Hadges v. Yonkers Racing Corp.

• Decision Date: 19 March 1990
• Docket Number: No. 89 Civ. 8055 (GLG).,89 Civ. 8055 (GLG).
• Citation: 733 F. Supp. 686
• Parties: George HADGES, Plaintiff, v. YONKERS RACING CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of New York

733 F. Supp. 686

George HADGES, Plaintiff, v. YONKERS RACING CORPORATION, Defendant.

No. 89 Civ. 8055 (GLG).

United States District Court, S.D. New York.

March 19, 1990.

Goodkind, Labaton & Rudoff, New York City (Mark S. Arisohn, of counsel), for plaintiff.

Bleakley Platt & Schmidt, White Plains, N.Y. (Frederick J. Martin and William P. Harrington, of counsel), for defendant.

OPINION

GOETTEL, District Judge:

George Hadges, a driver, trainer, and owner of standardbred horses,¹ has sued Yonkers Racing Corporation ("YRC"), the owner and operator of Yonkers Raceway ("Yonkers") in Yonkers, New York, under 42 U.S.C. § 1983 (1982) for alleged violations of his Fourteenth Amendment due process rights. Specifically, he contends that YRC's refusal to allow him to utilize his state-issued licenses at Yonkers without affording him sufficient procedural protections was a violation of his rights. Plaintiff now moves for a preliminary injunction and YRC cross-moves to dismiss or, in the alternative, for summary judgment.

I. FACTS

Plaintiff is licensed as a driver, trainer, and owner in numerous states, including Delaware, Florida, Maryland, New Jersey, Ohio, and Pennsylvania. His primary work, however, has been in New York, where he is also licensed. New York law, like that of most states, requires such licensing before one can work at any of the tracks in the state. N.Y.Comp.Codes R. & Regs. tit. 9, § 4101.24(b) (1985) (promulgated pursuant to N.Y. Rac. Pari-Mut. Wag. & Breed. Law § 309 (McKinney 1984 & Supp.1990)). Within New York, plaintiff has worked most of the state's harness tracks,² but has worked most frequently at Yonkers. He has worked at Yonkers in one capacity or another since 1972, with two significant interruptions.

First, plaintiff's New York license was suspended by the New York State Racing and Wagering Board ("NYSWRB")³ from 1974 to 1976 because of certain omissions on his initial application for a license. Specifically, he had neglected to report four criminal arrests on his application. Plaintiff could not compete at any of the harness tracks in New York during the period of suspension. More germane to the present action, however, is plaintiff's recent suspension by the NYSRWB. Plaintiff's license was suspended from January 5, 1989 to July 5, 1989 due to events occurring at Roosevelt Raceway on October 9, 1986. The NYSRWB determined that plaintiff had illegally signaled a patron of the racetrack to bet on a horse other than the one plaintiff was riding. Thereafter, the NYSRWB reinstated plaintiff's license effective July 5, 1989. Plaintiff's request for reinstatement of his privileges at Yonkers, however, was denied by YRC. Moreover, in the Fall of 1989 YRC further excluded plaintiff from even entering the grounds at Yonkers as a patron.⁴

YRC contends that it banned plaintiff pursuant to its common law rights, which the NYSRWB has expressly protected, to exclude anyone "without reason, provided such exclusion is not based upon race, creed, color or national origin." N.Y. Comp.Codes R. & Regs. tit. 9, § 4119.8 (1985). Notwithstanding the NYSRWB's ability to suspend or revoke licenses, YRC claims that as a private racetrack owner, it retains the ability to exclude participants and patrons. More specifically, YRC states that it banned plaintiff because of his past racing performances and his involvement in litigation over the ownership of horses. Galterio Aff. at 3. Additionally, YRC points out that plaintiff's record as a driver and trainer was marginal, at best, and that it is continually seeking to offer the highest quality competition to its patrons.⁵

In December 1989, not having been able to convince YRC to reinstate his privileges, plaintiff instituted this action and moved for a preliminary injunction.⁶ YRC, in turn, cross-moved to dismiss or, alternatively, for summary judgment. Since we find one issue to be dispositive of both motions, we will consider them simultaneously.

II. DISCUSSION

The standard for granting a motion for a preliminary injunction is well established. The plaintiff must show:

irreparable harm and either (1) probable success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the movant's favor.

Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200, 206-07 (2d Cir.1979). Thus, even if we assume irreparable harm and a balance of hardships in plaintiff's favor, plaintiff must at least show the existence of "sufficiently serious questions going to the merits." The standard governing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) is equally well settled. Such a motion can only be granted if "it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). However, rule 12(b) further states that if in resolving a motion under rule 12(b)(6) the court considers matters outside the pleading, the motion shall be treated as one for summary judgment. In this case, we have considered affidavits submitted by both parties and, therefore, treat YRC's motion as one for summary judgment under rule 56. Rule 56 states that summary judgment shall be granted if the moving party can "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). If the moving party satisfies this burden, the party opposing the motion "must set forth specific facts showing that there is a genuine need for trial," Fed.R.Civ.P. 56(e), and there must be more than merely "some metaphysical doubt as to these material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). While motions for a preliminary injunction and for summary judgment obviously rest on different grounds, it stands to reason that if we conclude that YRC's summary judgment motion can be granted because there are no genuine issues of material fact and it is entitled to judgment as a matter of law, a fortiori, there are no serious questions going to the merits and plaintiff's motion for a preliminary injunction must be denied.

Plaintiff has sued under 42 U.S.C. § 1983, which provides a remedy for deprivations of rights secured by the Constitution when such deprivation takes place "under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory...." 42 U.S.C. § 1983 (1982). Plaintiff claims that his Fourteenth Amendment right to freedom from deprivations of "life, liberty, or property, without due process of law" has been violated. Specifically, the Fourteenth Amendment is limited to deprivations caused by the "state" and without this so-called "state action," there is no Fourteenth Amendment violation. Since section 1983 was meant to provide a remedy for Constitutional violations, a finding of "state action" for Fourteenth Amendment purposes also satisfies the "under color of" requirement of section 1983. See Lugar v. Edmondson Oil Co., 457 U.S. 922, 934-35, 102 S.Ct. 2744, 2752, 73 L.Ed.2d 482 (1982).⁷ Therefore, for there to be a genuine issue of material fact and, in turn, a serious question going to the merits, we must conclude that YRC's actions can be considered state actions.

YRC moves for summary judgment claiming there is no issue of material fact on the question of state action. YRC argues that it is a private, closely held corporation operating for the profits of its shareholders. Moreover, it contends that since acquiring the track in 1970, the Rooney family, who are the corporation's shareholders, have invested $65,000,000.00 in the track. YRC also claims that while it is heavily regulated and operates the track pursuant to a license granted by the state, these factors do not transpose its private decisions into state action, especially since the NYSRWB has reserved YRC's common law right to exclude anyone from the track except if based on race, creed, color, or national origin. N.Y.Comp.Codes R. & Regs. tit. 9, § 4119.8 (1985); see Saumell v. New York Racing Ass'n, 58 N.Y.2d 231, 238, 460 N.Y.S.2d 763, 766-67, 447 N.E.2d 706, 708 (1983); Jacobson v. New York Racing Ass'n, 33 N.Y.2d 144, 149, 350 N.Y. S.2d 639, 642, 305 N.E.2d 765, 767-68 (1973). Finally, YRC offers an affidavit from the general manager at Yonkers stating that no state officials were involved in the decision to deny privileges to plaintiff.

Plaintiff counters these arguments by stating that racing at Yonkers is highly regulated by the state and that the state receives substantial revenues from the tracks. Moreover, plaintiff suggests that the state has afforded YRC a monopoly in the metropolitan New York City region, especially now that Roosevelt Raceway on Long Island has closed. Plaintiff contends that the other tracks in the state are not viable alternatives because of their location and their small purses and, therefore, that a denial of privileges at Yonkers is a de facto revocation of his license. With these arguments before us, we can now address this issue. We note that we are apparently the first federal court in this state to squarely address this truly vexatious question.⁸

The Supreme Court has announced two different tests for determining whether state action exists. Specifically, there must be a showing that:

"there is a sufficiently close nexus between the government and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the government itself," Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351, 95 S.Ct. 449, 453, 42 L.Ed.2d 477 (1974) (citing Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 176, 92 S.Ct. 1965, 1973, 32 L.Ed.2d 627 (1972)), or that even if the particular act is not directly attributable to the

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