Catrone v. Ogden Suffolk Downs, Inc.

• Citation: 683 F. Supp. 302
• Decision Date: 11 April 1988
• Docket Number: Civ. A. No. 86-1529-C.
• Parties: Patrick CATRONE, Plaintiff, v. OGDEN SUFFOLK DOWNS, INC., et. al., Defendants.
• Court: U.S. District Court — District of Massachusetts

683 F. Supp. 302

Patrick CATRONE, Plaintiff, v. OGDEN SUFFOLK DOWNS, INC., et. al., Defendants.

Civ. A. No. 86-1529-C.

United States District Court, D. Massachusetts.

April 5, 1988.

As Amended April 11, 1988.

COPYRIGHT MATERIAL OMITTED

David L. Kelston, Boston, Mass., for Patrick Catrone.

Michael J. Liston, Palmer & Dodge, Boston, Mass., and Jack Kaplan and Gloria M. Gonzalez, Carter, Ledyard & Milburn, New York City, for defendants Thoroughbred Racing Protective Bureau, Thoroughbred Racing Assn, Wickman, Berube and Graf.

Alan R. Hoffman, Lynch, Brewer, Hoffman & Sands, Boston, Mass., for defendants Ogden Suffolk Downs and O'Malley.

Anne Hoffman, Lynch, Brewer, Hoffman & Sands, Boston, Mass., for defendant New Suffolk Downs Corp.

MEMORANDUM

CAFFREY, Senior District Judge.

The plaintiff brought this suit alleging violation of the Sherman Act, 15 U.S.C. § 1, denial of his constitutional rights in violation of 42 U.S.C. § 1983, interference with business relationships, and defamation. The action is now before the court on defendants' motion for judgment on the pleadings, and defendants' motion for summary judgment.

I. Background

The plaintiff, Patrick Catrone, is a race horse trainer who has raced horses in Massachusetts, New York, New Hampshire, Rhode Island, Delaware, Florida, and Maryland. In 1971, the plaintiff was suspected of running ringers at several racetracks.¹ These incidents were investigated by the defendant Paul Berube in his capacity as field investigator for the defendant Thoroughbred Racing Protective Bureau (TRPB). The TRPB is a corporation formed by the Thoroughbred Racing Association (TRA) to provide informational and investigative services to members of the TRA. Consequently, the plaintiff was indicted in federal court for violation of 18 U.S.C. § 2314.² The plaintiff was acquitted of this charge. Despite his acquittal, the defendant Ogden Suffolk Downs, owners and operators of Suffolk Downs race track, refused Catrone permission to race there. Catrone then sued Ogden Suffolk Downs ("Ogden") to force them to accept his entries. The federal district court issued an injunction prohibiting Ogden from refusing to allow Catrone to race at the track.³ See Catrone v. Massachusetts State Racing Commission, 404 F.Supp. 765 (D.Mass. 1975). As a result of the court order, Catrone was allowed to race at Suffolk Downs in 1975 and 1976.

The TRPB, however, continued to investigate Catrone in connection with the running of ringers, and allegedly revealed their suspicions to numerous members of the racing community. In 1976, the plaintiff was denied a trainer's license by New Hampshire as a result of the TRPB's allegations and of evidence presented by defendant Graf, who was at that time also president of New Hampshire's only flat track. This denial, in turn, led the Massachusetts Racing Commission (MRC) to deny Catrone a trainer's license for 1977.⁴ New Hampshire, and consequently Massachusetts, continued to deny Catrone a license until 1980, when New Hampshire ceased issuing licenses due to the destruction of the state's sole track.

In 1981, Catrone applied for, and received a license from the MRC. After the plaintiff raced twice at Suffolk Downs in 1981, O'Malley informed him that he would again be excluded from Suffolk Downs. This exclusion was premised on the same information that had led to Catrone's exclusion, that is, the allegations by Berube, Wickman, Graf, and the TRPB of running ringers. In 1982, the plaintiff was again licensed by the MRC, but excluded by Ogden. Catrone thereupon appealed this exclusion to the MRC.⁵ The MRC upheld Ogden's decision, and the MRC's ruling was affirmed by the Massachusetts Appeals Court. See Catrone v. State Racing Commission, 17 Mass.App.Ct. 484, 459 N.E.2d 474 (1984). In 1986, the New Suffolk Downs Corporation took over Suffolk Downs. O'Malley, however, continued to serve under the new owner as general manager. The new owners continued to exclude Catrone from the track on the same grounds as had Ogden.

Finally, the plaintiff claims that the allegations leading to his exclusion have been widely disseminated to other TRA-affiliated tracks by Berube, Graf, and the TRPB. As a result, the defendant has been denied the right to enter a number of these tracks. The plaintiff claims these facts show that Berube, Grap, and the TRPB have a "continuing vendetta" against the plaintiff.

