Livingston Downs Racing Ass'n v. Jefferson Downs

• Decision Date: 24 October 2002
• Docket Number: No. CIV.A.97-18-D-M1.,No. CIV.A.96-3430-D-M1.,CIV.A.96-3430-D-M1.,CIV.A.97-18-D-M1.
• Citation: 257 F.Supp.2d 819
• Parties: LIVINGSTON DOWNS RACING ASSOCIATION, INC. v. JEFFERSON DOWNS CORPORATION, et al. United National Insurance Corporation, et al. v. Jefferson Downs Corporation, et al.
• Court: U.S. District Court — Middle District of Louisiana

Page 819

257 F.Supp.2d 819

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

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

No. CIV.A.96-3430-D-M1.

No. CIV.A.97-18-D-M1.

United States District Court, M.D. Louisiana.

October 24, 2002.

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 B. Williams, Ransome Law Firm, Baton rouge, LA, for Livingston Downs Racing Ass'n, Inc.

Vance A Gibbs, Charles S. McCowan, Jr., Bradley Charles Myers, Shannan Sweeney Rieger, Troy J. Charpentier, James P. Dor, 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.

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

Craig J. Fontenot, Smith and Davis, Baton Rouge, LA, for General Agents Ins. co. of America, Inc.

RULING & ORDER

BRADY, District Judge.

This matter is before the Court on motions for summary judgment filed by Jefferson Downs Corporation (doc. 635), The Committee to Control Gambling (doc. 629), Marie Krantz (doc. 618), Larry Bankston (doc. 650), Peter Henry (doc. 632), and George Boudreaux (doc. 626). Each request for summary judgment asserts several bases, many of them now irrelevant. Pending also is a motion for partial summary judgment on the issue of damages (doc. 665) and several motions in limine (docs. 622, 624, 658, and 660) filed by Fair Grounds, Finish Line, Bryan Krantz, Marie Krantz, the Committee to Control Gambling, Peter Henry, and George Boudreaux. The Court considers whether the plaintiff, Livingston Downs Racing Association, Inc. has sufficiently supported its claims under (1) § 1964(c) of the Racketeer Influenced and Corrupt Organizations Act ("RICO") and (2) § 1 of the Sherman Act. Finding that the supporting evidence is insufficient for the action to survive summary judgment, the Court grants the motions of all these defendants with respect to all claims under RICO and § 1 of the Sherman Act. Since the Court determines that Livingston Downs may have stated a claim under § 2 of the Sherman Act, this ruling does not terminate the case entirely. Consequently, the other motions remain. The Court denies the motion for partial summary judgment and the motions in limine, though the remaining defendants may urge these motions again once the § 2 claims, if any, have been developed.

FACTUAL BACKGROUND

This case involves an alleged sweeping plan, implicating all the original defendants, to keep Livingston Downs out of the market for live horse racing and off-track betting ("OTB") in a portion of southeastern Louisiana. Livingston Downs alleges that Defendants proposed to effectuate their plan by tying it up in layers of government process. The Court presented the full details of the alleged scheme in its ruling of August 13, 2001 (doc. 557).¹ The Court adopts that version for the purpose of addressing these motions. Some additional facts are, however, needed for a complete disposition.

A. The Claims

A brief overview of the plan will provide some context. Live horse racing and OTB are heavily regulated markets in Louisiana, with very few government-approved participants. Marie and Bryan Krantz ("the Krantzes") are two of these participants. Until October of 1992, the Krantzes operated Jefferson Downs racetrack in Jefferson Parish, Louisiana. Sometime in 1990, they purchased a controlling interest in the Fair Grounds racetrack, which operates within one hundred miles of Jefferson Downs. These two racetracks were, at all relevant times, the only two in the area. The Krantzes also own Finish Line Management which itself operated OTB parlors associated with Jefferson Downs. Later, these parlors transferred to Fair Grounds when the Krantzes closed Jefferson Downs.

When Jefferson Downs stopped holding races, Al Ransome, owner of Livingston Downs saw a business opportunity. Because these gambling enterprises are highly regulated, to make a go of his proposed new racetrack in Livingston Parish, Ransome had to obtain the approval of the Louisiana State Racing Commission as well as the voters of Livingston Parish.

