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. e du/thir dc ir c uit_2001/123Filed 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

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* Hon. Richard D. Cudahy, Senior Judge, United Stat es 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 de termine whether the expulsion of three state-licensed horse -trainers and horse owners by a privately owned harness racin g association from its racetrack without a hearing co nstitutes state action for purposes of 42 U.S.C. S 1983. 1 Th e District Court concluded that no state action was present an d granted summary judgment in favor of Dover Downs, t he racetrack operator. Because the plaintif fs present ed conclusive evidence that the track enjoyed a symbio tic relationship with the State of Delaware, we reverse

.

I.

Appellee, Dover Downs, Inc. (Dover Downs), is a subsidiary of Dover Downs Entertainment Inc., a pub licly held corporation operated for profit. Dover Downs i s licensed by the Delaware Harness Racing Commission (HRC) to conduct harness races at its track in Dove r, Delaware. It conducts harness racing meets six mont hs out of every year, during which time no other track in Delaware holds harness racing meets.2 Dover Downs also opera tes

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1. 42 U.S.C. S 1983 provides: "Every person who, un der color of any . . . regulation . . . of any state . . . subjects, or ca uses to be subjected,

any citizen of the United States . . . to the deprivati on of any rights, privileges, or immunities secured by the Constituti on and laws, shall be liable to the party injured in an action at law, su it in equity, or any

other proper proceeding for redress."

2. Harrington Raceway, the only other licensed harn ess racing facility in Delaware, conducts races during the six months each year that Dover

Downs does not.

2video lottery gambling and other entertainment acti vities at

its facility.

Harness racing is a heavily regulated business in Delaware, as it is in most states. The State of Del aware plays an active role in the management of the harne ss racing operation at Dover Downs. The State r equire s that 14 harness racing officials assigned to Dover Downs , with titles ranging from "equipment checker" to "state veterinarian," be licensed by the HRC. Although Dov er Downs pays and supervises these officials, HRC rule s set forth their duties and job descriptions in detail. Moreover, HRC rules require Dover Downs to "enfor ce the [Har ness Racing] Act and the rules and orders of the Commiss ion."

In 1993, Delaware passed the "Horsemen's Revitaliza tion Act," whose stated purpose was to rejuvenate the de clining Delaware horse-racing industry. See 29 Del. C. S 48 01(b)(1). To achieve this goal, the legislature authorized ha rness racetracks such as Dover Downs to operate "video lo ttery 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 conne cted to the Delaware State Lottery Office for monitoring an d control. See 29 Del. C. S 4819. Dover Downs, as a " video lottery agent," is responsible for securing and ope rating the machines, and is free to determine the number of ma chines it chooses to house, up to the statutory maximum of 1000 machines. See 29 Del. C. S 4820. Nonetheless, a Del aware statute plainly states that the video lottery is op erated "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 D elaware statute requires Dover Downs to send all r evenue f rom 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 distrib uted in accordance with Delaware statute, which is painstak ingly specific. First, the State pays administrative cost s associated with the operation of the lottery, inclu ding 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

3that remains. The statute then directs that a perce ntage of

the remaining funds be given to racetracks such as Dover Downs "to be applied under the direction of the Del aware Harness Racing Commission to purses for races condu cted at such agent's racetrack." 29 Del. C. S 4815. Fina lly, Dover Downs, as a video lottery agent, receives a statuto rily 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 stat e of
Delaware to own and train race horses. In October 1 997, Charles Lockhart, the newly-appointed general manag er 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. L ockhart offered the Crissmans no explanation for their excl usion and no opportunity to be heard. Lockhart's depositi on in this proceeding discloses that he expelled the Cris smans because he had heard unconfirmed rumors that the HR C was investigating Charles Crissman for certain alle ged improprieties. Lockhart decided to exclude W endy a nd Christine Crissman only because they had applied jo intly
with Charles Crissman to race at Dover Downs. The Crissmans, however, were all licensed in good stand ing and there is no indication of record that they had viol ated 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 f or the District of Delaware. The complaint alleged that Do ver 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 wel l as preliminary and permanent injunctive r elief restra ining the defendants from denying them access to the racetrac k. When they filed their complaint, the Crissmans move d for a temporary restraining order. The District Court d enied 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, ho lding

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3. On or about November 1, 2000, Christine Crissman stipulated to a dismissal of her appeal with prejudice.

4that 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 fo r 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 privatel y owned
restaurant for racial discrimination. The r estaura nt leased the land on which it stood from a state agency, whi ch ran the adjacent public parking garage. After examining the close relationship between the restaurant and the s tate agency, the Supreme Court concluded that state acti on 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 d ependence" with the private actor, the state "must be recogniz ed 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 cond uct 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 ab sent in a case challenging racial discrimination by a private club that was heavily regulated by the Pennsylvania Liquor Co ntrol Board. The essence of the Court's holding was that extensive and detailed regulation of a private enti ty 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 w as in

5some particulars, could not be said "to in any way foster or

encourage racial discrimination." Id. at 176-177. I n addition, the court noted that, in spite of the r e gulation to which the State subjected the Moose Lodge, the Stat e could not be said to be "a partner or even a joint ventur er in the club's enterprise." Id. at 177.

