Hadges v. Yonkers Racing Corp.
| Decision Date | 02 March 1995 |
| Docket Number | D,No. 619,619 |
| Citation | 48 F.3d 1320 |
| Parties | George HADGES, Plaintiff-Appellant, William M. Kunstler, Appellant, v. YONKERS RACING CORP., Defendant-Appellee. ocket 94-7444. |
| Court | U.S. Court of Appeals — Second Circuit |
William M. Kunstler, New York City, for plaintiff-appellant and for himself, pro se.
Frederick J. Martin, White Plains, NY (Bleakley Platt & Schmidt, William P. Harrington, of counsel), for defendant-appellee.
Before: FEINBERG, KEARSE and ALTIMARI, Circuit Judges.
Plaintiff George Hadges appeals from three rulings of the United States District Court for the Southern District of New York, Gerard L. Goettel, J. The first ruling, filed in March 1994 and reported at 845 F.Supp. 1037 (S.D.N.Y.1994), denied relief to Hadges in his action brought under Fed.R.Civ.P. 60(b) (the Rule 60(b) action) to set aside the judgment of the court in an earlier case, Hadges v. Yonkers Raceway Corp., 733 F.Supp. 686 (S.D.N.Y.1990) (Hadges I ). In Hadges I, Judge Goettel had denied Hadges's application for a preliminary injunction and had granted defendant Yonkers Racing Corp. (YRC) summary judgment in Hadges's action against it. We affirmed that judgment in an opinion reported at 918 F.2d 1079 (2d Cir.1990), cert. denied, 499 U.S. 960, 111 S.Ct. 1583, 113 L.Ed.2d 648 (1991). The basis of the present Rule 60(b) action is that YRC had committed a fraud on the court in Hadges I.
In the second ruling on appeal, issued on April 14, 1994, Judge Goettel imposed Rule 11 sanctions on Hadges and his attorney, William M. Kunstler, for misleading the court in the course of the Rule 60(b) action. The judge fined Hadges and censured Kunstler. In the third ruling, two weeks later, the judge denied Hadges and Kunstler permission to reargue the sanctions issues. This appeal followed. For the reasons stated below, we affirm the denial of Rule 60(b) relief, but we reverse the sanction on Hadges and the censure of Kunstler.
This appeal concerns the most recent dispute arising out of the efforts of plaintiff-appellant Hadges to compel various racetracks and state agencies to permit him to pursue his career as a harness racehorse driver, trainer and owner. We set forth below the factual background; first, as it relates to denial of Rule 60(b) relief to plaintiff, and second, as it relates to the sanctions imposed upon plaintiff and his attorney.
Hadges was first licensed by the New York State Racing and Wagering Board (Racing Board) in 1972. His license was suspended and revoked in 1974 because he failed to disclose the full extent of his criminal arrest record in his initial license application. Hadges was relicensed in 1976.
In early 1989, the Racing Board again suspended Hadges's license for six months after determining that Hadges had illegally passed wagering information to a member of the betting public at Roosevelt Raceway in 1986. According to the Racing Board, as Hadges approached the starting gate, he trailed behind the other horses and shouted, "Get the '7'," to someone in the stands. The number seven horse did in fact win, and Hadges's horse, number two, drove erratically and interfered with the other horses.
In September 1989, although the Racing Board had reissued Hadges's license, YRC denied Hadges the right to work at its racetrack, Yonkers Raceway. In response, Hadges filed an action against YRC in the district court under 42 U.S.C. Sec. 1983, which resulted in the decision in Hadges I. Hadges alleged that YRC had violated his Fourteenth Amendment right to due process in banning him. In the course of the Hadges I litigation, YRC submitted an affidavit of its General Manager, Robert Galterio, who stated that the YRC ban did not prevent Hadges from pursuing his profession because he could still work at other regional tracks, including the Meadowlands in New Jersey.
In March 1990, the district court granted YRC's motion for summary judgment, finding that YRC's practices were not state action and thus could not give rise to liability under Sec. 1983. In two footnotes, the district court indicated its apparent understanding that Hadges was not barred from racing at other facilities but "that proof that other tracks in the state followed YRC's decision could establish state action." Hadges I, 733 F.Supp. at 691 nn. 9-10.
