Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Racehorse trainer unable to maintain antitrust claims against racetrack, (Jun 6, 2014)

By Edward L. Puzzo, J.D.

A racehorse trainer ejected from doing business at a racetrack due to sexual harassment charges did not have standing, nor did he adequately allege a conspiracy in restraint of trade, required to maintain an antitrust claim, the federal district court in Philadelphia has ruled (Guerrero v. Bensalem Racing Association, Inc., June 4, 2014, Slomsky, J.).

Two female employees accused Juan Carlos Guerrero, a thoroughbred racehorse trainer at Parx Racetrack in Philadelphia, of sexual harassment. On the basis of the accusations, Guerrero was ejected from Parx Racetrack, where he had over 40 stalls to quarter horses, for a period of ten years.

Guerrero challenged his ejection before the State Horse Racing Commission, maintaining that the alleged sexual harassment was merely a pretext used by horsemen in a conspiracy to eliminate him as a competitor because they benefited financially from his removal from the racetrack. The Commission found that the sexual misconduct warranted an ejection. The state court affirmed the ejection order, but found the ten-year term excessive. The Commission later reduced the ejection period from ten years to thirty months.

After the unsuccessful state court action, Guerrero brought claims in federal district court against various parties including the corporate entities conducting horseracing at Parx and a horsemen's association, alleging antitrust and other claims. Guerrero alleged that the defendants conspired to restrain competition in horseracing by interfering with his ability to participate in the horseracing industry, and therefore violated Section 1 of the Sherman Antitrust Act. Defendants moved to dismiss and the court granted the motion.

Standing. The court explained that Guerrero could not have standing to pursue an antitrust claim without first alleging an antitrust injury; i.e. the type of harm to competition, not to competitors, that the antitrust laws were intended to prevent. Guerrero failed to meet that requirement, the court stated. His complaint focused on injuries to his horse training business as a result of defendants' actions ejecting him from Parx, but failed to allege how those actions produced an anticompetitive effect on the larger market, nor did he identify the relevant market. Guerrero’s belated allegation once the case was brought in federal court—that expelling trainers from the horseracing market allowed the horsemen's association to obtain higher training fees from horse owners, thus injuring the market—was still inadequate, because he failed to show how higher training fees, rather than his ejection from Parx, caused his injuries. Because he could not establish a plausible antitrust injury, Guerrero did not have standing to bring an antitrust claim, the court ruled.

Restraint of competition. Guerrero also failed to explain how the defendants' conduct was an unreasonable restraint of trade, the court continued. There is a considerable overlap between the concept of an unreasonable restraint of trade and the aforementioned antitrust injury needed to establish standing, the court explained. For the same reasons Guerrero failed to demonstrate an antitrust injury, he likewise could not establish an unreasonable restraint of trade, the court stated. He alleged injury to "the horseracing industry", but failed to indentify whether he was referring to a national market, a Pennsylvania market, or another jurisdiction, and thus was unable to demonstrate the defendants' market power within that market. Under the rule of reason standard, the court ruled, Guerrero failed to demonstrate an unreasonable restraint of trade, the second required element of a valid antitrust claim.

Conspiracy. The very essence of a Section 1 claim, the court explained, is the existence of an agreement—shown by a unity of purpose, common understanding or meeting of the minds, or conscious commitment to a common scheme—to take action against the plaintiff. Concerted conduct among officers and employees within a firm or corporation does not qualify. Concerted action among separate economic actors is required to show the necessary conspiracy. Even if plaintiff had proven standing to assert a Sherman Act violation, his claim would fail because the defendants did not engage in concerted conduct, the court stated. The decision to eject Guerrero from the Parx Racetrack was solely determined by Parx. Other named defendants were not part of the decision-making process to eject Guerrero.

The case is Civil Action No. 13-7420.

Attorneys: Max J. Ernst (Braverman Kaskey, PC) for Juan Carlos Guerrero. Andrew J. Kramer (Kane, Pugh, Knoell & Driscoll) for Bensalem Racing Association, Inc. and Keystone Turn Club Inc. Grant S. Palmer (Blank Rome Comisky & McCauley), and Patrick J. Doran (Archer & Greiner PC) for the Pennsylvania Thoroughbred Horsemen's Association.

Companies: Bensalem Racing Association, Inc., Keystone Turn Club Inc.; Pennsylvania Thoroughbred Horsemen's Association.

Cases: Antitrust PennsylvaniaNews