III.

Summary judgment is appropriate only when the r eco rd could not lead a reasonable jury to find for the no n-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 th e nonmovant. See Matsushita Elec. Indus. Co. v. Zenith R adio 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 co nstitute 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 Ci r. 1990). However, we believe that the r ecord in this case shows that the affairs of the State and the racetra ck were much more than a regulatory relationship between th e State and a private gambling enterprise. For instan ce, 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, 5 42-43 (5th Cir. 1977)(finding symbiotic r elationship abs ent and emphasizing that private party was not a lessee of state property). The State maintains control over these s lot machines by directly connecting them to the central computer system at the State Lottery Office. In add ition, and perhaps most important to the symbiotic r elati onship analysis, Dover Downs is the State's agent in the v ideo lottery enterprise. Because of this agency r elatio nship, the State stands to gain or lose substantial revenue as a result of business decisions made by Dover Downs.4 The sit uation

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4. As it turns out, the stakes are quite high. In 1 998, slot machines from Delaware's three video lottery agents br ought $206 million into

Delaware's General Fund.

6here is even more striking than the symbiotic relat ionship

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 ab ility to pay

rent.

Dover Downs urges this court to view the video lott ery operation in which, Dover Downs concedes, the State is heavily involved, as separate from its har ness-rac ing activities. It argues that, because the Crissmans w ere banned from participating in harness races, this co urt 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 predica tes state action not merely on its participation in the chall enged conduct, but on the overall involvement of the Stat e in the affairs of the private entity. See Braden v. Univer sity of Pittsburgh, 552 F.2d 948, 958 (3d Cir. 1977)(holdin g that symbiotic relationship test does not require that t he 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 depende nce with" the private actor. Burton, 365 U.S. at 725. When su ch a relationship of interdependence exists, aS 1983 pla intiff need not show state participation in the challenged activity.
See id. at 958.

Moreover, Dover Downs' contention that we should ig nore the State's involvement in the video lottery is not persuasive because the record reflects that video lottery is i nextricably 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 in creased economic activity and vitality for Delaware's harne ss and thoroughbred horse racing industries, which activit y and vitality will . . . cause increased employment." Se e 29 Del.C.

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5. Dover Downs' argument is more in tune with the " close nexus" test, articulated by the Supreme Court in Jackson v. Metr opolitan Edison Co., 419 U.S. 345 (1974), which held that, in the absenc e of a symbiotic relationship, state action may be found if the stat e was a participant in the challenged activity.

7S 4801(b)(1). Under Delaware law, Dover Downs would not

be permitted to operate a video lottery if it did n ot conduct harness racing meets. See 29 Del. C.S 4819(a). To effectuate the stated purpose of the statute, Delaw are gives a portion of the lottery's revenue to Dover Downs t o be applied to harness racing purses "under the directi on of the Delaware Harness Racing Commission." 29 Del. C. S 4815(b)(3) b.2. Thus, the recipients of harness r acing purses are direct beneficiaries of r evenues derive d from the video lotteries jointly operated by the State and t he 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 invo lved in Dover Downs' harness racing activities. Ther e are many positions which Dover Downs is not permitted to fil l without State approval. The HRC requir es no fewer than 14 harness racing officials to be licensed 6 and it re serves the right to designate other positions that requir e li censes. Although Dover Downs pays and supervises these offi cials, HRC rules describe their duties and responsibilitie s in detail. Most importantly, HRC rules requir e Dover Downs not only to abide by, but also to "enfor ce the [Ha rness Racing] Act and the rules and orders of the Commiss ion." (App. at 67)(emphasis added). In Jackson, the Supre me Court stated that the petitioner's case for state a ction would have been stronger if the private actor had "exercise[d] . . . some power delegated to it by th e State which is traditionally associated with sover eignty ." Jackson, 419 U.S. at 352-53. The power to enforce laws is on e 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 neces sarily give rise to a Burton symbiotic relationship. However, t he undisputed facts here show such a deliberate entwin ing and interdependence between the State and Dover Dow ns, not only in the operation of the State Lottery but also in the

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6. The following individuals must be licensed by th e HRC: state steward, board of judges, racing secretary, paddock judge, h orse identifier and equipment checker, clerk of the course, official st arter, official charter, official timer, photo finish technician, patrol jud ge, program director, State veterinarian, and LASIX veterinarian. (App. a t 59).

8harness 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 e ssion. The
overall involvement of the State in the affairs of the race track is manifest. We reject, ther efore, Dover Dow ns' arguments that the State specifically must be invol ved in the challenged activity or that the lottery activit ies can be insulated from the race track operations.

For all of the reasons discussed above, the Crissma ns have established that a symbiotic relationship exis ts
between Delaware and Dover Downs. The District Cour t's grant of summary judgment for Dover Downs on the st ate
action issue will therefore be reversed.

IV.

Our inquiry does not end with the state action anal ysis because, even if state action is present, the Criss mans must also demonstrate a triable issue of material f act as to whether their constitutional right to Due Pr ocess was violated. We must now consider whether the Crissman s made such a showing, a question which the District Court
did not address.

