Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
6-5-2001
Crissman v. Dover Downs Ent., Inc
Precedential or Non-Precedential:
Docket 00-5178
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Filed January 29, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-5178
CHARLES CRISSMAN; WENDY CRISSMAN;
*CHRISTINE CRISSMAN,
Appellants
v.
DOVER DOWNS ENTERTAINMENT INC.;
DOVER DOWNS, INC.
* (Dismissed as Party per Court's 11/8/2000 Or der)
On Appeal From the United States District Court
for the District of Delaware
(C.A. No. 99-cv-00755)
District Judge: Honorable Roderick R. McKelvie
Argued: December 5, 2000
Before: McKEE, ROSENN, and CUDAHY,*
Circuit Judges.
(Filed: January 29, 2001)
Jeffrey J. Clark (Argued)
Noel E. Primos
Schmittinger & Rodriguez
414 South State Street
P.O. Box 497
Dover, DE 19903
Counsel for Appellants
_________________________________________________________________
* Hon. Richard D. Cudahy, Senior Judge, United States Court of Appeals
for the Seventh Circuit, Sitting by Designation.
Thomas P. Preston (Argued)
Reed Smith
1201 Market Street
Suite 1500
Wilmington, DE 19801
Counsel for Appellees
OPINION OF THE COURT
ROSENN, Circuit Judge.
In this appeal, we return to familiar terrain to determine
whether the expulsion of three state-licensed horse-trainers
and horse owners by a privately owned harness racing
association from its racetrack without a hearing constitutes
state action for purposes of 42 U.S.C. S 1983. 1 The District
Court concluded that no state action was present and
granted summary judgment in favor of Dover Downs, the
racetrack operator. Because the plaintif fs presented
conclusive evidence that the track enjoyed a symbiotic
relationship with the State of Delaware, we reverse.
I.
Appellee, Dover Downs, Inc. (Dover Downs), is a
subsidiary of Dover Downs Entertainment Inc., a publicly
held corporation operated for profit. Dover Downs is
licensed by the Delaware Harness Racing Commission
(HRC) to conduct harness races at its track in Dover,
Delaware. It conducts harness racing meets six months out
of every year, during which time no other track in Delaware
holds harness racing meets.2 Dover Downs also operates
_________________________________________________________________
1. 42 U.S.C. S 1983 provides: "Every person who, under color of any . . .
regulation . . . of any state . . . subjects, or causes to be subjected,
any
citizen of the United States . . . to the deprivation of any rights,
privileges, or immunities secured by the Constitution and laws, shall be
liable to the party injured in an action at law, suit in equity, or any
other
proper proceeding for redress."
2. Harrington Raceway, the only other licensed harness racing facility in
Delaware, conducts races during the six months each year that Dover
Downs does not.
2
video lottery gambling and other entertainment activities at
its facility.
Harness racing is a heavily regulated business in
Delaware, as it is in most states. The State of Delaware
plays an active role in the management of the harness
racing operation at Dover Downs. The State r equires that
14 harness racing officials assigned to Dover Downs, with
titles ranging from "equipment checker" to "state
veterinarian," be licensed by the HRC. Although Dover
Downs pays and supervises these officials, HRC rules set
forth their duties and job descriptions in detail. Moreover,
HRC rules require Dover Downs to "enfor ce the [Harness
Racing] Act and the rules and orders of the Commission."
In 1993, Delaware passed the "Horsemen's Revitalization
Act," whose stated purpose was to rejuvenate the declining
Delaware horse-racing industry. See 29 Del. C. S 4801(b)(1).
To achieve this goal, the legislature authorized harness
racetracks such as Dover Downs to operate "video lottery
machines", commonly known as slot machines, on the
premises. The State, rather than Dover Downs, owns or
leases the slot machines, which are dir ectly connected to
the Delaware State Lottery Office for monitoring and
control. See 29 Del. C. S 4819. Dover Downs, as a "video
lottery agent," is responsible for securing and operating the
machines, and is free to determine the number of machines
it chooses to house, up to the statutory maximum of 1000
machines. See 29 Del. C. S 4820. Nonetheless, a Delaware
statute plainly states that the video lottery is operated "by
the State Lottery Office." 29 Del. C. S 4815(b)(2).
The State also exercises complete contr ol over the
distribution of revenue from the slot machines. A Delaware
statute requires Dover Downs to send all r evenue from the
lottery machines, net of payouts to patrons, to an account
controlled by the State Lottery Office. See Del. C. S 4815(b).
