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MURPHY v. NEW YORK RACING ASS'N

December 6, 1999

KAREN A. MURPHY, ESQ., PLAINTIFF,
v.
THE NEW YORK RACING ASSOCIATION, INC. ("NYRA"); KENNETH NOE, JR., AS CHAIRMAN OF THE BOARD OF TRUSTEES AND CHIEF EXECUTIVE OFFICER OF NYRA AND INDIVIDUALLY; TERENCE MEYOCKS, AS PRESIDENT AND CHIEF OPERATING OFFICER OF NYRA AND INDIVIDUALLY; TIMOTHY M. MCGINN, AS VICE CHAIRMAN OF THE BOARD OF TRUSTEES AN INDIVIDUALLY; JOSEPH V. SHIELDS, JR., AS VICE CHAIRMAN OF THE BOARD OF TRUSTEES AND INDIVIDUALLY; H. DOUGLAS BARCLAY, AS TRUSTEE OF THE BOARD ("TRUSTEE") AND INDIVIDUALLY; CHESTER BROMAN, SR., AS TRUSTEE AND INDIVIDUALLY; JOSEPH M. CORNACCHIA, AS TRUSTEE AND INDIVIDUALLY; ALLAN R. DRAGONE, AS TRUSTEE AND INDIVIDUALLY; ROBERT S. EVANS, AS TRUSTEE AND INDIVIDUALLY; ALBERT FRIED, JR., AS TRUSTEE AND INDIVIDUALLY; RICHARD L. GELB, AS TRUSTEE AND INDIVIDUALLY; CHARLES E. HAYWARD, AS TRUSTEE AND INDIVIDUALLY; JAMES P. HEFFERNAN, AS TRUSTEE AND INDIVIDUALLY; JOHN A. HETTINGER, AS TRUSTEE AND INDIVIDUALLY; PETER F. KARCHES, AS TRUSTEE AND INDIVIDUALLY; J BRUCE LLEWELLYN, AS TRUSTEE AND INDIVIDUALLY; EARLE I. MACK, AS TRUSTEE AND INDIVIDUALLY; JOHN W. MERIWETHER, AS TRUSTEE AND INDIVIDUALLY; PAUL F. OREFFICE, AS TRUSTEE AND INDIVIDUALLY; OGDEN MILLS PHIPPS, AS TRUSTEE AND INDIVIDUALLY; DOLPH ROTFELD, AS TRUSTEE AND INDIVIDUALLY; LEWIS RUDIN, AS TRUSTEE AND INDIVIDUALLY; PETER G. SCHIFF, AS TRUSTEE AND INDIVIDUALLY; BARRY K. SCHWARTZ, AS TRUSTEE AND INDIVIDUALLY; DELBERT STALEY, AS TRUSTEE AND INDIVIDUALLY; DANIEL P. TULLY, AS TRUSTEE AND INDIVIDUALLY; PEGGY VANDERVOORT, AS TRUSTEE AND INDIVIDUALLY; CHARLES V. WAIT, AS TRUSTEE AND INDIVIDUALLY, DEFENDANTS.



The opinion of the court was delivered by: Sand, District Judge.

  OPINION

Plaintiff Karen A. Murphy ("Plaintiff") brings this action against The New York Racing Association ("NYRA"), two of NYRA's executive officers (Kenneth Noe, Jr. and Terence Meyocks), and NYRA's Board of Trustees, asserting numerous causes of action under the Civil Rights Act, 42 U.S.C. § 1983, and tortious interference with prospective economic advantage under New York State law. Presently before the Court is the Joint Motion to Dismiss Plaintiff's First Amended Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6), brought by the named NYRA Board of Trustees members, excepting Mr. Noe (collectively, "the Board Members" or "the Board Defendants").

Background

The following facts are drawn from Plaintiff's First Amended Complaint, documents explicitly referenced therein, the parties' submissions pursuant to this Motion, and the transcripts of the oral arguments on this Motion, see Koppel v. 4987 Corp., 167 F.3d 125, 128 (2d Cir. 1999); Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47-48 (2d Cir. 1991), and are assumed to be true for purposes of considering the Board Defendants' Motion.

Plaintiff is an attorney licensed to practice law in the State of New York, and the holder of a separate license issued by the New York State Racing and Wagering Board ("NYSRWB"). (See 1st Am.Comp. ¶¶ 2, 98.) Since approximately 1993, Plaintiff has represented individuals employed, engaged, or otherwise associated with thoroughbred horse racing in the State of New York. (See id. ¶ 39.) In January 1997, Plaintiff was appointed General Counsel for the New York Thoroughbred Horsemen's Association, Inc. ("NYTHA"), whose mission is the provision of benevolent assistance to individuals who work in the stable area of NYRA's race tracks. (See id. ¶ 40.)

