Robert and Lauren Efford say their constitutional rights were violated because no hearings were held before their horses were stricken from the American Stud Book in February, causing their value to plunge.
The Effords' lawsuit against the Jockey Club, which publishes the book, was thrown out because the club has no offices there. They may refile their suit against the club in Kentucky or New York.
The Effords say they didn't know artificial insemination precluded the thoroughbred certification. They had arranged to breed their two palomino mares with a palomino stallion owned by a Texas couple, but the stallion had physical problems and artificial insemination seemed to be the solution.
``It was like finding a diamond,'' said Lauren Efford. ``(The stallion) was literally one of a kind.''
The results were four foals, including two with rare color combinations prized in the horse breeding and racing circles _ but only with their thoroughbred certification.
The Texas couple filled out the thoroughbred registration forms including a clause that states that breeders did not artificially inseminate the mares.
Lauren Efford said the couple later informed Jockey Club that the foals were artificially conceived.
She said she and her husband became aware of the rule only when the certificates of all four foals were revoked.
Thomas Riley, a lawyer representing the Jockey Club, said the decision to revoke the certificates could not be considered punishment.
``The Jockey Club hasn't come after anyone,'' he said. ``It's a violation of the rules.''
Meanwhile, the Effords have been sued by a Kentucky woman who purchased one of the foals while it was still considered a thoroughbred.