if he remembers it, you just don't remember it?
19 A. I don't remember it, ma'am.
20 Q. Now, if Trent Taylor has testified that you appointed
21 yourself to the Cloning Task Force, would you disagree with
22 that?
23 A. I'm sorry, would you say that again?
24 Q. Sure. If Trent Taylor has testified, or will testify,
25 that you appointed yourself to the Cloning Task Force, would
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1121
1 you disagree with him?
2 A. No. I don't know how I could have appointed myself
3 though.
4 Q. Okay. Put yourself -- volunteered for the Cloning Task
5 Force?
6 A. If he says I did, then I'm sure he's right.
7 Q. Okay. Now, if he -- and I'll -- let me ask you this:
8 You know Trent Taylor?
9 A. Yes, ma'am.
10 Q. And you know Don Treadwell [sic]?
11 A. Treadway.
12 Q. Don Treadway.
13 A. Uh-huh.
14 Q. Excuse me, Don Treadway.
15 And you know Chad Pierce, the lawyer for AQHA?
16 A. Yes, I do.
17 Q. And did you know Dan Schaap, who also did legal work for
18 AQHA?
19 A. Yes, ma'am.
20 Q. Okay. And are you aware that those three gentlemen,
21 according to Mr. Treadway's notes, identified, as red
22 herrings, things, reasons that AQHA could not use to refuse to
23 register clones to include linebreeding?
24 Did you know that?
25 A. Ma'am, I'm not -- I'm not sure I know one way or the
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1122
1 other. Do you have some facts or -- you can show me?
2 Q. Sure.
3 MS. STONE: Exhibit No. 81.
4 Q. (By Ms. Stone) Okay. Up at the --
5 A. I can't see that very well.
6 Q. Let me give you a copy.
7 (Exhibit enlarged on screen.)
8 A. That's better. Ms. Stone, I can read that now.
9 Q. (By Ms. Stone) Okay. All right. And up at the very
10 top, if we -- we'll go to the second page. And up at the top,
11 the very left-hand corner, Mr. Treadway has told us that that
12 says "red herrings."
13 You see where it looks like it's been in a notebook, and
14 part of the word "red" was cut out with the punching of a hole
15 for a notebook. Do you see that?
16 A. Yes, ma'am, I do.
17 Q. Okay. And then if we go down to -- further down on the
18 page to No. 2, first, he identifies mitochondrial DNA.
19 And then No. 2, down to here is "linebreeding." Do you
20 see that?
21 A. Yes, ma'am.
22 Q. And then No. 3 is "gene concentration." Do you see that?
23 A. Yes.
24 Q. And then the fourth one is "parentage verification." Do
25 you see that?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1123
1 A. Well, I can't read the writing, but I'll -- it looks like
2 it could be.
3 Q. Okay. Well, I'll tell you what Mr. Treadway testified.
4 A. Fair enough.
5 Q. Mr. Treadway testified that it says: "Don't have
6 parentage verification anyway."
7 Okay. So my question to you, sir, is: Is this the first
8 time that you have heard that the two highest ranking paid
9 officers at AQHA and two lawyers met and identified as red
10 herrings -- as red herrings, in other words, reasons that they
11 couldn't use as reasons, to deny the registration of clones,
12 mitochondrial DNA?
13 MR. ARNOLD: Objection, Your Honor. That's a
14 mischaracterization of the testimony of Mr. Treadway.
15 THE COURT: Sustained.
16 Q. (By Ms. Stone) I'll rephrase it.
17 Is this the first time that you have ever seen any of
18 those four things identified as red herrings?
19 A. Yes, ma'am.
20 Q. Now, you testified about -- in response to Mr. Arnold's
21 question, he went over a list of the two -- the people that
22 were on the Stud Book and Registration Committee in 2012,
23 correct?
24 A. The two people?
25 Q. The people that were on the --
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1124
1 A. Oh, yes.
2 Q. -- Stud Book in 2012?
3 A. Uh-huh.
4 Q. Do you know Butch Wise?
5 A. Yes, ma'am.
6 Q. And who is Mr. Wise?
7 A. He's the co-manager of the Lazy E Ranch, a commercial
8 breeding farm for racehorses.
9 Q. All right. And personally owns racehorses himself?
10 A. Yes. Over time, he's a -- I don't know how many he owns,
11 but --
12 Q. Okay. And races them, correct, breeds them?
13 A. Yes. For the most part, he buys and sells horses.
14 Q. Okay. Buys and sells horses, many of them very expensive
15 racehorses, correct?
16 A. Well, I'm not -- I'm not privy to how much or how little
17 he's spent except in the sales results for his particular
18 entity. Whatever he bought would be publicized.
19 Q. He's a mover and shaker in the Quarter Horse racing
20 industry, isn't he, sir?
21 A. Yes, ma'am.
22 Q. Okay. He's also on the Stud Book and Registration
23 Committee in 2012, correct?
24 A. Yes, ma'am.
25 Q. And I don't think you got quite down that far on the list
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1125
1 that Mr. Arnold was showing you, but let me just read to you
2 what Mr. Russell [sic] said about that 2012 Stud Book and
3 Registration list, and this came into testimony -- into
4 evidence yesterday.
5 The question to Mr. Wise was: "How about in the year
6 2012; is there anyone listed under the year 2012 as a member
7 of the Stud Book and Registration Committee that you cannot
8 identify as a breeder?"
9 And he -- his response was: "The only one that I would
10 have -- not have knowledge of would be Dickson Varner."
11 Okay. If Mr. Wise has so testified, are you -- is he
12 mistaken with regard to the people that are on the 2012 Stud
13 Book and Registration Committee?
14 A. Well, you'll have to say -- you'll have to define breeder
15 for me, ma'am. Ever bred a mare or currently breeding a mare?
16 How is that -- how is that question posed?
17 Q. I think we even have a definition of it. I'll get back
18 to you on that.
19 A. Okay.
20 Q. Okay. I'll also represent to you that Dr. Veneklasen
21 testified, with regard to the 2012 Stud Book and Registration
22 Committee members, that at least twenty-one of them were
23 breeders. Would you disagree with Dr. Veneklasen on that?
24 MR. ARNOLD: Objection, Your Honor. Again, that's a
25 mischaracterization of the testimony. What he said was, they
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1126
1 were breeders or influential people.
2 THE COURT: Can you clarify?
3 MS. STONE: Sure.
4 Q. (By Ms. Stone) I will represent to you -- here's another
5 question from Mr. Wise's deposition: "I'm going to use the
6 phrase loosely, but clearly a breeder would be one who owns
7 mares that are bred or conceived a foal, and that they would
8 be the record owner of the mare at the time the foal was
9 conceived."
10 A. I would agree with that statement.
11 Q. All right. Now, you also testified about Dr. Blodgett,
12 Glenn Blodgett who is a member or was a member, a longtime
13 member of the Stud Book and Registration Committee, correct?
14 A. Yes, ma'am.
15 Q. And now he's on the Executive Committee, correct?
16 A. Yes, ma'am, uh-huh.
17 Q. And he oversees -- he has a pretty big job, doesn't he,
18 at The Four Sixes?
19 A. Well, I would think so.
20 Q. Okay. He oversees their entire equine operation, doesn't
21 he?
22 A. Yes, ma'am.
23 Q. Okay. And they have some -- they stand some pretty
24 significant stallions down there. I mean, this is not just a
25 working ranch, is it, The Four Sixes?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1127
1 A. No. I mean, it's a stallion station.
2 Q. It's a stallion station, and they --
3 A. As well.
4 Q. -- they stand Mr. Jess Perry, don't they?
5 A. Yes, they do.
6 Q. And Mr. Jess Perry, tell the jury about Mr. Jess Perry.
7 A. Well, he's the leading sire of running Quarter Horses
8 currently, living sire.
9 Q. And are you also aware that they stand a number of
10 stallions down there, ten to twelve, fifteen, something like
11 that?
12 A. Yes, ma'am.
13 Q. Twenty maybe. I think maybe even as many as twenty.
14 Dr. --
15 A. Well, I'm not sure.
16 Q. All right. But a lot of them? It's a big operation?
17 A. A plethora.
18 Q. Okay. And so, clearly, Dr. Blodgett is involved in
19 breeding and raising racing Quarter Horses, correct?
20 A. That's correct.
21 Q. Okay. And some pretty significant ones at that?
22 A. Yes.
23 Q. And do you know Johnny Trotter?
24 A. Yes, I do.
25 Q. And Johnny Trotter was also on the Stud Book and
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1128
1 Registration Committee for several years, wasn't he?
2 A. Yes.
3 Q. And he is now on the Executive Committee, correct?
4 A. That's correct.
5 Q. And are you aware that The Four Sixes Ranch, where Dr.
6 Blodgett is and the operation that he oversees with the
7 racehorses, that has a partnership with Johnny Trotter and
8 that they own some horses together?
9 A. Yes.
10 Q. In fact, one of them just won the Rainbow Futurity last
11 weekend, didn't it?
12 A. Yes, ma'am.
13 Q. All right. And, together, Mr. Trotter and Dr. Blodgett's
14 company also own another stallion that's quite well known, One
15 Famous Eagle, correct?
16 A. Well, actually, no. He's syndicated him, ma'am, so
17 they -- they own some shares in him, but they don't own the
18 whole horse.
19 Q. Okay. And explain to the jury what a horse -- what is
20 syndicated? What does it mean to syndicate a horse?
21 A. Syndication is when you sell -- when the owner decides to
22 spread his risk over a large number of people. This horse has
23 got forty shares. So if you are interested, you'd buy a share
24 in the horse, and you would own one-fortieth of that animal.
25 Q. And that --
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1129
1 A. And that would allow you to breed a specific number of
2 mares to the horse.
3 Q. Okay. So, in essence, what you're doing is, you're
4 buying the opportunity to breed to the horse, correct?
5 A. Yes, ma'am.
6 Q. All right. And, over the years, you've syndicated a
7 number of horses too, didn't you, sir?
8 A. I have.
9 Q. All right. Also, you talked about -- I believe, in
10 response to Mr. Arnold's questions, you identified Jim Helzer
11 as a breeder of commercial or racing Quarter Horses, correct?
12 A. Yes, ma'am.
13 Q. And, in fact, he is the gentleman that owned Refrigerator
14 when it won all that it won, correct?
15 A. You are correct.
16 Q. All right. Now, Mr. Merrill, you didn't just make the
17 statement that AQHA would allow the registration of clones
18 over your dead body once. You made it several times, didn't
19 you?
20 A. I didn't count how many times I'd made that statement,
21 ma'am.
22 Q. Okay. But isn't it true though that you've made it
23 several times?
24 A. If you say so, I guess it has to be right.
25 MS. STONE: Well, may I approach the witness?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1130
1 THE COURT: You may.
2 (Pause.)
3 Q. (By Ms. Stone) This is from your deposition, Page 65,
4 Line 11. My question was: "And do you recall when you might
5 have made a comment to that effect?"
6 And your answer was?
7 A. "I've said it several times."
8 Q. And, again, we're referring to the question -- my
9 question preceding that was: "And the statement that you
10 made, over my dead body, the context of that statement was
11 something to the effect of, AQHA will allow clones -- the
12 registration of clones over my dead body, correct?"
13 A. Yes, ma'am.
14 Q. You've also made statements to the effect, in front of
15 the Stud Book and Registration Committee and others, that
16 this -- with respect to cloning, "That this is not going to
17 happen," in response -- in reference to the proposed rule
18 changes to Rule 227(a), correct?
19 A. I don't know. I can't remember.
20 Q. Okay. Do you recall when I asked you that in your
21 deposition?
22 A. No, I don't, ma'am.
23 Q. Okay. Let me just read the question and answer and see
24 if this refreshes your recollection.
25 My question was: "Do you recall making a statement at
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1131
1 the 2008 Stud Book and Registration Committee meeting at the
2 convention that this is not going to happen in reference to
3 the proposed amendment to Rule 227(a) to allow the
4 registration of cloned horses?"
5 And you said: "I don't know if I made that statement or
6 not."
7 And then my question was: "Is that a statement that you
8 have made before?"
9 And you responded: "In those particular words?"
10 And I responded: "Or to that effect."
11 And you said: "Yes."
12 Do you recall that?
13 A. Well, if it's in the deposition, I'm sure it's right,
14 ma'am.
15 Q. All right. And isn't it true that, at all times since
16 2008, the members of the Stud Book and Registration Committee
17 have agreed to exclude horses produced through somatic cell
18 nuclear transfer and their offspring from the registry of the
19 American Quarter Horse Association?
20 A. Would you repeat that question?
21 Q. Sure. Is it true that, at all times since 2008, the
22 members of the Stud Book and Registration Committee have
23 agreed to exclude horses produced through somatic cell nuclear
24 transfer and their offspring from the registry of the American
25 Quarter Horse Association?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1132
1 A. They have voted on that.
2 Q. Okay. Do you recall me asking you that exact question in
3 your deposition?
4 A. No, I don't, ma'am.
5 MS. STONE: May I approach the witness?
6 THE COURT: You may.
7 (Pause.)
8 Q. (By Ms. Stone) Page 105, Line 19. My question: "Is it
9 true that, at all times since 2008, the members of the Stud
10 Book and Registration Committee have agreed to exclude horses
11 produced through somatic cell nuclear transfer and their
12 offspring from the registry of the American Quarter Horse
13 Association?"
14 And you said?
15 A. Well, I can't believe I said this, but I said: "Yes,
16 sir."
17 (Laughter.)
18 Q. (By Ms. Stone) But you're actually --
19 A. So I'm not sure that that deposition is correct, ma'am.
20 Q. Well, I don't think you're reading it right, Mr. Merrill.
21 And, again, you were sworn to tell the truth when you gave
22 this deposition?
23 A. Absolutely.
24 Q. And you read the deposition and then signed it under oath
25 following it, correct?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Redirect--Mr. Arnold) (Defendant AQHA) 1133
1 A. Yes, ma'am. We've been over that before.
2 Q. Okay. Let's read it again, sir, and see who said, "Yes,
3 sir."
4 "Is it true that, at all times since 2008, the members of
5 the Stud Book and Registration Committee have agreed to
6 exclude horses produced through somatic cell nuclear transfer
7 and their offspring from the registry of the American Quarter
8 Horse Association?"
9 And your response?
10 A. "Since 2008; is that what your question is?"
11 Q. And I said: "Yes, sir."
12 A. Okay.
13 Q. And then you said?
14 A. "Yes."
15 MS. STONE: No further questions.
16 THE WITNESS: Sorry.
17 MS. STONE: I have nothing further.
18 REDIRECT EXAMINATION
19 BY MR. ARNOLD:
20 Q. Mr. Merrill, just a few questions. When was the last
21 time you had a championship horse in any event?
22 A. 1999, I think, Wade.
23 Q. When was the last time anybody else in your family had a
24 championship horse?
25 A. 2002 or 2001 maybe.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Recross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1134
1 Q. That $400,000 that you've earned, how long a period of
2 time are we talking about?
3 A. Since 1969.
4 Q. So '69 up to the present?
5 A. Yes, sir.
6 Q. That's not very much money if we divide that by the
7 number of years, is it?
8 A. Well, not compared to some other members of my family.
9 Q. Who has been doing the best in your family?
10 A. Megan.
11 Q. Okay.
12 A. Well, Matt too, but --
13 Q. When is the last time you had a racehorse that you own
14 that won a race?
15 A. Would have been sometime in the early '80s, '84, '85,
16 something like that.
17 MR. ARNOLD: No further questions. Thank you.
18 RECROSS EXAMINATION
19 BY MS. STONE:
20 Q. Mr. Merrill, while you may not have won, you haven't quit
21 trying, have you? You're still competing in cutting, aren't
22 you?
23 A. Yes, ma'am.
24 Q. And Bob Moore Farms where you are the manager -- in fact,
25 you're the manager of all the operations of Bob Moore Farms,
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Recross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1135
1 correct?
2 A. Yes, ma'am.
3 Q. Okay. And they've been in the horse racing and breeding
4 business for over six decades and have bred -- bred and
5 campaigned world champions like Dashing Perfection and Mr Jet
6 Moore, correct?
7 A. Yes, ma'am.
8 Q. Okay. And they offer breeding, sales preparation,
9 consultation, boarding services, and currently have five
10 standing stallions, correct?
11 A. Yes, ma'am.
12 Q. And, as you've previously -- as you've already testified,
13 that you've been hired to bring their interests in Quarter
14 Horse racing back to the pinnacle it once enjoyed, correct?
15 A. Yes, ma'am.
16 Q. And the pinnacle it once enjoyed means winning, doesn't
17 it, or selling horses that are -- that ultimately end up
18 winning races, correct?
19 A. That's what we all like to do.
20 MS. STONE: Thank you. No further questions.
21 MR. ARNOLD: Your Honor, no further questions. We'd
22 ask that this witness be excused.
