Kulick v. Pocono Downs Racing Ass'n, Inc.

• Decision Date: 23 April 1987
• Docket Number: No. 86-5294,86-5294
• Citation: 816 F.2d 895
• Parties: 22 Fed. R. Evid. Serv. 1574 KULICK, Robert J., Appellant, v. POCONO DOWNS RACING ASS'N, INC. Banks, Joseph, in his capacity as President of Pocono Downs Racing Ass'n, Inc., Appellees.
• Court: U.S. Court of Appeals — Third Circuit

Page 895

816 F.2d 895

22 Fed. R. Evid. Serv. 1574

KULICK, Robert J., Appellant, v. POCONO DOWNS RACING ASS'N, INC. Banks, Joseph, in his capacity as President of Pocono Downs Racing Ass'n, Inc., Appellees.

No. 86-5294.

United States Court of Appeals Third Circuit.

Argued Dec. 19, 1986.

Decided April 23, 1987.

Richard G. Phillips (argued), Richard G. Phillips Associates, Philadelphia, Pa., for appellant.

Jerry B. Chariton (argued), Steven M. Greenwald, Wilkes-Barre, Pa., for appellees.

Before HIGGINBOTHAM and BECKER, Circuit Judges and DUMBAULD, District Judge. ^*

OPINION OF THE COURT

BECKER, Circuit Judge.

This appeal in a civil rights case concerns the authority of a district court to use its factual findings about the existence of state action made during a preliminary injunction proceeding as a basis for determining its own jurisdiction. The plaintiff, Robert J. Kulick, owns horses which he races at Pocono Downs, a harness track in Wilkes-Barre, Pennsylvania. Defendants are Pocono Downs Racing Association, Inc. and its President and principal stockholder, Joseph Banks. Kulick sued pursuant to 42 U.S.C. Sec. 1983 for damages and injunctive relief, alleging that he had been ejected from the race track under Banks' order without due process of law and thereby lost the right to bet at the track and to be on the premises when his horses were racing. ¹

Following a preliminary injunction hearing, the district court dismissed the action for want of subject matter jurisdiction ² on the basis of its conclusion that Kulick had not established that the actions of defendants were taken under color of state law. It may be that Kulick will ultimately have difficulty proving state action or any of the other elements of his due process claim. We conclude, however, that the court should not have treated its preliminary injunction findings as conclusive on the issue of jurisdiction because the presence of state action was properly a concern not of jurisdiction but of the merits. We therefore reverse and remand for further proceedings.

I.

The requirement in a section 1983 case that the challenged conduct be taken "under color of state law" has been treated identically to the "state action" requirement of the fourteenth amendment. Lugar v. Edmonson Oil Co., 457 U.S. 922, 929, 102 S.Ct. 2744, 2749, 73 L.Ed.2d 482 (1982). Of the various state action tests summarized in Krynicky v. University of Pittsburgh, 742 F.2d 94, 98 (3d Cir.1984), two are relevant to this case: the "symbiotic relationship" test and the "nexus" test. The Supreme Court has found state action where the state has so far insinuated itself into the position of interdependence with a private party that the relationship of the two becomes symbiotic. Burton v. Wilmington Parking Auth., 365 U.S. 715, 725, 81 S.Ct. 856, 861, 6 L.Ed.2d 45 (1961). The Court has also held that state action may exist when there is a sufficiently close nexus between the state and the challenged action of a private entity such that the actions of the private actor may fairly be attributed to those of the state. Jackson v. Metropolitan Edison Co., 419 U.S. 345 351, 95 S.Ct. 449, 453, 42 L.Ed.2d 477 (1974).

Kulick concedes that the mere state regulation of harness racing, albeit heavy, is not alone sufficient to satisfy the "symbiotic relationship" test for state action. He relies, however, on Fitzgerald v. Mountain Laurel Racing, Inc., 607 F.2d 589 (3d Cir.1979), in which a sharply divided panel found the nexus requirement satisfied because state officials, acting in their official capacity, participated in the decision of racing track management to expel the plaintiff.

At the preliminary injunction hearing, Kulick tried to satisfy the nexus test by pointing out that his ejection slip listed Kulick's violation of a state Racing Commission rule as one reason for ejection. Further, Kulick attempted to establish that state racing officials participated in the decision to expel him through the testimony of Eugene Lipsi, a director of the track. Mr. Lipsi testified that Banks, the track president, had told him that the racing judges had told the general manager that Kulick should be ejected. ³ According to Lipsi, Banks was informed that the presiding state racing judge felt that he had no hard evidence to evict Kulick, but "he suggested that Pocono Downs evict him."

