Jessup v. American Kennel Club, Inc., 94 Civ. 5215(TPG).

• Decision Date: 20 August 1999
• Docket Number: No. 94 Civ. 5215(TPG).,94 Civ. 5215(TPG).
• Citation: 61 F.Supp.2d 5
• Court: U.S. District Court — Southern District of New York
• Parties: H. Price JESSUP, Linda Vaughn, Sally A. Kelly, Susan Owens, Annette Watkins and Nancy Hope Love, on their own behalf and as Representatives of a class, Plaintiffs, v. The AMERICAN KENNEL CLUB, INC., and Labrador Retriever Club, Inc., Defendants.

61 F.Supp.2d 5

H. Price JESSUP, Linda Vaughn, Sally A. Kelly, Susan Owens, Annette Watkins and Nancy Hope Love, on their own behalf and as Representatives of a class, Plaintiffs, v. The AMERICAN KENNEL CLUB, INC., and Labrador Retriever Club, Inc., Defendants.

No. 94 Civ. 5215(TPG).

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

August 20, 1999.

Steven D. Gladstone, Gladstone & Watkins, P.C., Mount Pocono, PA, for plaintiffs.

Dale C. Christensen, Jr., Seward & Kissel, New York City, for defendant The American Kennel Club, Inc.

Samuel J. Abate, McCarter & English LLP, New York City, Marshall Simonds, Goodwin, Procter & Hoar LLP, Boston, MA, for defendant Labrador Retriever Club, Inc.

OPINION

GRIESA, District Judge.

This is a class action antitrust suit for damages and injunctive relief. Plaintiffs, owners and breeders of purebred Labrador Retriever dogs ("Labs"), claim that rival breeders and sellers of Labs conspired to cause one defendant, the Labrador Retriever Club ("LRC"), to recommend, and the other defendant, the American Kennel Club ("AKC"), to adopt, a new rule concerning breed standards for AKC-registered, purebred Championship Stock Labrador Retrievers ("Champion Labs"). The new breed standard requires Labs to be of a certain height in order to compete in AKC dog shows for the title of Champion Lab. The attainment of that title increases the market value of a purebred Lab. Plaintiffs allege that the new rule operates to exclude from the market for Champion Labs a large number of the dogs that plaintiffs breed from English bloodlines, but includes in the market the narrower and taller Labs more recently developed in the United States that are bred and sold by plaintiffs' competitors.

Plaintiffs and defendants have filed cross-motions for summary judgment on claims 1-5 of the complaint alleging violations of the Sherman Act §§ 1 and 2, 15 U.S.C. §§ 1, 2. Claims 6 and 7 alleging state corporate law violations are not addressed by these motions.

Defendants' motion is granted and plaintiffs' cross-motion is denied. Claims 1-5 are dismissed. The court declines to retain jurisdiction over the state law claims (6 and 7). Accordingly, the entire action is dismissed without prejudice to plaintiffs to renew the state law claims in state court.

Facts

Plaintiff class representatives are six individual owners, breeders and sellers of purebred Labs. Defendant AKC is a not-for-profit corporation chartered by the New York Legislature for the protection and advancement of purebred dogs. Membership in the AKC consists of more than 500 dog clubs from across the country. The AKC's chartered purposes include advancement of the breeding, exhibition and maintenance of the purity of purebred dogs, as well as the adoption and enforcement of rules regulating and governing competitive dog shows. The bulk of the AKC's revenues are generated through registration fees and show entries at AKC dog shows and at performance events. The AKC does not compete or engage in the breeding, selling or showing of Labs.

The AKC currently registers 145 breeds of purebred dogs. The majority of these registered breeds each have parent clubs which assume primary responsibility for promoting and advancing each club's particular breed. The LRC is a not-for-profit corporation and the parent club for the Labrador Retriever breed. The LRC's membership consists of several hundred individual Lab enthusiasts from across the country. The LRC does not compete or engage in the breeding, selling or showing of Labs.

Pursuant to the AKC's constitution, each registered breed's parent club has the responsibility of defining the standard for its breed. The "standard" for a given breed of purebred dog, including that of the Labrador Retriever, refers to a detailed, written, descriptive account of the physical characteristics — for instance, size, shape and coat — as well as movement and temperament, that are considered definitive of that breed. The breed standards are then used by judges at AKC-registered dog shows to measure and compare the quality of dogs competing in the shows. A particular physical characteristic included in the breed standard may be stated in one of two ways. It may simply be expressed as a recommendation or preference which AKC judges can then use to compare the quality of dogs competing in a show; or it may be stated as mandatory such that a dog that does not exhibit that characteristic is disqualified from competition in the show.

