Court Opinion

ID: 7821474
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:56:02.164587+00
Date Added: 2024-06-11T16:30:44.977373
License: Public Domain

. John I. Purtle, Justice, dissenting. I cannot agree with the majority when they allow any person to be deprived of due process of law by an entity which is in actual operation an agency of the State of Arkansas. I believe the facts of this case, when considered in their totality, clearly require the decision of the trial court to be reversed both from the standpoint that the action complained of here is an indirect state action and, furthermore, that the appellant held a vested property right which had been taken from him without due process of law. There would be no pari-mutuel wagering in Arkansas if it were not for Amendment 46 to the Constitution of Arkansas which states: Horse racing and pari-mutuel wagering thereon shall be lawful in Hot Springs, Garland County, Arkansas and shall be regulated by the General Assembly. This amendment, approved by the people of Arkansas, allows pari-mutuel wagering on horse racing in Hot Springs, Garland County, Arkansas, under such regulations as the General Assembly may prescribe. Nothing in the amendment allows the Oaklawn Jockey Club, Inc. to prescribe the conditions for racing in Hot Springs. The legislature saw fit to create the Arkansas Racing Commission and give it certain functions, duties, and responsibilities, as evidenced by Ark. Stat. Ann. § 84-2701 et seq. (Repl. 1980). The Commission in turn has created its own operating rules and regulations. The Oaklawn Jockey Club, Inc. came into possession of the franchise in this case by operation of Ark. Stat. Ann. § 84-2735 (Repl. 1980) which reads: Horse racing may be conducted in all political subdivision of the State of Arkansas in addition to the City of Hot Springs, Garland County, Arkansas, wherein horse racing has been made lawful by Amendment 46 to the Constitution of the State of Arkansas, but only by the holder of a franchise granted by the Commission; and the Commission may grant a franchise only to a corporation organized under the laws of this State. Franchises may not be granted by the Commission to individuals, partnerships, associations, trusts, or to any others except corporations as in this section provided. It can be seen from this statute"that the General Assembly has restricted the operation of parti-mutuel wagering to the Oaklawn Jockey Club, Inc. as the- “one” selected by the Commission. No other city in Arkansas may be granted a franchise regardless of the language in the statute. Ark. Stat. Ann. § 84-2742 (Repl. 1980) provides the Commission with full, complete and sole power and authority to promulgate rules, regulations, and orders, and to prescribe conditions under which horse racing shall be conducted by a franchise holder. The statute further states that the authority so granted shall be exercised by the Commission in a reasonable manner and that any person or taxpayer shall have redress to the Pulaski County Circuit Court for any wrong committed by the Commission in the exercise of its authority. This statute provides that the Commission, rather than the franchise holder, has the final authority to determine who shall be the officers, employees, or agents in charge of directly administering the races and handling funds which may be wagered on these races. The Commission is further granted the power to compel the discharge of any employee of the franchise holder who fails or refuses to comply with the orders of the Commission or who is, in the opinion of the Commission, guilty of fraud or dishonesty. The Commission gives the franchise holder 10% of all wagers plus 90% of the gate receipts to operate the track for the state. Ark. Stat. Ann. § 84-2749 and § 2750 (Repl. 1980). The General Assembly for the State of Arkansas sets the number of days which races may be held during each year. The franchise holder does not even have the right to set the date for the racing meet because this power is reserved to the Commission by the legislature. Ark. Stat. Ann. § 84-2744 (Repl. 1980). The state collects $500 per day from the franchise holder, and, in addition, is given a commission of 6% of all wagering plus 10% of the gate receipts. Ark. Stat. Ann. § 84-2750 (Repl. 1980). The Commission has offices and personnel on the premises; and, they work in harmony with, and supervise, the franchise holder throughout the racing season. Also, the state sets the license fee for each horse owner, trainer, jockey, and agent who participates at Oaklawn. These fees are paid to the state. Ark. Stat. Ann. § 84-2746 (Repl. 1980). Another area of cooperation between the state and the franchise holder is the issuance of free passes to the races. Ark. Stat. Ann. § 84-2750 (Repl. 1980). Thousands of season passes and daily passes are issued to the Executive Department for the State of Arkansas and to members of the General Assembly and other elected officials. These passes are then passed on to persons deemed worthy of receiving them by the various grantees of the passes. No doubt, passes are issued to other than state officials, but, nevertheless, a sufficient number are issued to show a considerable interest by the state in the operation of the race track. In any event, it is the Commission which authorizes the thousands of passes to the races. Horse racing at Oaklawn is an exclusive monopoly under which only the Oaklawn Jockey Club, Inc. is allowed to operate. It is allegedly for the benefit of the people of the State of Arkansas, and certainly, there are no legislative restrictions