Fulton v. Hecht

• Decision Date: 28 September 1978
• Docket Number: No. 76-2391,76-2391
• Citation: 580 F.2d 1243
• Parties: 1978-2 Trade Cases 62,273 George J. FULTON, Plaintiff-Appellant, v. Isadore HECHT et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1243

580 F.2d 1243

1978-2 Trade Cases 62,273

George J. FULTON, Plaintiff-Appellant, v. Isadore HECHT et al., Defendants-Appellees.

No. 76-2391.

United States Court of Appeals Fifth Circuit.

Sept. 28, 1978.

Paul Siegel, Paul A. Louis, Miami, Fla., Jay M. Vogelson, Dallas, Tex., for plaintiff-appellant.

Herbert L. Nadeau, Daniel G. LaPorte, Miami, Fla., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before CLARK and GEE, Circuit Judges, and LYNNE, ^* District Judge.

GEE, Circuit Judge:

In 1972, West Flagler Kennel Club, a South Florida dog track owned and managed by the individual defendants, refused to renew a booking contract with George Fulton, a breeder and racer of greyhounds. Fulton brought this action, alleging, Inter alia, violation of federal antitrust laws and commission of a state law tort. The district court entered final judgment for defendants. Plaintiff appeals from the district court's disposition of all his claims with the exception of the dismissal of his breach of contract claim. We affirm.

BACKGROUND

George Fulton raises and races greyhounds. He maintains a breeding farm in Nueces County, Texas, and up until the events complained of in this lawsuit he had raced his dogs at four South Florida tracks for approximately fifteen years. Three of these tracks, West Flagler Kennel Club, Miami Beach Kennel Club, and Biscayne Kennel Club, are located in Dade County. The fourth, Hollywood Kennel Club, is in neighboring Broward County. The tracks are allocated racing dates by the Florida Board of Business Regulation. Each of the three Dade County tracks operates for approximately 109 days per year, and except for slight overlaps at the beginning and end of a racing season, no two of these tracks are in operation at the same time. The Broward County track is also open 109 days per year during which time one of the Dade County tracks is always in operation.

Contracts between dog owners and the tracks are made on a season-to-season basis. Under these contracts the owner of the track agrees to let the dog owner race at his track, and in return the dog owner promises to race a certain number of dogs at the track. The dog owner receives a share of the track's profits and competes with other dog owners for prize money awarded for dogs who win, place or show.

Following the 1972 summer season West Flagler Kennel Club (Flagler), owned and managed by defendants, refused to renew Fulton's contract for the upcoming fall season. Fulton alleged and presented evidence tending to show that this refusal stemmed from the fact that he had testified before the Board of Business Regulation at its hearing to determine the allocation of racing dates for 1973. Fulton testified in response to a subpoena, and the uncontroverted evidence established that the substance of his testimony was that the facilities at Flagler and Biscayne Kennel Club were comparable. After the hearing the Board awarded the 1973 summer racing dates to Biscayne Kennel Club. The summer dates are the most lucrative for the tracks, and Flagler had usually been awarded those dates.

According to plaintiff's evidence, Isadore Hecht, the managing partner of Flagler, was outraged by plaintiff's testimony and the loss of the summer racing dates. Several witnesses testified that Hecht refused to renew plaintiff's booking contract in retaliation. Witnesses for the defendants testified that Hecht's refusal was not so motivated. They testified that Fulton had always been a trouble-maker and that he had resisted certain innovations, such as marathon and hurdle races, which Flagler had sought to introduce into its racing program.

The four tracks own the only public kennels in the area, Florida Kennels, Inc., which provides facilities for dog owners who race at any of the four area tracks. If a dog owner races at all four tracks he may lease two kennels; a dog owner racing at one, two or three of the tracks may lease only one kennel. Until Flagler refused to renew his contract, plaintiff had been racing at all four tracks and had occupied two kennels. When he lost his contract at Flagler, he also lost his second kennel under the four-track/two-kennel rule.

Plaintiff's motley complaint asserted claims based on: (1) violation of section 2 of the Sherman Act, 15 U.S.C. § 2; (2) violation

of section 1 of the Sherman Act, 15 U.S.C. § 1; (3) violation of 42 U.S.C. § 1983; (4) violation of 42 U.S.C. § 1985; (5) tort; and (6) breach of contract. The district court dismissed all but the antitrust claims, granted a directed verdict for defendants on the section 2 Sherman Act claim, and entered final judgment on a jury verdict for defendants on the section 1 Sherman Act claim. Another panel of this court has already affirmed the district court's dismissal of the section 1983 claim. See Fulton v. Hecht, 545 F.2d 540 (5th Cir.), Cert. denied, 430 U.S. 984, 97 S.Ct. 1682, 52 L.Ed.2d 379 (1977). Except for the dismissal of the breach of contract claim, which plaintiff does not appeal, we now consider the remaining issues.