23 MR. NICKUM: Wait a minute, Your Honor. I have --
24 MR. ARNOLD: I'm sorry, Your Honor.
25 THE COURT: You have some questions?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Mr. Nickum) (Plaintiff Jason Abraham) 1136
1 MR. NICKUM: I have a line of questions, Your Honor.
2 THE COURT: All right, sir.
3 MR. ARNOLD: My apologies, Counsel.
4 MR. NICKUM: Counsel, may it please the Court?
5 CROSS EXAMINATION
6 BY MR. NICKUM:
7 Q. I don't believe, Mr. Merrill, that, in this case, we've
8 yet to hear really what a Quarter Horse is. Are you familiar
9 with the book, They Rode Good Horses?
10 A. Yes, sir, uh-huh.
11 Q. And they mention in that book that the original Quarter
12 Horse started with Steel Dust; is that true?
13 A. Well, there are Steel Dust type horses.
14 Q. The cowboys loved Steel Dusts, correct?
15 A. Yes, sir, uh-huh.
16 Q. And so that horse -- was it a foundation upon which
17 Quarter Horses came to be based?
18 A. Well, very honestly, I'm not sure Steel Dust ever
19 existed. I think it's a term that was used by the old
20 horsemen as a type -- a Steel Dust type horse.
21 Q. A type, yes. And that's where I'm going with this. I
22 wanted to call it attributes; you call it a type. But
23 describe to the jury, please, what are the attributes of a
24 Quarter Horse. For example, a large jaw, small ears, high
25 intelligence?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Mr. Nickum) (Plaintiff Jason Abraham) 1137
1 A. Would you like me to paint a picture?
2 Q. No. Well, with words.
3 A. That's what I'm saying.
4 Q. Sure.
5 A. Figuratively speaking.
6 Q. Yes, please.
7 A. Well, it's a horse that has been bred to run a quarter of
8 a mile, 440 yards, faster than any other equine, Thoroughbred,
9 Arabian, Morgan, or what have you, any other breed.
10 It's been bred to have strong muscles, a large hind leg,
11 a long hip, a short back, strong through the loin, pretty head
12 —— not all of them have pretty heads, but we all like to raise
13 those type of horses; this is an ideal horse —— with a little
14 fox ear, which is about that long (indicating), and with a
15 nice round jaw, a square jaw in shape, but a rounded back that
16 protrudes on our stallions and a more feminine type jaw with
17 the female, slender neck, and a good wither, straight legs and
18 strong bone, and a good foot, a good strong foot to stand on.
19 Q. And will you agree with me that maybe one of the mental
20 attributes we seek is a kind eye?
21 A. Yes, sir.
22 Q. Tell the jury what a kind eye is.
23 A. Well, one that has no white around it, and it's a soft
24 brown color that doesn't -- that has a calmness to it that
25 doesn't show any strain or stress.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Mr. Nickum) (Plaintiff Jason Abraham) 1138
1 Q. And --
2 A. And you develop the eye for the horse after a period of
3 time being around them and telling the difference between one
4 that's in panic mode or one that's not.
5 Q. So a calm horse, one that a cowboy likes and likes a
6 cowboy, right?
7 A. Yes, sir.
8 Q. And a horse with a lot of cow?
9 A. Well, we would like that, yes.
10 Q. Tell the jury what that means, a lot of cow in it.
11 A. Well, we speak about cow sense, and it's hard to describe
12 because it's sort of a -- using selective breeding, we've
13 tried to get that trait where a horse will work a cow. I
14 think you've seen photographs and movies of cutting horses
15 working a cow and mirroring what it -- mirroring the movement
16 of that particular cow with an effort to block it from going
17 back into the herd.
18 So used to be horses didn't have that instinctive nature
19 as much as they do now, because we've been further along in
20 the breeding process. So, through selective breeding, we're
21 getting better and better at raising better and better cow
22 horses that have more cow sense.
23 Q. And, in that selective breeding, we've done something we
24 shouldn't have done, haven't we? We have inbred and linebred
25 these horses to the point where we have seen the emergence of
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Mr. Nickum) (Plaintiff Jason Abraham) 1139
1 genetic diseases that were not there with the original
2 foundation horses; isn't that true?
3 A. I'd answer that by saying that linebreeding or inbreeding
4 is a process where you -- you would take siblings that are
5 closely related and breed them to each other or their -- or
6 from the same lineage. And the old horsemen used to say that
7 it's -- that it's linebreeding if it works, if the resulting
8 cross works, and inbreeding if it doesn't.
9 We've had a problem in the last ten years with what Mr.
10 Nickum is calling linebreeding and inbreeding, which really
11 amounts to a single trait selection.
12 And people in different disciplines have chosen to go
13 down a path where they're using the same genetics on top of
14 those same genetics with the sire and the dam and exacerbated
15 a problem that wouldn't otherwise have reared its ugly head.
16 So it's -- it's a bit like -- well, I hate to use this
17 analogy, but some of the people in parts of the world, or even
18 in our own country, that have been accused of having some
19 inbreeding in their own families and come up with some
20 undesirable traits. We've had the same thing happen in our
21 horse.
22 Q. Yes, sir. And we love these horses, don't we? And
23 you've said that you have a moral obligation toward these
24 horses, don't you?
25 A. Well, I feel like I do, yes, sir.
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Mr. Nickum) (Plaintiff Jason Abraham) 1140
1 Q. Yes, sir. Yes, sir. Would it help with the problem if
2 the AQHA simply barred from registration a carrier of a
3 genetic disease? That would help, wouldn't it?
4 A. Well, I can't say that, sir. That's -- I can't, or no
5 one can say that you can't register a horse with a registered
6 parent on both sides, a registered sire and a registered dam.
7 Q. Well, you're on the Stud --
8 A. We can't preclude them from registration.
9 Q. Well, sure, you can. You're on the Stud Book and
10 Registration Committee. You write a rule. You say, if a
11 horse is a carrier of a genetic disease and we don't want the
12 disease to continue spreading the way that Dr. Sharon Spier,
13 who will testify, is going to say it's doing, we write a rule
14 and say, "Don't bring us any carriers anymore; go breed to
15 clean horses."
16 Now, isn't it true, if that rule is written in that way,
17 breeders aren't going to breed to carriers; they're going to
18 have to go find clean horses?
19 A. No. I think it's a better idea to give the information
20 to the public as to which sires and dams are afflicted with
21 particular diseases, which we are currently doing now.
22 We have a five-panel test that either you've heard about
23 or you'll hear more about that designates exactly what that
24 particular stallion is afflicted with, if any. And so a
25 breeder can then consciously make a decision to breed a
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Mr. Nickum) (Plaintiff Jason Abraham) 1141
1 specific type of mare, who is genetically free or compatible
2 with that stallion in order to come up with a disease-free,
3 genetic disease-free animal, offspring.
4 Q. All right.
5 A. So it's -- it's quite simple, if you know what you're
6 doing.
7 Q. And we're going to hear about education and how the
8 effect of -- and what the effect of education has had on
9 breeders and how they choose to breed. We'll hear from them.
10 But my question to you is, sir: If you just wanted to
11 stamp it out altogether, just don't allow the carriers to be
12 registered. And you reject that. You think education is the
13 better approach?
14 A. Yes, sir.
15 Q. All right. Thank you.
16 A. Diplomacy's better than -- a diplomatic solution is much
17 better than that one that is so harsh.
18 Q. That's harsh? It's harsh to ban clones from the registry
19 too, is it not?
20 A. No, sir.
21 Q. Especially, when clones are clean, aren't they?
22 A. I can't say that they are. I can't guarantee that they
23 are.
24 Q. If the testimony in this case is that all the clones
25 shown in the pictures are clean, they are not carriers, and
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Mr. Nickum) (Plaintiff Jason Abraham) 1142
1 your [sic] testimony is that, if clones are allowed, the
2 breeders will prefer to go to the clones —— they're pretty
3 nice horses —— a lot of those breeders are going to go to
4 clean horses as their choice of mating rather than go to
5 carriers. Can we make that assumption?
6 A. No, sir, I can't with any certainty make that assumption.
7 Q. You can't make that assumption?
8 A. No, sir.
9 Q. All right. So, returning to the moral position, for you,
10 AQHA should continue to allow registration of carriers even
11 though we know the effects?
12 A. You're asking for a yes-or-no answer?
13 Q. No. You can -- I'm not going to pin you down.
14 A. No. I think our rules of registration, as they currently
15 are, in effect, are very adequate to satisfy our breeders and
16 our members currently.
17 Q. Your rules -- we talked about the breed, the Quarter
18 Horse breed. The attributes of that -- I say little horse.
19 Most of the Quarter Horses that I've rode are smaller than the
20 Thoroughbreds.
21 Would you agree that the Quarter Horse is probably a
22 smaller horse?
23 A. Well, it comes in all shapes and sizes. Now --
24 Q. Okay. All Right.
25 A. So to characterize him as a small horse would be
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Mr. Nickum) (Plaintiff Jason Abraham) 1143
1 improper.
2 Q. Well, at any rate, we have a breed called a Quarter
3 Horse, and we -- and you have eloquently told the jury the
4 attributes of that horse.
5 We also have a breed called a Thoroughbred, do we not?
6 A. Yes, sir.
7 Q. And the Quarter Horse Association has put together an
8 appendix where a Thoroughbred could be registered with the
9 association, correct?
10 A. Yes, sir, as long as the horse is a registered
11 Thoroughbred, that horse that's bred, and his dam or sire is a
12 registered Quarter Horse, then you would come up with a horse
13 that's registered in the Appendix Registry.
14 Q. So an appendix is not something that's unheard of?
15 A. No, sir.
16 Q. And Chad Pierce and his staff brought you an appendix for
17 the registration of clones, did he not?
18 A. You mean, as a -- you'll have to --
19 Q. Well, he brought --
20 A. -- explain what you're saying here.
21 Q. He brought you an amendment to Rule 227(a) that would
22 allow registration of clones as a part of the project to look
23 at whether or not registering clones was a good idea or a bad
24 idea?
25 A. Do you have a copy of that, Mr. Nickum?
Stacy Mayes Morrison Official Court Reporter Frank Merrill (Cross--Mr. Nickum) (Plaintiff Jason Abraham) 1144
1 Q. No. I'm just asking if you're aware of it.
2 A. Without seeing it, I don't want to say one way or the
3 other.
4 Q. Did you read it? Did you ever read it?
5 MR. ARNOLD: Your Honor, this witness already
6 responded he doesn't know what Mr. Nickum's talking about.
7 THE COURT: Overruled.
8 A. I'm sorry, I've -- I've got to see what you're talking
9 about, Mr. Nickum.
10 Q. (By Mr. Nickum) All right.
11 MR. NICKUM: Pass the witness.
12 MS. STONE: Nothing further.
13 MR. STEIN: Nothing for this witness.
14 MR. ARNOLD: Nothing further, Your Honor. At this
15 time, we'd ask that the witness be excused.
16 THE COURT: May the witness be excused altogether?
17 MS. STONE: Yes, Your Honor.
18 THE WITNESS: Thank you, ma'am.
19 THE COURT: You are excused as a witness in the
20 case.
21 THE WITNESS: Thank you, Your Honor.
22 (Witness excused.)
23 THE COURT: Call your next witness.
24 MS. WHITE: We call Joan Schroeder.
25 (Pause.)
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1145
1 THE COURT: The clerk will administer the oath right
2 up here.
3 (The witness was sworn by the courtroom clerk.)
4 MS. WHITE: May it please the Court and Counsel?
5 JOAN SCHROEDER,
6 having been first duly sworn, testified as follows:
7 DIRECT EXAMINATION
8 BY MS. WHITE:
9 Q. Good afternoon.
10 A. Good afternoon.
11 Q. Can you please state your name for the record.
12 A. My name is Joan Schroeder.
13 Q. And, Joan, please tell the jury what you do for a living.
14 A. I raise and breed Quarter Horse, American Quarter Horses.
15 Q. And what discipline of horses do you raise and breed?
16 A. Primarily western pleasure horses. I also stand a
17 reining stallion. Pretty much.
18 Q. We heard an interesting description of western pleasure
19 discipline yesterday from Dave Brown. Can you tell the jury,
20 in your own words, what western pleasure is.
21 A. Yes, ma'am. Western pleasure horses are ridden in a
22 western saddle. It is -- to me, it's the entry level into
23 riding, all age groups from two years old, which is when I
24 started, to people in their eighties and their nineties. It's
25 a safe horse in the show world, horse show world.
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1146
1 The horse has three gaits, walk, trot, and lope both
2 directions of the arena, and they're judged primarily on their
3 movement and discipline, conformation, everything that is the
4 American Quarter Horse.
5 Q. And it's a separate discipline from racing or cutting,
6 correct?
7 A. Absolutely.
8 Q. Okay. What about reining; can you give them a
9 description of what reining is?
10 A. Yes. That's a pattern class. In the western pleasure
11 classes, numerous horses show all at one time. So if there's
12 thirty entries in a class, they probably, depending on the
13 size of the arena, could split the class up into two sections,
14 but if it's only ten horses in a class, you all compete at the
15 same time. The judges are in the center and choose their
16 favorites from first place to the most at ten -- ten places.
17 Reining classes is where the horse goes in alone and has
18 a pattern class, and it goes from loping, circles, and mainly
19 in spins and stops, and they are judged as well, and they are
20 scored on their performance.
21 Q. And so, also, reining would be a separate discipline from
22 racing and cutting?
23 A. Absolutely.
24 Q. Would you consider yourself to be a participant or a
25 competitor in the elite racing market for Quarter Horses?
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1147
1 A. No, ma'am.
2 Q. And what about a participant or a competitor in the elite
3 cutting market for Quarter Horses?
4 A. No, ma'am.
5 Q. How did you become involved in Quarter Horses or either
6 of those disciplines that you just described?
7 A. As a child, my parents both had ridden all of their
8 lives, so I was pretty much born on a horse, and it has always
9 been my lifelong passion.
10 In the beginning, I just started on grade horses and
11 worked my way up through 4-H and around the age of twelve
12 became an AQHA member, because that was a step above, in my
13 opinion, from open horse shows. It was a quality breed, and
14 I've always strived to hit the next level.
15 Q. Okay. So all of your life you've been passionate about
16 Quarter Horses?
17 A. Absolutely.
18 Q. And can you explain why you have a passion for this
19 particular breed?
20 A. They're intelligent, versatile. I think there's a great
21 saying that the outside of a horse is good for the inside of a
22 soul, and that's what I've found for me.
23 Q. And I think you just mentioned that you've been a member
24 of AQHA since you were twelve?
25 A. Uh-huh, yes, ma'am.
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1148
1 Q. What does the association mean to you? Why are you a
2 member?
3 A. Again, the association protects the American Quarter
4 Horse. It's in the mission statement from the beginning of
5 the American Quarter Horse in 1940, and they are there to
6 protect the integrity of the breed, and they work hard.
7 I have been -- I'm a lifelong member, but since I was
8 twelve, an AQHA member through -- came through the ranks of
9 the youth association and then turned it into a business.
10 But the association and the officers have always -- I've
11 come to know several very well and consider friends through
12 the years. But they have always worked tirelessly to maintain
13 the integrity, keep the records, of the Quarter Horse and keep
14 it moving forward in a positive way.
15 Q. So you say you're passionate about the breed, but it also
16 sounds like you're passionate about the AQHA?
17 A. Absolutely.
18 Q. Okay. And so do you serve on the Board of Directors or
19 on any committees for the association?
20 A. Yes. I was elected to the Board of Directors in Texas in
21 2011, so I've had two full years now.
22 Q. And what does that mean to you, to --
23 A. Oh, my good --
24 Q. -- be nominated and elected for the Board of Directors?
25 A. It's an honor, very much an honor. I was one of
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1149
1 twenty-one applicants in 2011 and was -- there was seven
2 positions available, and I was one of those chosen. So -- and
3 by my peers.
4 Q. Okay. And also committees, have you served on any
5 committees?
6 A. I've served on the Professional Horseman's Committee
7 since 1997, and --
8 Q. And let me stop you there. Go ahead and explain to them
9 what that committee is.
10 A. The Professional Horseman Committee is made up of
11 professionals in the American Quarter Horse industry. They
12 are primarily horse trainers, some breeders, AQHA judges, as
13 well as other people that are involved in the business as far
14 as insurance, but they are all professionals in the Quarter
15 Horse industry.
16 Q. Okay. And so, other than that committee, what else have
17 you served on?
18 A. I was appointed to the Stud Book and Registration
19 Committee after the convention in 2011, which is when I was
20 voted in as a director.
21 Q. Okay. Well, let's focus on the Stud Book and
22 Registration Committee.
23 A. Okay.
24 Q. What do you enjoy about being a member of that committee?
25 A. It is an elite group of professional horsemen, again,
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1150
1 that -- it is a broad spectrum of people that have devoted
2 their lives to, again, proving and -- the American Quarter
3 Horse, taking care of it, the integrity of the horse, the
4 individual itself as well as the association. It -- there's
5 veterinarians, there's AQHA judges, there's breeders of
6 different disciplines. There -- I know that there is one of
7 the -- one of the committee members is -- has given lessons
8 kind of at the all-around level. So, again, it's a broad
9 spectrum of committee members.
