Analyzing the Scope of Major League Baseball's Antitrust Exemption in Light of San Jose V. Office of the Commissioner of Baseball

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INTRODUCTION

"If this ruling is unrealistic, inconsistent, or illogical, it is sufficient to answer ... that were we considering the question of baseball for the first time upon a clean slate we would have no doubts. But Federal Baseball held the business of baseball outside the scope of the Act.... We, therefore, conclude that the orderly way to eliminate error or discrimination, if any there be, is by legislation and not by court decision." (1)

To be a successful Major League Baseball franchise requires hard work and dedication by a team of great players and knowledgeable coaches, coupled with sound on-field decisionmaking, and a little luck. It also helps to have a lot of money. In the 2013 season, nearly half of major league teams spent more than $100 million on player salaries. (2) In professional sports the "[t]eams with impressive records tend to show bigger revenues than teams in the cellar" largely because "[t]he richest teams enjoy competitive advantages" such as "the ability to bid for free agents or to pay to keep their own players who opt for free agency," and "the ability to hire top notch staffs." (3) For the Oakland Athletics, however, such a high payroll figure is not a realistic option while playing in O.co Coliseum, an outdated stadium in desperate need of repair that the Commissioner of Major League Baseball bluntly calls "a pit." (4)

Just thirty-five miles south of Oakland, however, the City of San Jose has attempted to give the Athletics an opportunity to do better. The city agreed in 2011 to help the Athletics build a new stadium in San Jose, and the San Jose City Council executed an agreement that gave the team a two-year option to purchase land owned by the city to build a new stadium. (5) However, the team has been prevented from taking further action by Major League Baseball while the league considers whether to approve the team's move. (6) Tired of waiting on baseball, the City of San Jose decided to file a lawsuit against Major League Baseball for tortious interference and violation of state and federal antitrust laws. (7) However, the city's legal efforts ran into an even larger roadblock: Major League Baseball has historically enjoyed an exemption from federal antitrust laws that bars any claims that baseball's conduct violates antitrust laws.

The Supreme Court first held that professional baseball was exempt from federal antitrust laws in Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs. (8) In what would later be referred to as "not one of [his] happiest days," (9) Justice Holmes reasoned that the business of baseball was not a subject of interstate commerce and thus was not within the scope of Sherman Antitrust Act, (10) which meant that anticompetitive behavior engaged in by organized baseball was not challengeable under the Act. (11)

The Court confronted the applicability of the antitrust laws to professional baseball again in Toolson v. New York Yankees, Inc, (12) Rather than revisit the questionable reasoning that baseball was not interstate commerce or trade, the Court issued a one paragraph, per curiam opinion affirming the validity of Federal Baseball for the much broader proposition that "the business of providing public baseball games for profit between clubs of professional baseball players was not within the scope of the federal antitrust laws." (13) The Court's only support for that proposition was that Congress had not passed legislation to overturn Federal Baseball, which indicated Congress's consent to the exemption. (14)

The Court directly addressed its judicially created baseball antitrust exemption for the third and final time in Flood v. Kuhn. (15) While the Court noted that the exemption was "an exception and an anomaly," the Court concluded that baseball's reliance on the exemption was a greater concern that trumps any argument for overturning the exemption. (16) Instead, the Court reasoned that a change or repeal of the exemption should be made by Congress. …