II. Discussion

A. Defendant's Motion for Judgment on the Pleadings

The defendants Ogden Suffolk Downs, New Suffolk Down, and O'Malley move for judgment on the pleadings on counts one and two of the amended complaint for failure to state a claim upon which relief can be granted.⁶ In count one, the plaintiff alleges an "unreasonable restraint of trade through a concerted refusal to deal," in violation of section one of the Sherman Act, 15 U.S.C. § 1. In count two, the plaintiff alleges that the defendants have failed to deal reasonably with him, thus unreasonably restraining trade in violation of § 1 of the Sherman Act. The defendant first contends that the plaintiff has failed to allege with sufficient specificity the existence of a conspiracy. In analysing these issues for the purposes of a motion for judgment on the pleadings, I accept as true all factual allegations of the plaintiff, and I draw all reasonable inferences in favor of the plaintiff. Society Hill Civic Ass'n v. Harris, 632 F.2d 1045, 1058 (3d Cir.1980). In order to succeed on their motion for judgment on the pleadings, the defendants must clearly demonstrate that their alleged actions do not, as a matter of law, violate the Sherman Act. General Cinema Corp. v. Buena Vista Distribution Co. Inc., 681 F.2d 594, 597 (9th Cir.1982).

Section one of the Sherman Act renders illegal every contract, combination, or conspiracy that restrains trade. 15 U.SC. § 1. In this case, the allegedly unlawful combination is a concerted refusal by the defendants to deal with the plaintiff. A refusal by one party to deal with another does not violate section one, however, unless the party refusing to deal is doing so in combination with at least one other party. United States v. Colgate & Co., 250 U.S. 300, 307, 39 S.Ct. 465, 468, 63 L.Ed. 992 (1919); Ford Motor Co. v. Webster's Auto Sales, Inc., 361 F.2d 874, 878 (1st Cir.1966). In proving the existence of a conspiracy or combination, the plaintiff need not prove that there was a formal agreement. Rather, a conspiracy is established "where the circumstances are such as to warrant a jury in finding that the conspirators had a unity of purpose or a common design and understanding or a meeting of minds in an unlawful arrangement ..." American Tobacco Co. v. United States, 328 U.S. 781, 810, 66 S.Ct. 1125, 1139, 90 L.Ed. 1575 (1946). Thus, the essential combination or conspiracy may be found in a course of dealing or other circumstances as well as in a formal exchange of words. Id. at 809-10, 66 S.Ct. at 1138-39. See also Computer Identics Corp. v. Southern Pacific Co., 756 F.2d 200, 203 (1st Cir.1985) (to prove a conspiracy under section one, a plaintiff must present direct or circumstantial evidence that the defendants had a conscious commitment to a common scheme).

In this case, the plaintiff has sufficiently alleged the existence of a conspiracy. The plaintiff alleges that the defendants Wickman, Berube, and Graf, as officers and employees of the TRA and TRPB, disseminated allegations that the plaintiff had run ringers, despite the fact that the plaintiff had been found not guilty of these charges. They then presented the owners of Suffolk Downs with these allegations. Based on this information, Suffolk Down refused the plaintiff permission to race even though he was licensed by the MRC. Based on these facts, a jury could reasonably infer that the defendants were acting in concert to prevent the plaintiff from racing in Massachusetts. The plaintiff's complaint, therefore, adequately alleges a conspiracy. Compare Larry R. George Sales Co. v. Cool Attic Corp., 587 F.2d 266 (5th Cir.1979) (plaintiff's complaint fails to properly allege a conspiracy where the complaint sets forth no facts which tend to support his conclusory allegation).

While the plaintiff's complaint properly alleges the first essential element of a § 1 violation, the complaint must also set forth facts supporting the conclusion that the combination or conspiracy was an unreasonable restraint of trade. See Standard Oil Co. v. United States, 221 U.S. 1, 50-55, 31 S.Ct. 502, 511-14, 35 L.Ed. 619 (1911) (§ 1 proscribes only unreasonable restraints); Cha-Car Inc. v. Calder Race Course, Inc., 752 F.2d 609, 612 (11th Cir.), reh'g denied, 762 F.2d 1023 (1985). Based on long experience, some activities have been shown to be unreasonable in all contexts. These activities are deemed to be "illegal per se." M & H Tire Co. v. Hoosier Racing Tire Corp., 733 F.2d 973, 977 (1st Cir.1984). If the alleged activity does not fall within this category of per se illegality, the activity will be deemed unlawful only if it is deemed unreasonable in the particular context of the case. This latter test is known as the rule of reason analysis. United States v. Topco Associates, 405 U.S. 596, 606-7, 92 S.Ct. 1126, 1133, 31 L.Ed.2d 515 (1971). If the rule of reason analysis applies, the plaintiff must show that the anticompetitive consequences of a particular action outweigh the legitimate business purpose of the action. Interface Group, Inc. v. Mass. Port Authority, 816 F.2d 9, 10 (1st Cir.1987). This balancing test involves consideration of the facts peculiar to the business, the nature of the restraint and the reasons for its adoption. United States v. Topco Associates, 405 U.S. at 607, 92 S.Ct. at 1133. In this case, the defendants argue that the rule of reason analysis applies. The defendants further contend that the complaint fails to allege facts supporting the conclusion that the exclusion of Catrone from Massachusetts racing was...