Judge: Rosecroft antitrust suit can proceed

Posted: 7:10 pm Tue, August 10, 2010
By Liz Farmer
Daily Record Business Writer

An antitrust suit against the Maryland thoroughbred industry filed by the bankrupt owner of a Prince George’s County harness racing track is still alive.

A federal judge has ruled that Cloverleaf Enterprises Inc., which shuttered Rosecroft Raceway last month, has put forth enough evidence to allow the case to go forward. But U.S. District Judge Richard D. Bennett noted several times in his opinion that his ruling was based on whether Cloverleaf had enough of a claim to proceed.

He noted it is rare to dismiss antitrust cases before the discovery stage.

“An antitrust complaint should not be dismissed … ‘merely because the court doubts the plaintiff will ultimately prevail,’” Bennett wrote, citing a 1976  Supreme Court case against a private hospital in Raleigh, N.C.

Bennett’s opinion, issued last week, was in response to a motion to dismiss filed by defendants Maryland Jockey Club, the Maryland Thoroughbred Horsemen’s Association and others.

The suit, filed last summer, claims that members of the Maryland thoroughbred industry essentially conspired to put Rosecroft out of business when the Fort Washington track said it could not afford to pay the $5.9 million annual fee required for Rosecroft to broadcast and take bets on thoroughbred races.

Rosecroft halted live racing in 2008 and essentially began operating as an off-track betting facility. In May 2009, the Maryland Racing Commission shut off Rosecroft’s simulcast signal at the request of the thoroughbred industry because of the track ownership’s failure to make any payments toward the annual fee that year.

Although Rosecroft won a temporary restraining order to get its signal turned back on just hours before the Kentucky Derby last year, Cloverleaf alleges that didn’t stop officials from the jockey club and the horsemen’s association from contacting its partner thoroughbred tracks across the country. Cloverleaf claims they urged those tracks, including Kentucky’s Churchill Downs, to cut their simulcast signals to Rosecroft.

Kelley Rogers, president of Cloverleaf, estimates the delay on Derby Day cost Rosecroft at least $1 million because many potential bettors had already left Rosecroft by the time the signal was restored.

In his ruling, Bennett said Cloverleaf had enough evidence to move forward with its conspiracy and antitrust claims based on those actions by the thoroughbred industry, but noted he was not making a statement on “whether or not the Circuit Court’s [temporary restraining order] was correct in halting the [racing commission] from withdrawing its consent.”

Bennett’s ruling keeps most of Cloverleaf’s case intact. Rogers said Cloverleaf will seek to collect evidence “we know is there” that will round out the track owner’s antitrust claims and unfair competition and tortuous interference claims.

The ruling drops Cloverleaf’s breach of contract claim against the horsemen and grants the jockey club more time to respond to the same claim.

The jockey club deferred all requests for comment to Alan Foreman, general counsel for the horsemen’s association. Foreman declined to comment, citing his role as a defendant in the suit. But in an affidavit taken last year, Foreman denied telling any out-of-state tracks to cut their signals to Rosecroft, noting neither the horsemen nor breeders deal with “racetracks or signal disseminators in this regard.”

Also in the affidavit, Foreman detailed the several simulcast agreements renegotiated at the behest of Rosecroft over the years.

Rogers says those agreements were unfair.

“No one’s ever stood up to them,” he said. “We’ve allowed them to run this industry for 10 years.”