10 Q. And, so by broad spectrum, I assume then you would agree
11 with me that it's diverse?
12 A. Yes.
13 Q. And what would be your opinion on whether it's composed
14 of all competitors in the elite Quarter Horse market, however,
15 that's defined?
16 A. Could you say that again, please.
17 Q. What would be your opinion, if I said that the Stud Book
18 and Registration Committee is composed of all competitors or
19 breeders within the elite Quarter Horse market, however,
20 that's defined, would you agree with that?
21 A. No, I -- not in the elite group, absolutely not.
22 Q. Well, during this trial, we've heard some references to
23 the Stud Book and Registration Committee as a good ol' boys'
24 club. What are your thoughts? What's your take on that?
25 A. I have been a female, have dealt with many different
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1151
1 organizations, both with good ol' boy clubs and with not.
2 Women can be just as pressing.
3 And I have never considered any of the American Quarter
4 Horse Association of any of the committees that I have been
5 on, Task Force, been treated as it was a good ol' boys' club,
6 that I was a female that needed to follow. I think that I
7 have been appointed to the different committees that I have
8 because of me standing for who I am and what I believe.
9 Q. And so ever since you've been on the committee, do you
10 feel that you're an equal member to all the other committee
11 members?
12 A. Absolutely.
13 Q. And you feel free to have your own views on whatever the
14 issues are before the committee?
15 A. I do have my own views.
16 Q. How do you feel about expressing those views or your
17 opinions to the other committee members during those meetings?
18 A. It's easy. (Laughs.) It's simple for me.
19 Q. Do you feel that the other committee members -- are they
20 receptive to your views and opinions?
21 A. Absolutely, as -- as I am them. I think we all are very
22 respectful of each other, as well as AQHA and their officers.
23 Q. Now, just going back to how you became a member of the
24 committee, how did that happen?
25 A. Mr. Peter Cofrancesco was president when I was elected
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1152
1 onto the Board of Directors in 2011, and Mr. Cofrancesco had
2 had horses with my husband and I, and he knew of my passion of
3 breeding and my expertise over the years, and he appointed me.
4 Q. Okay. And his name's come up a couple of times in this
5 trial. Were you aware of what his view or his opinion was on
6 cloning or the registration of clones or --
7 A. I did not. He was never in any meetings that I was in
8 that it was ever expressed, nor did he personally, and he has
9 my telephone number, and that was never the case. And, in
10 fact, he's been to my ranch as well.
11 Q. Okay. And when you became a committee member, what is
12 your understanding as to whether you were there to represent
13 AQHA's membership or your own personal interests?
14 A. Oh, absolutely, you are there to represent the
15 membership, absolutely.
16 Q. Okay. And so why is that important, to represent the
17 membership?
18 A. They're the voice. They -- you know, by you becoming a
19 member of at least the American Quarter Horse Association, I
20 would assume any association, that that gives you -- gives you
21 a voice, and they've always been very open.
22 That's how I was appointed on the Professional Horseman's
23 Committee in 1997; I wrote a letter on something that I did
24 not agree about, which was judging, and they put me on a
25 committee.
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1153
1 Q. So, as a general member, you wrote a letter, and that's
2 how you ended up being on a committee?
3 A. Absolutely.
4 Q. About something that you felt passionate about?
5 A. Correct.
6 Q. Okay. And how, as a member of the SBRC, do you become
7 aware of the members' sentiment or how they feel about certain
8 issues?
9 A. It's important, as a member as a Board of Director, to
10 make yourself accessible throughout the year every year to the
11 membership, and that is simply by being at events.
12 I do attend numerous events. I've not been to a racing
13 yet, but I go to cuttings, reinings, AQHA World Show, the
14 Youth World Show, the Select World Show. I have been at every
15 convention since I don't remember when. I think probably the
16 last twenty-two years.
17 Q. Okay.
18 A. So you just put yourself out there. I advertise, and
19 membership is -- I'm accessible, telephone, e-mails.
20 Q. So through those interactions and the communications,
21 have you gained a general sense of how the members, at least
22 in the area that you represent, how they feel about the
23 registration of clones?
24 MS. STONE: I'm going to object to the extent this
25 calls for hearsay.
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1154
1 THE COURT: Sustained.
2 Q. (By Ms. White) Would it be important to you if we assume
3 that the members in your area were against the registration of
4 clones in terms of your vote on the SBRC?
5 A. Yes, it's important.
6 MS. STONE: I'm going to object that that calls for
7 speculation and also been --
8 THE COURT: Overruled.
9 Q. (By Ms. White) I'm sorry, you can repeat your answer.
10 A. Yes, it's very important, as my job, again, as a director
11 and a committee member of the Stud Book and Registration, that
12 I do hear what the membership has to say. That's what
13 educates me, one of the things that educates me.
14 Q. Okay. And you said just a second ago you've been to
15 conventions for as long as you can remember?
16 A. Yes, ma'am.
17 Q. And, I guess, for the last two years, you've been going
18 to conventions as both a board member and an SBRC member?
19 A. That's correct.
20 Q. What do you before the conventions to prepare for those?
21 A. We receive a really big binder of information of requests
22 of rule changes that the membership has. It's advertised,
23 publicized, both e-mail and on the Internet, the AQHA website,
24 if anyone would like to propose a rule change, that it has to
25 be done by December 31st.
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1155
1 AQHA staff then puts it to the proper committees. Those
2 committees receive the binders, and it's up to us committee
3 members to read, educate ourselves, research, talk amongst
4 ourselves of the committee and with AQHA staff. So that we're
5 fully prepared when we arrive at the convention every March.
6 It's the beginning week, first week of March every year, at
7 different locations, and that's when we come together in
8 meetings.
9 Q. Okay. So, in terms of 2012, you attended the convention?
10 A. Yes, ma'am.
11 Q. And, based on that binder that you received, were you
12 aware that there was a proposal before the Stud Book and
13 Registration Committee about Rule 227(a)?
14 A. Yes, ma'am.
15 Q. Okay. And did you feel that, when you went to the
16 convention, you were informed about that proposal and the
17 issues that surround it?
18 A. Absolutely. It was well-publicized, again, on the
19 Internet on AQHA's website.
20 Q. So when you got to the convention and the SBRC met, what
21 type of discussion took place among the members or any other
22 members who attended the meeting?
23 A. It was explained, again, throughout the committee
24 meetings about cloning, and the pros and the cons.
25 And there had been previous to me becoming a member of
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1156
1 the Stud Book and Registration Committee —— I believe, it was
2 in 2008 and 2009 —— a Task Force and a forum, which I was not
3 present at, but that's why I was playing catchup in 2012,
4 2013.
5 Q. Were you successful in catchup? Were you able to get
6 informed about the issues?
7 A. Yes.
8 Q. Okay. And who all do you remember speaking at that
9 meeting?
10 A. I recall that there was Dr. Veneklasen from West Texas,
11 from what I understood. I don't know him personally. And a
12 few other people, both -- on both sides of the case, I mean,
13 believing for trying to register clones and those that were
14 explaining the genetics and so on and so forth.
15 Q. So both sides of the case? You thought it was a fairly
16 balanced discussion?
17 A. Absolutely. It was very interesting.
18 Q. Okay. And how did they vote on that item? I know we've
19 heard before, but you're --
20 A. It was denied.
21 Q. Okay. And how did you personally vote on that issue?
22 A. I denied it.
23 Q. So going to 2013, are you aware that there was a proposal
24 for a rule change again with regard to Rule 227(a)?
25 A. Yes.
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1157
1 Q. And what do you remember in 2013 about the discussion of
2 that agenda item?
3 A. It was discussed both in the open committee meeting as
4 well as in the closed committee. There were questions amongst
5 the committee members. Dr. Dickson Varner was new to our
6 committee, and I have the utmost respect for him, so he had
7 asked some questions of the older committee members as well as
8 AQHA staff. And I asked questions of Dr. Varner after he had
9 finished his questions, because, again, it was just about
10 education.
11 I am obviously not a scientist. I'm a breeder of horses.
12 And so, in any way that I can try to understand the scientific
13 end of this, I think it's important, but I won't pretend to
14 understand it. I understand the integrity of the breed, and
15 what I'm trying to produce is a more-improved horse, not a
16 copy of a horse.
17 Q. So, as a breeder and not a scientist, at the end of that
18 meeting you still felt well enough informed to be able to vote
19 knowledgeably on that issue?
20 A. Absolutely.
21 Q. And how did you vote in 2013?
22 A. I denied the proposal.
23 Q. Okay. And I want to ask you now, what are your personal
24 reasons for the way that you voted?
25 A. I have a few. Probably two of the most important reasons
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1158
1 in my -- in mind, is that I, again, believe on the integrity
2 of the breed, that it is our job as a breeder to try and
3 improve, improve the bloodlines.
4 When I breed a stallion to a mare and I give them
5 three -- three years to try, and if in those three years, it
6 doesn't work, I don't want to continue to do that. So that's
7 important to me that we need to keep on trying to improve
8 every time we breed. That's number one.
9 Number two, morally, it goes against my convictions.
10 And, number three, from what I understand about parentage
11 verification, that we are unable to verify the original
12 stallion with the clone and then with the baby. Is the baby's
13 sire the clone or the original stallion? And, to me, that's
14 important. I would want to know. In buying a horse, or in my
15 selling a horse, I parentage-verify every one of my foals.
16 It's important for me to know what I'm selling as well as what
17 I'm buying.
18 Q. Well, so if you have the clone and the original and their
19 DNA are exactly the same, why is that important to you? Why
20 would you care if the foal came from the clone or the
21 original?
22 A. Again, for down -- I mean, today, as well as down the
23 road, I want to know who the sire is, who's the daddy. I want
24 to know that it is that specific horse. That's the one I was
25 breeding for and breeding to.
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1159
1 Q. So we talked about, in the SBRC meetings, how you think
2 that both sides were presented and --
3 A. Uh-huh.
4 Q. -- you know, when the members made their decisions based
5 on education, they were well informed.
6 Do you feel that AQHA has done a good job of informing
7 its general membership, the wider membership, about both sides
8 of the cloning debate?
9 A. Yes, I do. It's well publicized on the AQHA website, as
10 it has been. It's -- there's been numerous articles, not just
11 in the American Quarter Horse Journal, but it has been there
12 most definitely, and Quarter Horse News. I mean, there's
13 numerous publications as well as now with Google, the
14 Internet, anybody can find, you know, pretty much anything
15 they want.
16 Q. And so, as the Quarter Horse Association continues to
17 educate its membership and continues to educate the SBRC
18 committee, do you think there's any information that could
19 ever come in the future that would change your mind?
20 A. I don't believe it will my mind, but I -- again, I'm a
21 very open person, so I would say -- and positive. I'm -- I
22 cannot project the future, but, as of today with the evidence
23 that I have and the education that I received from the
24 American Quarter Horse Association, absolutely, I would deny
25 it again today.
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1160
1 And if nothing changes in the next five years and there's
2 nothing -- no new technology to prove the sire from the clone,
3 I would still vote to deny.
4 Q. I want to turn a little bit and talk about a claim that
5 the Plaintiffs have made here, and that is the SBRC is
6 composed of a conspiracy.
7 First, just generally, what are your thoughts on that, on
8 that allegation?
9 A. I think it's ludicrous.
10 Q. Okay. Now, let's get more specific. I assume, in 2012,
11 from my knowledge, Frank Merrill, Butch Wise, and Jim Helzer
12 were all members of the SBRC at that time; is that --
13 A. That's correct.
14 Q. Okay. The Plaintiffs claim that those three individuals,
15 and maybe another or two, have intimidated the committee into
16 voting the way that the committee ended up voting during those
17 two years.
18 What are your thoughts on that?
19 A. I am -- I am very aware of everyone on the committee.
20 Again, I feel like there's a mutual respect amongst all of us.
21 I truly enjoy and like each individual that you mentioned as
22 I've gotten to know them.
23 I've known Mr. Merrill, Mrs. Merrill for numerous years.
24 I just met Butch when I was appointed to this committee, and
25 I've learned much from him, but we have never spoken about --
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1161
1 about cloning, honestly.
2 Q. So during the meetings, both 2012 and 2013, and I'm
3 talking about the SBRC meetings, how would you describe Frank
4 Merrill's conduct during those meetings?
5 A. I believe he is passionate, but, again, very respectful.
6 He believes, again, in the integrity of the association, and
7 he makes that very clear, but he's always been very
8 respectful.
9 Q. And what about Butch Wise; how would you describe his
10 conduct during those meetings?
11 A. The same thing. He's a -- you know, the person that I
12 have always -- have gotten to know over the past two years, he
13 is very sincere, very respectful, a great personality.
14 Q. And how would you describe the conduct of Jim Helzer
15 during those meetings?
16 A. Same thing. I think he has direction, he has beliefs,
17 and anyone that I believe has strong convictions and beliefs,
18 they're going to stand up and voice their opinion, but they
19 don't have anyone's arm behind their back whatsoever.
20 I've only spoke with Mr. Helzer in regards to the gaming
21 that they were trying to pass or get out to the -- to
22 Washington, D.C. and then as well as that he has a veterinary
23 practice in my hometown.
24 Q. Okay.
25 A. So he's had ample opportunity. I'm seven miles away from
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Direct--Ms. White) (Defendant AQHA) 1162
1 him, and we've never discussed cloning.
2 Q. So did your vote in 2012 or 2013 have anything to do with
3 any comments made by any of those three individuals during
4 those meetings?
5 A. No. I took in everything that they said, as well as
6 everyone else and as well as the information that I had
7 researched, and that's how I came to my conclusion, which is
8 how I always come to my conclusions.
9 Q. Did your vote have anything to do with the influence that
10 those three men have over the general Quarter Horse industry?
11 A. No.
12 Q. Is there any way that any of those men could harm you
13 financially had you voted in favor of the registration of
14 clones?
15 A. No.
16 Q. Do you believe that any of those men would try to use
17 their influence to harm you financially had --
18 MS. STONE: Objection.
19 Q. (By Ms. White) -- you voted --
20 MS. STONE: -- leading.
21 THE COURT: Overruled.
22 Q. (By Ms. White) Do you believe that any of those men
23 would try to use their influence to harm you financially had
24 you voted in favor of the registration of clones?
25 A. Absolutely not. That would be, again, disrespectful, no.
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1163
1 Q. So you would have voted -- I'm sorry. Would you have
2 voted the same way in the absence of those three men on the
3 committee?
4 A. Absolutely.
5 Q. Did your vote have anything to do with protecting your
6 own economic interest?
7 A. No, ma'am, not at all.
8 Q. Do you believe that the registration of clones and their
9 offspring, if they're eventually registered, will harm you
10 financially?
11 A. No, ma'am.
12 Q. Do you believe they'll harm your business financially?
13 A. Not at all.
14 MS. WHITE: Okay. I have no further questions.
15 CROSS EXAMINATION
16 BY MS. STONE:
17 Q. You are aware that, if clones and their offspring, and/or
18 their offspring are registered, that they would not be limited
19 to competing in racing and cutting, are you not?
20 A. Am I aware of that?
21 Q. Yes.
22 A. I'm aware that they could compete, I suppose, yes.
23 Q. Okay. And so it would be reasonable to assume that they
24 would also compete then in western pleasure and reining,
25 correct?
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1164
1 A. If they were registered.
2 Q. And if there was a clone registry, a separate clone
3 registry, as had been drafted by AQHA where a "C" was put on
4 the registration papers of the clone, then you wouldn't run
5 the risk of unknowingly or of not knowing whether or not your
6 horse was a clone or not, correct, if you bought one?
7 A. I'm not aware of that. No, I'm not aware of that.
8 Q. Okay. I'm going to ask you to assume that. Assume that
9 AQHA drafted a changed rule that would have -- would have
10 provided for a special clone registry with a "C" marked on the
11 paper of the clones. And, assuming that to be true, you would
12 not then run any risk of not knowing whether or not your horse
13 was cloned, correct?
14 A. It would -- it would go against my morals.
15 Q. That's not my question, ma'am. My question is: Isn't it
16 true, if clones were registered and their papers had a "C"
17 marked on them designating that they were clones, you would
18 then not run the risk of buying a horse -- you would know
19 whether or not it was a clone at the time you bought it,
20 wouldn't you?
21 A. No, I would not. I would not know if it were a clone or
22 it was the original. Is that what you're asking?
23 Q. Yes, ma'am. If they were registered and AQHA required
24 their papers to have a "C" on it to be in a special registry
25 like the Appendix Registry --
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1165
1 A. Uh-huh.
2 Q. -- then you would know at the time that you bought a
3 horse whether or not it was a clone or not, correct?