The funds received by this account are then distributed in
accordance with Delaware statute, which is painstakingly
specific. First, the State pays administrative costs
associated with the operation of the lottery, including the
salaries of state lottery personnel. Next, Gamblers
Anonymous and similar programs receive a share. The
State then receives a large percentage share of the money
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that remains. The statute then directs that a percentage of
the remaining funds be given to racetracks such as Dover
Downs "to be applied under the direction of the Delaware
Harness Racing Commission to purses for races conducted
at such agent's racetrack." 29 Del. C. S 4815. Finally, Dover
Downs, as a video lottery agent, receives a statutorily
designated "commission." See 29 Del. C. S 4815(b)(4) c & d.
Charles, Wendy, and Christine Crissman ar e, and at all
relevant times have been, duly licensed by the state of
Delaware to own and train race horses. In October 1997,
Charles Lockhart, the newly-appointed general manager of
Dover Downs, informed the Crissmans that they were no
longer welcome at Dover Downs and that Dover Downs
would no longer permit them to race horses there. Lockhart
offered the Crissmans no explanation for their exclusion
and no opportunity to be heard. Lockhart's deposition in
this proceeding discloses that he expelled the Crissmans
because he had heard unconfirmed rumors that the HRC
was investigating Charles Crissman for certain alleged
improprieties. Lockhart decided to exclude W endy and
Christine Crissman only because they had applied jointly
with Charles Crissman to race at Dover Downs. The
Crissmans, however, were all licensed in good standing and
there is no indication of record that they had violated
Delaware's harness racing rules.3
The Crissmans filed suit against Dover Downs under 42
U.S.C. S 1983 in the United States District Court for the
District of Delaware. The complaint alleged that Dover
Downs had denied the plaintiffs due pr ocess of law in
violation of the Fourteenth Amendment to the United States
Constitution. The plaintiffs sought damages, as well as
preliminary and permanent injunctive r elief restraining the
defendants from denying them access to the racetrack.
When they filed their complaint, the Crissmans moved for
a temporary restraining order. The District Court denied the
motion, holding that the Crissmans were unlikely to prevail
on the merits. Dover Downs then moved for summary
judgment. The District Court granted the motion, holding
_________________________________________________________________
3. On or about November 1, 2000, Christine Crissman stipulated to a
dismissal of her appeal with prejudice.
4
that the Crissmans had failed to adduce sufficient evidence
that Dover Downs acted under color of state law as
required by 42 U.S.C. S 1983.
II.
The primary question presented by this lawsuit is
whether Dover Downs' exclusion of the Crissmans
constituted state action, a necessary element of a
successful section 1983 suit. The starting point for our
state action analysis is the seminal case of Burton v.
Wilmington Parking Authority, 365 U.S. 715, 81 S.Ct. 856
(1961). In that case, the plaintiff sued a privately owned
restaurant for racial discrimination. The r estaurant leased
the land on which it stood from a state agency, which ran
the adjacent public parking garage. After examining the
close relationship between the restaurant and the state
agency, the Supreme Court concluded that state action was
present. The Burton Court enunciated a"symbiotic
relationship" test. It provides that when the state has not
clearly directed the private act of discrimination, but it "has
so far insinuated itself into a position of inter dependence"
with the private actor, the state "must be recognized as a
joint participant in the challenged activity." Id. at 725;
Fitzgerald v. Mountain Laurel Racing, Inc. , 607 F.2d 589,
594 (3d Cir. 1979). The Court emphasized that"only by
sifting facts and weighing circumstances can the
nonobvious involvement of the state in private conduct be
attributed its true significance." Id. at 722.
The Court later refined the symbiotic r elationship test in
Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 92 S.Ct. 1965
(1972). There, the Court held state action to be absent in a
case challenging racial discrimination by a private club that
was heavily regulated by the Pennsylvania Liquor Control
Board. The essence of the Court's holding was that
extensive and detailed regulation of a private entity is
generally insufficient to convert that entity into a state
actor. See id. at 176-177. The Court distinguished the
situation in Moose Lodge from that in Burton on the ground
that, unlike the private restaurant in Burton, the Moose
Lodge was a private club operating on private land and that
the regulation of the Moose Lodge, detailed as it was in
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some particulars, could not be said "to in any way foster or
encourage racial discrimination." Id. at 176-177. In
addition, the court noted that, in spite of the r egulation to
which the State subjected the Moose Lodge, the State could
not be said to be "a partner or even a joint venturer in the
club's enterprise." Id. at 177.
