Court Opinion

ID: 8914361
Source: CourtListenerOpinion
Date Created: 2022-11-27 04:22:28.513607+00
Date Added: 2024-06-11T17:08:50.429013
License: Public Domain

BAUER, Circuit Judge,
dissenting.
I would affirm the judgment of the district court.
I
I do not believe that USTA has proved in the district court, or in this court, that it owns the eligibility and registration certificates. The undisputed record reveals that the horse owners, not USTA, retain possession of the registration and eligibility certificates. In its cross-motion for summary judgment, USTA failed to advance evidence sufficient to rebut the presumption of ownership that arises from possession. Mori v. Chicago Nat’l Bank, 3 Ill.App.2d 49, 120 N.E.2d 567 (1954).
Horse owner members of USTA pay yearly membership dues of $20.00. They pay an additional fee of from $15.00 to $100.00 to register a horse, whereupon USTA issues a registration certificate to the owner. The owner retains possession of the certificate until the horse is sold, then the certificate passes to the new owner. At the time of sale, the new owner signs the certificate and returns it to USTA. USTA records the transfer in its permanent record and returns the certificate to the new owner who retains possession of it until any further transfer.
I agree with the district court that the registration certificate “seem[s] to function as something akin to a ‘title,’ at least insofar as ‘it will be relied upon by purchasers and will pass from hand to hand with each change of ownership.’ Howard v. National French Draft Horse Association, 169 Iowa 719, 730, 151 N.W. 1056 (1915).” 487 F.Supp. at 1013. USTA maintains permanent records of horse ownership and regis*793tration at its offices and issues the certificate to the owner, for a fee, for his sole use. USTA has failed to prove it owns the registration certificate. I see no reason to remand for further hearings on this issué.
Similarly, the horse owner retains sole possession of the eligibility certificate, which is issued annually for a fee of $5.00. He carries it with him from track to track. At the end of the racing season, the horse owner discards the eligibility certificate. In fact, the application for the certificate specifically admonishes members not to return the certificate to USTA.
USTA seeks to bolster its argument concerning ownership of the eligibility certificates by relying on the language printed on the face of the certificate which provides:
[t]his eligibility certificate and the information contained on it are the property of USTA and all rights to its use or reproduction are reserved by it.
In essence, USTA argues that it owns the eligibility certificate because it owns the information recorded on it.
USTA has a protectible property interest in the information contained on the certificate only if the information was acquired as “the result of organization and the expenditure of [USTA] labor, skill and money.” Int’l News Service v. Associated Press, 248 U.S. 215, 239, 39 S.Ct. 68, 72, 63 L.Ed. 211 (1918). The record reveals unequivocally that the information on the certificate is supplied by racetrack employees who are not paid by USTA. USTA does not have any representative at any track observing the recording of information on the certificates to ensure accuracy.
Notwithstanding USTA’s failure to expend its “labor, skill and money” in the acquisition and recording of the information on the certificate, USTA maintains that it owns the certificate because the information recorded on it is central to USTA’s system of recordkeeping. The record reveals, however, that USTA’s system of recordkeeping relies on the information it receives from the tracks on the Judge’s Sheets. USTA could not rely on the information recorded on the eligibility certificate because USTA never sees the certificate after it is issued to the horse owner. Like the district court, I remain “unconvinced, however, that the term ‘ownership’ properly characterizes USTA’s regulatory interest in the information contained in the certificate.” 487 F.Supp. at 1013 (footnote omitted).
The statement on the face of the certificate purporting to identify USTA’s ownership of the information and the certificate does not aid USTA in establishing its claim of ownership, for, as the district court found, the “expression of ownership is negated by the adhesive nature of the contract between horsemen and USTA.” Id. at 1014. Illinois law requires that all horses racing on Illinois tracks must have eligibility certificates issued by USTA. 111. Racing Bd. Rule 9.01. USTA will issue an eligibility certificate only if the horse owner is a USTA member. Horse owners applying for USTA membership in order to purchase eligibility certificates are in no position to bargain over the expression of USTA ownership contained on the certificate. “As a result, this provision on the eligibility certificate provides no basis for deciding that USTA owns those certificates.” 487 F.Supp. at 1014 (footnote omitted).
The undisputed evidence in the record supports the district court’s conclusion that USTA does not own the certificates and, therefore, lacks a protectible interest in them. Accordingly, I would affirm the district court order granting defendants-appel-lees’ motion for summary judgment on USTA’s misappropriation claim.
II
The majority contends that the rule of reason, rather than the per se boycott rule, is the proper standard of analysis for this case. I disagree.