4 A. If it had a "C" on it.
5 Q. Okay.
6 A. If -- if there were a way to parentage-verify.
7 Q. No, ma'am. That's not my question. Because you --
8 A. Are you asking -- can I -- I don't understand.
9 Q. Okay. You testified that you wanted to know whether your
10 horse was from a clone or a donor, correct, or whether or not
11 it was a clone or a donor?
12 A. Correct.
13 Q. If AQHA registered clones and designated them on their
14 breeding cert -- on their registration paper and in the
15 registry of AQHA with a "C", then you would not run the risk
16 of not knowing whether or not the horse you were buying was a
17 clone, would you?
18 A. I apparently am confused by your question.
19 Q. Okay. Now, Mr. Merrill has testified that, at all times
20 since 2008, the members of the Stud Book and Registration
21 Committee have agreed to exclude horses produced through
22 somatic cell nuclear transfer and their offspring from the
23 registry of the American Quarter Horse Association.
24 Would you agree with that for the years 2012 and 2013?
25 A. Restate the question again, please.
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Redirect--Ms. White) (Defendant AQHA) 1166
1 Q. Sure. Isn't it true that, in 2012 and 2013, the members
2 of the Stud Book and Registration Committee agreed to exclude
3 horses produced through somatic cell nuclear transfer and
4 their offspring from the registration of the American Quarter
5 Horse Association?
6 A. That's correct.
7 Q. And even if clones were -- if AQHA were required to
8 register clones or their offspring, there would be nothing
9 that would require you to have to buy one; isn't that true?
10 A. That's true.
11 Q. And there's nothing that would require you to have to
12 breed to one; isn't that true?
13 A. That's true.
14 MS. STONE: No further questions.
15 REDIRECT EXAMINATION
16 BY MS. WHITE:
17 Q. I just have a few questions.
18 A. Uh-huh.
19 Q. Now, when Ms. Stone characterizes the SBRC's vote as an
20 agreement, do you understand that to mean that the SBRC got
21 together and discussed with each other to agree that they
22 won't register clones, or do you understand that to be a vote?
23 A. It was a vote.
24 Q. Okay. Now, you're not a scientist; is that correct?
25 A. That's correct.
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Redirect--Ms. White) (Defendant AQHA) 1167
1 Q. You said you're a breeder, not a scientist. When Ms.
2 Stone talks about the appendix, she's talking about a clone
3 versus the original, and the clone would have the "C" --
4 A. Uh-huh.
5 Q. -- on the Appendix Registry.
6 Now I want you to focus on the offspring of those.
7 A. Uh-huh.
8 Q. Would that solve your parentage verification concerns?
9 A. It would not.
10 Q. Okay. Would that solve your moral conviction against
11 cloning?
12 A. It would not.
13 Q. Okay. Would the appendix idea, would that be the
14 solution that you're looking for to change your mind?
15 A. No.
16 Q. Okay. And my last question has to do with the western
17 pleasure and reining. And she says that they may be in the
18 elite market, but I'm wondering how much money is at stake
19 with western pleasure and reining in comparison to cutting and
20 racing?
21 A. I would say it would be minuscule.
22 Q. Minuscule compared to cutting and racing. And so do you
23 understand how much cloning costs?
24 A. I do.
25 Q. How much in your estimate -- I know you haven't been here
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Recross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1168
1 for the testimony, but how much would you guess cloning would
2 cost?
3 A. I believe it's upwards of $160,000 for -- for one.
4 MS. WHITE: No further questions, Your Honor.
5 RECROSS EXAMINATION
6 BY MS. STONE:
7 Q. Are you aware that there are 166 offspring of identical
8 twins that have the same issue with DNA verification as do the
9 offspring of clones?
10 A. I'm not aware of 166. I'm aware of one set of identical
11 twins.
12 Q. So you're not aware that those identical twins
13 collectively have 166 offspring?
14 A. Well, I wasn't sure of the number.
15 Q. Okay. And if they're --
16 A. I understand they have offspring.
17 Q. Okay. And you've been in the -- a member of AQHA for
18 quite some time, correct?
19 A. Yes, ma'am.
20 Q. And you can recall that in the past that all horses were
21 registered based on a breeder's certificate and a registration
22 application, correct?
23 A. That's correct.
24 Q. Okay. And are you -- would you assume that that's also
25 what AQHA relies upon in connection with those 166 offspring;
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Recross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1169
1 they rely upon the breeder's certificate and the registration
2 application for parentage verification?
3 A. I don't assume. No, I do not.
4 Q. Okay. If that's been the testimony here today, would you
5 agree that that presents the same problems and would have the
6 same -- you could utilize the same solutions with the
7 offspring of clones?
8 A. Parentage -- parentage verification?
9 Q. Yes. In other words, the representation of the breeder
10 and the owner.
11 A. Please restate your question.
12 Q. Sure. If, in fact, AQHA relies on a breeder's
13 certificate --
14 A. Uh-huh.
15 Q. -- and a registration application for parent -- as the
16 means of parentage verification for the offspring of clones,
17 the same thing could be done with the off -- or, excuse me,
18 with the offspring of the identical twins, the same thing
19 could be done with the offspring of clones; isn't that true?
20 A. Well, I think that AQHA is moving forward as this became
21 a means --
22 MS. STONE: Objection, nonresponsive.
23 THE COURT: Overruled.
24 A. It's a means of verifying who the parents are.
25 When I started breeding, there was not the ability to
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Recross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1170
1 parent-verify, so, yes, we got a breeder's certificate from
2 the stallion. We sent in the stallion report to American
3 Quarter Horse Association, and that was the means that we went
4 by to register the offspring.
5 However, now, in order to be able to reproduce down the
6 road and register the foal, the sire and the dam must be
7 parentage-verified, and that is to ensure who the sire is and
8 who the dam is.
9 Q. (By Ms. Stone) Are you aware that AQHA
10 parentage-verifies through DNA-testing each year about
11 fifty percent, only fifty percent of the horses that are
12 registered each year?
13 A. And that number has probably, I would assume, increased
14 every year as the public has become more educated on parentage
15 verification as well as registering your foals.
16 MS. STONE: Objection, nonresponsive.
17 THE COURT: Sustained.
18 Q. (By Ms. Stone) My question was: Are you aware that half
19 of the horses that AQHA registers each year, only half of the
20 horses that are registered each year are DNA-tested?
21 A. I'm not aware of that.
22 Q. Okay.
23 MS. STONE: No further questions.
24 MS. WHITE: Just one question, Your Honor.
25
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Further Redirect/Cross) 1171
1 FURTHER REDIRECT EXAMINATION
2 BY MS. WHITE:
3 Q. Are you aware that when all Quarter Horses registered
4 with the AQHA begin breeding, they must be DNA-tested?
5 A. I am very aware of that.
6 MS. WHITE: We have no further questions.
7 CROSS EXAMINATION
8 BY MR. NICKUM:
9 Q. My name is Ron Nickum. I represent Jason Abraham.
10 I'd just like to ask you, as regards pleasure horse and
11 reining venues or disciplines, do you have an incidence of
12 genetic disease in those disciplines or in the horse herds in
13 those disciplines?
14 A. Yes, sir.
15 Q. You do? All right. And you have said that cloning goes
16 against your morals?
17 A. Correct.
18 Q. Have you -- are you aware that Chad Pierce and his staff
19 prepared or promulgated a proposed rule that would allow the
20 cloning of horses as a separate type of appendix or separate
21 registry?
22 A. I'm not aware of that, no.
23 Q. You stated that, when the issue of cloning came before
24 the Stud Book and Registration Committee upon which you sat,
25 you attempted to educate yourself as to everything that you
Stacy Mayes Morrison Official Court Reporter Joan Schroeder (Cross--Mr. Nickum) (Plaintiff Jason Abraham) 1172
1 could find about cloning, did you?
2 A. All that I could take in, yes, in -- in two years.
3 Q. All right. But you didn't read the rule that would have
4 allowed cloning?
5 A. Yes, I have read the rule, but I believe you had -- the
6 rule as it is, not the proposed that you --
7 Q. You read --
8 A. -- stated.
9 Q. -- Rule 227(a)?
10 A. That's correct.
11 Q. That barred the registration of cloned horses?
12 A. Correct.
13 Q. You never read the rule that Chad Pierce and his staff
14 prepared that allowed the registration of cloned horses?
15 A. That's correct. I have not read that rule.
16 MR. NICKUM: Pass the witness.
17 MS. WHITE: We have no further questions, Your
18 Honor.
19 MS. STONE: Nothing further.
20 THE COURT: May the witness be excused altogether?
21 MS. WHITE: Yes, Your Honor.
22 MS. STONE: Yes, Your Honor.
23 THE COURT: You're excused altogether as a witness.
24 THE WITNESS: Thank you, ma'am.
25 (Witness excused.)
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1173
1 THE COURT: Call your next witness.
2 MR. LOFTIN: Call Jeff Tebow.
3 (Pause.)
4 THE COURT: Just come around right up here, and the
5 clerk will administer the oath.
6 (The witness was sworn by the courtroom clerk.)
7 THE COURT: Take this chair right over here.
8 JEFF TEBOW,
9 having been first duly sworn, testified as follows:
10 DIRECT EXAMINATION
11 BY MR. LOFTIN:
12 Q. Would you introduce yourself to the jury, please.
13 A. Yeah. Hi. My name is Jeff Tebow, and I'm from Piedmont,
14 Oklahoma.
15 Q. Are you a member of the American Quarter Horse
16 Association?
17 A. Yes, sir, I am.
18 Q. Are you a director of the American Quarter Horse
19 Association?
20 A. Yes, sir.
21 Q. How long have you been a director?
22 A. I've been a director for, I believe, this is going on the
23 fourth year.
24 Q. And are you a member of the Stud Book and Registration
25 Committee?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1174
1 A. Yes, sir.
2 Q. And for how long?
3 A. I went on in 2012.
4 Q. Are you a member of any conspiracy?
5 A. No, sir.
6 Q. Let me talk a little bit about where you grew up, just
7 briefly go over your background.
8 Where did you grow up?
9 A. I grew up in Edmond, Oklahoma. It's just north of
10 Oklahoma City, kind of a bedroom community north of Oklahoma
11 City about ten or fifteen miles.
12 Q. Most of our witnesses in this trial are involved with
13 horses one way or another.
14 How did you first become involved with horses?
15 A. Well, it was actually quite by accident that I got
16 involved in the horse business.
17 The best I can remember, I think it was summertime, maybe
18 after my seventh grade year in school, and me and a couple of
19 buddies decided we were going to learn to make money, and so
20 we went in the lawn-mowing business for one day. And we went
21 to the neighborhood next door to us and started mowing the
22 lawn, and my two friends quit, so I quit with them and went
23 home.
24 And, later that day, when my dad got home, I think he
25 knew I'd been up to no good that day, and asked me what I'd
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1175
1 been up to, and I finally confessed that we'd been mowing a
2 lawn. He asked me: "How much money did you make mowing the
3 lawn?" And I said: "We -- we didn't make any money, because
4 we didn't finish." I thought that was good enough, not to
5 have to collect any money since I didn't finish the job. And
6 my dad informed me to get the lawnmower ready, and we were
7 going to finish the job.
8 So my dad taught me a very valuable lesson that day.
9 When we showed back up to Mr. Cherry's house for me to finish
10 the lawn by myself without my two friends, and I think at that
11 point Mr. Cherry saw that my dad was trying to teach me a
12 lesson and wanted me to -- if I wanted to go to work, he owned
13 a boarding stable down the road.
14 So that's where I went to work and first got introduced
15 to horses, cleaning stalls, and feeding horses as a
16 thirteen-year-old boy in Edmond, Oklahoma. So that's how I
17 got involved in the horse business.
18 Q. Did you start riding horses?
19 A. No, sir. For two years, all that I got to do was clean
20 the stalls and feed horses, and there was a -- there were
21 trainers there at this facility, and I got to see the -- this
22 trainer specialized in Quarter Horses and had youth kids there
23 that were riding Quarter Horses, so I was always able to watch
24 what was going on.
25 And I'm not going to tell you that, when they weren't
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1176
1 watching, I wasn't climbing on their backs and riding them
2 with a halter or maybe sneaking a ride in here or there, but,
3 no, sir, it was a year or two before I got a chance to start
4 riding them and becoming a part of the horses.
5 Q. All right. Just tell the jury briefly about your youth
6 experience in terms of riding, competing, and that sort of
7 thing.
8 A. Around fourteen, my parents bought my first horse, and I
9 was able to get involved in the Oklahoma Youth Quarter Horse
10 Association, and introduced to -- to that side of the business
11 and learning, you know, a little about the competition, would
12 go to the local shows around there.
13 And I got involved in the Oklahoma Youth Quarter Horse
14 Association. I think in 1983 I was elected the president of
15 the Oklahoma Youth Quarter Horse Association, so became
16 involved that way.
17 And not only did I enjoy showing the horses, but I've met
18 friends and remained friends with people from all over the
19 United States that I met through showing horses.
20 I got involved in judging. They have a judging program
21 where you go around and judge horses, and I was able to do
22 that as a youth.
23 So that was kind of my involvement through my high school
24 years in the horse business.
25 Q. Then you went off to college?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1177
1 A. Yes, sir. I went to a junior college in Eastern Oklahoma
2 called Connors State College. It's a little -- a little
3 two-year college in Warner, Oklahoma on the eastern side of
4 Oklahoma.
5 And they had an equine associate's program where you went
6 over, and you learned a lot more about horses, and, you know,
7 from training and nutrition, you know, breeding, reproduction.
8 They had a two-year associate's program where you got your
9 basic English and some of those out of the way, so that's what
10 I started in college with.
11 Q. Okay. And you were a businessman for awhile in different
12 various enterprises, not related to horses or Quarter Horses?
13 A. Yeah. Once I graduated from college, I went back and
14 graduated from college in Edmond, Oklahoma at the University
15 of Central Oklahoma with a degree in finance and a lot of
16 accounting classes, and actually moved off to Houston and went
17 to work down there as an accountant living in the inner city.
18 Moved back to Oklahoma, was in the wireless industry for
19 a number of years and did different things, eventually worked
20 for AT&T Wireless, and went on my own and had some businesses
21 that I owned, and I eventually got back into the horse
22 business.
23 Q. Most stories -- most men stories have at least one woman
24 as a main character.
25 A. Yeah.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1178
1 Q. Is Vicki a main character in your story?
2 A. Yeah, Vicki, my wife, we've been married for ten years
3 now. Vicki and I had met when I was a teenager showing
4 horses. She was from North Carolina; I was from -- obviously,
5 from Edmond, Oklahoma.
6 And so we met, and, years later, we got reacquainted
7 after I went through a divorce, and Vicki and I got
8 reacquainted. She lived in North Carolina and trained horses
9 professionally. That was her profession. She was an AQHA
10 professional horse person. And so she decided to move to
11 Oklahoma and moved her business with her to Oklahoma.
12 And I found myself very much back in the horse business
13 very quickly.
14 Q. And you and Vicki have two children?
15 A. Yes. I have two children from my previous marriage.
16 Anna Elizabeth is fifteen and a half, and Meg is thirteen.
17 They're both very involved in the horse program through the
18 Oklahoma Youth Association, and they show and compete and do
19 things as well.
20 Q. And Vicki is a professional trainer?
21 A. Yes, she was. She's retired. She no longer makes her
22 profession training horses, but she's the horseman in the
23 family.
24 Q. So lots of weekend events where the whole family goes,
25 and some of the family competes?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1179
1 A. Yeah.
2 Q. Now, let's switch gears. The jury has heard about
3 Heritage Place, and you are the -- what's your title at
4 Heritage Place?
5 A. Well, my title now is chief executive officer.
6 Q. Well, let's start with when you went to work there. And,
7 again, just briefly tell the jury about your -- how you
8 started and how you got to where you are now.
9 A. Approximately, eleven years ago, I went to work for
10 Heritage Place as the -- kind of the assistant manager. I
11 worked for Clayton Keyes. Clayton was the general manager at
12 the time, and he was nearing retirement, and they were looking
13 for the next person to manage Heritage Place.
14 And, obviously, I described the horse background that
15 I've had, with no knowledge of the racing industry, but with a
16 strong business background and knowledge of the horses, I was
17 hired as an assistant manager.
18 And, approximately, eight years ago, I was hired as the
19 general manager for Heritage Place, which Heritage Place is a
20 horse sale auction company.
21 Q. Now, we're going to talk a lot more about Heritage Place,
22 but you also are in the insurance business as well?
23 A. Yes, sir.
24 Q. And so would you just tell the jury briefly about that.
25 A. I'm in the insurance business. I'm a partner in a
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1180
1 company called Andreini of Oklahoma. We're a commercial
2 insurance agency or insurance brokerage, as we refer to
3 ourselves as.
