Opinion ID: 397422
Heading Depth: 1
Heading Rank: 2

Heading: USTA's Misappropriation Claim

Text: 12 In its first two complaints USTA contended that defendants had misappropriated its records and services, particularly its registration and eligibility certificates, and therefore sought an accounting, money judgments and injunctive relief. After defendants filed a motion for summary judgment on the ground that the certificates were the property of the horse owners to whom issued, USTA filed a cross-motion for summary judgment on the ground that its affidavits and exhibits showed that defendants were liable for misappropriation of plaintiff's property. The district court held that USTA had failed to persuade it that USTA owned the registration and eligibility certificates and therefore granted defendants' motion for summary judgment, stating that USTA has established no proprietary interest in the certificates or the information contained therein. 487 F.Supp. at 1014 and n. 22. However, the court and defendants left unanswered USTA's affidavits and documentary materials supporting its cross-motion. 13 In support of affirmance defendants contend that USTA's cross-motion for summary judgment precludes it from now claiming that there are certain disputed questions of fact. But the filing of a cross-motion for summary judgment does not prevent a plaintiff from contending on appeal that there is a dispute as to material facts. Case & Co., Inc. v. Board of Trade of City of Chicago, 523 F.2d 355, 360 (7th Cir. 1975). 14 The eligibility certificates have the following legend on their face: 15 This eligibility certificate and the information contained on it are the property of USTA and all rights to its use and reproduction are reserved by it. Use of this certificate and the information contained hereon is restricted to members of USTA and tracks contracting with the Association and only for the purposes of entering, classifying and identifying the horse named hereon and for recording its performances. Permission for any other use of this certificate and the information contained on it or for its use by any other person or organization must be obtained from USTA. 6 16 In deciding that this language did not raise an inference of ownership, the district court found that th(e) expression of ownership is negated by the adhesive nature of the contract between horsemen and USTA. 487 F.Supp. at 1014. The record, however, does not support a finding of adhesion. We do not deal here with parties of vastly disparate bargaining power, to whose agreements the adhesion doctrine is properly applied. Rather horseowners and other USTA members collectively select a Board of Directors which supervises the USTA and which, together with the officers, establishes USTA's operating procedures. Thus there are institutional means available through which the horseowners collectively can modify or eliminate any terms in the eligibility certificates with which they disagree. 17 The adhesion argument has also been recently rejected in a challenge to a forum selection clause in the USTA by-laws. In language equally applicable here the court said: 18 Plaintiffs assert that the USTA has successfully achieved its goal of regulating the entire harness racing industry, and that by virtue of its control of the sport, membership in the USTA is, practically speaking, compulsory for all who wish to compete in the United States and Canada. Thus, plaintiffs argue, the forum clause is in reality part of a contract of adhesion to which they did not freely assent. But, even assuming the accuracy of their description of the USTA's power, plaintiffs' contention that the by-law is thus unenforceable as a matter of contract law    cannot be accepted. This is not a situation where the court is asked to enforce a highly prejudicial term in a contract between two parties of significantly different bargaining power, which term is to the benefit of the stronger and the detriment of the weaker. Plaintiffs have entered into a contract with their fellow members, who adopted the instant by-law for their mutual benefit. Collectively, they retain the power to change it. Cases concerning overwhelming bargaining power in a commercial context are simply inapposite. Moreover, plaintiffs' argument proves too much, for it would vitiate every by-law of a host of membership associations. 19 Cruise v. Castleton, Inc., 449 F.Supp. 564, 570 (S.D.N.Y.1978) (citation omitted). In our view, the language on the eligibility certificates is not nullified by adhesion; instead it is valid and sufficient to rebut the presumption that ownership of the eligibility certificates rested with horsemen who happened to possess them. 7 20 USTA ownership of the registration certificates presents more difficult issues. Unlike the eligibility certificates, the registration certificates do not contain an explicit affirmation of USTA ownership. Once issued by USTA, registration certificates remain in the possession of the horseowner, except when they are temporarily sent to USTA to record transfers of title. Judge Aspen likened the registration certificates to certificates of registration of motor vehicle ownership. 487 F.Supp. at 1013 n. 18. Like USTA, the State has a strong interest in accuracy and up-to-date ownership information, but it does not, at least in Illinois, own motor vehicle registrations. 8 Resisting this analogy, USTA notes that horseowners do not have unfettered control over the use of registration certificates: USTA can impose penalties on owners who fail to report sales of registered horses or who submit false information; and USTA can cancel registration certificates if the information on them is incorrect. USTA also emphasizes the importance of the registration certificates to its centralized recordkeeping. On the present record we agree with the court below that USTA has not met the burden of proving ownership in the registration certificates and therefore lacks the predicate for a misappropriation claim as to them. Our ruling, however, does not prevent USTA from submitting further evidence on remand to show that it has sufficient ownership rights to ground a misappropriation claim. 21 In sum, USTA is entitled to an accounting, damages and an injunction on the misappropriation claim based on the eligibility certificates. USTA may also be able to adduce further facts to support its ownership claims in the registration certificates. 9 Even if it cannot, however, judgment for defendants should not be construed as suggesting that USTA is not entitled to reimbursement for the services it provides to nonmember tracks. 487 F.Supp. at 1014 n. 22. USTA will have the burden of identifying the services and proving a reasonable charge for them. Id. at 1017 n. 37.