Monday, August 30, 2010

Cloverleaf Enterprises, Inc. v. Maryland Thoroughbred, Horsemen's Association, Inc. (Maryland U.S.D.C.)

Filed: August 25, 2010
Opinion by Judge Richard D. Bennett.

This is a companion opinion to the opinion, the summary of which was posted on August 16, 2010.

Held: (1) Allegations that the defendants conspired to orchestrate an illegal boycott require more proof to survive summary judgment than e-mails informing defendants that other parties to a consent agreement were withdrawing their consent.

(2) Contract provisions that provide that the contract can be terminated if certain governmental approvals or consents are not "private rights of action" to enforce provisions of legislative enactments, but are, instead, contractual provisions.

Facts: Cloverleaf Enterprises, Inc. owns a racetrack in Maryland that accepts horse racing wagers on live simulcast signals provided by other racetracks. The signals come from both Maryland and out-of-state racetracks. As required under federal and Maryland law, Cloverleaf obtained the consent of other Maryland racetracks and certain other groups before receiving the simulcast signals. The consent was in the form of a Cross-Breed Agreement, pursuant to which Cloverleaf paid weekly fees in return for the right to accept wagers on the simulcast races. Cloverleaf and TrackNet Media Group, LLC entered into a Simulcast Agreement, pursuant to which TrackNet agreed to simulcast horseracing content from certain other racetracks.

Cloverleaf breached the Cross-Breed Agreement by failing to pay the required weekly fees. As a result, the other Maryland racetracks withdrew their consent to Cloverleaf receiving the simulcast signals of their own races and out-of-state races. Following the withdrawal of consent, TrackNet informed Cloverleaf it could no longer distribute the horseracing content under the Simulcast Agreement.

Cloverleaf filed a complaint against TrackNet and Churchill Downs Incorporated alleging breach of contract. (Additional claims brought by Cloverleaf are discussed in the posting of August 16, 2010.) Defendants moved for summary judgment.

Cloverleaf contended summary judgment should be denied for three reasons: 1. the Maryland Jockey Club did not have the right under law to withdraw consent; 2. the Simulcast Agreement required approval to be withdrawn from a government entity for termination; and 3. the defendants participated in an illegal group boycott.

Analysis: The court applied Kentucky law to find the Simulcast Agreement was not breached. The agreement was free of ambiguity and "automatically terminated . . . upon the failure to obtain or withdrawal of any approvals required by any applicable laws . . . ." Thus, the agreement terminated when consent was withdrawn.

The court disagreed with all of plaintiff's arguments against summary judgment. First, the legality of the withdrawal of consent is irrelevant because the Simulcast Agreement did not require the defendants to assess the validity of the withdrawal. Second, the use of different words in the Simulcast Agreement, such as "approvals," "consents," and "requirements," did not convey different authorizations as the agreement stated termination can occur upon the "withdrawal of any approvals." Third, as a "party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences," e-mails sent to defendants informing them of the withdrawal of consent lacked sufficient proof of an illegal group boycott to withstand summary judgment.

The full opinion is available in pdf.

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