4 And we represent lots of different companies in
5 insurance. We do a lot of worker's comp, employee benefits,
6 property and casualty, but we're also -- a main focus of my
7 business and my wife's business is in the equine industry. We
8 sell a lot of life insurance. We refer to it as animal
9 mortality insurance, but we sell a lot of insurance policies
10 for owners of horses that want to insure their interest
11 against mortality, against death, or, for example, there's
12 major medical and things that people purchase on horses
13 because of the value and the amount they have invested, as
14 well as we do a lot of insurance for people's farms and
15 ranches and things of that nature.
16 Q. Mr. Andreini is kind of an older gentleman?
17 A. Yes, sir. Mr. Andreini is eighty-five.
18 Q. Okay. And has he been active in the American Quarter
19 Horse industry for a number of years?
20 A. Yes, sir.
21 Q. And just in -- just in general terms, his name has come
22 up in the trial a couple of times. Can you give a quick
23 sketch of who is he and what he's done in recent years.
24 A. Yeah. Mr. Andreini, you know, as far as from the horse
25 side of it, I probably met Mr. Andreini approximately ten or
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1181
1 eleven years ago when I got involved with Heritage Place.
2 His focus in the horse business is on the racing side. I
3 know he'd been in the cutting industry at one time, bred and
4 raised cutting horses and things, but his focus and his
5 passion was racehorses.
6 I think, if I remember the story correctly, that in the
7 '60s, he bought his first horse and got introduced to racing
8 horses. And there was a gentleman named Judd Morrison, a
9 famous guy on the West Coast that John, Mr. Andreini,
10 originally got involved with and later a Hall of Fame trainer,
11 Blane Schvaneveldt was one that managed Mr. Andreini's horses
12 for a number of years.
13 So he's just had a passion and remains involved in the
14 industry today.
15 Q. All right. Now, let's first, I guess, set the stage with
16 Heritage Place. It sits on a piece of property over in
17 Oklahoma City.
18 And can you just tell the jury about the facilities.
19 Just give them a guided tour, as best you can, without having
20 the building. Walk through it with them today.
21 A. Well, I think the interesting thing about Heritage Place
22 is, the reason it came about was, there were a group of owners
23 and breeders in our industry that, I want to say, around 1974
24 or 1975, were attending a sale in Kentucky, in Keeneland,
25 Kentucky, and at -- not in -- it's in Kentucky. Keeneland is
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1182
1 the sale facility, and there's a racecourse there.
2 And Keeneland is the quintessential, you know, the
3 pinnacle of the sale facilities in the Thoroughbred industry.
4 If you're -- if you want to go see really nice Thoroughbreds
5 and go see the biggest sale company in the Thoroughbred
6 industry, certainly, in the United States, you go to
7 Keeneland, and they have a beautiful facility.
8 And there were a number of these people that wondered why
9 the Quarter Horse industry didn't have a facility like this.
10 So they came back, and they had a meeting in Oklahoma City, I
11 think, somewhere around 1976. And there was a group, and I
12 think there was twelve or thirteen different people that
13 invested in Heritage Place and built a state of the art horse
14 sale auction facility as its primary and only purpose really
15 that it's used for that's just a beautiful facility.
16 It's five acres under one roof. There's 650 stalls in
17 this facility. There's a restaurant. There's kind of a club/
18 bar area there. And, in the main auction ring, there are 650
19 theater-type seats all kind of in a semi oval.
20 So they built this beautiful facility, and the idea was
21 that it would be a place where commerce could happen, and they
22 would develop a legitimate auction facility for this Quarter
23 Horse industry with the emphasis being on racing Quarter
24 Horses, and that's what we are today.
25 We specialize in selling racing Quarter Horses. We have
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1183
1 three sales a year, three Quarter Horse sales a year. The
2 first one being in the middle of September that we sell
3 yearlings. These are all horses that are one year old that
4 next year are all being sold as prospects for racing as
5 two-year-olds. Our upcoming sale that will be in the middle
6 of September of this year has approx -- or has 840 yearlings
7 that will be in that sale.
8 In November, we also have a sale that we refer to as the
9 Fall Mixed Sale. And what we mean by mixed is, we have horses
10 of all ages. We have yearlings, two-year-olds. We have
11 horses that are at the racetrack racing. We have broodmares
12 or the mother's that are producing these foals. We sell
13 stallions. So it's a mix of different things that we have in
14 November.
15 And then we also have a sale that we call the Winter
16 Mixed Sale, the January sale that's in January, and that's our
17 biggest sale typically every year. Anywhere from twelve to
18 thirteen hundred horses are in that sale, and all of these
19 sales are -- have participation from people all over the
20 United States and foreign countries such as Canada, New Mexico
21 [sic], Brazil, and other countries, but those make up the
22 primary --
23 Q. New Mexico is a foreign country?
24 A. No, Mexico.
25 Q. (Laughs.) Okay.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1184
1 A. Yeah, did I say New Mexico? Excuse me. Mexico.
2 Q. You may not have. I don't know.
3 A. Yeah. Yeah.
4 Q. They consider Texans over there aliens, I don't know,
5 so --
6 A. Exactly.
7 Q. All right. Now, I want to slow down, because we're
8 getting to the part that I think is going to be helpful to the
9 jury.
10 I want to talk about the yearling sale that's coming up
11 in September. And these are all -- I don't want to lead you,
12 so what kind of horses are these?
13 A. Well, the sale that's coming up are all registered
14 Quarter Horses that are, what we refer to, the term is
15 yearlings. They're one year old, and they are the next crop,
16 if you will, the next -- you know, the next runners for the
17 next year's two-year-old season will be -- a lot of them will
18 come through Heritage Place, but that's what we specialize in.
19 We don't sell -- as I look up there, and I see cutting
20 horses on that board, we don't sell cutting horses and those
21 types of pedigrees. We're primarily a racing Quarter Horse
22 sale facility.
23 Q. Now, when you use the term "runners," runners and racers,
24 just two different ways of saying the same thing, right?
25 A. Yes, sir.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1185
1 Q. And a runner is a good racehorse or just any racehorse?
2 A. Well, I think -- I think it can be used different. If we
3 talk about a racehorse as one that will compete, oftentimes,
4 we say, "That horse is really a runner." And I think we refer
5 to that as that horse is, you know, faster or shows a lot a
6 potential, if you will.
7 Q. All right. So I want to talk about, you know, both sides
8 of the transaction that's going to take place, and also I want
9 to talk about how you actually mechanically get all of these
10 buyers and sellers together.
11 But the sellers are the people that own the 840 horses.
12 And do you have any just rough idea, for those 840 horses, how
13 many different sellers there are? Just any idea?
14 A. Oh, in the upcoming sale, there will be 100 to 120
15 different consignors. It's sometimes difficult to establish
16 how many independent owners of those horses are, but I'm going
17 to say roughly 100 to 120 different consignors. Obviously, we
18 have some people that consign one or two. We have some people
19 consign fifteen or twenty, so that's an estimate, I would say.
20 Q. Tell the jury about the buyers. Who are the people that
21 are the -- the prospective buyers, I should say. Who are the
22 people that are coming to consider purchasing a racing Quarter
23 Horse yearling? Who are these people?
24 A. Well, I would tell you that the only thing that I really
25 think they hold in common is, they all have a love and a
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1186
1 passion for the racing Quarter Horse. They come from, as I
2 said, different -- different places throughout the United
3 States.
4 There are parts of our country in the United States here
5 that have a lot more involvement in racing Quarter Horses
6 versus other parts. For example, the northeast, we don't see
7 a lot of racing Quarter Horses and breeders in the northeast.
8 We tend to think of Texas, Oklahoma, New Mexico, California,
9 those states.
10 But then we have people that come from Canada. We have
11 people that come from Mexico. We have people that come from
12 Brazil. You know, you have business owners. You have -- it
13 just seems like really every walk of life, and the common
14 thread that binds them all or holds them all together, the
15 common thread would be the love for the -- for the horse.
16 Q. Now, do you start it at a certain time on a Saturday
17 morning, or how does that work?
18 A. We always start our sales at 10:00 in the morning. We
19 always start the yearling sale, for as many years as I've been
20 involved and as far back as I can see, that, when it's a
21 three-day sale, we always start on Thursday, Friday, and
22 Saturday, are the three selling days. We always start at
23 10:00 in the morning.
24 That gives everyone plenty of time to feed these horses
25 in the morning, to groom them, and gives them time to what we
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1187
1 call show the horses.
2 So if you're a prospective seller and you bring your
3 horse to Heritage Place to sell it, you are given a stall
4 area. And many of these people have decorated their stalls up
5 and, you know, tried to really, you know, class it up as best
6 that they can.
7 And then the prospective buyers will wander through the
8 barns, and they all have a catalog that shows all the
9 different horses that we're selling and what order they're
10 selling. We refer to them as hip numbers. You can think of
11 it as sale order numbers from 1 to 840.
12 And the sale order has been drawn that, this year, we'll
13 sell 1 to 280 on the first day. So many people know if
14 they're going to look at horses, they're going to go look at
15 the first-day horses first, and through whatever criteria they
16 use, they'll go find those horses and ask the sellers to pull
17 those horses out of the stall so that they can look at them
18 and judge their conformation and, you know, look at them and
19 decide if it's something they may be interested in bidding on.
20 Q. Before I forget to ask, how many horses an hour do you
21 sell on the average?
22 A. We sell forty horses an hour on average, so we move very
23 rapidly, very quickly through the process.
24 If you've ever attended an auction before, you know the
25 auctioneer chant's quick, and we have a professional staff
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1188
1 that's been there a long time, and they know where they're
2 supposed to be and what to do.
3 So, roughly, you know, every —— I don't know; what would
4 that be —— every minute, minute and a half, we've got another
5 horse that's coming in there. So everything's happening very
6 quickly in the auction environment.
7 Q. All right. But the buyers can come way ahead of time and
8 look around and study the horse like you described and
9 everything, right?
10 A. Yeah. Many times the horses are there as many as two,
11 and sometimes three, days in advance of selling, and it gives
12 everyone plenty of time to come look at the horses.
13 You know, one of the things that we offer at Heritage
14 Place for the sellers as well as the buyers, is we have a
15 radiograph repository, which is -- basically means that we
16 have x-rays. If a seller wants to put x-rays on this horse on
17 file, then a buyer can send a veterinarian into our repository
18 to go look at the x-rays on this potential horse that they may
19 be considering buying to see if it meets whatever, you know,
20 x-ray quality that they deem valuable for that particular
21 horse.
22 Q. Does each horse have a published pedigree?
23 A. Yes, sir.
24 Q. Well, how do the buyers get all of the pedigrees so they
25 can look at the ones they want to?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1189
1 A. Well, several ways. One of the things that we do as a
2 sale company and is our responsibility, when a seller consigns
3 a horse to Heritage Place, one of the things that we provide
4 is the research and the development of a pedigree page that
5 basically takes the history of that family, the sire, the
6 father; the mother, the dam, as it's referred to, and we
7 condense the pedigree down to one page.
8 We actually outsource that to a third party that provides
9 that for us. And once we get all of these pedigree pages put
10 together, we bind them, we go to a printer, and have them
11 print it into catalogs. And then we mail out approximately
12 4,000 catalogs per sale throughout the country to people that
13 have called and requested a catalog, to anybody who has
14 consigned a horse to our sale, and anybody that has bought or
15 sold a horse in the last three years automatically gets a
16 catalog, as well as we publish it on our website.
17 And, with technology now, we even have the ability to --
18 over the last couple of years, people can download this
19 catalog onto an IPad and use the electronic digital form of
20 that.
21 Q. Okay. Now, we've heard a lot about genetics and
22 bloodlines. When we talk about a horse's bloodlines, is that
23 another way of saying we're looking back at the horse's
24 genetics?
25 A. Yes, sir.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1190
1 Q. Okay. We're trying to see the family tree of the horse
2 on both the father and mother's side, the parents,
3 grandparents, great grandparents, that sort of thing?
4 A. That's correct.
5 Q. Now, for these eight to nine hundred horses you typically
6 sell, these are race-bred yearlings, correct?
7 A. Yes, sir.
8 Q. In other words, they were bred with the intention that
9 they would be racehorses?
10 A. Yes, sir.
11 Q. Do -- what can you tell the jury about how many of those
12 eight or nine hundred have good genetics in their pedigree?
13 A. Well, I believe that the majority of all the horses in
14 our sale have good genetics. And what I mean by that is, I
15 think our industry has done such a good job of breeding in the
16 racing industry for the last forty or fifty years, that, at
17 this point in time, I think it is very difficult to figure out
18 where the next big runner is coming from.
19 And what I mean by runner is, where the next champion is
20 coming from. You don't have to look very far in the family
21 tree, whether it's the father or the mother or the grandfather
22 or the grandmother, or somewhere relatively close, and see
23 where there was a champion racehorse in that pedigree. So I
24 believe that all of our horses have good genetics as far as
25 racing goes in our catalog.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1191
1 Now, I will tell you that I believe there are some that
2 have, what I refer to as, a more popular pedigree, and those
3 are the ones that seem to bring a higher-dollar amount at our
4 sale.
5 Q. So, for instance, if the last season or two of Mr. Jess
6 Perry as a sire and then some mare bloodline have produced
7 good runners, then that's going to be popular at the sale this
8 year, correct?
9 A. Yes, sir, uh-huh.
10 Q. Do those popular crosses of sires -- sire bloodlines and
11 dam bloodlines, do those come and go?
12 A. Yeah, they certainly do. There are some that stay longer
13 and that are more established and seem to have the bigger
14 influence, but, yeah, they seem to ebb and flow with the tide,
15 if you will.
16 Every year, we have a set of champions. There's only so
17 many horses that win our biggest races, and there's only so
18 many -- you know, each horse gets named the World Champion
19 two-year-old or World Champion three-year-old.
20 And so those horses that do very well that year are what
21 I refer to as a very popular pedigree, because of how well
22 they've done. However, the following year, if that same
23 cross, if you will, that same family tree doesn't continue to
24 do well and something else does, it becomes less popular, and
25 you have something else. So it's really kind of an
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1192
1 always-evolving process, if you will.
2 Q. Now, in racing --
3 MR. LOFTIN: Go ahead.
4 THE COURT: You're anticipating recess.
5 MR. LOFTIN: Well, I just didn't want to speak over
6 the Court, Your Honor.
7 THE COURT: You have that look.
8 (Laughter.)
9 THE COURT: The jury will be in recess at this time
10 for fifteen minutes.
11 MR. LOFTIN: Thank you, Your Honor.
12 (There was a recess taken; after which, the following
13 took place in open court with the jury and all parties
14 present.)
15 MR. LOFTIN: May it please the Court, Counsel?
16 Q. (By Mr. Loftin) Mr. Tebow, just one more thing on
17 genetics, and then I'll leave and try not to come back to
18 them.
19 So genetics, bloodlines. We've talked about the popular
20 sires in racing, for example, can breed a hundred or more
21 mares a year, correct?
22 A. Yes, sir.
23 Q. Whereas, a mare can only produce one, two, three, maybe
24 four, offspring a year, correct?
25 A. That's correct.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1193
1 Q. So there's a disparity there?
2 A. Yes, sir.
3 Q. Okay. Now, those popular sires, they have a hundred
4 offspring if they're bred a hundred times, and roughly
5 fifty percent of those are fillies; is that correct?
6 A. Yeah, fifty percent would be female, yeah, roughly.
7 Q. So what does that mean in terms of our supply of future
8 mares to produce -- to continue these good bloodlines? Can
9 you explain that.
10 A. Well, I think that the number of mares that are bred
11 every year and the number of stallions -- obviously, you don't
12 need as many stallions as you need mares because of these
13 stallion capable of breeding, you know, many mares, but the
14 offspring or the genetics are transferred even if the
15 stallion, who is by a mother and a father and produces, is the
16 top of your pedigree, the father and then the dam, and then if
17 they -- if the resulting foal baby is a filly, then, I mean,
18 you're creating an adequate number of female horses a year, I
19 believe, to continue to develop this breed. I think it's
20 served us well.
21 Q. The new daughter is a future mother?
22 A. Yes, sir.
23 Q. Okay. Now, I want to talk about the range of prices at
24 your yearling sale. What's -- and I don't mean the lowest,
25 the very lowest, but what's the general range of prices that
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1194
1 are paid for these race-bred yearlings?
2 A. Well, the general range is what we refer to as our sale
3 average.
4 Q. Okay.
5 A. And I would say, over the last several, two or three or
6 four years, the average number on -- anywhere from 800 to
7 1,000 yearlings, however many we sell a year, is approximately
8 twelve to thirteen thousand dollars a year, is what the
9 average is.
10 So we certainly have had horses that sell for a couple
11 hundred thousand dollars, or even more, and we have some that
12 sell for $1,000 or 1200 or 1500. So, you know, we measure the
13 success of our sale not so much by what's the most expensive
14 horse or what's the least expensive horse, but what does our
15 sale average from one year to the next, and that's an
16 approximate number.
17 Q. Now, an economist in this case, Dr. Pflaum, has done an
18 economic analysis of the yearling market, and he has reached a
19 conclusion that there is an elite class of yearlings, the top
20 five or ten percent, and then the rest are non-elite. There's
21 some -- there's a line of demarcation, so to speak.