concerning who may attend the races, as long as they are age 16 or older, pay the entrance fee or are able to obtain a pass. Everyone admits the state could not do what the appellee did in this case. The question is did the state do it indirectly. Despite this monopoly granted by the people of the State of Arkansas, the Oaklawn Jockey Club, Inc. claims the right to exclude any person under any circumstances they deem appropriate. Indeed, they argue they have the authority to exclude a person because he has red hair or false teeth or for any other reason. Certainly they have demonstrated that they intend to exclude any person against whom they have heard a rumor that displeases them. It is obvious that it was the Oaklawn Jockey Club, Inc. that “called the shots” in this case rather than the Racing Commission, which theoretically holds this power. In effect, the Commission exercised its authority in this case through Oaklawn for the purpose of trying to evade the due process rights of appellant. The franchise holder has certain personnel on its property known as “TRA officers.” These so called “officers” are empowered by the club to take any person into custody and question them or even “throw them off the track.” The state cooperates with these TRA people to the extent that regularly commissioned officers of the state, county and city are on the tracks to assist in these operations. No clearer course of state action could be found than that which is exercised by these people who call themselves “TRA officials.” In fact, they are “super” policemen because they have the right to expel a man and his horses from the premises based entirely upon rumor and suspicion. No other such circumstances are allowed to exist anywhere in the State of Arkansas as far as I have been able to determine. The power which Oaklawn wields is clearly demonstrated in the procedure held by the Commission and the court below. Even though the state licensed the appellant, finding no valid legal reason not to do so, the franchise holder warned the Commission it would do no good to grant the license because they intended to prevent appellant from racing, regardless. Thus, it became Oaklawn that made the decision and overruled the Racing Commission. Oaklawn is clearly exercising state power in circumstances as are present in this case. As far as the bookmaking activities of the appellant is concerned, it was rank hearsay and did not rise to the dignity of a first-class rumor. Appellant had raced horses at Oaklawn for 25 years prior to this incident. Only the appellant appeared and testified under oath. The TRA officials, who made the allegations in the first place, respectfully declined to appear and undergo cross-examination. Obviously, appellant was never convicted of a crime, which is one of the reasons the Commission could use to refuse to issue him a license. Perhaps the Commission was afraid to disobey the wishes of Oaklawn for fear they would be thrown off the track. The majority relies heavily upon the opinion in Jackson v. Metropolitan Edison Co., 419 U.S. 345 (1974). Although I disagree with the results in the Jackson case, as did several members of the United States Supreme Court, I think it can easily be distinguished on its facts from the case before us. Perhaps there was not a sufficiently close nexus between the state and the franchise holder to show state action either directly or indirectly. However, the facts in the present case go far beyond those in Jackson. There, the state granted the franchise and approved the rates, and there was no further association between the state and franchise holder. In the present case there is a daily supervision by state officials, a daily fee collected, a commission on the wagering, 10% of the gate receipts, and police protection and supervision on the premises. The state has veto power on employees of Oaklawn who run the races and collect the money. There is more state supervision and control at the Oaklawn Jockey Club, Inc. than there is at a Razorback football game. Certainly, no one would argue that a man with red hair or false teeth could be excluded, for that cause, from a Razorback game. A case very close to the present facts is that of Burton v. Wilmington Parking Authority, et al, 365 U.S. 715 (1961). In Burton the appellant was refused services at a public restaurant because he was black. The State of Delaware denied the appellant relief on the theory that there was not sufficient state action to allow standing for Burton to bring his action based upon discrimination in violation of the equal protection clause of the Fourteenth Amendment to the Constitution of the United States. In Burton the city of Wilmington created an agency known as the Wilmington Parking Authority. The law relied upon in excluding appellant in Burton stated that the proprietor of a restaurant may refuse to serve “persons whose reception or entertainment by him would be offensive to the major part of his customers. . . .” The test set out in Burton was one of “sifting the facts and weighing the circumstances” in order to determine the nonobvious involvement of the state in private conduct. We must sift the facts and weigh the circumstances and in doing so there is no question in my mind but that there is a sufficiently close nexus between the state and Oaklawn that the action complained of in this matter is clearly state action. If the nexus were any greater, the state would have full and complete control of all activity at the track. It is impossible to find any type of measuring stick or device which would allow us to determine