New York Law Review

Tag: Exclusion

  • Jacobson v. New York Racing Ass’n, 33 N.Y.2d 144 (1973): Exclusion by Monopolies and Judicial Scrutiny

    Jacobson v. New York Racing Ass’n, 33 N.Y.2d 144 (1973)

    An association with virtual monopoly power over an activity affecting a person’s livelihood is not immune from judicial scrutiny when it excludes that person from participating in that activity, even in the absence of direct state action.

    Summary

    Howard Jacobson, a licensed horse owner and trainer, was denied stall space at New York Racing Association (NYRA) tracks after a license suspension. NYRA claimed a right to exclude him, citing common law. The Court of Appeals held that NYRA, possessing a virtual monopoly on thoroughbred racing in New York, could not arbitrarily exclude a licensed trainer without justification. The court modified the lower court ruling, reinstating Jacobson’s right to sue for damages, emphasizing that NYRA’s actions are subject to judicial review due to its monopolistic position, even without needing to find direct state action.

    Facts

    Howard Jacobson was a licensed owner and trainer of thoroughbred horses in New York since 1952. The New York Racing Association (NYRA) owns the major racetracks in New York (Aqueduct, Belmont Park, Saratoga). In 1970, Jacobson’s license was suspended for 45 days by the State Racing Commission. After the license was restored, NYRA denied him stall space at its tracks, effectively preventing him from racing in New York.

    Procedural History

    Jacobson sued NYRA for damages. NYRA moved to dismiss, arguing failure to state a claim and a pending federal antitrust suit. Special Term denied the motion. The Appellate Division agreed the complaint was sufficient, but converted the action to a CPLR Article 78 proceeding (review of administrative action). The Court of Appeals modified the Appellate Division’s order, reinstating the action for damages and remitting the case for trial.

    Issue(s)

    Whether NYRA, possessing a virtual monopoly over thoroughbred racing in New York, has an absolute right to exclude a licensed owner and trainer from its tracks without justification, potentially infringing on the state’s licensing power.

    Holding

    No, because NYRA’s virtual monopoly power over thoroughbred racing in New York means that excluding a licensed owner and trainer requires justification, and is subject to judicial review in an action for damages.

    Court’s Reasoning

    The Court recognized the common-law right of private enterprises to exclude patrons, as affirmed in Madden v. Queens County Jockey Club. However, it distinguished NYRA’s position due to its near-monopoly. Exclusion from NYRA tracks effectively bars Jacobson from racing in New York, impacting his livelihood and potentially infringing on the state’s licensing authority. The court stated, “Exclusion from its tracks is tantamount to barring the plaintiff from virtually the only places in the State where he may ply his trade and, in practical effect, may infringe on the State’s power to license horsemen.” The court reasoned that NYRA should not have an absolute immunity from justifying the exclusion of a state-licensed owner and trainer. The court cited the principle that arbitrary actions of private associations are not immune from judicial scrutiny, referencing cases involving hospitals denying staff privileges and medical societies excluding physicians. The court emphasized, “In this regard, it will be plaintiff’s heavy burden to prove that the denial of stall space was not a reasonable discretionary business judgment, but was actuated by motives other than those relating to the best interests of racing generally.” The court found it unnecessary to reach the “state action” question, deciding the case on the basis of NYRA’s monopolistic position. The dissent, if any, is not noted in the text of the opinion.