Livingston Downs Racing Ass'n v. Jefferson Downs

• Decision Date: 13 August 2001
• Docket Number: Civ. A. No. 97-18-D.,Civ. A. No. 96-3430-D.
• Citation: 192 F.Supp.2d 519
• Parties: LIVINGSTON DOWNS RACING ASSOCIATION, INC., Plaintiff, v. JEFFERSON DOWNS CORPORATION, et al., Defendants. United National Insurance Corporation, et al., v. Jefferson Downs Corporation, et al.
• Court: U.S. District Court — Middle District of Louisiana

Page 519

192 F.Supp.2d 519

LIVINGSTON DOWNS RACING ASSOCIATION, INC., Plaintiff, v. JEFFERSON DOWNS CORPORATION, et al., Defendants.

United National Insurance Corporation, et al., v. Jefferson Downs Corporation, et al.

Civ. A. No. 96-3430-D.

Civ. A. No. 97-18-D.

United States District Court, M.D. Louisiana.

August 13, 2001.

COPYRIGHT MATERIAL OMITTED

Provino C. Mosca, Mosca & Mosca, New Orleans, LA, Darlene Sansone Ransome, Baton Rouge, LA, J. Marvin Montgomery Baton Rouge, LA, David T. Ralston, Jr., Steven C. Lambert, Roderick V. Williams, Ransome Law Firm, Baton Rouge, LA, for plaintiff.

Vance A. Gibbs, Charles S. McCowan, Jr., Bradley Charles Myers, Shannan Sweeney Rieger, Troy J. Charpentier, James P. Dore, Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, Baton Rouge, LA, for Jefferson Downs, Corp., Fair Grounds Corp., Inc., Finish Line Management, Inc., Bryan Krantz, Marie Krantz, Committee to Control Gambling, Peter Henry, George Boudreaux, defendants.

Michael A. Patterson, Daniel D. Holliday, III, Long Law Firm, LLP, Baton Rouge, LA, Andrew C. Engolio, Baton Rouge, LA, for Larry Bankston, defendant.

Amos H. Davis, Craig J. Fontenot, Smith and Davis, Baton Rouge, LA, for General Agents Ins. Co. of America, Inc., defendant.

MEMORANDUM RULING

BRADY, District Judge.

Before the Court is the Defendants' motion for summary judgment urging dismissal of both the Plaintiffs' antitrust and civil Racketeering Influenced and Criminal Organizations (RICO) claims. Regarding the antitrust claims, the Defendants assert that their actions, though admittedly anticompetitive, represent a good-faith effort to petition the Government for favorable action. As a result, these actions come within the aegis of the Noerr-Pennington doctrine, which shields from antitrust liability a private party's efforts to obtain, through government action, a competitive advantage over business rivals. The Plaintiffs counter that the Defendants undertook a campaign of repetitive, baseless litigation, the sole purpose of which was to burden the Plaintiffs with the costs and delays which attend the litigatory process. The Defendants' actions thus fall under the "sham litigation" exception to the Noerr-Pennington doctrine and are subject to antitrust liability, the Plaintiffs contend. The Court concludes that the Plaintiffs have raised a genuine dispute as to whether the Defendants' actions were predominantly motivated by a desire to hinder the Plaintiff's ability to obtain financing. Accordingly, the Court holds that the Defendants are not entitled to summary judgment on the Plaintiffs' antitrust claims.

As to the civil RICO claims, the Defendants argue that the Plaintiffs, having suffered no concrete injury as a result of the Defendants' actions, lack standing to bring such a claim. The Defendants also urge that any such claims are barred by the doctrine of res judicata. Accordingly, the motion to dismiss the Plaintiff's antitrust claims must be granted.

Background

This hoary case stems from the Plaintiffs' failed efforts to open a racetrack for live horse racing in Livingston Parish, Louisiana, and to obtain a license to conduct off-track betting (OTB) operations. This enterprise required the Plaintiffs not only to obtain the appropriate licenses from the Louisiana State Racing Commission (the Commission), but also to secure the voters' approval for horse racing in Livingston Parish through a referendum election. The Plaintiffs aver that they found their efforts to satisfy these requirements opposed at every turn by the Defendants, Bryan and Marie Krantz. According to the Plaintiffs, the Defendants pursued four main avenues in their efforts to thwart the Plaintiffs' bid to enter the market for live horse racing. These include lobbying the Commission and the Louisiana legislature to oppose the Plaintiffs' applications for racing and gaming licenses; campaigning against the new racetrack in the referendum election; filing lawsuits contesting the legitimacy of both the referendum election and the Plaintiffs' racing and gaming licenses; and intervening in the various lawsuits the Plaintiffs filed in an attempt to obtain racing and gaming licenses. The delays engendered by the Defendants' incessant legal challenges and lobbying, the Plaintiffs argue, caused the financing for the proposed racetrack to fall through, eventually scuttling their plans entirely.