III.
Summary judgment is appropriate only when the r ecord
could not lead a reasonable jury to find for the non-moving
party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248-49 (1986). The court making this determination must
view the evidence in the light most favorable to the non-
movant. See Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587-88 (1986).
Dover Downs attempts to portray its relationship to the
State as one consisting solely of "regulations and revenue."
Such a relationship is generally insufficient to constitute a
symbiotic relationship under Burton. See Jackson v.
Metropolitan Edison Co., 419 U.S. 345, 350 (1974); Hadges
v. Yonkers Racing Corp., 918 F.2d 1079, 1082 (2d Cir.
1990). However, we believe that the r ecord in this case
shows that the affairs of the State and the racetrack were
much more than a regulatory relationship between the
State and a private gambling enterprise. For instance, the
slot machines used by Dover Downs, like the leased
restaurant building in Burton, ar e the property of, or leased
by, the State. Cf. Fulton v. Hecht, 545 F.2d 540, 542-43
(5th Cir. 1977)(finding symbiotic r elationship absent and
emphasizing that private party was not a lessee of state
property). The State maintains control over these slot
machines by directly connecting them to the central
computer system at the State Lottery Office. In addition,
and perhaps most important to the symbiotic r elationship
analysis, Dover Downs is the State's agent in the video
lottery enterprise. Because of this agency r elationship, the
State stands to gain or lose substantial revenue as a result
of business decisions made by Dover Downs.4 The situation
_________________________________________________________________
4. As it turns out, the stakes are quite high. In 1998, slot machines from
Delaware's three video lottery agents br ought $206 million into
Delaware's General Fund.
6
here is even more striking than the symbiotic relationship
found in Burton, where the State primarily acted as
landlord to the privately-owned restaurant and had no
direct stake in its financial success beyond its ability to pay
rent.
Dover Downs urges this court to view the video lottery
operation in which, Dover Downs concedes, the State is
heavily involved, as separate from its har ness-racing
activities. It argues that, because the Crissmans were
banned from participating in harness races, this court
should only analyze the State's connection to Dover Downs'
harness racing operation. This argument misses the point
of the symbiotic relationship test,5 which predicates state
action not merely on its participation in the challenged
conduct, but on the overall involvement of the State in the
affairs of the private entity. See Braden v. University of
Pittsburgh, 552 F.2d 948, 958 (3d Cir. 1977)(holding that
symbiotic relationship test does not require that the state
be involved in the challenged action). The purpose behind
the Burton decision was to recognize a state as "a joint
participant in the challenged activity" when it has
"insinuated itself into a position of inter dependence with"
the private actor. Burton, 365 U.S. at 725. When such a
relationship of interdependence exists, aS 1983 plaintiff
need not show state participation in the challenged activity.
See id. at 958.
Moreover, Dover Downs' contention that we should ignore
the State's involvement in the video lottery is not persuasive
because the record reflects that video lottery is inextricably
linked with Dover Downs' harness-racing operation. The
State of Delaware created the video lottery for the express
purpose of providing "assistance in the for m of increased
economic activity and vitality for Delaware's harness and
thoroughbred horse racing industries, which activity and
vitality will . . . cause increased employment." See 29 Del.C.
_________________________________________________________________
5. Dover Downs' argument is more in tune with the "close nexus" test,
articulated by the Supreme Court in Jackson v. Metropolitan Edison Co.,
419 U.S. 345 (1974), which held that, in the absence of a symbiotic
relationship, state action may be found if the state was a participant in
the challenged activity.
7
S 4801(b)(1). Under Delaware law, Dover Downs would not
be permitted to operate a video lottery if it did not conduct
harness racing meets. See 29 Del. C.S 4819(a). To
effectuate the stated purpose of the statute, Delaware gives
a portion of the lottery's revenue to Dover Downs to be
applied to harness racing purses "under the direction of the
Delaware Harness Racing Commission." 29 Del. C.
S 4815(b)(3) b.2. Thus, the recipients of harness racing
purses are direct beneficiaries of r evenues derived from the
video lotteries jointly operated by the State and the race
track. Furthermore, Dover Downs also specifically
participates in the revenues generated by the video lottery.
Finally, we note that the State of Delaware is involved in
Dover Downs' harness racing activities. Ther e are many
positions which Dover Downs is not permitted to fill
without State approval. The HRC requir es no fewer than 14
harness racing officials to be licensed 6 and it reserves the
right to designate other positions that requir e licenses.