In 1992, Hadges commenced another suit against YRC, this time in New York state court. He alleged several causes of action including that all the harness tracks in New York State were engaged in a civil conspiracy and that the racetracks had blackballed him in violation of the Donnelly Act, New York's antitrust law, N.Y.Gen.Bus.Law Sec. 340 (McKinney). The state court ruled against Hadges on all of his claims. Hadges v. Yonkers Racing Corp., Westchester Co., Sup.Ct., Index No. 2407/92 (Dec. 4, 1992), aff'd, 206 A.D.2d 405, 616 N.Y.S.2d 189 (2d Dep't 1994) ().
In 1993, Hadges brought another Sec. 1983 action, this time against the Meadowlands Raceway, in federal district court in New Jersey. Hadges v. New Jersey Sports & Exposition Auth., 93 Civ. 673 (D.N.J.1993) (the Meadowlands suit). He alleged that in 1992 Meadowlands had improperly banned him from racing without a hearing. Because Meadowlands is run by a state agency, the New Jersey Sports & Exposition Authority (Sports Authority), there was no dispute as to whether the banning constituted state action. The parties settled that litigation.
In the course of that action, Meadowlands General Manager Bruce Garland submitted an affidavit stating that Meadowlands had banned Hadges based on the YRC ban. In particular, Garland said that Meadowlands had acted pursuant to a Sports Authority resolution adopted in 1992, which provided that Meadowlands would exclude those who had been "ruled off from ... [an]other racetrack." Thus, he stated, "the fact that plaintiff has been barred at Yonkers Raceway would operate as a basis for ... rejecting plaintiff's application for participation in [a] 1993 ... [m]eet at the Meadowlands, had such an application been properly filed."
After successfully settling the Meadowlands suit, and with the appeal from dismissal of the New York state court action pending, Hadges brought the instant Rule 60(b) action in the Southern District of New York. He sought to vacate the court's decision in Hadges I on the ground that YRC had perpetrated a fraud on the court in that action by submitting the Galterio affidavit stating that Hadges could continue to work at other tracks despite the YRC ban. Hadges did not inform the district court of the then-pending state court appeal. As noted above, the district court ruled against Hadges and granted YRC's motion for summary judgment. In response to a request by YRC the court also imposed sanctions under Fed.R.Civ.P. 11 on both Hadges and Kunstler.
In support of his claim for relief in the Rule 60(b) action, Hadges submitted a sworn statement that 1993 was his "fifth year ... out of work, with the boycott by Yonkers still in effect." In addition, he stated that "there was a secret agreement among all of the racetracks, that barring a licensee from one, will result in his being barred from all." Plaintiff's memorandum of law, signed by Kunstler, also asserted that Hadges "has not worked for more than four years." Hadges claimed that he had applied to race at other tracks in New York State, but that these tracks refused to act upon the applications, thereby barring him from racing. He also asserted that upon the advice of a former attorney, Joseph A. Faraldo, he had written to the general managers of these tracks to apply for driving privileges in mid-1990 but received no reply. Hadges presented the court with an affidavit of Faraldo stating that Faraldo had so advised Hadges.
In response, YRC produced documents revealing that Hadges had in fact raced at Monticello Raceway five times in 1991 and seven times in 1993. The most recent race took place less than one month before Hadges submitted his affidavit stating that he had been banned from racing by all tracks in New York State for more than four years. YRC also submitted letters of current and former Racing Secretaries from race tracks in Saratoga, Batavia Downs, Fairmount Park, Vernon Downs and Buffalo who asserted that Hadges had not applied (or they had no recollection of his having applied) for racing privileges at their respective tracks in the relevant time period.
In a memorandum of law and notice of motion to dismiss the Rule 60(b) action, YRC requested that the court impose sanctions on Hadges and, if warranted, on his counsel for this misrepresentation and for failing to disclose the state court action to the district court. This method of requesting Rule 11 sanctions was, as set forth below, contrary to the procedural requirements of Rule 11 that took effect on December 1, 1993, five days before Hadges filed his complaint in the Rule 60(b) action and 15 days before YRC requested sanctions.
After YRC requested sanctions, Hadges submitted an affidavit dated December 28, 1993, admitting that he had raced in Monticello in 1991 and 1993, but explaining that he considered the races insignificant because he had earned less than $100 in the two years combined. That affidavit also described a so-called "scratching incident" that Hadges claimed had taken place at Yonkers Raceway on October 31, 1989. He stated that although his state racing license had been restored in 1989, New York State Racing Board judges "scratched" him from that race, in which he was to have ridden the horse "Me Gotta Bret." After this scratching incident, YRC informed him of its independent ban. Hadges argued to the district court that this sequence of events supported his theory that YRC was acting as a state agent in banning him and thus could be held liable in...
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