Berman v. Narragansett Racing Association, No. 7245-7247.
| Court | United States Courts of Appeals. United States Court of Appeals (1st Circuit) |
| Writing for the Court | ALDRICH, , McENTEE and COFFIN, Circuit |
| Citation | 414 F.2d 311 |
| Parties | Frank E. BERMAN et al., Plaintiffs, Appellants, v. NARRAGANSETT RACING ASSOCIATION, Inc., Defendant, Appellee. Frank E. BERMAN et al., Plaintiffs, Appellants, v. BURRILLVILLE RACING ASSOCIATION, Inc., Defendant, Appellee. Frank E. BERMAN et al., Plaintiffs, Appellants, v. The NEW HAMPSHIRE JOCKEY CLUB, INC., Defendant, Appellee. |
| Docket Number | No. 7245-7247. |
| Decision Date | 31 July 1969 |
414 F.2d 311 (1969)
Frank E. BERMAN et al., Plaintiffs, Appellants,
v.
NARRAGANSETT RACING ASSOCIATION, Inc., Defendant, Appellee.
Frank E. BERMAN et al., Plaintiffs, Appellants,
v.
BURRILLVILLE RACING ASSOCIATION, Inc., Defendant, Appellee.
Frank E. BERMAN et al., Plaintiffs, Appellants,
v.
The NEW HAMPSHIRE JOCKEY CLUB, INC., Defendant, Appellee.
Nos. 7245-7247.
United States Court of Appeals First Circuit.
Heard March 5, 1969.
Decided July 31, 1969.
J. Fleet Cowden, Boston, Mass., with whom Frank E. Berman, Boston Mass., was on brief, for appellants.
Stephen F. Achille, Providence, R. I., on brief, for appellee Narragansett Racing Assn., Inc.
William A. Curran, Providence, R. I., with whom Jordan, Hanson & Curran, Providence, R. I., was on brief, for appellee Burrillville Racing Assn., Inc.
Kenneth F. Graf and Charles A. DeGrandpre, Manchester, N. H., with whom McLane, Carleton, Graf, Greene & Brown, Manchester, N. H., was on brief, for appellee New Hampshire Jockey Club, Inc.
Before ALDRICH, Chief Judge, McENTEE and COFFIN, Circuit Judges.
McENTEE, Circuit Judge.
These consolidated appeals are from dismissals of three class actions brought under Fed.R.Civ.P. 23 by plaintiffs as representatives of a class comprised of licensed owners of horses that have won purses at the defendants' race tracks.1 Two of the suits were commenced in the district court in Rhode Island and the third in the district of New Hampshire. In all three the gravamen of the complaint is that for over three decades the defendants had failed to pay to the plaintiff pursewinners certain monies alleged to be theirs under annual purse agreements, and that this fact had been fraudulently concealed from them by the defendants. Plaintiffs pray for an accounting, injunctive relief, and damages in the amount of several million dollars.2
In each case the defendant moved to dismiss the complaint on four grounds: (1) the court lacks jurisdiction because the matter in controversy is not in excess of $10,000 within the meaning of 28 U.S.C. § 1332(a) (1); (2) the complaint
No meaningful discussion of the issues can take place without a somewhat detailed recitation of how the race tracks operate under the "Pari-Mutuel Pool" system of wagering existent in both states. In Rhode Island the system is statutorily created and controlled by R.I.Gen.Laws 1956, §§ 41-1-1 to 41-4-13, as amended, and in New Hampshire by N.H.Rev.Stat.Ann. ch. 284:22. Under the system, patrons of the track who wish to bet on a particular race, purchase a ticket on a horse specifying whether the horse will win, run second (place) or third (show). The cash proceeds from the sale of the tickets, known as the "handle", are deposited in respective win, place or show pools. Before distribution to the winning bettors, however, the money in the pools is charged with a "commission" which is shared by the state and the track. This "commission" has two components: first, a certain percentage prescribed by statute is taken out; second, a certain amount known as the "breakage" is deducted. In Rhode Island, the statutory percentage is 16% of each dollar wagered, of which the state takes 8½% and the track keeps 7½%; in New Hampshire the percentage is 15%, of which the state and the track each take 7½%.
The "breakage" is computed as follows. After the statutory percentage is taken out, 84% or 85% of the pool (depending on the state) is left for distribution among the winning bettors. After the race the amount in each pool is divided by the number of winning tickets in the pool to determine the amount to be paid to each winning bettor. But under the statutes, after the winning tickets are divided into the pool according to class, payments per ticket are evened off to the next lowest dime. To use the Rhode Island district court's example, "a winning ticket that would have paid $4.43, had a precise division to the cent been carried out, actually pays $4.40 under the current statutorily authorized practice." Berman v. Narragansett Racing Ass'n, Inc., 293 F.Supp. 1258, 1260 (D.R.I.1968). The odd cents, known as the "breakage", are then divided equally between the state and track. This is no mean sum, being well over a hundred thousand dollars per year.4
By an annual purse agreement,5 each track promises to pay 44.7% of its annual share to the group of owners whose horses win purses. The tracks have never interpreted this to include the breakage. Plaintiffs claim that under the annual agreements they are entitled to receive 44.7% of the track's share of the breakage as well as 44.7% of the track's share of the money wagered.
Although we do not reach the merits of that question here, the nature of the alleged purse agreements in matters other than the inclusion of the breakage are of central importance to a determination of the jurisdictional question. Although the agreements were not reduced to
"the money must be paid (by virtue of the annual percentage agreement) — the payee, however, as long as he is one, or more, of the purse winners, is chosen without obligation of contract, rule, or regulation — purely upon the mere whim of the licensee." Berman v. New Hampshire Jockey Club, Inc., 292 F.Supp. 993, 996 (D.N.H.1968).
Turning to the question of jurisdiction, we note that any argument that plaintiffs may have made in the district courts that their claims individually exceed $10,000 has not been pressed on appeal. As stated in their briefs, they rely "solely upon aggregation on the jurisdictional issue." In order to succeed they must bring themselves within the latter half of the rule succinctly stated in Pinel v. Pinel, 240 U.S. 594, 596, 36 S.Ct. 416, 417, 60 L.Ed. 817 (1916):
"The settled rule is that when two or more plaintiffs having separate and distinct demands unite in a single suit, it is essential that the demand of each be of the requisite jurisdictional amount; but when several plaintiffs unite to enforce a single title or right in which they have a common and undivided interest, it is enough if their interests collectively equal the jurisdictional amount."9
In Snyder v. Harris, 394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969), the Court stated that the doctrine of aggregation is based upon its interpretation of the statutory phrase "matter in controversy." The New Hampshire district court found that since no single plaintiff has a contractual right to a portion of the withheld money, there was no definable amount or matter in controversy. But "in determining the matter in controversy, we may look to the object sought to be accomplished by the plaintiffs' complaint; the test for determining the amount in controversy is the pecuniary result to either party which the judgment would directly produce." Ronzio v. Denver & R. G.W.R. Co., 116 F.2d 604, 606 (10th Cir.1940). An examination of the pleadings leaves no doubt that the object of these suits is to determine whether, under the annual agreements, the provision that entitles the class of pursewinners to 44.7% of defendants' share of the money wagered also entitles them to a like share of the breakage. All other objects of the action depend upon plaintiffs' ability to establish this right. The pecuniary result that the judgment would directly produce would be the awarding of a fund of several million dollars to the class. We think it is the amount of
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