22 Other than what Dr. Pflaum has said, have you ever heard
23 of two groups of yearlings?
24 A. No. No, I haven't. I mean, the only -- no, there's not
25 any certain groups there.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1195
1 The results of the yearlings or the yearling sales are
2 based on how much money they bring. Oftentimes, you might
3 hear of how many brought more than 100,000, or what was the
4 top twenty horses, what did the top twenty average or this.
5 But as far as what you're referring to in Dr. Pflaum's
6 report that the elite horses and this line of demarcation of
7 it being -- the elite being 35,000 or greater and everything
8 else being of lesser, I've never heard of that before.
9 Q. Okay. And Dr. Pflaum, I'm paraphrasing, of course, but
10 he said that it would simply be uneconomical, would not make
11 good economic sense, to buy one of these horses, one of these
12 yearlings down in this non-elite group if what you want to do
13 is attempt to win a major race, a lot of money out there on
14 the racetrack.
15 Do you agree with that or disagree?
16 A. Disagree.
17 Q. Why?
18 A. Well, our industry has results every year of horses that
19 do -- you know, based on how well they perform. That's
20 tracked; it's measured; it's monitored.
21 The number of horses that are what maybe you would refer
22 to as the yearlings that brought the most amount of money, why
23 did they bring the most amount of money? Because of the
24 pedigree? What their bloodline looked like? Maybe they had
25 full brothers or sisters or half brothers or sisters that were
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1196
1 just unbelievable the year before or maybe for several years.
2 So those horses tend to bring in, what I refer to as the
3 popular pedigree for the year or for a period of time, seem to
4 bring the most amount of money.
5 But then when you go back and look at how the overall
6 industry is and what horses are winning races, there are those
7 horses that have those very popular pedigrees that tend to win
8 some races, and there are the other pedigrees that at the time
9 may not have been popular or fashionable that go on to win big
10 races and earn lots of money.
11 So, earlier, when I made the statement, we don't really
12 know where the runner is going to -- the champion is going to
13 come from in our industry when we're selling our horses, and
14 people have all different ways of looking at these prospective
15 horses when we talk about yearlings, which one they think will
16 be runners and whatever, but I believe that there's so much
17 more that is involved in a champion horse other than just
18 genetics. I believe you have nutrition; you have training;
19 you have environmental issues. You have a lot of things that
20 ultimately determine the success of a racehorse.
21 Q. If we could list the 840 -- if we were in October now,
22 and we could list the 840 horses that you're going to sell in
23 September, just had a list of them and had the price by
24 everyone, okay, from 400,000 down to 1500, okay, would we --
25 and we put a little dot or a check next to each horse that won
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1197
1 a significant amount of money, you know, hundreds of thousands
2 of dollars out there on the racetrack, would all the dots be
3 up there at the top?
4 A. No, absolutely not.
5 Q. How would it look?
6 A. They would be scattered throughout. I mean, there would
7 be some at the top, some at the bottom, some of them in the
8 middle. They come from all over. That's what I referred to,
9 is that we don't know where that runner is going to come from.
10 If someone did know where the runner was going to come
11 from or could go pick out every year which horse out of 890 at
12 Heritage Place or the other sale companies, if you had that
13 magic recipe or potion, you know, everyone else would be
14 running for second place. But no one's ever been able to
15 figure that out, so I think that's why people continue to
16 breed and continue to mate horses differently and try to
17 figure out where that next big racehorse or runner, as we
18 refer to, is going to come from.
19 Q. What's easier to predict, the sales price of a yearling
20 or the eventual earnings of a yearling?
21 A. I think it certainly would be easier to probably predict
22 what the sales price would be, but I can also tell you that,
23 as an auction company and as a manager, I don't get involved
24 in trying to determine what the value of an animal is, and I
25 don't go give valuation of horses.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1198
1 Q. All right. Now, let me talk to you about a couple of
2 particular horses the jury has heard something about. The
3 first one is Wicked Courage, sold as a stallion for $4,000,
4 later was gelded.
5 Have you -- are you familiar with that horse?
6 A. Yeah, very familiar with that horse.
7 Q. You're the one that told me about it, I think?
8 A. Yeah, uh-huh.
9 Q. Okay. Can you tell the jury about it.
10 A. Wicked Courage is, you know, maybe the Seabiscuit story
11 of today. He is a horse that sold two years ago at Heritage
12 Place when we had —— I don't know —— I think roughly 800
13 horses in our sale. He brought $4,000.
14 He was consigned by one of the biggest breeders in our
15 industry, The Four Sixes Ranch, and we sold him for $4,000.
16 He immediately went into race training. A gentleman by the
17 name of Luis Villafranco in Wapanucka, Oklahoma is the trainer
18 of the horse.
19 I saw the horse work the first time at Remington Park, a
20 racetrack there in Oklahoma City, in the spring. It's one of
21 the first racetracks that opens. No two-year-olds start
22 racing officially, that have been bought in the fall as a
23 yearling year, ever start racing until at least March 1 of
24 their two-year-old year. And that horse, I think, had two
25 outs at Remington Park and didn't show a whole lot of promise,
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1199
1 didn't -- didn't win any races, didn't make a lot of money.
2 And it wasn't until later in his two-year-old year, the
3 summer he went to Tulsa, Oklahoma, I think won a race up
4 there. Went to Claremore, Oklahoma, in the northeastern part
5 of Oklahoma and competed up there in what's called the Black
6 Gold Futurity. It's a series of races. He won that, won the
7 Black Gold Championship.
8 Came back to Remington Park this spring, won several more
9 races there, and was shipped to Ruidoso, New Mexico to compete
10 in the set of races out there, what we call the derby races in
11 Ruidoso, New Mexico, the first being the Ruidoso Derby. And
12 the way that you run in these races are, people make payments
13 to make these horses eligible to get to run in some of what we
14 call these added stakes or these futurities and derbies. So
15 they made the payments. And all the horses that have made the
16 payments run in a set of trials. I think there was roughly
17 six trials, so there was ten horses, nine horses in each
18 trial, and the ten fastest horses got to come back for the
19 finals two weeks later.
20 He not only qualified to come back to the finals, he won
21 the Ruidoso Derby. Now he's won seven races in a row. He is
22 eligible now to run in the Rainbow Derby. The Rainbow Derby
23 was run approximately seventeen, eighteen days ago, the
24 trials, so you still have to qualify and have a little racing
25 luck to get into the finals. He qualifies back into the
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1200
1 finals, runs for the richest purse in the Rainbow Derby's
2 history of well over $1,000,000 and last Saturday wins the
3 Rainbow Derby and now has lifetime earnings of over
4 $1,000,000.
5 Q. All right. Now, his pedigree was available to all the
6 potential buyers, correct?
7 A. Yes, sir.
8 Q. And all of them had an opportunity to see him?
9 A. Yes, sir.
10 Q. And the highest bid was $4,000?
11 A. That's correct.
12 Q. And whoever it was that made that bid, his owner had
13 enough faith in him to spend a lot of money getting him to
14 where he now is, correct?
15 A. That's correct.
16 Q. Well, now, when we look back at the pedigree with 20/20
17 hindsight, can you see some elite blood in the pedigree?
18 A. Oh, yeah. I mean, if you go back and look at it, his
19 sire was certainly a quality racehorse. I think he ran out --
20 Captain Courage was this horse's father, hence the name Wicked
21 Courage. You'll see this in horses. They kind of pass the
22 names around. He'd ran out approximately $250,000, the sire.
23 And his sire is one of the all-time leading sires, Mr. Jess
24 Perry. You look at the bottom side of the pedigree, and he
25 certainly has a good -- you know, a good family there.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1201
1 And, yeah, you look back now going, "Why didn't I buy
2 that one?" You know, that was the one that -- that was the one
3 that I should have bought. You know, there were eight or nine
4 hundred, and I guess only one person ended up with him.
5 Q. You said your buyers share a love of horses. Is another
6 common theme the dream of getting that horse that can win the
7 big race?
8 A. Oh, yeah. I mean, I think that's -- in the back of their
9 mind, that's everyone's goal as they get into the business,
10 but if you're in the racing business -- or even as a breeder,
11 and let's say that you were the breeder that sold that
12 yearling and still owned the mare, that is just as much of an
13 accomplishment, almost like seeing one of your kids go out
14 there and compete, whether or not that you owned Wicked
15 Courage or not, because one of the benefits of that is, is the
16 mother of Wicked Courage now has got a great pedigree now
17 underneath her. She has produced a big-time runner, if you
18 will, a big-time champion.
19 So now if you're fortunate enough to own that mare, even
20 if you had sold Wicked Courage, the value of that mare just
21 shot up dramatically, and she has now become popular, and so
22 the offspring of that mare are worth more money.
23 Q. Let's talk about another horse that the jury has heard
24 about, Big Biz Perry --
25 A. Uh-huh.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1202
1 Q. -- a mare.
2 A. Yeah.
3 Q. Tell me about her.
4 A. Well, Big Biz Perry was a mare that was sold last year at
5 Ruidoso Horse Sale, which is -- that sale was over Labor Day
6 weekend last year. Her pedigree is a great pedigree. She's
7 by Mr. Jess Perry, a horse that —— I don't know —— his
8 offspring now have had to have earned over forty-something
9 million dollars. The advertised stud fee just on Mr. Jess
10 Perry when that mare was conceived, I believe, was 35,000.
11 She's out of an unproven mare when this was sold, a mare
12 called Big Bazoom, so without getting technical, the mare
13 had -- this was one of her first babies. She had never
14 produced anything. I think she ran out approximately 15,000
15 at the racetrack or -- yeah, I think it was 15,000, had two
16 wins out of three starts.
17 And so -- well, I'm trying to think. I got lost in my
18 thoughts there for a minute. Could you help me out.
19 Q. You were just telling us her story. So she was -- she
20 was sold for --
21 A. She was sold --
22 Q. -- I think 20,000?
23 A. -- for $20,000. And she was entered into a race in
24 Oklahoma called the Heritage Place Futurity.
25 The Heritage Place Sale Company that I manage owns two
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1203
1 races called the Heritage Place Futurity, futurities being for
2 two-year-olds and the derby being for three-years-olds. So
3 people start making payments to be eligible for their horse to
4 run in this race.
5 So the mare sold last year for $20,000 in Ruidoso, and
6 the owner, by November the 15th, made a payment of $600 to
7 Heritage Place, and each month, for a total of six months,
8 made $600 payments to make her eligible to compete in this
9 race.
10 We started with approximately over 300 people making the
11 first payment, and I think at time of entry, when the race was
12 ready to be contested, there was approximately 180 horses that
13 were eligible and that ran in this race.
14 So how do we get down to the final ten horses to compete?
15 Over two days, we split the field in half, so we have 90
16 days -- 90 horses that compete on the first day and 90 on the
17 second day. Each race, or what we refer to as a trial, has
18 ten horses in it. So we ran nine races the first day, and the
19 ten fastest -- the five fastest horses from the first day come
20 to the finals, and the second day the five fastest horses
21 come.
22 Three weeks later —— I think it was May 31st this year ——
23 load them in the gates and kick the gates open for a
24 million-dollar race. And that filly is what -- won our race.
25 Q. She won?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1204
1 A. Yes.
2 Q. When you look back at her pedigree now, it looks good?
3 A. Yes, sir.
4 Q. Has good bloodlines?
5 A. Yes, sir.
6 Q. But all the buyers looked at it, and the highest bid was
7 $20,000?
8 A. That's correct.
9 Q. Now, Dr. Pflaum said, you know, people win the lottery.
10 Is that how you explain these two horses, or are there more
11 like this?
12 A. There's more examples. I think, in 2010, the horse that
13 won the Heritage Place Futurity, same scenario all over. We
14 were -- we sold the horse, a horse called Givinitaroyaleffort.
15 He was a very well-bred horse. He's by the all-time leading
16 sire in our industry, First Down Dash, out of a mare who was
17 the daughter of a World Champion mare called Florentine —— so
18 the pedigree was unbelievable if you look at it on paper ——
19 out of a mare called Delphia by Florentine, by First Down
20 Dash.
21 He brings $20,000 at our sale. It cost a lot more to
22 produce that horse than what he brought, and he goes on that
23 year to win the Heritage Place Futurity and runs out over
24 450,000.
25 Q. What about Especially Tres? Am I pronouncing that right?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1205
1 A. Yeah. Especially Tres, that's a filly that is running
2 right now. We sold her last September. She brought $6,700.
3 And some people named the Pitts bought her. The Pitts have
4 had a very successful racing career. They've had an All
5 American Futurity winner, which is the pinnacle of horse
6 racing, if you could win the All American. And so they've had
7 a lot of success.
8 And I remember at one sale the Pitts bought our
9 highest-price yearling that we sold that year, so these people
10 are certainly capable of paying a lot of money for a horse
11 that they want or they certainly have in the past.
12 And I remembered this year that you see buyers that
13 typically buy in certain ranges. You have buyers that buy in
14 the upper-end range and pay lots of money. You have buyers
15 that buy, you know, less than 10,000.
16 But I thought it was interesting, when I saw the sales
17 results, that Jim and Dina Pitts bought this Tres Seis filly
18 for 6700. And she has gone on, and I think she's run out over
19 $187,000 this year. She's already won a big futurity, and
20 certainly I think a contender for the All American Futurity.
21 I think she's eligible for that race.
22 So, you know, there's another example, and there's many
23 more that you can look through our industry, and I think it's
24 important, and I think that's why the racehorse industry is on
25 solid footing, and I think that that's why --
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1206
1 (Ms. Stone stands up.)
2 Q. (By Mr. Loftin) Let me go ahead and ask another question.
3 A. Yeah.
4 MS. STONE: Thank you.
5 Q. (By Mr. Loftin) So we can see the pedigree. We can look
6 at the horse. We can go get the trainer we think is best,
7 pick the farm that we think is -- we can do everything we
8 think is best, get the best rider.
9 What's the one thing that you can't measure in advance
10 about a racehorse?
11 A. I don't think you can measure their will, their will and
12 determination to win. And call it the It Factor. I'm not
13 sure what you call it, but, you know, we can all read pedigree
14 pages, and we can -- we can look at a catalog page and think
15 one way or the other.
16 (Ms. Stone stands up.)
17 Q. (By Mr. Loftin) I think she's probably right. You
18 answered my question.
19 A. All right.
20 Q. All right. Let me leave the Heritage Place. By the way,
21 one more thing before we leave the Heritage Place, you
22 yourself -- you and friends, occasionally, you would buy a
23 racehorse?
24 A. Yes, sir.
25 Q. So this dream of owning a champion is -- you understand
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1207
1 that dream, right?
2 A. Yes, sir.
3 Q. Haven't realized it yet, have you?
4 A. No, sir.
5 Q. Well, do you feel like that -- okay. So at every
6 auction, there's going to be a couple of horses, you know,
7 maybe -- I don't know, maybe -- you tell me. When we're
8 talking about the horses that are the most coveted at a
9 particular auction, is it usually -- is it five, ten, fifteen,
10 what -- is there any rhyme or reason to that?
11 A. No, sir. No, sir, there's no rhyme or reason.
12 Q. Okay. So sometimes it's a few more; sometimes it's a few
13 less?
14 A. Yeah.
15 Q. There's always only one that sells for the highest price,
16 right?
17 A. That's correct.
18 Q. And you're not able to compete for those at the four-
19 hundred, five-hundred-thousand dollar level?
20 A. Me personally?
21 Q. Yeah.
22 A. No, sir.
23 Q. Okay. But you still feel like that, maybe if you keep
24 looking at those horses, one of these days you and your
25 buddies are going to find one down there at a price range you
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1208
1 can afford that might -- might be another Wicked Courage?
2 A. That's correct.
3 Q. Big Biz Perry?
4 A. That's correct.
5 Q. All right. Let me talk to you about the Stud Book and
6 Registration Committee.
7 How do you feel about being named as a conspirator?
8 MS. STONE: Judge, I need to object. Clearly --
9 THE COURT: Sustained.
10 Q. (By Mr. Loftin) Okay. The testimony -- there's been
11 testimony that Frank Merrill has intimidated, badgered members
12 of the Stud Book and Registration Committee. Has Frank
13 Merrill attempted to intimidate or badger you?
14 A. No.
15 Q. If he tried to, would he be successful?
16 A. No.
17 Q. Does Frank Merrill have the ability to exercise some kind
18 of financial leverage over you, hurt your business, hurt your
19 income, hurt your pocketbook in any way?
20 A. Absolutely not.
21 Q. Has anyone else on the committee attempted to intimidate
22 you or threaten you in any way?
23 A. No.
24 Q. And tell me, again, I'm sorry, when did you join the
25 committee?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1209
1 A. 2012.
2 Q. Okay. And how have you voted in 2012 and 2013 with
3 respect to proposals to register the offspring of clones?
