Let's think outside the box here. You can GUESS about what to do. Or, you can go out on a limb a bit and find out for SURE what you should do.
Try "faking" a reference call to see what they will say about you. Call your old employer (or have a trusted, good-actor type of friend do it if you're not good at disguising your voice believably).
Say, "Hi, Mr. Soandso, my name is Made-up-Name from Made-up-Company (don't say Vandelay Industries, though). I've just interviewed Your-own Name for a position and s/he's high on my list of potentials. I understand s/he worked for you directly out of college?"
Then you lead into a short list of questions, like "How would you describe this person's reliability overall? Did this person take initiative? Would you say this person did high-quality work? Any overall comments on your experience with this person?" General things like that. Don't grill them. Just ask a few pointed questions that you think might be likely to produce an unsavory answer (so you'll know for sure whether they would take the opportunity to lambast you).
Now, assuming you've worked up the stones to do that, and you've just hung up, what did you learn?
A) You were pleasantly surprised by the nice, or at least neutral, things they said about you. Include it on your resume and stop worrying.
B) They said some things that would be very damaging if a potential employer had heard it instead of just you. There's not really a "smooth" way to explain that they give bad references to everyone. I wouldn't believe you (no offense), nor would any hiring boss-- it would be very bad form for you to overtly disrespect your previous workplace during an interview. So, if you KNOW you'll get a damaging reference, you have two options: The hopeful way and the deceitful way. The hopeful way involves you just putting it down there and hoping that your hiring employer is one of those that doesn't really check your references or work history too in-depth. The deceitful way is about you making sure that phone call never happens, by starting to fudge things. You probably want to either leave it off or omit key details. If you still do include it on your resume (good idea since it's your only experience post-college), don't include contact info (but they can still look it up if you stop there!). If it's been a couple of months, you might even go so far as to claim that they reorganized their business, renamed it, and moved and that you lost contact. Realize, of course, that trying to avoid the reference is going to seem a little fishy, but as long as you have an awesome resume, and a kick-butt collection of other references (like during-college bosses and/or major professors) who will sing your praises, that can be skimmed over. Getting a bad reference, though... you want to avoid that.