Although Dover Downs pays and supervises these officials,
HRC rules describe their duties and responsibilities in
detail. Most importantly, HRC rules requir e Dover Downs
not only to abide by, but also to "enfor ce the [Harness
Racing] Act and the rules and orders of the Commission."
(App. at 67)(emphasis added). In Jackson, the Supreme
Court stated that the petitioner's case for state action
would have been stronger if the private actor had
"exercise[d] . . . some power delegated to it by the State
which is traditionally associated with sover eignty." Jackson,
419 U.S. at 352-53. The power to enforce laws is one such
power, the delegation of which converts Dover Downs into
an executive arm of the HRC. Of course, heavy state
regulation alone of a private entity does not necessarily give
rise to a Burton symbiotic relationship. However, the
undisputed facts here show such a deliberate entwining
and interdependence between the State and Dover Downs,
not only in the operation of the State Lottery but also in the
_________________________________________________________________
6. The following individuals must be licensed by the HRC: state steward,
board of judges, racing secretary, paddock judge, horse identifier and
equipment checker, clerk of the course, official starter, official
charter,
official timer, photo finish technician, patrol judge, program director,
State veterinarian, and LASIX veterinarian. (App. at 59).
8
harness racing operations at the track. The State's
concerns in the "economic activity and vitality" of the
racetrack operation is a matter of statutory expr ession. The
overall involvement of the State in the affairs of the race
track is manifest. We reject, ther efore, Dover Downs'
arguments that the State specifically must be involved in
the challenged activity or that the lottery activities can be
insulated from the race track operations.
For all of the reasons discussed above, the Crissmans
have established that a symbiotic relationship exists
between Delaware and Dover Downs. The District Court's
grant of summary judgment for Dover Downs on the state
action issue will therefore be reversed.
IV.
Our inquiry does not end with the state action analysis
because, even if state action is present, the Crissmans
must also demonstrate a triable issue of material fact as to
whether their constitutional right to Due Pr ocess was
violated. We must now consider whether the Crissmans
made such a showing, a question which the District Court
did not address.
In Fitzgerald v. Mountain Laurel Racing , supra, this Court
held that a horse trainer who had been summarily evicted
from the track where he previously raced had made out a
case of deprivation of due process. This court recognized
that "Fitzgerald had a liberty interest in his employment
reputation protected by the Due Pr ocess Clause of the
fourteenth amendment." Id. The court further noted his
liberty interest in earning a livelihood, stating,
Mountain Laurel had officially recognized Fitzgerald's
status as a state licensed trainer and driver by allowing
him to perform these activities at the track. His
summary expulsion significantly altered a`status
previously recognized by state law' and denied him the
opportunity of earning a livelihood. W e, therefore, agree
that Fitzgerald has a cognizable liberty inter est.
Id., quoting Paul v. Davis, 424 U.S. 693, 711 (1976).
9
The facts of this case bear considerable similarity to
those in Fitzgerald. Like Fitzgerald, the Crissmans are and
have been at all relevant times, licensed by the state of
Delaware to train and race horses. Prior to the challenged
expulsion, Dover Downs had recognized that status by
allowing them to race their horses there. Mor eover, the
expulsion "significantly altered a status previously
recognized by state law" by prohibiting them from using
their Delaware racing licenses during the six months each
year when Dover Downs conducts the only harness racing
meets in the state.
Dover Downs argues that it "has not taken any action to
impede Appellants from pursuing their employment at any
other track."7 However, it is not necessary under Fitzgerald
for the Crissmans to prove that they can no longer race
anywhere in order to make out a S 1983 case. Fitzgerald,
like the Crissmans, was only evicted from one track. There
is nothing in the opinion to indicate that he was banned
from racing anywhere or even that he was banned from
racing throughout Pennsylvania. Although the Crissmans
are still free to race their horses at Harrington Raceway and
at tracks in other states, their Delaware racing licenses are
of no use to them for half of every year because of Dover
Downs' summary expulsion.
Dover Downs also disputes whether the Crissmans'
reputations were damaged by their exclusion from the
_________________________________________________________________
7. Dover Downs cites Greene v. McElr oy, 360 U.S. 474 (1959) as support
for the proposition that the denial of an employment opportunity does
not amount to a liberty or property right unless the plaintiff is entirely
deprived of his ability to earn a living in his chosen profession.