4 A. I voted to deny --
5 Q. Why?
6 A. -- the request.
7 I believe, as a member of the Stud Book and Registration
8 Committee member, as well as a member of the association, that
9 our responsibility is to intect [sic] -- to protect the
10 integrity of the breed.
11 And I'm personally not in favor of cloning. First of
12 all, I don't think it is a form of breeding. I think it's a
13 reproductive technique, but I don't think it's a form of
14 breeding, and, you know, I have some concerns over the
15 constraint on the gene pool, if you will, the narrowing of the
16 gene pool. Potentially, you know, there could be, you know,
17 other things, genetic diseases, other things of that nature.
18 I don't know. But I personally and my feeling is that -- to
19 answer your question, I have voted to deny it.
20 Q. Now, as far as it -- there's been some discussion about
21 genetic diseases. Would you agree that if -- to the extent
22 we're talking about known genetic diseases, known genetic
23 diseases, if breeders make good decisions, that's going to
24 certainly lessen known genetic diseases?
25 A. That's correct.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Direct--Mr. Loftin) (Defendant AQHA) 1210
1 Q. In that regard, has the Quarter Horse Association
2 provided a five-panel test that's affordable that breeders can
3 use to test the horses they're breeding to see if they have
4 any of the known genetic diseases?
5 A. Yes, sir.
6 Q. And are there a number of ways in which the association
7 has tried to educate breeders about these genetic diseases
8 that have cropped up in recent years?
9 A. Yes.
10 Q. And has the association said that you cannot register a
11 horse that's affected with HYPP, to be technical, that has
12 both the alleles; is that true?
13 A. Yes, it is.
14 Q. And, at this year's -- well, you were a member of the
15 Stud Book and Registration Committee this year, and there was
16 an important decision made this year, was there not, about
17 mandatory five-panel testing for stallions?
18 A. Yes, sir, there was.
19 Q. Can you explain that to the jury.
20 A. Well, what the Stud Book and Registration Committee voted
21 to -- the rule that was then passed on to the membership
22 committee, that was then passed on and approved by the Board
23 of Directors, was that all stallions —— and, I believe; I'm
24 going off of recollection —— that all stallions breeding
25 twenty-five mares or more are required to have this genetic
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1211
1 panel testing on file and available for people to see.
2 And, at some point —— I think it's a year or two years
3 from now —— all stallions, so those ones that are breeding less
4 than twenty-five mares a year will also be required to do that.
5 Q. Finally, the -- there's been testimony that one reason
6 for cloning would be that there's a shortage of elite mares.
7 We don't have enough mares to produce the quality Quarter
8 Horses we need.
9 Now, you work around the Heritage Place. You look at the
10 sales. You look at the horses. You invest in horses
11 yourself. Do you see a shortage of quality mares?
12 A. No, sir.
13 Q. You think cloning is needed to produce more mares?
14 A. No.
15 MR. LOFTIN: Thank you. I'll pass the witness.
16 CROSS EXAMINATION
17 BY MS. STONE:
18 Q. Mr. Tebow, isn't it true that Bob Moore Farms is a
19 twenty-five-percent owner of Heritage Place?
20 A. Yes, ma'am.
21 Q. And isn't it also true that Frank Merrill is the manager
22 for Bob Moore Farms and has -- is responsible for the
23 management and oversight of the Moore family's
24 twenty-five-percent interest in Heritage Place?
25 A. I was not aware of that.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1212
1 Q. Okay. If he testified to that, would you dispute it?
2 A. No.
3 Q. All right. Isn't it also true that one of the largest
4 single consignors or, in fact, the largest consignor to
5 Heritage Place for horses, for the sale of horses, acting as
6 an agent on behalf of people that want to sell horses, is
7 Butch Wise on behalf of the Lazy E?
8 A. Yes, ma'am.
9 Q. Okay.
10 MS. STONE: May I use the easel? May I use the
11 easel?
12 THE COURT: Yes.
13 (Pause.)
14 Q. (By Ms. Stone) And that's a twenty-five-percent
15 ownership interest that Bob Moore Farms owns; is that correct?
16 A. Yes, ma'am.
17 Q. And Frank Merrill is its manager, correct?
18 A. Yes, ma'am.
19 Q. And he is on the Stud Book and Registration Committee,
20 correct?
21 A. Yes, ma'am.
22 Q. And Heritage Place is your employer?
23 A. One of my employers, yes, ma'am.
24 Q. You're the CEO for that company?
25 A. Yes, ma'am.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1213
1 Q. And so you have every interest in seeing that that
2 business is profitable, correct?
3 A. Yes, ma'am.
4 Q. And the money that Heritage Place makes is all from
5 commission; isn't that true?
6 A. From entry fees and commissions, yes, ma'am.
7 Q. The part of the sale though -- entry fees for what?
8 A. When you consign a horse to our sale, you pay a $600
9 entry fee to consign the horse, and then we get a percentage
10 of what the horse sells for.
11 Q. Okay. And so the more -- the more expensive the horse
12 sells for, the higher the price, the bigger the commission
13 that's paid to Heritage Place, correct?
14 A. Yes, ma'am.
15 Q. All right. And the other owner -- the other owner of --
16 one of the other owners of Heritage Place is Dr. Charles
17 Graham, correct?
18 A. Yes, ma'am.
19 Q. And he's in the racehorse business also, is he not?
20 A. Yes, ma'am.
21 Q. And his business is Southwest Stallion Station, correct?
22 A. That's correct.
23 Q. And his interest is twenty-five percent also, correct?
24 A. Yes, ma'am.
25 Q. And the -- who manages that business is his grandson,
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1214
1 correct?
2 A. His grandson is involved in that business, that's
3 correct.
4 Q. And his grandson's name is Tyler Graham?
5 A. Yes, ma'am.
6 Q. And he is also on the Stud Book and Registration
7 Committee?
8 A. That's correct.
9 Q. And you are the CEO of the company, correct?
10 A. Yes, ma'am.
11 Q. And you are on the Stud Book and Registration Committee,
12 correct?
13 A. That's correct.
14 Q. And you are also involved in the insurance business with
15 John Andreini?
16 A. Yes, ma'am.
17 Q. And he also is a big-time owner of racehorses? Major --
18 he's owned some pretty significant horses, correct?
19 A. Yes, ma'am.
20 Q. In fact, are you aware that his horses have earned more
21 than $3,000,000 racing?
22 A. That doesn't surprise me.
23 Q. Okay. And he is on the Board of Directors of AQHA?
24 A. Yes, ma'am.
25 Q. And Butch Wise, Lazy E, is the largest consignor of
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1215
1 horses through the sale of Heritage Place?
2 A. Yes, ma'am.
3 Q. And Butch Wise is on the Stud Book and Registration
4 Committee?
5 A. He is.
6 Q. Do you know him to be a friend of Mr. Andreini's?
7 A. Yeah, acquaintance, yeah.
8 Q. Well, do you know that they traveled to Australia
9 together with --
10 A. Yeah, I do know that.
11 Q. Okay. You also know that Butch Wise acts as the agent on
12 all the horses that Andreini buys or sells through Heritage,
13 correct?
14 A. I do.
15 Q. And, again, Butch Wise and Lazy E buy and sell horses
16 through Heritage Place, correct?
17 A. Yes, ma'am.
18 Q. Okay. So we have -- Andreini also buys and sells horses
19 through Heritage Place?
20 A. He does.
21 Q. Now, some of the other -- oh, and Bob -- Bob Moore, not
22 only is it an owner, but it also buys and sells horses,
23 correct?
24 A. Yes, ma'am.
25 Q. So it buys and sells horses and is an owner, correct?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1216
1 A. Yes, ma'am.
2 Q. Okay. And Southwest Stallion Station, it's an owner, and
3 it also buys and sells horses through Heritage Place, correct?
4 A. Yes, ma'am.
5 Q. Okay. And so we have a Stud Book and Registration
6 Committee there through that owner (indicating). We have a
7 Stud Book and Registration Committee here through this owner
8 (indicating), correct?
9 A. Yes, ma'am.
10 Q. Okay. And then you, as the CEO, are a Stud Book and
11 Registration Committee member, correct?
12 A. Yes, ma'am.
13 Q. Mr. Andreini, you are with his company. It's a big
14 insurance brokerage firm, isn't it, one of the largest fifty
15 in the United States?
16 A. Yes, ma'am, that's correct.
17 Q. Okay. And you have -- you are the managing partner or
18 the managing director of the Oklahoma part of his business,
19 correct?
20 A. That's correct.
21 Q. Okay. And he and Butch Wise have a relationship, correct?
22 A. That's correct.
23 Q. And we have -- also, who is -- you've testified -- maybe
24 you didn't testify. I think it was Mr. Merrill that testified
25 about Jim Helzer. Jim Helzer has JEH Stallion Station; is
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1217
1 that right?
2 A. Yes, ma'am.
3 Q. And he would be -- JEH Stallion Station, that would be
4 one of the three or four largest consignors of horses to the
5 sale -- to the Heritage Place sales, correct?
6 A. I don't believe that to be correct, that he'd be the top
7 three or four, but he is a consignor and has done business and
8 consigned horses for a number of years with Heritage Place,
9 yes, ma'am.
10 Q. A significant number of horses on each of the yearling
11 sales, correct?
12 A. Yeah, fifteen, twenty maybe.
13 MS. STONE: Well, may I approach the witness, Your
14 Honor?
15 THE COURT: Yes.
16 (Pause.)
17 Q. (By Ms. Stone) I'll show you what I've marked as
18 Plaintiffs' Exhibit 144, and ask if you can identify this as
19 the list of horses that have been consigned to the Heritage
20 Place Yearling Sale for 2013?
21 A. Yes, ma'am, I can.
22 Q. Okay. And would you count, please, how many horses are
23 consigned --
24 A. Consigned by JEH Stallion Station?
25 Q. Yes, please.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1218
1 A. I count thirty-nine.
2 Q. So he's a pretty big -- JEH Stallion Station is a
3 significant size consignor to Heritage Place, correct?
4 A. Yes, ma'am.
5 Q. Buys and sells horses through Heritage?
6 A. Yes, ma'am.
7 Q. And Mr. Helzer is also on the Stud Book and Registration
8 Committee, correct?
9 A. Yes, ma'am.
10 Q. Do you -- is Granada -- a business known as Granada also
11 a consignor of horses, buyer and seller of horses through
12 Heritage?
13 A. Yes, ma'am.
14 Q. And the principal and owner of that business is James
15 Eller?
16 A. Yes, ma'am.
17 Q. And Granada also consigns a significant number of horses
18 to the sale and buys and sells a significant number of horses?
19 A. Yes, ma'am.
20 Q. And Mr. Eller also is on the Stud Book and Registration
21 Committee?
22 A. He is.
23 Q. Do you know of a business named Scarlett Hill?
24 A. Yes, ma'am.
25 Q. Scarlett Hill is also a business that consigns horses,
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1219
1 buys and sells horses through Heritage?
2 A. A few, yes, ma'am.
3 Q. Okay. And the principal in that business is Gus Barakis?
4 A. Yes, ma'am.
5 Q. And is he also on the Stud Book and Registration
6 Committee, or has he been?
7 A. I don't believe he's on there now, and I don't have any
8 knowledge of him being on there prior. He very well could
9 have been.
10 Q. Okay. Would you look please in Volume 1 of the
11 Plaintiffs' Exhibits up there at Exhibit No. 29.
12 A. Yes, ma'am, I see.
13 Q. And, in fact, he was on -- Mr. Barakis was on the Stud
14 Book and Registration Committee, according to this, from the
15 earliest date that's shown on here, 2013, through -- excuse
16 me, 2003 through 2011, correct?
17 A. That's correct.
18 Q. So he had a pretty long tenure there on the Stud Book and
19 Registration Committee; wouldn't you agree with that?
20 A. Yes, ma'am.
21 Q. Do you know Ben Hudson?
22 A. Yes, ma'am.
23 Q. Okay. Ben Hudson is the owner and editor of TRACK
24 Magazine?
25 A. Yes, ma'am.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1220
1 Q. He's also a very good friend of Mr. Wise?
2 A. Yes, ma'am.
3 Q. Does he buy and sell horses -- has he bought and sold
4 horses through Heritage?
5 A. Yes, ma'am.
6 Q. A good friend of Mr. Wise, and he also is on the Stud
7 Book and Registration Committee?
8 A. Yes, ma'am.
9 Q. Do you know Vaughn Cook?
10 A. Yes, ma'am.
11 Q. Okay. Vaughn Cook, Royal Vista Equine, correct?
12 A. Yes, ma'am.
13 Q. And he also has been a buyer and seller of a significant
14 number of horses through Heritage Place?
15 A. He has.
16 Q. He also is, or has been, on the Stud Book and
17 Registration Committee?
18 A. He has.
19 Q. Paul Jones. Do you know Paul Jones?
20 A. Yes, ma'am.
21 Q. He also has bought and sold horses through Heritage Place?
22 A. He has.
23 Q. And these are all racehorses we're still talking about,
24 right, as I think we've established that? These are all
25 racehorses, correct?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1221
1 A. Yes, ma'am.
2 Q. He also is on the Stud Book and Registration Committee?
3 A. Well, I'm looking to verify that. I didn't know that he
4 was on there, and I am --
5 (Pause.)
6 MS. STONE: I'll have Mr. Stein find for us where on
7 there he is.
8 Q. (By Ms. Stone) Do you know Glenn Blodgett?
9 A. Yes, ma'am. Dr. Blodgett, yes, ma'am.
10 Q. And we've talked about Glenn Blodgett. In fact, you
11 testified that he was -- I've forgotten what's the word you
12 used, but Glenn, he's with The Four Sixes Ranch, correct?
13 A. Yes, ma'am.
14 Q. He oversees their entire equine operation, stands Mr.
15 Jess Perry, correct?
16 A. Yes, ma'am.
17 Q. He also has been on the Stud Book and Registration
18 Committee, correct?
19 A. Yes, ma'am.
20 Q. Johnny Trotter; do you know Mr. Trotter?
21 A. Yes, ma'am.
22 Q. Oh, and Mr. Blodgett was on the Stud Book and
23 Registration Committee for many, many years, wasn't he?
24 A. It appears so, yes, ma'am.
25 Q. And he's now on the Executive Committee, correct?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1222
1 A. Yes, ma'am.
2 Q. Okay. And likewise -- if you would -- Mr. Stein has
3 helped me here. If you would look under 2010, Paul Jones is
4 listed as a Stud Book and Registration Committee member, 2010.
5 2011.
6 A. Yes, ma'am, I see.
7 Q. And Johnny Trotter was at one time on the Stud Book, not
8 too long ago was on the Stud Book and Registration Committee,
9 correct?
10 A. Yes, ma'am.
11 Q. Now on the Executive Committee?
12 A. Yes, ma'am.
13 Q. And buys and sells horses?
14 A. He does.
15 Q. Through -- and, in fact, Glenn Blodgett and Johnny
16 Trotter -- or, excuse me, Four Sixes and Johnny Trotter have
17 some common ownership in some horses?
18 A. They do.
19 Q. Okay. Including the one that just won the Rainbow
20 Futurity, correct?
21 A. Yes, ma'am.
22 Q. And that was this past weekend?
23 A. Yes, ma'am.
24 Q. And what did that pay?
25 A. I think it was roughly a gross purse of $1,000,000. I
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1223
1 think approximately a half-million dollars to win the race.
2 Q. Okay. And that was a horse that was sold through -- that
3 they purchased through Heritage Place?
4 A. It was.
5 Q. For $170,000?
6 A. Yes, ma'am.
7 Q. And wouldn't you agree that there are more horses like
8 that that are at the higher-end of the sales prices that go on
9 to win the races than do the ones like Wicked -- I can't
10 remember the last name.
11 A. Wicked Courage.
12 Q. Thank you.
13 A. And I would not agree with what -- your statement.
14 Q. Okay. Can you identify any other horses -- well, we'll
15 come back to that in just a minute. Let me finish my diagram.
16 Now, Joan Schrader (phonetic) is not anywhere on this
17 diagram, is she?
18 A. Ms. Schroeder, no, no, ma'am.
19 Q. This is the good ol' boys' club for the racing Quarter
20 Horses, isn't it, sir?
21 A. I would not refer to it as the good ol' boys' club.
22 Q. All of these people are influential in racing Quarter
23 Horses, correct?
24 A. I would -- they all play a significant part of our
25 industry, yes, ma'am.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1224
1 Q. They are all people -- they are all people that have
2 earned substantial monies -- substantial sums of money?
3 A. Would you re --
4 Q. They've had horses that won, correct?
5 A. Yeah. I would assume that, at some point, they've all
6 owned some horses. Whether or not they've all owned horses
7 that won a substantial amount of money -- I can certainly tell
8 you I have not.
9 Q. All right.
10 (Laughter.)
11 Q. (By Ms. Stone) Okay.
12 A. Yeah.
13 Q. And, really, we'll take you out of the good ol' boys'
14 club, because you're working for a living as the CEO of
15 Heritage; isn't that true? Your -- your primary business is
16 not racehorses, is it?
