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San Jose Strikes Out in 9th Cir. MLB Antitrust Appeal

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By Mark Wilson, Esq. on January 23, 2015 9:18 AM

When we last left the City of San Jose in its ongoing battle with the behemoth known as Major League Baseball, it was trying to fast-track an antitrust lawsuit against MLB to the Ninth Circuit Court of Appeals.

Well, the Ninth Circuit has decided, and with Judge Alex Kozinski at the bat, San Jose -- like Mighty Casey -- has struck out.

The Baseball Trust

When a Major League Baseball team wants to move into another team's geographic territory, three-fourths of the MLB teams must agree. In this case, the Oakland A's wanted to move to San Jose in order to attract more fans; San Jose lured them with the promise of a new stadium. The only problem was that San Jose was in (world champion) San Francisco Giants territory.

Before San Jose could seal a deal on a new stadium, MLB had to allow the A's to move there. The land sat there, unused, for years while MLB did nothing. San Jose eventually sued, claiming MLB was intentionally sitting on its hands in order to protect the Giants' monopoly on the San Jose territory.

The lawsuit was more or less doomed from the start because of This One Weird Trick: MLB is historically exempt from antitrust laws. This exemption, admittedly (and Kozinski basically admits it), is a relic of the Lochner era, the result of a 1922 U.S. Supreme Court opinion holding that baseball is a "purely state affair[]." The year 1972 marked the last time the Court was talkin' baseball, upholding the 1922 opinion and basically saying that if Congress wants baseball to be governed by antitrust laws, it can do it.

Fly Out to Center

San Jose argued that the historic antitrust exemption doesn't apply to team relocation. It claimed that the 1972 case, Flood v. Kuhn, applied only to a "reverse clause," a provision in a player's contract preventing him from signing with another team without his most recent team's consent.

But Kozinski wasn't going to read Flood so narrowly. Nothing in any of the baseball cases suggested that the antitrust exemption was limited to any particular aspect of the business of baseball. In fact, the exemption applies to anything that could be considered "the business of organized professional baseball." Maintaining league territories, he said, was such an activity, as it protected each franchise's profitability.

While acknowledging that MLB is not immune from all antitrust suits, Kozinski said this situation ain't one of 'em. In fact, Congress explicitly called out this situation as exempt in 1998 when it removed the antitrust exemption for reserve clauses but kept it in place for "franchise [] location or relocation."

Makes legal sense, but those of us who live in Oakland are wondering when all of San Francisco's sports teams are going to end up in the South Bay.

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