what amounts to state action except that we must examine all of the facts in each case. Sometimes it becomes as difficult as tracking a snake across the interstate highway to follow the action of the state through the legislation, the Commission, and the clubs. Here the tracks are very visible all the way from the legislature to the incident in question. In this case it started with state action and ended with the denial of the appellant’s continued operation as an owner and trainer of thoroughbreds at Oaklawn. It is the ground between these two points that confuses my brethren. To me it is quite clear that the state is so entwined and engaged in the operation that it has become a joint venture between the state and Oaklawn. The two have become inextricably partners in the operation of the races at Oaklawn, and the state should not now be allowed to wash its hands and stand back as did Pontius Pilate. Ark. Stat. Ann. § 84-2734(f) (Repl. 1980) defines some of the duties of the Racing Commission when it states: (f) Take such other action, not inconsistent with the law, as it may deem necessary or desirable to supervise and regulate, and to effectively control in the public interest, horse racing in the State of Arkansas. Any function granted to the Commission which it delegates to Oaklawn is still state action. The state cannot do indirectly what it cannot do directly. The nexus between the state and Oaklawn could not be greater without throwing the franchise holder off the track. Up to this point I have primarily dealt with the Fifth and Fourteenth Amendment rights of the citizens of the United States and the State of Arkansas. The Fourteenth Amendment deals with state action which may be either direct or indirect as the foregoing discussion has shown. However, property rights between citizens and/or organizations other than the government had been provided for in Chapter 42 of the United States Code Annotated. For example, 42 U.S.C.A. 1982 states that all citizens of the United States shall have the same right, in every state and territory, as enjoyed by white citizens thereof, to inherit, purchase, lease, sell, hold and convey real and personal property. 42 U.S.C.A. 1981 provides that all persons within the jurisdiction of the United States shall have the same right to make and enforce contracts and, in general, be entitled to full and equal benefits provided to other citizens. No doubt, 42 U.S.C.A. 1983 has given rise to more action than any other single statute in the United States. Section 1983 applies to every person who acts under color of law . . . custom or useage of any state subjects citizens to the deprivation of any rights . . . secured by the constitution and laws, shall be liable to the party injured either at law or in equity. An attempt to deny black persons membership in the Y.M.C.A., because of their color, was declared to be a violation of § 1981. Smith v. Young Men’s Christian Ass’n of Montgomery, 462 F. 2d 634 (5th Cir. 1972). It has been held that the ticket for admission to a place of entertainment is a contract within the provisions of § 1981. Therefore, defendants who denied black persons admission to a place of entertainment were violating the rights of those excluded. Scott v. Young, 421 F. 2d 143 (4th Cir. 1970), cert. denied 398 U.S. 929. A similar situation was dealt with in Tillman v. Wheatson-Haven Recreation Assn., 410 U.S. 431 (1973). A group of people attempted to organize a private club for the purpose of operating a swimming pool. Although the area had a geographical limitation for qualifying for membership, they further attempted to exclude black persons from the swimming pool. The Supreme Court held that this was in violation of § 1982. These laws were passed shortly after the civil war; and, although they lay dormant for many years, they have been used very successfully in recent years. It has long been recognized that an interest in a lawful business in a species of property entitled to the protection of due process. Goldsmith v. Bd. of Tax Appeals, 270 U.S. 117 (1926); Greene v. McElroy, 360 U.S. 474 (1959). Such interests may not be viewed as merely a privilege subject to withdrawal or denial at the whim of the state, nor may such interests be dismissed as de minimis. Frontier Salon, Inc. v. Alcoholic Beverage Con. Bd., Alaska, 524 P. 2d 657 (1974). Further, the Supreme Court has repeatedly refused to recognize a distinction between privileges and rights in determining the applicability of due process. Goldberg v. Kelly, 397 U.S. 254 (1970). Moving to a case very close in point is the one we are now considering, we look at Barry v. Barchi, 443 U.S. 55 (1979). The United States Supreme Court held that a licensed trainer, whose license was suspended for a bad test on one of his horses, had a property interest in the license under state law sufficient to invoke the due process protection. The Court stated: ... as a threshold matter, therefore, ■ it is clear that Barchi had a property interest in his license sufficient to invoke the protection of the due process clause. .. . There is no room for reasonable doubt that the action in the present case was actually state action. Although the Racing Commission obviously shirked its duty and allowed Oaklawn to act in its stead, the action is, nevertheless, still state action. It would serve no useful purpose to list countless cases which hold that a license, particularly involving livelihood, requires procedural due process as well as a reasonable justification and a meaningful and timely hearing prior to suspension of said license. Franklin