On Antitrust - Spring 2015

"Baseball? It's just a game — as simple as a ball and a bat. Yet, as complex as the American spirit it symbolizes. It's a sport, business — and sometimes even religion." Ernie Harwell, "The Game for All America," 1955.

In City of San Jose v. Office of the Commissioner of Baseball, Case No. 14-15139 (9th Cir. Jan 15, 2015), the United States Court of Appeals for the Ninth Circuit applied the judge-made antitrust exemption for baseball to bar a challenge by the City of San Jose, California to a rule adopted by Major League Baseball ("MLB") that three-quarters of MLB teams must approve a baseball franchise relocation — a rule which San Jose argued has been interfering with its ability to lure the Oakland A's to San Jose.

Those who are not antitrust aficionados may find it somewhat surprising that baseball enjoys an antitrust exemption. In fact, the court-crafted exemption has a long pedigree and has been discussed in three U.S. Supreme Court opinions. Almost a century ago, in Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200 (1922), the Supreme Court held that the "business [of] giving exhibitions of base ball" did not constitute interstate commerce and was therefore not subject to the reach of the Sherman Antitrust Act. Id. at 208-09.

A quarter century later, in Toolson v. New York Yankees, Inc., 346 U.S. 356 (1953), the Supreme Court affirmed Federal Baseball Club, but on stare decisis rather than interstate commerce grounds. (Under the modern interpretation of the Commerce Clause, it would be difficult if not impossible to argue that Major League Baseball — which requires teams to travel to each other's stadiums throughout the country — does not involve interstate commerce.) The Court noted that "Congress [had] the [Federal Baseball Club] ruling under consideration [and had] not seen fit to bring [baseball] under the [antitrust] laws by legislation...." Id. at 357. Baseball was thus left for thirty years to develop on the understanding that it was not subject to antitrust regulation. If there were circumstances that warranted application of the antitrust laws, the Court wrote, those circumstances should be legislatively specified. Id.

After another quarter century, the Supreme Court reaffirmed the exemption in its third baseball decision, Flood v. Kuhn, 407 U.S. 258 (1972). The Court noted that Congress had acquiesced in the exemption, id. at 283-84, emphasized "the confusion and the...