In the fall of 1997, Board Defendant Schwartz allegedly permitted Defendants Noe and Meyocks (N.Y.RA's executive officers) to falsely register the ownership of two of his horses in the name of their undercover investigator — pursuant to an investigation of Dr. Michael J. Galvin, a State-licensed equine veterinarian. On the basis of this investigation, Defendants NYRA, Noe, and Meyocks commenced an allegedly rigged disciplinary proceeding against Dr. Galvin. (See id. ¶¶ 126-28.)

On or about March 27, 1998, Dr. Galvin retained Plaintiff to represent him in connection with proceedings, brought by NYSRWB and NYRA, arising out of an incident that occurred on that date involving alleged "race-day treatment" of a filly named "HIP WOLF." (See id. ¶ 41.) In May 1998, Plaintiff again represented Dr. Galvin in an administrative hearing before a panel of NYRA officers, including Defendant Meyocks. Following four days of proceedings, the Panel voted to terminate Dr. Galvin's NYRA credentials. (See id. at ¶ 43.)

On the date the termination of Dr. Galvin's NYRA credentials was to take effect (June 8, 1998), Plaintiff, on behalf of Dr. Galvin, commenced a civil rights action in Federal District Court against Defendants NYRA, Noe, and Meyocks, and sought a temporary restraining order and preliminary injunction to prevent NYRA from terminating Dr. Galvin's credentials. The District Court denied the application for a temporary restraining order and referred the matter to a Magistrate Judge for a hearing on the preliminary injunction, which hearing commenced on June 18, 1998. (See id. ¶¶ 44-46.) On that same day, the NYTHA Board voted summarily to terminate Plaintiff as NYTHA General Counsel. Plaintiff alleges that immediately after this vote was taken, she was informed that she had been terminated because of her representation of Dr. Galvin. (See id. at ¶ 47.)

On June 20, 1998, Defendants Noe and Meyocks allegedly informed NYTHA's President that NYRA would not proceed with a planned NYTHA-sponsored day care center for stable employees so long as Plaintiff was involved with that project, and that, because of her representation of Dr. Galvin, NYRA would not have any further dealings with Plaintiff. On June 22, 1998, during the hearing on Dr. Galvin's preliminary injunction motion, Defendant Meyocks repeated these two claims and added that they were based on his belief (shared by Defendant Noe) that Plaintiff's representation of Dr. Galvin was not in the best interests of horse racing. (See id. ¶¶ 48, 49.)

Shortly after Dr. Galvin's administrative hearing in May 1998, Plaintiff was interviewed by Chester Broman, a member of the Board of Directors of the New York Thoroughbred Breeders, Inc. ("NYTB") regarding a vacancy on the NYTB Board. NYTB is a private association made up of breeders of thoroughbred race horses in New York. Mr. Broman allegedly informed Plaintiff of the Board's intention to offer the recently-vacated position on the Board to Plaintiff. (See id. ¶ 50.)

On June 20, 1998, however, Defendant Noe allegedly informed Mr. Broman that Plaintiff, because of her representation of Dr. Galvin, "was not to be appointed to the [NYTB] Board," and was "anti-NYRA." At the June 23, 1998 Board meeting, Broman allegedly conveyed to the Board Defendant Noe's negative remarks about Plaintiff. Plaintiff's proposed appointment to the NYTB Board was thereafter withdrawn. (See id. ¶¶ 52, 54, 55.)

On September 28, 1998, the District Court granted Dr. Galvin's motion for a preliminary injunction ordering NYRA to reinstate Dr. Galvin's credentials. On December 23, 1998, the Second Circuit affirmed. (See id. ¶¶ 58, 59.)

On December 4, 1998, while at NYRA's Belmont Park Racetrack to meet with Dr. Galvin on his case, as well as to transact business with other clients, Plaintiff was arrested and forcibly ejected from the Racetrack, despite allegedly being in possession of (i) a NYSRWB-issued license, (ii) NYRA credentials, and (iii) a NYRA-issued one-day visitor's pass. Plaintiff was allegedly later informed by NYRA's Director of Security that the arrest had been ordered by "legal or above"; i.e., either NYRA's General Counsel or even more senior executive officers. (See id. ¶¶ 60-63.)