In Fitzgerald v. Mountain Laurel Racing , supra, th is Court held that a horse trainer who had been summarily ev icted from the track where he previously raced had made o ut a case of deprivation of due process. This court reco gnized that "Fitzgerald had a liberty interest in his empl oyment 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 Fi tzgerald's
status as a state licensed trainer and drive r by allowing him to perform these activities at the track . His summary expulsion significantly altered a`st atus previously recognized by state law' and deni ed him the opportunity of earning a livelihood. W e, th erefore, agree that Fitzgerald has a cognizable liberty int er est.

Id., quoting Paul v. Davis, 424 U.S. 693, 711 (1976 ).

9The 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 st ate of
Delaware to train and race horses. Prior to the cha llenged expulsion, Dover Downs had recognized that status b y allowing them to race their horses there. Mor eover , the expulsion "significantly altered a status previousl y recognized by state law" by prohibiting them from u sing their Delaware racing licenses during the six month s each year when Dover Downs conducts the only harness rac ing
meets in the state.

Dover Downs argues that it "has not taken any actio n to impede Appellants from pursuing their employment at any other track."7 However, it is not necessary under F itzgerald for the Crissmans to prove that they can no longer race anywhere in order to make out a S 1983 case. Fitzge rald, like the Crissmans, was only evicted from one track . There is nothing in the opinion to indicate that he was b anned from racing anywhere or even that he was banned fro m racing throughout Pennsylvania. Although the Crissm ans are still free to race their horses at Harrington R aceway and at tracks in other states, their Delaware racing li censes 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 th e

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7. Dover Downs cites Greene v. McElr oy, 360 U.S. 4 74 (1959) as support for the proposition that the denial of an employmen t opportunity does not amount to a liberty or property right unless th e plaintiff is entirely deprived of his ability to earn a living in his cho sen profession.
However,
Greene erects no such barrier to Due Process claims based on the denial of employment opportunities. Rather, it mer ely not ed that in that case, the plaintiff 's career had been "seriously affecte d, 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 Green e to hold that eviction
from a track in a state where one is licensed to ra ce constitutes an unreasonable interference with the pursuit of one's chosen profession, particularly when that track is the only place in t he state that one can practice one's profession from November through Apr il.

10track. It accurately points out that, in Fitzgerald , a

Pennsylvania Racing Commission Rule requir ed the t rack to notify the Commission of all people excluded ther e from. 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 publici zed their exclusion, their reputations have not been da maged by this incident. On the other hand, their exclusio n in all probability would be known to the other owners and trainers of race horses at the Dover Downs track, a nd those associated with them. In our view, the Crissmans ha ve presented sufficient evidence to warrant trial on t his issue.

Dover Downs acknowledges that the HRC was notified orally of the Crissmans' expulsion. Although Dover Downs tries to downplay the significance of this notifica tion, Fitzgerald held that the notification of the r elev ant regulatory agency amounts to a deprivation of the plaintiff 's liberty interest in his employment rep utation. See Fitzgerald, 607 F.2d at 602. Moreover, Charles Lock hart'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 a gent asked "because he had heard that [Crissman] had bee n [excluded]." (App. at 260). This testimony demonstr ates that the expulsion of the Crissmans from Dover Downs has , at some point, been the subject of conversation in Del aware harness racing circles. Although it r emains possib le 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 Cri ssmans, that there is a genuine issue of fact as to whether Dover Downs' expulsion adversely affected their r eputati on.

We conclude that the Crissmans have pr esented a tr iable issue of fact as to whether their expulsion fr om D over Downs amounted to a deprivation of a liberty inter est cognizable under S 1983 and an injury to their libe rty interest in employment reputation. The question the n remains whether they received due pr ocess of law. Under Fitzgerald, a suspended harness racing trainer is e ntitled, at the very least, to a reasonably prompt post-susp ension hearing. See Fitzgerald, 607 F.2d at 603. It is und isputed

11that the Crissmans never received any hearing.

Accordingly, the District Court erred in granting s ummary judgment for Dover Downs and we will remand this ca se for
trial.

V.

Finally, the Crissmans ask this court to reverse th e District Court's denial of their motion for a pr el iminary injunction. A court ruling on a motion for a pr eli minary injunction must consider the following four factors :

1) whether the movant has shown a reasonable probability of success on the merits; 2) whe ther the movant will be irreparably injured by denial of the relief; 3) whether granting preliminary r el ief 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 i njunction 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 rela tionship
existed between the State of Delaware and Dover Dow ns 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 na ture of harness racing is such that no adequate r emedy exi sts 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 allowe d to race. Finally, there is no evidence that the public would be adversely affected if the Crissmans wer e reinstate d at Dover Downs. Thus, the District Court's denial of the Cri ssmans' motion for preliminary injunctive relief will be re versed.

12VI.

Accordingly, for the reasons set forth above, summa ry judgment in favor of Dover Downs, Inc. will be r ev ersed and the case remanded to the District Court, with direc tions 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

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