The AKC's constitution provides that the amendment or revision of a breed standard by the parent club for that breed does not become effective until it is approved by the AKC's board of directors. The LRC's constitution provides that amendments to the Labrador Retriever breed standard must be approved by the members of the LRC, and that such amendments only become effective after their subsequent approval by the AKC board of directors.

In practice, the LRC's recommendation, and AKC's adoption, of an amendment to the Labrador Retriever breed standard pursuant to their respective charters follows a multi-staged process, as the facts in this case demonstrate. First, a revision committee within the LRC drafts the proposed amendment and then votes by a majority to present the amendment for a vote by the LRC membership at large. A majority vote by the members of the LRC in favor of the amendment then operates to recommend the change to the AKC board of directors which must also vote by majority to adopt the amendment before it becomes effective.

The issues in this case involve a 1994 amendment to the breed standard for Labrador Retrievers. The breed standard in effect prior to the 1994 amendment was approved by the AKC in 1957. The 1957 standard stated in pertinent part:

Height at Shoulders — Dogs — 22½ inches to 24½ inches; bitches — 21½ inches to 23½ inches.

As plaintiffs observe, the text of the 1957 height specification for the Labrador Retriever breed provided no express guidance as to whether it was intended merely as a recommendation or as a mandatory requirement for the breed. Plaintiffs contend that the shorter Labs from English bloodlines, bred and owned by plaintiffs, do not generally rise to the height described in the standard, whereas the taller American Labs do. The practical result of the 1957 standard was that, prior to the 1994 amendment, the height specification for Labs was not enforced as a strict requirement for purebred Labs to enter and compete in AKC-sponsored dog shows. Because height is only one of many attributes that are judged at the shows, dogs such as those belonging to plaintiffs, that fell below the height standard, were able to place and even win in dog show competitions based on superior quality in other facets of the breed standard.

Beginning in 1987, the AKC undertook a program with the help of the various breed parent clubs to conform all breed standards to a standardized format for order and content, using standardized terminology.

In August 1989 the LRC submitted to the AKC board of directors a proposed, revised Labrador Retriever breed standard that had been drafted and approved by the LRC Revision Committee and approved by the vote of 72% of the LRC membership that participated in the vote. The proposal incorporated various changes not challenged in the present case. It retained the same height specification from the breed standard that was passed in 1957, again with no express statement as to whether the specification was a recommendation or mandatory.

Following submission of the proposed revised standard to the AKC board, the AKC received a number of letters in opposition to the revisions. The AKC subsequently returned the proposed standard to the LRC in November 1989 for further consideration of the criticisms raised.

In January 1993 the AKC board of directors received a second proposed revised standard from the LRC which had been approved by 68% of the LRC members voting. The second proposed standard again retained the original height specification from the 1957 breed standard. However, the new proposal provided for the first time that compliance with the height specification was mandatory. Specifically, it provided that any deviation from the height specification would constitute a disqualifying fault, meaning that a judge in a dog show would disqualify a dog not conforming to the height specified in the standard. Again, the AKC received letters in opposition to the new breed standard. The submissions on the present motions do not expressly state that this opposition related to the mandatory height requirement, but the implication is that at least part of the opposition related to this subject. The LRC membership subsequently approved several amendments to the second proposed revised standard, providing with respect to the height requirement that: (1) the requirement would not apply to dogs less than 12 months old; and (2) dogs ½ inch outside the height standard would not be disqualified on the basis of height.

The amended second proposed revised standard was submitted to the AKC board of directors in November 1993. The AKC again received letters in opposition to the proposal — presumably objecting to the height requirement. The AKC then published the proposal in its own publication and solicited comment on the proposed standard.

On February 2, 1994, before the AKC voted on the proposed standard, the members of its board of directors received a letter from Richard Gross, prospective counsel for the dissenting members of the LRC and certain other Lab breeders and owners who opposed the proposed height requirement. The letter advised the board that these individuals were considering bringing a lawsuit alleging antitrust violations if the height requirement were adopted. The letter went on to itemize several ways in which the LRC had failed to comply with established procedures for adopting a new breed standard, and insisted that the proposal then...