Academic journal article Journal of Corporation Law

Overcoming an "Aberration": San Jose Challenges Major League Baseball's Longstanding Antitrust Exemption

Academic journal article Journal of Corporation Law

Overcoming an "Aberration": San Jose Challenges Major League Baseball's Longstanding Antitrust Exemption

Article excerpt

  I. INTRODUCTION  II. BACKGROUND      A. A History of Greatness      B. The Oakland Coliseum      C. Attempts to Relocate         1. Fremont, CA (2006-09)         2. San Jose, CA (2009-Present)         3. Lease Extension (Summer 2014)      D. Professional Baseball's Antitrust Exemption         1. The Origin of the Exemption         2. Subsequent Litigation and Statutory Development            a. Subsequent Cases                 i. The Toolson v. New York Yankees Case                ii. The Flood v. Kuhn Case               iii. The City of San Jose v. Office of the Comm'r of                    Baseball Case                iv. Other State Court Decisions            b. Subsequent Statutory Development                 i. The Clayton Act                ii. The Curt Flood Act of 1998               iii. Application of the Antitrust Laws to MLB         3. Non-exemption of Professional Sports from the Antitrust            Laws III. ANALYSIS      A. Analyzing the Fed. Base Ball Club Case         1. The Game Has Changed         2. The Exemption's Impact: Monopolization as Defined Under the            Sherman Act         3. Criticism of the Fed. Base Ball Club Decision      B. Analyzing the Toolson v. New York Yankees Case      C. Analyzing the Flood v. Kuhn Case      D. Analyzing the City of San Jose v. Office of the Comm'r of         Baseball Case      E. Analyzing the Baseball Amendment to the Clayton Act  IV. RECOMMENDATION      A. The Ninth Circuit Might Uphold the Exemption      B. The Ninth Circuit Should Overturn the Exemption      C. Chances of a Settlement?   V. CONCLUSION 

I. INTRODUCTION

The Sherman Act is the cornerstone of American antitrust law, from which Major League Baseball (MLB) is exempt. The Supreme Court established the exemption in 1922, (1) and has since upheld it twice. (2) First, the Court held that professional baseball was exempt from American antitrust laws (3) because it did not constitute interstate commerce. (4) A half-decade later, the Court realized that professional baseball clearly constituted interstate commerce, but upheld the exemption nonetheless. The Court subsequently changed its reasoning, however, now basing the exemption on congressional inaction. (5) Congress narrowed the exemption in 1998 by passing the Curt Flood Act. (6) The Court has yet to analyze this Act, and its impact remains unclear.

In part, this exemption allows each individual team to maintain its own exclusive territory. (7) No team is allowed to infringe upon another's territory without first obtaining permission from the territory's owner, the Commissioner, or approval by 75% of all owners. (8) The City of San Jose's (9) lawsuit against MLB is the latest illustration of the exemption controversy. (10) Oakland's professional baseball team, the Oakland Athletics (A's), are attempting to move to San Jose, which is arguably within the San Francisco Giants' exclusive territory. (11) Because the A's were unable to obtain owner or Commissioner approval for the move, the City of San Jose sued MLB's Commissioner for violating American antitrust law by maintaining local monopolies on professional baseball teams. (12) The City of San Jose urged the judiciary to remove the exemption in its entirety. (13)

This Note advocates for either the judiciary or the legislature to overturn professional baseball's antitrust exemption, putting an end to MLB's longstanding monopoly over the sport. Part II presents the A's general history, the obstacles preventing their move to San Jose, and provides an overview of professional baseball's antitrust exemption. Part III compares the strengths and weaknesses of each Supreme Court case and federal statute on the subject. Part IV analyzes the City of San Jose's ongoing lawsuit against the Commissioner's Office of Baseball, and asserts that the judiciary should rule in the City of San Jose's favor, thereby abolishing the exemption.

II. BACKGROUND

A. …

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