Plaintiff commenced this action on April 8, 1999. On June 2, 1999, the Board Defendants moved to dismiss, and, on June 24, 1999, an oral hearing was held on that motion. On July 1, 1999, the Court granted Plaintiff leave to file an amended complaint, and Plaintiff filed her First Amended Complaint on July 23, 1999. The Board Defendants moved to dismiss the First Amended Complaint on August 11, 1999, and oral argument on the motion was heard on September 9, 1999.

Plaintiff's First Amended Complaint asserts that the Court has subject matter jurisdiction pursuant to 42 U.S.C. § 1983 and 28 U.S.C. § 1331, 1343(3) and 1334(4), in that Plaintiff seeks redress for the violation of her constitutional and civil rights. Plaintiff asserts the following seven causes of action: (1) First Amendment retaliation; (2) violation of Fourteenth Amendment Due Process rights; (3) violation of Fourteenth Amendment liberty interest; (4) violation of Fourteenth Amendment property interest; (5) Fourteenth Amendment violation; (6) supervisory liability; and (7) tortious interference with prospective business advantage under New York State law.

Legal Standard

On a motion to dismiss for failure to state a claim upon which relief may be granted, see FRCP 12(b)(6), we must "construe in plaintiff['s] favor factual allegations in the complaint. . . . Dismissal of the complaint is proper only where `it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Automated Salvage Transp., Inc. v. Wheelabrator Envtl. Sys., Inc., 155 F.3d 59, 67 (2d Cir. 1998) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)) (footnote omitted) (citation omitted).

Discussion

To state a valid claim under Section 1983, Plaintiff must allege, first, that she was deprived of "rights, privileges, or immunities secured by the Constitution and laws," and, second, that this deprivation was perpetrated by a person acting "under color of [a state] statute, ordinance, regulation, custom or usage." 42 U.S.C. § 1983. Plaintiff advances two different Section 1983 claims involving the Board Defendants. First, she alleges that two of the Board Defendants, viz., Broman and Schwartz, directly violated her rights by "active[ly] participa[ting] in Defendants NYRA's, Noe's and Meyocks' unlawful and unconstitutional acts." (1st Am.Comp. ¶ 124.) Second, she alleges that all of the Board Defendants (including Broman and Schwartz) indirectly violated her rights by being "deliberately indifferent to their statutory and corporate duties to halt Defendants Noe's and Meyocks' unlawful, tortious and unconstitutional acts." (Id. at 41, 78 S.Ct. 99.) Hence, to satisfy the first Section 1983 requirement as regards the first of these claims, Plaintiff must sufficiently allege that Broman and Schwartz themselves violated her rights; whereas, to satisfy this requirement as regards the second, indirect claim, she must sufficiently allege both that the Board Defendants' supervisees, viz., Noe and Meyocks, directly violated her rights, and that the Board Defendants themselves indirectly violated her rights by failing to prevent Noe's and Meyocks' direct violations. See Blyden v. Mancusi, 186 F.3d 252, 265 (2d Cir. 1999) ("Of course, for a supervisor to be liable under Section 1983, there must have been an underlying constitutional deprivation.").

Turning to the second Section 1983 element, viz., state action, since a determination of state action is focused on a defendant's conduct rather than his status, see Polk County v. Dodson, 454 U.S. 312, 319-20, 102 S.Ct. 445, 70 L.Ed.2d 509 (1981), the allegation of state action in Plaintiff's direct violation claim could have been somewhat different than the allegation of state action in her indirect violation claim. In fact, however, both of Plaintiff's two state action arguments are presented in support of both claims.

We begin, in Section I, with a consideration of these two state action arguments — concluding that neither is successful. In Section II, we conclude that, even assuming Plaintiff had sufficiently alleged state action, both of her claims (i.e., the direct violation claim and the indirect violation claim) would fail in any event because neither sufficiently alleges a deprivation of constitutional rights. Finally, in Section III, we take up the Board Defendants' assertion of qualified immunity — concluding that, even assuming that Plaintiff's indirect violation claim had satisfied both of the Section 1983 requirements, it would have to be dismissed nonetheless because the Board Defendants are entitled to assert qualified immunity in defense to it.*fn1

I. State Action

As noted, Plaintiff advances two arguments in support of her claims that the Board Defendants' conduct constituted state action. The first of these relies on one of the four tests developed by the Supreme Court for determining whether the conduct of an ostensibly private party qualifies as state action for the purposes of Section 1983, viz., the "symbiotic relationship" test. (See 1st Am.Comp. ¶ 5.) Second, she argues that the Board Defendants' conduct constituted state action because it involved a breach of duties imposed on them by state statute. (See id. ¶ 121.) We consider each of these arguments in turn.