Allegedly, the Krantzes saw in the regulatory process their own business opportunity, namely to delay and perhaps frustrate a possible competitor by playing fast and loose with the procedures and institutions of the regulatory process. Livingston Downs claims that the Krantzes engaged in the following anticompetitive behavior: (1) they aggressively lobbied the state legislature and racing commission for favorable actions; (2) they attempted to delay the licensing process with the racing commission; (3) they filed frivolous lawsuits through corporations within their control and other straw-plaintiffs, without regard to the merits of their claims; and (4) they ran, via a freshlyminted alter-ego, an aggressive ad campaign aimed at convincing voters to reject a new live horse racing operation. These endeavors, Livingston Downs claims, imposed costs in the form of legal fees and also ultimately succeeded in frustrating Livingston Downs' entry into the market, which caused it to lose expected profits.

B. The Parties

Any full understanding of this case requires a cast of characters. When Livingston Downs originally filed suit in this Court, it named seventeen defendants.² They are:

(1) Jefferson Downs Corporation;

(2) Fair Grounds Corporation;

(3) Finish Line Management Corporation;

(4) The Committee to Control Gambling, Inc.;

(5) Bryan Krantz;

(6) Marie Krantz;

(7) Karen Thomas;

(8) Terence Lee Odom;

(9) Peter Henry;

(10) George Boudreaux;

(11) Larry Bankston;

(12) Oscar Tolmas;

(13) Albert Stall;

(14) Payton Covington;

(15) Melinda Tucker;

(16) Ben Thomas; and

(17) W.C. Littleton.

Livingston Downs retains claims against nine of these original defendants. Livingston Downs agreed to dismiss Oscar Tolmas, Albert Stall, Payton Covington, Melinda Tucker, Ben Thomas, and W.C. Littleton pursuant to a settlement.³ The Court dismissed them on November 21, 1996 (doc. 50). Livingston Downs submitted a motion to dismiss Karen Thomas and Terrence Lee Odom on August 18, 1998 (doc. 249). The Court dismissed these defendants on October 22, 1998 (doc. 277). Remaining in the action are Bryan and Marie Krantz, four incorporated entities that they control in some degree, two people—Peter Henry and George Boudreaux—whom the Krantzes employed at the relevant times through three of these corporations, and Larry Bankston, attorney for the Krantzes and their corporations. Further introductions are in order.

1. The Plaintiff: Livingston Downs Racing Association

Livingston Downs Racing Association ("Livingston Downs") is a Louisiana corporation domiciled in the Parish of Livingston, Louisiana. In October of 1992, it began the process required to open a racetrack featuring live horse racing and to provide OTB parlors, which according to Louisiana statute may only be owned and operated by interests that also operate a horse racing establishment.⁴ The horse racing business is tightly regulated by the State of Louisiana. Livingston Downs had the opportunity to open the track only because defendant corporation Jefferson Downs had decided to close its racetrack. Livingston Downs had to obtain a permit to operate a racetrack, gain a transfer of the license once held by Jefferson Downs to operate OTB parlors from the Racing Commission, and obtain the approval of the voters in Livingston Parish. Upon commencing to navigate these regulatory obstacles, Livingston Downs faced immediate resistance that it now attributes to the machinations of the Krantzes and their agents.

2. Jefferson Downs Corporation

Jefferson Downs Corporation ("Jefferson Downs") is a Louisiana Corporation domiciled in Jefferson Parish, Louisiana. Until October, 1992, Jefferson Downs operated a racetrack that featured live horse racing. The racetrack was also called Jefferson Downs. In addition, Jefferson Downs housed several OTB parlors associated with its racetrack operations. In October, 1992, Jefferson Downs decided to close its racetrack. Because Louisiana state law limits the number of tracks that may operate within a region, this closure gave Livingston Downs the opportunity to open its own racetrack. Livingston Downs claims that Jefferson Downs, through its ownership, has been involved in the plan to keep Livingston Downs out of the market for live horse racing and OTB parlors throughout the relevant period. Jefferson Downs, among other parties, filed suit against the Louisiana State Racing Commission to annul the license granted to Livingston Downs on December 10, 1992.⁵ The reason for Jefferson Downs' continued interest is that its owners also control the only racetrack that was operating in the area at the time.

3. Finish Line Management Corporation

Finish Line Management Corporation ("Finish Line") is a Louisiana Corporation conducting business in Orleans, Jefferson, St. Charles, St. Tammany, and Terrebonne Parishes. Finish Line Management at one time operated the OTB parlors associated with Jefferson Downs. After Jefferson Downs closed, Finish Line entered an agreement to continue operating those parlors for Fair Grounds Corporation. According to Livingston Downs, Finish Line, through its ownership, was involved in the plan to keep Livingston Downs out of the market for live horse racing and OTB parlors throughout the relevant period.

4. Fair Grounds Corporation

Fair Grounds Corporation ("Fair Grounds") is a Louisiana corporation doing business in New Orleans. At the time of these events, Fair Grounds operated a racetrack that featured live horse racing. It...