v. State, 267 Ark. 311, 590 S.W. 2d 28 (1979); Jacobson v. New York Racing Association, Inc., 341 N.Y.S. 2d 333 (1973). The Supreme Court reached a result inJacobson contrary to the majority in the present case. In that case a licensed owner and trainer of thoroughbreds brought suit when the franchise holder refused to allot him any stalls following a 45-day suspension. He had been allotted stall spaces for 20 years prior to the suspension. The franchise holder refused to allow stalls to the trainer-owner on the ground that his character was not approved “as being sufficiently good to have him racing” at the corporation’s tracks. The Supreme Court of New York held an owner and trainer of thoroughbreds cannot be deprived of a facility, previously granted to him, by an arbitrary refusal of the entity franchise to conduct thoroughbred races with pari-mutuel betting. The Court held that the requirements of due process must be met whenever the state has so far insinuated itself into a position of interdependence that it must be recognized as a joint participant in the challenged activity. In Jacobson v. New York Racing Association, Inc., supra, the Court held that the franchise holder has a monopoly, except for one track, in the State of New York, and that its refusal to provide stable space prevented the owner from pursuing his livelihood as an owner and trainer of thoroughbred horses. The Court pointed out that the Racing Commission was the sole authority entitled to pass on the character of persons engaged in racing. The Court further stated: We think that the close regulation of the appellant (franchise holder) by the Racing Commission, the delegation to appellant of the conduct of pari-mutuel betting, and control over the affairs of the appellant exercisable by the Racing Commission are strong evidence of state involvement. In this context the franchise granted by the state, the franchise fee consisting of the taxable income of the appellant subject to stipulated deductions, and the disposition of the assets of the appellant to “exempt” organizations designated by the Governor on its disillusion becomes highly significant. . . . Certainly, there is more involvement by the state in Oaklawn than was shown in Jacobson v. New York Racing Association, Inc., supra. When the state moves into private sector, it brings with it its burdens as well as its benefits. A franchise to conduct horse racing did not exist in common law and exists here solely upon the authority of the state through Amendment 46 to the Constitution. The Oaklawn Jockey Club, Inc. had no right prior to Amendment 46 to conduct races anywhere in Arkansas. It derives its every fiber through the action of the state. Many cases have held wherever the state or federal government becomes so involved in what would be otherwise private business that such activities become those of the government. Simkins v. Moses H. Cone Memorial Hospital, 323 F. 2d 959 (4th Cir. 1963); Smith v. Holiday Inns of America, Inc., 336 F. 2d 630 (6th Cir. 1964); Saratoga H.R.A. v. Agric & N.Y.S.H.B.D.F., 291 N.Y.S. 2d 335 (1968). No doubt, the legislature and the Racing Commission had in mind the public interest of the people of the State of Arkansas when they set up the controls and regulations governing horse racing and pari-mutuel wagering. Surely, they realized there was a danger in allowing a franchise holder to refuse to allow any owner, trainer, jockey, or agent to participate in the races for no reason at all. This, no doubt, is why the Racing Commission kept to itself the authority to license these people and to collect the fee for the license. The Commission believed that a franchise holder could prevent certain persons and horses from appearing at Oaklawn in a manner which would result in the franchise controlling the results of the races. If by some chance only a selected few owners and trainers were allowed to race, results might be very nearly determined in advance of the races. Also, those who reside in Arkansas and earn their livelihood in the state might well be denied the right to earn a living in Arkansas upon the arbitrary whim or caprice of the franchise holder. It would appear that if the franchise holder were allowed to exclude all patrons from the premises who are not acceptable to the franchise holder, the results could be a selected audience which comports to the views of the franchise holder. Not only would this likely result in discrimination but could also result in the loss of money to the State of Arkansas. I would not under any circumstances argue that the operator of the track would have to tolerate any person creating a public disturbance or otherwise violating the law while on the track. The Oaklawn Jockey Club, Inc. is an Arkansas corporation organized for the sole purpose of operating the racing and pari-mutuel wagering at Hot Springs. As far as the record reveals, there is no membership roster, and no one pays any dues to the club. It is obvious that this club is not a private club within the ordinary meaning of the word. In fact, it is perhaps the most public club in Arkansas. Shortly before and during the racing meet, the advertising media carries a heavy load of advertisement directed at the public in attempting to get the public to attend the races at Oaklawn. To say that it is not a public organization is to defy logic. Appellant does not claim he was thrown off the track because of race, sex, or other discriminatory criterion. He claims he was deprived of property and liberty without due process of law which is applicable to every citizen of America, on paper