Take Me Out to the Courtroom

Baseball holds a special place in America’s hearts . . . and courtrooms. A federal judge recently dismissed antitrust claims made by the City of San Jose against Major League Baseball. The claims arose out of the Oakland Athletics’ desired move to San Jose, which is complicated because a relocation would infringe on the San Francisco Giants’ territorial rights. And according to Major League Baseball’s rules, teams cannot “relocate within the operating territory of a member without the written consent of such member.”

The federal judge based his ruling on Major League Baseball’s exemption from federal antitrust laws. The exemption dates back to 1922, when a unanimous Supreme Court decided Federal Baseball Club v. National League, 259 U.S. 200 (1922). In Federal Baseball Club, the Court stated that baseball is in the business of “giving exhibitions . . . , which are purely state affairs.” Because baseball is a “state affair,” it is intrastate commerce and therefore exempt from federal antitrust laws.

The judicially created baseball exemption from Federal Baseball Club was later upheld in Toolson v. New York Yankees, 346 U.S. 356 (1953). In Toolson, the Supreme Court issued a one paragraph per curiam opinion that discussed Congressional intent. The Court noted that Congressional inaction since Federal Baseball Club indicated an intent to keep baseball exempt from federal antitrust legislation. The Court then stated that if antitrust laws now need application to the business of baseball, then “it should be by legislation.” In a dissenting opinion, Justice Burton and Justice Reed called it a “contradiction in terms to say that the defendants . . . are not now engaged in interstate trade or commerce.” The justices noted that, among other things, baseball has “numerous purchases of materials in interstate commerce,” crowds that often travel across state lines to watch games, and “radio and television activities which expand its audiences beyond state lines.”

The baseball exemption was once again upheld in Flood v. Kuhn, 407 U.S. 258 (1972). In Flood, the Court admitted that “baseball is a business and it is engaged in interstate commerce.” The Court further said that baseball’s exemption from federal antitrust laws is, “in a very distinct sense, an exception and an anomaly.” Despite these arguments, the Court upheld the exemption, calling it “an aberration that has been with us now for half a century.” The Court then said that the exemption is “entitled to the benefit of stare decisis.”

With Supreme Court precedent working against San Jose, it is not surprising that the judge dismissed the city’s antitrust claims. Despite this setback, San Jose still has a contract interference claim. The claim arose out of a land-purchase contract between the Oakland Athletics and San Jose. The contract grants the Athletics the right “to buy half the property needed for a proposed downtown ballpark from the city for about $7 million.” According to San Jose, Major League Baseball’s “failure to make a decision allowing the A’s to buy the land hurt the city.”

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*Stephen DeGrow is a third-year student at Wake Forest University School of Law and holds a Bachelor of Arts in Economics from Cornell University.