17 A. That's correct.
18 Q. Okay. And many of these other people, their primary
19 businesses are racehorses?
20 Four Sixes, that's a big part of their business,
21 certainly with regard to what Dr. Blodgett does, correct?
22 A. I would agree with that one, and I think we would have to
23 go through that and distinguish which one of them it's a big
24 part of and not, and I don't know their entire business, you
25 know, entity, so I don't know that.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1225
1 Q. Okay. I'll just ask you about a few of them then.
2 A. Okay.
3 Q. Certainly with Jim Helzer, correct?
4 A. My understanding is that he owns a big roofing company,
5 that that's where his primary source of income comes from.
6 Q. Okay. What about Butch Wise Lazy E?
7 A. I certainly think Butch Wise is one of the ones that's
8 full-time in the horse business on that list up there, yes.
9 Q. And Bob Moore Farms, while it may have other businesses,
10 including an interest in Heritage, that's always been a fairly
11 significant business for Bob Moore Farms; would you agree?
12 A. For the Bob Moore family?
13 Q. For the Bob Moore Farms.
14 A. The farm itself?
15 Q. Bob Moore Farms.
16 A. Yeah, I guess Bob Moore Farms' farm is a significant part
17 of Bob Moore Farm, and yes.
18 Q. All right. And, again, not only is Joann or Joan
19 Schroeder, Schrader, not there, but also Peter Cofrancesco's
20 not up there on that chart either?
21 A. That's correct.
22 Q. And would you also agree that racehorses is -- racing is
23 the discipline, the Quarter Horse discipline in which the most
24 money is made?
25 A. I would agree with that, yes, ma'am.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1226
1 MS. STONE: May I approach the witness?
2 THE COURT: You may.
3 (Pause.)
4 Q. (By Ms. Stone) Can you identify those, please, sir?
5 A. Yes, ma'am. Exhibit 145, Plaintiffs' Exhibit 145 is the
6 top twenty sales report for the 2011 Quarter Horse Yearling
7 Sale that was held at Heritage Place.
8 Q. And, also, No. 146, what is it?
9 A. Plaintiffs' Exhibit 146 appears to be the top twenty
10 sales report for the 2010 Winter Mixed Sale that was held
11 January 14th through the 16th, 2010.
12 Q. And those are documents that are maintained on your
13 web -- the website of Heritage Place; is that correct?
14 A. Yes, ma'am.
15 Q. Okay. And would you agree with me that, particularly
16 with regard to the 146, the one for 2010, that of the top
17 twenty horses, that Mr. Wise, Butch Wise was the agent on nine
18 of the top twenty selling horses?
19 A. Yes, ma'am.
20 Q. Okay. So you would agree with me then that a significant
21 amount of the commissions that were received by Heritage Place
22 from this sale came from consignments made by Butch Wise?
23 A. Yes, ma'am.
24 Q. Okay. And, if you would look, please, at No. 145, that,
25 again, is -- as you've testified, was -- is the top twenty
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1227
1 sales prices for 2011. And, again -- and Mr. Wise, with
2 regard to seven of the highest selling of the twenty horses
3 was the consignor or the agent for the consigning party,
4 correct?
5 A. Yes, ma'am.
6 Q. And, again, a significant amount of the commission that
7 was paid from this sale was as a result of consignments made
8 by Mr. Wise?
9 A. Yes, ma'am.
10 Q. In fact, in some instances, he's made consignments, and
11 once -- in just one sale, sales that have been in the range of
12 $2,000,000 or more; wouldn't you agree?
13 A. I would agree.
14 Q. Okay. Now, you've also -- you testified that
15 broodmares -- that you didn't think that there was a shortage
16 of broodmares. You have had some sales that were broodmare
17 sales at Heritage; is that correct?
18 A. Not broodmare specific only, but we do sell broodmares at
19 two of the three sales that we sell a year, yes, ma'am.
20 Q. Did you at one time not too long ago —— this would have
21 been in 2010 —— have a broodmare that sold for $875,000?
22 A. We did.
23 Q. And was that the highest-selling broodmare ever?
24 A. No, ma'am. I -- well, I think it might have been the
25 highest-selling broodmare, yes, ma'am, I think it was.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1228
1 Q. And that sale had -- in fact, there are other sales that
2 you've had where you have had substantial prices paid for
3 broodmares, correct?
4 A. Yes, ma'am.
5 Q. Do you recall when your deposition was taken, Mr. Tebow?
6 Do you recall that your deposition was taken?
7 A. Yes, ma'am, I do.
8 Q. And you recall that, in response to my questions -- and,
9 at that point in time, we had the top twenty sales results for
10 the Winter Sale. Do you recall that?
11 A. Yes, ma'am. I believe it was for the 2013 Winter Sale,
12 yes, ma'am.
13 Q. Yes, sir. That was held January 17th through 19th; do
14 you recall that?
15 A. Yes, ma'am.
16 Q. And, at that time, you agreed that all of the -- that the
17 buyers of all of the top twenty selling horses were located in
18 the United States or Canada, correct?
19 A. I remember going through that -- through that exercise
20 with you, but I don't recall my testimony.
21 MS. STONE: May I approach the witness, Your Honor?
22 THE COURT: You may.
23 (Pause.)
24 Q. (By Ms. Stone) And, Mr. Tebow, my question -- this is on
25 Page 10, Line 3.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Cross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1229
1 "So I'll ask you again if you can identify anybody on
2 Exhibit 124 that was a buyer of the top twenty horses at the
3 Heritage Winter Mixed Sale held January 17th through the 19th
4 that is not a resident of the continental United States."
5 And your answer?
6 A. "No, ma'am, I cannot, based on this list."
7 Q. Okay. And then I said: "I will rep --"
8 And then I said: "My question is, isn't it true that all
9 of the purchasers identified in Exhibit No. 124 are, in fact,
10 residents of the continental United States, at least according
11 to the records of Heritage Place?"
12 And your answer was?
13 A. "Yes, ma'am."
14 Q. Okay. If you would look, please, in -- probably in
15 Exhibit Volume 3 at Exhibit No. 91.
16 And 91 is a Horse Ownership Summary for a horse named
17 Last Shall Be First; is that correct?
18 A. Yes, ma'am.
19 Q. That went through the sale that we just talked about?
20 A. Yes, ma'am.
21 Q. Second highest-selling horse?
22 A. Yes, ma'am.
23 Q. Sold for $225,000?
24 A. I don't have that record in front of me.
25 Q. Okay. Do you recall that it was approximately that?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Redirect--Mr. Loftin) (Defendant AQHA) 1230
1 A. Yes, ma'am.
2 Q. Okay. And, at the time your deposition was taken, you
3 had a question as to whether or not this gentleman might have
4 been buying this horse for somebody outside the United States.
5 Do you recall that?
6 A. To some extent.
7 Q. And, in fact, this document confirms that this horse was
8 bought by somebody in the United States; isn't that true? It
9 shows the current owner as Luis Alvarez, Apple Valley,
10 California, correct?
11 A. Yes, ma'am.
12 MS. STONE: No further questions.
13 REDIRECT EXAMINATION
14 BY MR. LOFTIN:
15 Q. Are there any other major racehorse auction houses in our
16 part of the country other than Heritage Place?
17 A. Would you define "our part of the country"?
18 Q. You tell me what -- how you want to define it.
19 A. Well, I believe there are major auction companies that
20 we, as Heritage Place, feel like are certainly our
21 competitors, one being the Ruidoso Select Horse Sale Company,
22 I think, is the name of that entity.
23 You know, there's a sale that's going to be held this
24 weekend in San Antonio that's managed by the Texas Quarter
25 Horse Association. They put their own sale on. That will be
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Redirect--Mr. Loftin) (Defendant AQHA) 1231
1 in San Antonio this weekend.
2 There's a big sale in October out in California that's
3 held at the Los Alamitas Equine Facility at the racetrack out
4 there called the Los Alamitas Equine Sale, I think, or
5 something like that.
6 So there are certainly other sales around the country
7 that sell horses.
8 Q. Is it surprising to you that folks in the racehorse
9 business that live in Texas, Oklahoma, and this general -- New
10 Mexico, this general area, that they consign horses to the
11 Heritage Place? Is that surprising to you?
12 A. No, that's not surprising at all.
13 Q. And is it surprising to you that people that are
14 prominent in the racehorse industry are among the
15 thirty-some-odd people that serve on the Stud Book and
16 Registration Committee?
17 A. It is not surprising.
18 Q. There's been testimony that the Stud Book and
19 Registration Committee is considered an important standing --
20 all the standing committees are important, but, particularly,
21 vital -- plays a particularly vital role. Would you agree
22 with that?
23 A. I would agree with that.
24 Q. And there's a good number of experienced folks on that
25 committee?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Redirect--Mr. Loftin) (Defendant AQHA) 1232
1 A. I believe there is.
2 Q. And so these people that are on this chart over here, is
3 it surprising to you that they're on the Stud Book and
4 Registration Committee?
5 A. No. I think they're some of the leaders of our industry.
6 Q. Have any of them exerted any influence over you in terms
7 of trying to sway you about how you vote on the cloning issue?
8 A. They have not.
9 Q. Do you check with the people -- you're elected to the
10 Board of Directors?
11 A. Yes.
12 Q. There's some people that have positions where they
13 weren't elected. You were elected to the Board of Directors?
14 A. Yes.
15 Q. And do you check with your constituents before you vote
16 on controversial issues?
17 A. I talk to my constituents. I'm very involved, for
18 example, through the Oklahoma Quarter Horse Race Association,
19 and through, you know, being involved in the horses and around
20 it all the time, yes.
21 Q. There's a document here that's been marked as Plaintiffs'
22 Exhibit 145, and it's the top twenty sales from the Quarter
23 Horse Yearling Sale in 2011 at Heritage Place.
24 Do you have a -- did she show you that? Do you have a
25 copy of that?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Redirect--Mr. Loftin) (Defendant AQHA) 1233
1 A. Yes, sir, I have it in front of me.
2 Q. Okay. Have you actually taken those top sellers and
3 taken a look at how they did in terms of earning money on the
4 track?
5 A. No, I haven't.
6 Q. Did you do a similar exercise with some other ones?
7 A. Yes, I did.
8 Q. What did you find?
9 A. Well, I found that, in 2011, if you took the top
10 twenty-five highest-priced yearlings and look at how they
11 performed at the end of 2012, it was -- it was quite shocking,
12 that I believe the entire group, the top twenty-five
13 highest-priced yearlings that sold in our industry in 2011,
14 the total amount of money earned by them was like $200,000.
15 Wasn't very much money at all.
16 Q. Sold just at Heritage Place or at all the auction houses?
17 A. It was the top -- it was all the auction houses. It was
18 the top twenty --
19 Q. All right. So the top --
20 A. -- five.
21 Q. -- twenty sellers --
22 A. Top twenty-five.
23 Q. -- for the year 2011, correct?
24 A. Yes, sir.
25 Q. And then you looked at their earnings when they went on
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Redirect--Mr. Loftin) (Defendant AQHA) 1234
1 the track in 2012?
2 A. That's correct. At the end of 2012.
3 Q. And their total earnings were?
4 A. Approximately 200,000.
5 Q. Now, did you look at the top earners for that year?
6 A. Yes. The top earners for 2012, yes.
7 Q. On the track?
8 A. Yes, by money earned on the track.
9 Q. And looked backward to see what they sold for?
10 A. Uh-huh.
11 Q. Did you do that?
12 A. Yes.
13 Q. What did you see?
14 A. I didn't see any of the horses that were, you know, the
15 highest-priced yearlings -- for example, First Prize Moon that
16 sold at our sale for 435,000, he didn't -- he didn't do any
17 good that year, in 2012. It doesn't mean he might not come
18 back this year and do well, and some of the others.
19 But, you know, what -- what appears to be the crème de la
20 crème of our industry, because they bring the most money and
21 the likelihood of them having the most success, in fact, did
22 not happen.
23 It was other horses that were the top money-earners, some
24 of which never went through a sale facility. They were raised
25 and either traded through private treaty or the owner who
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Redirect--Mr. Loftin) (Defendant AQHA) 1235
1 raised them ran those horses, but many of them had been
2 sold -- you know, over half of them had been sold, and they
3 weren't any of the big-priced horses. They weren't the
4 four-hundred, three-hundred-thousand-dollar horses. They were
5 the twenty, you know, the forty, fifty, ten-thousand-dollar
6 horses that were our biggest money earners for 2012.
7 Q. Were a pretty fair number of them below this -- were a
8 pretty fair number of these horses that earned a lot of money
9 below the $35,000 line?
10 A. Yeah. I don't have an exact recollection, other than
11 that they kind of varied, but this $35,000 line of demarcation
12 that you referred to earlier is something I've never heard of
13 before, but there's certainly many, many horses that have
14 success in our industry and had success in 2012 that brought
15 less than $35,000.
16 Q. All right. Thank you.
17 MR. LOFTIN: Pass the witness.
18 MS. STONE: May I approach the easel?
19 THE COURT: Yes.
20 MS. STONE: I've marked the chart that I've just
21 drawn with the information that Mr. Tebow testified to as
22 Exhibit No. 147, and I'd offer it into evidence.
23 MR. LOFTIN: No objection.
24 THE COURT: Admitted.
25 MS. STONE: I'd also offer Exhibits 145 and 146.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Recross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1236
1 MR. LOFTIN: No objection.
2 THE COURT: Admitted.
3 RECROSS EXAMINATION
4 BY MS. STONE:
5 Q. Now, Mr. Tebow, members of the Stud Book and Registration
6 Committee are not elected, are they? They're appointed by the
7 Executive Committee, including the president, correct?
8 A. That's correct.
9 Q. Okay. Now -- and these people are leaders in the racing
10 Quarter Horse industry, correct?
11 A. Yes, ma'am.
12 Q. Okay. Now, you would agree that, as a general rule, the
13 higher-quality horses sell for more money than the
14 lower-quality horses?
15 A. I would agree.
16 Q. And it's true that there are bloodlines, certain
17 bloodlines that currently dominate the top earning racehorses,
18 correct?
19 A. Would you rephrase that --
20 Q. Sure.
21 A. -- or expand on --
22 Q. Isn't it true that there are bloodlines, certain
23 bloodlines that currently dominate the top earning racehorses?
24 A. Yes.
25 Q. And some of those would be Mr. Jess Perry, correct?
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Recross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1237
1 A. That's correct.
2 Q. Corona Cartel?
3 A. That's correct.
4 Q. Walk Thru Fire?
5 A. To some extent.
6 Q. Okay. And First Down Dash?
7 A. That's correct.
8 Q. And would you agree that the likelihood of producing a
9 champion is increased by the breeding of two high-quality
10 horses?
11 A. I would.
12 Q. You would also agree that stud fees, the stud fees of a
13 horse or what's paid for a stud fee for a horse's sire can
14 affect the sales price of a horse that goes through your sale?
15 A. Could you re --
16 Q. Sure. Wouldn't you agree that stud fees, the stud fees
17 of a horse's sire can affect the sales price of a horse that
18 goes through your sale?
19 A. It can.
20 Q. Well, do you recall having been asked that question in
21 your deposition?
22 A. I remember being asked the first question you just asked
23 me, not --
24 MS. STONE: May I approach?
25 A. -- the second.
Stacy Mayes Morrison Official Court Reporter Jeff Tebow (Recross--Ms. Stone) (Plaintiff Abraham & Veneklasen Joint Venture) 1238
1 MS. STONE: May I approach the witness, Your Honor?
2 THE COURT: You may.
3 Q. (By Ms. Stone) Page 34, Line 3: "In other words, would
4 you agree that stud fees, the stud fees of a horse's sire can
5 affect the sire's -- the sales price of a horse that goes
6 through your sale?"
7 And your answer?
8 A. "Yes, ma'am."
9 Q. Thank you.
10 MS. STONE: No further questions.
11 MR. LOFTIN: I have nothing further, Your Honor.
12 THE COURT: May the witness be excused?
13 MR. LOFTIN: Yes, Your Honor.
14 MS. STONE: Yes, Your Honor.
15 THE COURT: You are excused as a witness.
16 THE WITNESS: Thank you, ma'am.
17 (Witness excused.)
18 THE COURT: Ladies and Gentlemen of the Jury, you'll
19 be in recess at this time until 9:00 tomorrow morning.
20 And the courtroom will be locked up, and you can
21 leave your notepads there in the courtroom. We'll be in
22 recess at this time.
23 COURT SECURITY OFFICER: All rise.
24 (Proceedings recessed until 9:00, 07/24/2013.)
25 (Further proceedings continued in Volume VI.)
Stacy Mayes Morrison Official Court Reporter Reporter's Certificate 1239
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3 I certify that the foregoing is a correct transcript from
4 the record of proceedings in the above-entitled matter. I
5 further certify that the transcript fees format comply with
6 those prescribed by the Court and the Judicial Conference of
7 the United States.
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