New York City Off-Track Betting Corp. v. New York Racing Ass'n

250 A.D.2d 437, 673 N.Y.S.2d 387, 1998 N.Y. App. Div. LEXIS 8376
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMay 14, 1998
StatusPublished
Cited by13 cases

This text of 250 A.D.2d 437 (New York City Off-Track Betting Corp. v. New York Racing Ass'n) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New York City Off-Track Betting Corp. v. New York Racing Ass'n, 250 A.D.2d 437, 673 N.Y.S.2d 387, 1998 N.Y. App. Div. LEXIS 8376 (N.Y. Ct. App. 1998).

Opinion

—Order, Supreme Court, New York County (Karla Moskowitz, J.), entered on or about November 26, 1997, which, inter alia, granted petitioner’s motion for a preliminary injunction enjoining respondent from withdrawing or disrupting the simulcast signal it provides to petitioner, unanimously reversed, on the law, without costs, and the preliminary injunction is vacated.

Respondent New York Racing Association, Inc. (NYRA) is a nonprofit association incorporated under Racing, Pari-Mutuel Wagering and Breeding Law § 202, which conducts horse racing and wagering at Belmont, Aqueduct and Saratoga Racetracks. New York City Off-Track Betting Corporation (OTB) is a statutorily created public-benefit corporation that operates an off-track wagering system on horse races (see, Racing, PariMutuel Wagering and Breeding Law § 601 et seq.), including races held at NYRA tracks. Through a series of written agreements, the latest in January 1996 (1996 Agreement), NYRA sold its live simulcast signal of races to OTB, which used the transmission in its branches (known as parlors), teletheaters and for “in-home” cable television viewing. The 1996 Agreement was scheduled to expire according to its terms on June 1, 1996, but was extended by the parties from time to time pursuant to letter agreements. The instant dispute arose when NYRA sought a substantial increase, over 200% according to OTB, in the amount OTB should pay for the simulcast signal. [438]*438NYRA responds that its provision of simulcasting to OTB outlets significantly decreases its own revenues, since bettors simply watch the races and make bets at OTB parlors instead of going to the race track.

As the last letter agreement was about to expire on November 12, 1997, the parties exchanged several proposals for a new agreement, none of which was mutually acceptable. On November 12, NYRA tersely rejected OTB’s latest proposal and made no counter-proposal. On November 13, NYRA cut the simulcast signal provided to OTB without prior warning. That same day, OTB sent a letter to NYRA and the New York State Racing and Wagering Board (Board),1 purportedly invoking the binding arbitration mechanism in Racing, Pari-Mutuel Wagering and Breeding Law § 1013, and demanding that NYRA immediately restore the signal under the terms of the pre-existing 1996 Agreement pending the outcome of the arbitration (Racing, Pari-Mutuel Wagering and Breeding Law § 1013 [1] [c]). In its letter, OTB further requested mediation of the dispute concerning in-home simulcasting pursuant to Racing, Pari-Mutuel Wagering and Breeding Law § 1003 (1) (a).

On November 14, 1997, the Board sent a letter to NYRA stating that “binding arbitration procedures are being initiated” pursuant to Racing, Pari-Mutuel Wagering and Breeding Law § 1013, and that NYRA was required to restore the simulcast signal to OTB under the preexisting terms and conditions pending the outcome of the arbitration. The Board’s letter further stated that since NYRA had failed to comply with the 45-day notice of termination provision in Racing, PariMutuel Wagering and Breeding Law § 1003, it was therefore being directed to continue with the in-home simulcasting arrangement pending the Board’s mediation of a replacement agreement. Pursuant to the Board’s order, NYRA restored the signal to OTB on the afternoon of November 14.

Nonetheless, on November 14, OTB moved by order to show cause for a temporary restraining order (TRO) to enjoin NYRA from disrupting the simulcast signal pending the outcome of the arbitration. OTB’s accompanying petition requested a preliminary and permanent injunction, and included causes of action under Racing, Pari-Mutuel Wagering and Breeding Law § 1013 to compel NYRA to arbitrate the dispute over a new agreement, and under Racing, Pari-Mutuel Wagering and Breeding Law § 1003 to require NYRA to comply with that [439]*439section’s requirement that 45 days’ notice be given before an agreement for in-home simulcasting could be terminated. After a brief hearing, during which counsel for NYRA stated NYRA’s intention to fully comply with the Board’s injunction order (although he would not unequivocally rule out a further interruption of the signal), the IAS Court granted the TRO in order to preserve the status quo.

On November 17, 1997, NYRA provided OTB with notice pursuant to Racing, Pari-Mutuel Wagering and Breeding Law § 1003 of its intention to terminate the in-home simulcast signal, while simultaneously reserving its right to challenge the applicability of the 45-day notice provision.

On November 26, 1997, the IAS Court held a hearing on OTB’s motion for a preliminary injunction, at the conclusion of which it granted injunctive relief pursuant to CPLR 6301 and 7502 (c). The court ruled that under CPLR 7502 (c), an injunction in aid of arbitration was appropriate because any ultimate arbitration award might be rendered ineffectual unless an injunction were issued. The court stated that if NYRA were to arbitrarily cut off the simulcast signal, money damages would be inadequate to measure OTB’s losses, which would include customer good will. The court further ruled that the traditional prerequisites for a preliminary injunction — the likelihood of the movant’s success on the merits, irreparable injury in the absence of an injunction and a balancing of the equities in the movant’s favor — had been satisfied. As to the relief granted, the court essentially continued the TRO, enjoining NYRA from disrupting simulcasting to branches and teletheaters pending the conclusion of the arbitration, with the terms of the 1996 Agreement remaining in effect.

By letter dated December 12, 1997, NYRA informed the Board that pursuant to Racing, Pari-Mutuel Wagering and Breeding Law § 1013 (1) (c) (ii), it was refusing to enter into binding arbitration. On December 29, 1997, the Board wrote to both parties “in anticipation of the forthcoming arbitration” be- . tween NYRA and OTB, and reminded NYRA that “there must be a continuity of the simulcast signal to all branches and teletheaters, based on the pre-existing terms and conditions, pending the outcome of the arbitration.”

On or before January 2, 1998, NYRA informed OTB that pursuant to the expiration of the 45-day notice period, it intended to cut the in-home simulcast on January 2. The parties appeared for argument before the IAS Court on January 2, after which the IAS Court agreed with OTB that such termination was not permissible under its previous November 26 and [440]*440December 8 injunction orders. The court warned NYRA that any violation could subject it to contempt proceedings.

On appeal, NYRA argues that the court erred in implicitly ruling that Racing, Pari-Mutuel Wagering and Breeding Law § 1013 mandated compulsory arbitration of this dispute with OTB. While this claim may well have merit, the issue of whether arbitration is statutorily required is not directly before us on appeal. Neither the November 26 order nor the December 8 order compelled or otherwise directed NYRA to arbitrate this dispute, although the terms of the injunction clearly contemplated a pending arbitration proceeding (NYRA “is hereby enjoined, pending the conclusion of the arbitration procedures commenced by the [Board]”). Although OTB did request an order compelling arbitration in its petition, the request for that relief was neither granted nor denied in the court’s orders. Thus, even though the parties vigorously dispute on appeal whether the arbitration initiated by the Board was proper, we do not rule on this issue in the absence of determination from the IAS Court (see, CPLR 7503 [a], [b]).

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250 A.D.2d 437, 673 N.Y.S.2d 387, 1998 N.Y. App. Div. LEXIS 8376, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-york-city-off-track-betting-corp-v-new-york-racing-assn-nyappdiv-1998.