Sherman Act Strikes out; Antitrust Law May Bring Expos to D.C.(OPED)(DISTRICT FORUM)

Article excerpt


The events of the last six months have given new hope to Washington finally getting a baseball team. The double switch in team ownership, where Jeffrey Loria went from the Montreal Expos to the Florida Marlins, John Henry went from the Marlins to the Boston Red Sox, and Major League Baseball took over the Expos, raises a tantalizing legal question.

Would it be illegal for Major League Baseball to refuse to sell the Expos to Washington investors at the end of the year as a violation of the Sherman Antitrust Act?

The answer may lie in the decision of the U.S. District Court in Philadelphia. In Piazza vs. Major League Baseball (1993), the court ruled that baseball's antitrust exemption is limited to the reserve clause and that ownership issues are not covered by the exemption.

Baseball's antitrust exemption is well-known. In a trilogy of cases, starting with Oliver Wendell Holmes' decision in 1922, the Supreme Court has ruled that baseball is exempt from the antitrust laws. These cases - Federal Baseball Club of Baltimore Inc. vs. National League of Professional Baseball Clubs (1922); Toolson vs. New York Yankees Inc. (1953); and Flood vs. Kuhn (1972) - all concerned the reserve clause, which bound a player to the team who held his contract, essentially for life.

Justice Holmes ruled that the business of baseball was giving exhibitions of the game of baseball, which is not susceptible to being transferred between the states. The games are, therefore, "purely state affairs" lacking the character of interstate commerce and thus are exempt from the Sherman Act.

Piazza, however, did not deal with the reserve clause. Rather, it concerned the refusal of the National League to allow the San Francisco Giants to be sold to investors in Florida, who planned to move the team to Tampa Bay. The investors filed suit, alleging violation of the Sherman Act.

The District Court found that baseball's antitrust exemption was limited to the reserve clause, and the investors' claim that Major League Baseball violated the Sherman Act by frustrating their efforts to purchase the Giants and relocate them, was not within baseball's exemption from the antitrust laws.

In Flood, the Supreme Court found that "professional baseball is a business, and it is engaged in interstate commerce." This would seem to overturn the ruling of Federal Baseball that baseball was not interstate commerce. The Supreme Court said though "with its reserve system enjoying exemption from the federal antitrust laws, baseball is, in a very distinct sense, an exception and an anomaly," and even though this might be "unrealistic, inconsistent, or illogical," Federal Baseball and Toolson were entitled to the benefit of stare decisis, the common law principle that courts should follow the precedent of their previous decisions. The Supreme Court concluded that Congress "as yet has no intention to subject baseball's reserve system to the reach in the antitrust statutes. …