A. The Symbiotic Relationship Argument

Plaintiff alleges that the Board Defendants' conduct qualifies as state action because there exists a "symbiotic relationship" between NYRA and the State. This "symbiotic relationship test" for establishing state action was fashioned by the Supreme Court in Burton v. Wilmington Parking Authority, 365 U.S. 715, 725, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961). In attempting to satisfy the state action requirement under this rubric, Plaintiff has set herself a difficult task indeed — for two reasons. First, it is highly questionable whether this test remains viable. Second, even assuming that it is viable, because it was developed in a case in which the Section 1983 defendant was a private firm — as opposed to a private individual — it is unclear how the allegation of a symbiotic relationship between NYRA and New York State satisfies Plaintiff's burden of alleging that each of the Board Defendants as individuals engaged in state action. We consider each of these difficulties in turn.

1. The Symbiotic Relationship Test

A leading commentator has observed that "[a]lthough Burton has never been overruled, it has been narrowed to the point of being virtually unworkable as a state action doctrine." 1A Martin A. Schwartz, Section 1983 Litigation § 5.11, at 529 (3d ed. 1997). This narrowing began in Burton itself, where the Court stressed that its holding was limited to cases in which "a state leases public property [to a private firm] in the manner and for the purpose shown to have been the case" there. Burton, 365 U.S. at 726, 81 S.Ct. 856. This holding was narrowed still further in Rendell-Baker v. Kohn, 457 U.S. 830, 843, 102 S.Ct. 2764, 73 L.Ed.2d 418 (1982), where the Court stated that a vital element of Burton's holding was the conclusion that "the State profited from the [private actor's] discriminatory conduct." See Burton, 365 U.S. at 724, 81 S.Ct. 856 ("Neither can it be ignored . . . that profits earned by discrimination not only contribute to, but also are indispensable elements in, the financial success of a governmental agency.").

As a result of this narrowing process, the Court — with one possible exception — "has rejected every attempt to establish state action on the basis of Burton." Schwartz, Section 1983 Litigation § 512, at 526. Accordingly, the lower federal courts "usually reject state action claims based on the Burton symbiotic relationship doctrine. . . . generally follow[ing] the present Supreme Court's reading of Burton that the most significant fact that led to the finding of state action was the public authority's profiting from the [private actor's] discrimination." Id. at 528. For example, in Morse v. North Coast Opportunities, Inc., 118 F.3d 1338, 1342 (9th Cir. 1997), the Ninth Circuit held that a private, non-profit community action agency was not a state actor on the ground that "there is no evidence here that the federal government profited from any alleged constitutional violation in the [agency's] decision to approve [plaintiff's] termination [from employment]." See also Barrios-Velazquez v. Asociacion De Empleados Del Estado Libre Asociado De Puerto Rico, 84 F.3d 487, 495 (1st Cir. 1996); Gallagher v. "Neil Young Freedom Concert", 49 F.3d 1442, 1453 (10th Cir. 1995); Albright v. Longview Police Dept., 884 F.2d 835, 841 (5th Cir. 1989); Adams v. Vandemark, 855 F.2d 312, 315 (6th Cir. 1988).

The handful of lower federal court cases that have found state action based on the symbiotic relationship doctrine fall into two categories. First, a few cases explicitly acknowledge the requirement that the governmental entity profit from the state actor's alleged constitutional violation, and then go on to find that this requirement has indeed been met. See Heinrich v. Sweet, 62 F. Supp.2d 282, 310 (D.Mass. 1999); Citizens to End Animal Suffering and Exploitation, Inc., v. Faneuil Hall Marketplace, Inc., 745 F. Supp. 65, 74 (D.Mass. 1990). Second, the remainder of the cases fail to acknowledge this requirement, basing their respective findings of state action, instead, on findings of a high degree of general interdependence between the private actor and the government. See Jatoi v. Hurst-Euless-Bedford Hosp. Authority, 807 F.2d 1214 (5th Cir. 1987) (hospital board of trustees' alleged constitutional violation constitutes state action where state benefitted financially from operation of hospital and "retained the ability to prevent or control racial discrimination by [the board of trustees]"); Krynicky v. University of Pittsburgh, 742 F.2d 94 (3d Cir. 1984) (finding state-supported and supervised private university to be state actor); Stevens v. New York Racing Association, Inc., 665 F. Supp. 164 (E.D.N.Y. 1987).


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