LDRA's Efforts to Obtain a Racing License

Marie and Bryan Krantz owned Jefferson Downs Corporation (Jefferson Downs), a racetrack for live horse racing in Jefferson Parish. Jefferson Downs also possessed an OTB license, which allowed it to conduct off-track wagering both at the racetrack and at other facilities. In 1990, the Krantzes acquired an interest in Fair Grounds Corporation, a racetrack in Orleans Parish which also had an OTB license. In 1992, after the Krantzes had obtained a majority interest in Fair Grounds, they elected to consolidate their operations by shuttering the racetrack in Jefferson Parish and transferring Jefferson Downs's OTB license to Fair Grounds.

Under state regulations, Jefferson Downs and Fair Grounds could not, owing to their geographical proximity, hold races on the same dates. See La.Rev.Stat. §§ 4:147(1) & 4:215(b). Accordingly, prior to its closing, Jefferson Downs had conducted races in the Spring and Summer, whereas Fair Grounds had held races only in the Fall and Winter. The closing of Jefferson Downs thus left a void for live horse racing in Louisiana during the spring and summer months. In hopes of exploiting this opening, Al Ransome formed Livingston Downs Racing Association, Inc. (LDRA) in December 1992. LDRA's business plan called for building a racetrack in Livingston Parish and obtaining an OTB license therefor. LDRA applied to the Commission for a license to conduct horse races on Jefferson Downs' erstwhile race dates. See Livingston Downs Racing Ass'n v. State, 96-2890 (La.12/2/97), 705 So.2d 149, 150-51 (recounting the circumstances leading up to the formation of LDRA and its efforts to obtain racing dates).

The Commission approved LDRA's application and voted, on December 12, 1992, to grant it a permit to conduct pari-mutuel horse racing on the dates abandoned by Jefferson Downs. The next step for LDRA was to secure popular approval for live horse racing in Livingston Parish through a referendum election. See La. Rev.Stat. § 4:181. But before the Commission could issue LDRA's permit, Jefferson Downs and Fair Grounds obtained an order in state court staying the Commission's decision to grant the permit. Jefferson Downs and Fair Grounds subsequently amended their complaint to request an injunction prohibiting the referendum election. The election, they argued, was precipitous in light of the stay on LDRA's license. See Original Complaint ¶¶ 41, 43.

LDRA appealed the order staying the issuance of its license. It prevailed, and the state appellate court ordered the license issued. Jefferson Downs and Fair Grounds, however, appealed to the Louisiana Supreme Court, which reinstated the original order staying the issuance of LDRA's racing permit. Because Jefferson Downs and Fair Grounds omitted to request a stay while they took this appeal to the Louisiana Supreme Court, however, the Commission issued LDRA's permit while the appeal was pending. Since the permit had been issued, the police jury for Livingston Parish added the proposition on live horse racing to an election scheduled for January 16, 1993. See Def.'s Exh. I, Ransome v. Secretary of State for the State of Louisiana, No. 67,710, slip op. at 2-3 (Jan. 11, 1993)(detailing the circumstances surrounding the referendum election in Livingston Parish).

LDRA believed that the pendency of the suit challenging its racing license cast doubt upon the propriety of the referendum election. To remove this taint, Al Ransome filed suit seeking a writ of mandamus to compel the Secretary of State to permit the referendum election to proceed. The Krantzes intervened in this suit, urging that the referendum be halted. To obtain standing to challenge the referendum, the Krantzes' attorney, Larry Bankston, solicited the aid of Karen Thomas, a legal secretary in his firm and a resident of Livingston Parish. Ms. Thomas agreed to serve as the titular plaintiff for the petition to intervene, which alleged various procedural improprieties in noticing the referendum election. Also at the behest of the Krantzes' attorney, Ms. Thomas served as the plaintiff in a separate lawsuit which sought a writ of mandamus prohibiting the Secretary of State from holding the referendum election in Livingston Parish. This suit was also predicated in part upon alleged procedural irregularities in noticing the referendum. See Depo. of Karen Thomas at 11-12; see also Def.'s Exh. I, Thomas v. Secretary of State, No. 67,728, Division B, 21st Judicial District Court, Parish of Livingston.

The independent suit filed under Ms. Thomas's name was consolidated with Ransome's suit seeking a writ of mandamus. The state trial court concluded that, although there were some troubling deficiencies in noticing the referendum, they were too trifling to warrant cancelling the election. In light of the substantial media coverage the election had received, the court remarked, there was little danger that the "plaintiff was trying `to pull a fast one' as alleged." More nettlesome in the trial court's view was Thomas's assertion that the election could not proceed because the Louisiana Supreme Court's ruling effectively abrogated the Commission's decision to issue LDRA a racing license.¹ The trial court determined, however, that as the Commission issued LDRA's license before the Louisiana Supreme Court had ruled, and as there was no stay in place when the Commission issued the license, the license was valid. Accordingly, the district court granted Ransome's writ request and directed the Secretary of State to conduct the referendum...