However,
Greene erects no such barrier to Due Process claims based on the denial
of employment opportunities. Rather, it mer ely noted that in that case,
the plaintiff 's career had been "seriously affected, if not destroyed" by
the government's action. Id. at 492. It then stated that the right "to
follow a chosen profession free fr om unreasonable governmental
interference comes within the liberty and property concepts of the Fifth
Amendment." Id. at 492. It is consistent with Greene to hold that eviction
from a track in a state where one is licensed to race constitutes an
unreasonable interference with the pursuit of one's chosen profession,
particularly when that track is the only place in the state that one can
practice one's profession from November through April.
10
track. It accurately points out that, in Fitzgerald, a
Pennsylvania Racing Commission Rule requir ed the track to
notify the Commission of all people excluded ther efrom.
Delaware, it seems, has no comparable r egulation. Dover
Downs seizes on this distinction and maintains that, except
to the extent that the Crissmans themselves publicized
their exclusion, their reputations have not been damaged
by this incident. On the other hand, their exclusion in all
probability would be known to the other owners and
trainers of race horses at the Dover Downs track, and those
associated with them. In our view, the Crissmans have
presented sufficient evidence to warrant trial on this issue.
Dover Downs acknowledges that the HRC was notified
orally of the Crissmans' expulsion. Although Dover Downs
tries to downplay the significance of this notification,
Fitzgerald held that the notification of the r elevant
regulatory agency amounts to a deprivation of the
plaintiff 's liberty interest in his employment reputation. See
Fitzgerald, 607 F.2d at 602. Moreover, Charles Lockhart's
deposition reveals that this notification was only given after
an HRC employee asked him whether Mr. Crissman had
been excluded from the track. Apparently, the HRC agent
asked "because he had heard that [Crissman] had been
[excluded]." (App. at 260). This testimony demonstrates that
the expulsion of the Crissmans from Dover Downs has, at
some point, been the subject of conversation in Delaware
harness racing circles. Although it r emains possible that
the Crissmans themselves are primarily r esponsible for the
publicity surrounding their exclusion, we believe, viewing
the evidence in the light most favorable to the Crissmans,
that there is a genuine issue of fact as to whether Dover
Downs' expulsion adversely affected their r eputation.
We conclude that the Crissmans have pr esented a triable
issue of fact as to whether their expulsion fr om Dover
Downs amounted to a deprivation of a liberty inter est
cognizable under S 1983 and an injury to their liberty
interest in employment reputation. The question then
remains whether they received due pr ocess of law. Under
Fitzgerald, a suspended harness racing trainer is entitled,
at the very least, to a reasonably prompt post-suspension
hearing. See Fitzgerald, 607 F.2d at 603. It is undisputed
11
that the Crissmans never received any hearing.
Accordingly, the District Court erred in granting summary
judgment for Dover Downs and we will remand this case for
trial.
V.
Finally, the Crissmans ask this court to reverse the
District Court's denial of their motion for a pr eliminary
injunction. A court ruling on a motion for a pr eliminary
injunction must consider the following four factors:
1) whether the movant has shown a reasonable
probability of success on the merits; 2) whether the
movant will be irreparably injured by denial of the
relief; 3) whether granting preliminary r elief will result
in even greater harm to the nonmoving party; and 4)
whether granting the preliminary relief will be in the
public interest.
Allegheny Energy, Inc. v. DQE, Inc., 171 F.3d 153, 158 (3d
Cir. 1999). We review the denial of a preliminary injunction
only for "an abuse of discretion, a clear error of law, or a
clear mistake on the facts." Id.
In light of our determination that a symbiotic relationship
existed between the State of Delaware and Dover Downs
and based on substantial evidence presented by the
Crissmans that they were denied due process of law, we
believe they had a reasonable chance of succeeding on the
merits.
The other three factors also cut in favor of the
Crissmans. The Crissmans have suffered irreparable harm
due to the denial of the injunction "because the nature of
harness racing is such that no adequate r emedy exists at
law to compensate [them] for losses to income and
reputation sustained from an unlawful suspension."
Fitzgerald, 607 F.3d at 601. Ther e is no evidence that Dover
Downs would be harmed if the Crissmans wer e allowed to
race. Finally, there is no evidence that the public would be
adversely affected if the Crissmans wer e reinstated at Dover
Downs. Thus, the District Court's denial of the Crissmans'
motion for preliminary injunctive relief will be reversed.
12
VI.
Accordingly, for the reasons set forth above, summary
judgment in favor of Dover Downs, Inc. will be r eversed and
the case remanded to the District Court, with directions to
grant plaintiffs' motion for preliminary injunctive relief, and
for such further proceedings as are consistent with this
opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
13