On the other hand, Banks' direct testimony was that he had "received no information from anyone, under any circumstances, which indicated what [the racing judge's] opinion might be of Mr. Kulick" or whether the judge thought Kulick should be evicted. The district court, which heard the evidence and observed the witnesses, properly proceeded to weigh the conflicting testimony before ruling on the preliminary injunction motion. The court concluded that the racing judges "played no part" in Banks' decision to evict Kulick and accordingly denied the motion for failure to demonstrate a likelihood of success on the merits.

II.

Following its denial of the preliminary injunction, the district court proceeded to dismiss the complaint for lack of jurisdiction on the grounds that Kulick had not established state action. The court relied on its preliminary injunction finding that state officials had not participated in the decision to expel Kulick from the track. Kulick does not challenge this finding as support for the district court's denial of the preliminary injunction. Kulick does challenge the district court's reliance on this finding for dismissal of the case, however, and we agree that this dismissal was in error.

The district court had jurisdiction over Kulick's Sec. 1983 civil rights claim under 28 U.S.C. Sec. 1331's general grant of federal question jurisdiction and under 28 U.S.C. Sec. 1343(3)'s grant of civil rights jurisdiction. ⁴ Under either section, a court has jurisdiction over the dispute so long as the plaintiff alleges that defendant's actions violate the requisite federal law: under Sec. 1331, any federal law; under Sec. 1343, only laws that relate to civil rights. Once the plaintiff has met this threshold pleading requirement, however, the truth of the facts alleged in the complaint is a question on the merits, as is the legal question whether the facts alleged establish a violation. See Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 70-71, 98 S.Ct. 2620, 2628-29, 57 L.Ed.2d 595 (1978); Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946). ⁵ Otherwise, the district court could turn an attack on the merits, against which the party has the procedural protections of a full trial including the right to a jury, into an attack on jurisdiction, which a court may resolve at any time without a jury pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(h)(3). ⁶

In this respect, it is important to distinguish elements of a claim that relate to Congress's jurisdiction, i.e., its constitutional authority to act, from issues that relate to the jurisdiction of the courts. For example, one element of a federal antitrust claim is that the defendant's anticompetitive activity have a substantial affect on interstate commerce, and this element brings the antitrust laws squarely within Congress' authority to legislate under the Commerce Clause of Article I, section 8. Similarly, the state action requirement of a Sec. 1983 claim constitutes a basis for Congress to regulate conduct pursuant to Sec. 5 of the Fourteenth Amendment. Courts sometimes refer to these elements as jurisdictional. See McLain v. Real Estate Bd. of New Orleans, 444 U.S. 232, 100 S.Ct. 502, 62 L.Ed.2d 441 (1980) (referring to effects on interstate commerce as jurisdictional requirement).

But the jurisdictional concerns that a court has the power to resolve on its own pursuant to a Rule 12(b)(1) motion involve the court's jurisdiction. That jurisdiction is defined first by Article III of the Constitution, which enumerates the kinds of powers that Congress may vest in the federal courts, and then by statutes, such as Secs. 1331 and 1343, which actually vest a court with power. Thus, the court independently resolves questions such as standing and diversity. Elements of a claim that are called jurisdictional because they relate to Congress's jurisdiction remain questions of the merits, and the Supreme Court has made clear that a court may resolve them only in the manner that the court may resolve all other questions of the merits. McLain, 444 U.S. at 246, 100 S.Ct. at 511. ⁷

In limited circumstances, the Supreme Court has permitted courts to dismiss a claim for lack of jurisdiction if the federal claim is "made solely for the purpose of obtaining jurisdiction" or if the claim is "wholly insubstantial and frivolous." Bell v. Hood, 327 U.S. at 682-83, 66 S.Ct. at 776. These exceptions do not permit a court to prejudge the facts alleged in the complaint, however, for a court may dismiss for lack of jurisdiction only if claims are "insubstantial on their face." Hagans v. Lavine, 415 U.S. 528, 542 n. 10 94 S.Ct. 1372, 1382 n. 10, 39 L.Ed.2d 577 (1974) (quoting Brotherhood of Locomotive Eng'rs v. Chicago, Rock Island & Pac. R.R. Co., 382 U.S. 423, 428, 86 S.Ct. 594, 596, 15 L.Ed.2d 501 (1966)). Moreover, dismissal for lack of jurisdiction is not appropriate merely because the legal theory alleged is...