at least. The majority obviously is overlooking the fact that the state is the actual operator of this facility, and whatever Oaklawn does is done as an arm of the Racing Commission. Oaklawn is in error when it claims the right in Arkansas “to act concerning patrons or patrons who may be licensees without regard to due process standards, prehearing or posthearing.” The appellant had been training and racing horses at Oaklawn for 25 consecutive years prior to this incident. He also races in many other states. His investments in racing horses, primarily in Arkansas, exceed a million dollars. His very livelihood is at stake. He can never race again at Oaklawn, or any other track, nor can any of his horses be raced, unless this action is reversed. Obviously, the Commission is not going to order reinstatement as it has ducked its responsibility on previous occasions. Firmly believing that no person should be deprived of life, liberty, or property without due process of law, I would reverse this case with directions to the Racing Commission to order Oaklawn Jockey Club, Inc. to reinstate the appellant, and his horses, to racing status at Oaklawn Park. I am sorry that my brethen have failed to recognize the rights guaranteed to all Americans. Richard L. Mays, Justice, dissenting. After determining that it had no obligation to review Oaklawn Jockey Club’s decision to exclude a license thoroughbred horse owner and trainer from Oaklawn’s horse racing track, the Arkansas Racing Commission dismissed Gomer Evans’ appeal without further comment. The circuit court sustained the commission’s action, holding that the commission had no statutory authority to review such a decision. Today, without reversing, although holding contrary to both decisions below on the law, the majority sustains Oaklawn’s exclusion of Gomer Evans from the race track solely on the basis of hearsay evidence. While holding that state law, not the 14th Amendment, requires the Arkansas Racing Commission to scrutinize Oaklawn’s actions, the majority approves of conduct which the racing commission admittedly has not reviewed on the basis of a record which the commission had earlier held did not even justify denying Evans his racing license. In the name of “substantial evidence,” none of which could be cross-examined or even sworn to, the majority sustains a decision of the commission which was never made, i.e. — that Oaklawn’s exclusion of Evans was not arbitrary. I respectfully must dissent. At the very least, this case has to be sent back to the commission for proceedings consistent with the majority opinion. It is not moot because Evans contends that he can never race anywhere until his Oaklawn exclusion is rescinded. Although no testimony was taken by the commission, Evans’ attorney introduced the record of a previous hearing before the commission concerning the licensing of Gomer Evans to provide a record for the commission to evaluate his current complaint. The commission refused to consider any evidence, however, since the question before it, as articulated by the commission’s attorney was “whether or not you [the commissioners] want to recognizes the right to the track to eject a person for whatever reason they feel necessary.” The commission promptly answered the question in the affirmative and adjourned without reviewing the merits of Evans’ contention. Since the majority holds that the commission has both the authority and duty to review such decisions by Oaklawn, the Commission could not turn its back on Gomer Evans and refuse to hear his complaint against Oaklawn. Moreover, Oaklawn should also be given an opportunity to justify the exclusion of Evans with competent and persuasive evidence. If the case is not remanded, Oaklawn’s exclusion of Evans cannot be sustained on the record before us. Oaklawn justifies its exclusion of Evans on the basis that he was engaging in bookmaking. The only evidence in the record to support the bookmaking allegation is a Thoroughbred Racing Association newsletter indicating that Evans was barred from Louisiana Downs for bookmaking, a letter from a Louisiana Downs security official which indicates that Evans was asked to leave because he was suspected of bookmaking and alleged FBI reports which purportedly contained complaints about Evans’ activities. To rebut the allegation of bookmaking, Evans testified under oath that he had not engaged in bookmaking and that, although he was asked to leave Louisiana Downs, he had not been barred from the race track. In reviewing a record for substantial evidence, we consider the entire record rather than only the evidence which would support the administrative finding. Baxter v. Board of Dental Examiners, 269 Ark. 67, 598 S.W. 2d 412 (1980). Although hearsay evidence is admissible in administrative proceedings, we have never held that mere uncorroborated hearsay or rumor constitutes substantial evidence which would support an administrative determination. It should be especially difficult to do so in this case when the only competent evidence in the record directly rebuts the hearsay and our test of substantial evidence requires evidence of sufficient force and character to compel a conclusion with reasonable and material certainty. Jones v. State, 269 Ark. 119, 598 S.W. 2d 748 (1980). The only conclusion which can be drawn from the evidence in this record is that Evans is “suspected” of bookmaking. Mere suspicion, the sources of which cannot even be cross-examined, can hardly be described as substantial evidence. The judgment below should be reversed. George Rose Smith, J., joins in this dissent.