SECTION 2 CLAIM

Plaintiff makes two arguments in support of his contention that the district court improperly directed a verdict for defendants under section 2 of the Sherman Act, 15 U.S.C. § 2. Essential to both arguments is the assertion that Flagler had monopoly power in the relevant market. First, plaintiff argues that Flagler used its monopoly power to enhance or maintain its monopoly. Second, he argues that as a monopoly Flagler has a duty to deal fairly with dog owners who seek to compete at its track.

Turning first to the common element of both arguments, i. e., the existence of monopoly power in the relevant market, we pause merely to note the presence of some interesting questions which we need not decide. Both sides presented evidence on the definition of the relevant market. Plaintiff sought to introduce an expert's deposition on this issue, but the proffer was not accepted. The cynosure of the relevant market dispute was the Daytona Beach Kennel Club in Volusia County, some 200 miles from the four South Florida tracks. If the Daytona Beach track be not included, Flagler appears to control 25% Of the market, since it shares the South Florida dog track market with three other tracks which are, generally speaking, allocated an equal number of racing days per year. If the Daytona track is included, Flagler's market share would fall to a mere 20%. Plaintiff did race his dogs, at least occasionally, at the Daytona track.

Regardless of whether the Daytona Beach track is included, the defendant's market share is much lower than the percentages that courts have treated as indicative of monopoly power. See, e. g., United States v. Grinnell Corp., 384 U.S. 563, 571, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966) (87%); Cliff Food Stores, Inc. v. Kroger, Inc., 417 F.2d 203, 207 n.2 (5th Cir. 1969) (suggesting minimum of 50%); United States v. Aluminum Co. of America, 148 F.2d 416, 425 (2d Cir. 1945) (90%). Cf. United States v. United Shoe Machinery Corp., 110 F.Supp. 295, 343 & n.1 (D.Mass.1953), Aff'd, 347 U.S. 521, 74 S.Ct. 699, 98 L.Ed. 910 (1954) (market share not controlling).

But, the plaintiff argues, market share is not the determinative factor in assaying the existence of monopoly power. Monopoly power is "the power to control prices or exclude competition." United States v. E. I. Du Pont De Nemours & Co., 351 U.S. 377, 391, 76 S.Ct. 994, 1005, 100 L.Ed. 1264 (1956). Plaintiff argues that the sterile percentage of market approach should not be applied to the South Florida greyhound racing industry. Although each track may have only 25% Of the market, the fact that only one track is operating at any given time makes each track's power significantly greater than that of a firm whose sales represent 25% Of a normal market. According to plaintiff, the economics of this industry are such that a dog owner must be able to race year round in order to be competitive. Ignoring the Broward County track for the moment, plaintiff contends that each track has absolute monopoly power during the three months of the year when it is the only track in operation. Thus, each track can dictate the terms of booking contracts.

Plaintiff further argues that the tracks have increased their power by creating Florida Kennels. Through their agreement that a dog owner may lease two kennels only if he races at all four tracks, each Fortunately, we do not have to evaluate plaintiff's arguments for the existence of monopoly power. Assuming Arguendo that Flagler has a monopoly, plaintiff has failed to make out a section 2 violation because he did not present any evidence that Flagler used its power to enhance or maintain its position. See United States v. Grinnell Corp., 384 U.S. at 570-71, 86 S.Ct. 1698. The Supreme Court's holding in United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919), although tarnished in its application to resale price maintenance, See United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960), has yet to be overruled: "In the absence of any purpose to create or maintain a monopoly, the act does not restrict the long recognized right of a trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal . . . ." 250 U.S. at 307, 39 S.Ct. at 468. Cf. Lorain Journal Co. v. United States, 342 U.S. 143, 72 S.Ct. 181, 96 L.Ed. 162 (1951). Any monopoly power which the defendant has was thrust upon it by the Florida Board of Business Regulation. Even though the jury could have found that defendants' refusal to renew the contract was in retaliation for the plaintiff's testimony before the Board, such a finding would not support the monopolization claim. Plaintiff argues that Flagler sought to make an example of him so that other dog owners would not respond to...