First, the majority claims that the district court erred in failing to review USTA’s conduct pursuant to the rule of reason because courts lack sufficient experience with sporting associations to conclude that their restrictive membership rules are per se un*794lawful. The majority, however, misapprehends the nature of a court’s inquiry. The issue is not whether the courts have sufficient experience with the defendant’s type of business. Rather, in determining whether a per se rule applies, the relevant inquiry is limited to ascertaining whether the courts have sufficient experience with the type of restraint to decide that the practice has a “pernicious effect on competition” and lacks “any redeeming virtue.” Northern Pac. R. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958). The courts clearly have the requisite experience with group boycotts to hold that they are per se unlawful. See, e. g., Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959) (wholesaler and retailer combination); Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945) (newsgathering association); AMA v. United States, 317 U.S. 519, 63 S.Ct. 326, 87 L.Ed. 434 (1943) (professional association); Fashion Originators’ Guild v. FTC, 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949 (1941) (trade union); Paramount Famous Lasky Corp. v. United States, 282 U.S. 30, 51 S.Ct. 42, 75 L.Ed. 145 (1930) (movie industry).
The majority next argues that the per se rule does not apply in this case because the concerted refusal to deal was not directed at USTA’s horizontal competitor. This definition of “group boycott” is far too restrictive. Group boycott “refers to a method of pressuring a party with whom one has a dispute by withholding, or enlisting others to withhold, patronage or services from the target.” St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 541, 98 S.Ct. 2923, 2930, 57 L.Ed.2d 932 (1978). Concerted refusals to deal directed at noncompetitors are included within the definition of “group boycotts.” Id. at 543, 98 S.Ct. at 2930; Paramount Famous Lasky Corp. v. United States, 282 U.S. 30, 51 S.Ct. 42, 75 L.Ed. 145 (1930).
Finally, the majority contends that the district court should have applied the rule of reason because USTA’s conduct was exempted from per se analysis by Silver v. New York Stock Exchange, 373 U.S. 341, 83 S.Ct. 1246, 10 L.Ed.2d 389 (1963). The Supreme Court indicated in Silver that the stock exchange boycott was exempted from a finding of per se violation only because another federal statute authorized industry self-regulation. 373 U.S. at 364, 83 S.Ct. at 1260. When the Court stated that the per se boycott rule would not apply if there was a justification for the restraint “derived from the policy of another statute or otherwise,” id. at 348-49, 83 S.Ct. at 1252, it could not have been referring to a justification derived from a need for industry self-regulation.
The early cases also foreclose the argument that because of the special characteristics of a particular industry, monopolistic arrangements will better promote trade and commerce than competition .... That kind of argument is properly addressed to Congress and may justify an exemption from the statute for specific industries, but it is not permitted by the Rule of Reason.
Nat’l Soc’y of Professional Eng’rs v. United States, 435 U.S. 679, 689-90, 98 S.Ct. 1355, 1364, 55 L.Ed.2d 637 (1978) (citations and footnote omitted). See also Fashion Originators’ Guild of America, Inc. v. FTC, 312 U.S. 457, 465, 61 S.Ct. 703, 706, 85 L.Ed. 949 (1941).
USTA informed its member horse owners and drivers that it would enforce its sanctions against them if they participated in the Fox Valley meet. If the district court had not enjoined USTA from enforcing its rules, Fox Valley would have been forced to accede to USTA’s request that it become a member or an affiliate or risk not having a field of competitors. This is precisely the type of group enlisted pressure that the Supreme Court included within the definition of “boycott” set forth in St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 541, 543, 544 — 45, 98 S.Ct. 2923, 2929, 2930, 2931-32, 57 L.Ed.2d 932 (1978). I agree with the district court that USTA’s conduct in adopting these rules and in informing its members in July 1977 that it intended to sanction members participating in the Fox Valley meet was a group boycott and, *795therefore, was per se violative of the Sherman Act.
III
Count II of Fox Valley’s counterclaim alleged that USTA’s boycott tortiously interfered with the contract and business relations existing between Fox Valley and the Illinois Harness Horsemen’s Association. I agree with the majority that USTA’s actions did not harm Fox Valley because the district court’s injunction prevented USTA from proceeding as planned. I would not order the district court to lift the injunction, however, because I believe that USTA has tortiously interfered with the business relationship between Fox Valley and the IHHA.
The district court could reasonably infer from the two letters that USTA mailed to member horsemen that USTA knew of the agreement between Fox Valley and the IHHA. USTA claims that it informed the horsemen of its intention to invoke the sanction of its restrictive membership rules in order to preserve the integrity of its records system, “not on a malicious desire to interfere with Fox Valley’s business arrangements.” Appellants’ br. at 47-48 (footnotes omitted). Although USTA may have invoked the boycott of Fox Valley in order to preserve the integrity of its records system, its conduct was not justified because USTA had no interest in the certificates to protect. Its conduct was nothing more than a naked restraint of trade to induce its member horsemen to breach their contract with Fox Valley by not racing in the Fox Valley meet.
IV
For the reasons stated in this opinion, I would affirm the judgment of the district court. Accordingly, I dissent.