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Karlinsky v. New York Racing Association Inc.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT


decided: May 23, 1975.

RAYMOND E. KARLINSKY, HOWARD JACOBSON, AND HORSEMEN'S BENEVOLENT AND PROTECTIVE ASSOCIATION, INC., ON BEHALF OF THEMSELVES AND ALL OTHERS ENGAGED IN THE BUSINESS OF OWNING, TRAINING AND RACING THOROUGHBRED HORSES IN THE UNITED STATES, WHO ARE SIMILARLY SITUATED, PLAINTIFFS-APPELLANTS,
v.
THE NEW YORK RACING ASSOCIATION, INC., JOCKEY CLUB, JOHN C. CLARK, JACK J. DREYFUS, JR., JOHN G. GALBREATH, FRANK M. BASIL, G. H. BOSTWICK, JOHN W. HANES, FRANCIS KERNAN, ROBERT J. KLEBERG, JR., JOHN A. MORRIS, PERRY R. PEASE, OGDEN PHIPPS, JOHN M. SCHIFF, ALFRED G. VANDERBILT, JOSEPH WALKER, JR., AND JOHN H. WHITNEY, DEFENDANTS-APPELLEES

Appeal from a judgment of the Hon. Whitman Knapp, United States District Judge for the Southern District of New York, dismissing plaintiffs' complaint, which asserted violations of the federal antitrust laws.

Lumbard, Hays and Mulligan, Circuit Judges.

Author: Mulligan

MULLIGAN, Circuit Judge:

This is an appeal from a judgment on September 16, 1974 in the United States District Court for the Southern District of New York dismissing the plaintiffs' amended complaint,*fn1 after Hon. Whitman Knapp had conducted a four-day non-jury trial in July 1974. He made tentative oral findings of fact and conclusions at the end of the trial but permitted the plaintiffs to submit any further papers which might persuade him that their cause had merits. None were forthcoming and the judgment appealed from was thereupon entered, incorporating the oral findings and conclusions but without further opinion, which makes it necessary briefly to outline the cause before us. Brevity is dictated by the frivolity of the litigation.

The action was commenced by the Horsemen's Benevolent and Protective Association (HBPA), a Rhode Island membership corporation, and two named plaintiffs (a third plaintiff, Harry Hatcher, was dismissed as a plaintiff on motion.) The original defendants were the New York Racing Association, Inc. (NYRA),*fn2 the Jockey Club, the Thoroughbred Owners and Breeders Association, Inc., Record Publishing Company, Inc. and some 21 individual defendants, who were the President and trustees of NYRA. Eight individual defendants died between the filing of the complaint and the time of this appeal. Both the Thoroughbred Owners and Breeders Association, Inc. and Record Publishing Company, Inc. were dismissed as defendants by order below on March 23, 1971.

The plaintiff horseowners and trainers in this case have merely established that they are not contented with the way the New York State Racing Commission has conducted the business of thoroughbred horse racing in New York. Pursuant to statute*fn3 that Commission has delegated the operation of three New York tracks (Aqueduct, Belmont Park and Saratoga) to NYRA. Plaintiffs would change the NYRA racing program, would allocate more stable space to plaintiffs' horses instead of to those owned by NYRA trustees and Jockey Club members, and would radically alter the Saratoga summer program. While their disaffection is obvious, the plaintiffs have totally failed to establish that the conduct of the defendants constitutes a violation of the Sherman Act.

As best we can tell, the plaintiffs' theory is that the defendants have combined or conspired to monopolize the thoroughbred racing business in the State of New York. However, the record fails to establish that the New York tracks constitute a relevant competitive market for Sherman Act purposes. See United States v. Grinnell Corp., 384 U.S. 563, 16 L. Ed. 2d 778, 86 S. Ct. 1698 (1966). The proof indicates, on the contrary, that the same horses which race in New York also compete in other eastern states, Florida, and even abroad, depending upon the season of the year and the amount of the purses. The fact is that New York has a decided public-welfare interest in the conduct of racing and pari-mutuel betting and that defendants operate pursuant to a state regulatory scheme.*fn4 There is no showing whatsoever that the plaintiffs have been excluded in any way from participation in the regulated business.*fn5 While the plaintiffs' statistics establish that a somewhat higher percentage of horses owned by defendants are allocated track stable facilities than those owned or trained by plaintiffs, there is no showing that plaintiffs' horses are of comparable quality or possess equivalent speed credentials, or that they were precluded from obtaining such horses, or that any horsemen (including plaintiffs) were ever denied a stall unfairly.*fn6 There is no showing at all of any discrimination, exclusion or any competitive injury or damage. In view of their failure to establish the existence of illegal monopoly power -- e.g., the power to fix prices or exclude competition as a basis for Section 2 Sherman Act liability -- and perhaps conscious of their inability to establish any discrimination or exclusion, appellants in a post-argument memorandum suggest that the burden of establishing lack of monopoly abuse rests on the defendants. There is, of course, no authority for this position absent initial proof of illegal monopoly. Here there is no proof even of concerted activity.

While plaintiffs also claim a Section 1 Sherman Act violation, there is no indication of any joint activity which could be classified as a restraint of trade (e.g., price fixing or refusals to deal) and no reliance on any particular case or line of cases which might be analogous to the practices claimed here to be violative of the Act.

We conclude that, absent any proof of any Sherman Act infraction, whatever dissatisfaction plaintiffs may have with the conduct of the horse racing business in New York should be directed to fora other than the federal court, whose judicial manpower has been exposed for more than five years in this case to a litany of unproven grievances masquerading as antitrust claims.

Judgment dismissing the complaint is affirmed.

Disposition

Affirmed


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