San Jose Whiffs on Appeal of MLB Anti-Trust Exemption

Friday, January 16, 2015

There are no shortage of metaphors and similes to describe the U.S. Ninth Circuit Court of Appeals’ rejection of San Jose's attempt to overturn Major League Baseball's (MLB) unique exemption from federal anti-trust laws.

In a decision thought unlikely to be reversed via instant replay or the U.S. Supreme Court, the three-judge panel unanimously ruled that the law prevented San Jose from luring the Athletics baseball team from Oakland.

In announcing the court’s decision, Judge Alex Kozinski, like just about every writer writing about it, couldn’t avoid the temptation of using a sports metaphor, or two. “The City of San Jose steps up to the plate to challenge the baseball industry’s 92-year-old exemption from the anti-trust laws,” he wrote. “It joins the long line of litigants that have sought to overturn one of federal law’s most enduring anomalies.”

Kozinski concluded his opinion with a mournful reference to Ernest Thayer’s immortal 1888 poem: “Like Casey, San Jose has struck out here.”   

San Jose sued baseball after a four-year struggle to obtain the Oakland franchise. MLB did not want the move and invoked a league rule that gave the San Francisco Giants territorial rights to the San Jose area in 1990. Each of the 30 league franchises has veto power over a club moving into its operating territory.

As is often the case when sports franchises change cities, a new stadium is being dangled in the suitor’s town. The Athletics have not been happy in their aged (1966) Oakland stadium for years despite success on the field.

U.S. District Judge Ronald Whyte had been sympathetic to San Jose’s pitch for denying baseball the last word on moving the club from Oakland before slapping them down in October 2013. “The exemption is an aberration that makes little sense given the heavily interstate nature of the business of baseball today,” he wrote.

But what does make sense is that the courts are loath to reverse a decision that empowers 30 billionaires and billionaire wannabees to move franchises at will, pitting cities and developers against each other for their personal enrichment.

The last time the U.S. Supreme Court weighed in on the exemption in a major way was in 1972, in Flood v. Kuhn. Justice Harry Blackmun began his majority opinion by listing 88 famous baseball players—“the list seems endless” —before ridiculing the exemption. He warned that no other sport should expect such special treatment and hinted that it would be okay for an arbitrator to scale back baseball’s near dictatorial powers over the lives of players.

The court suggested that if anyone was going to have to monkey around with the rules for America’s former national pastime, it should be Congress.  

The Flood decision marked the beginning of the end of the “reserve clause,” the start of astronomical salaries and the end of the indentured servitude that gave continuity to major league rosters and honed the loyalty of fans.

The Oakland A’s owners don’t want to play in the dilapidated Coliseum. New stadiums come with luxury boxes and plumbing that works. They also offer new revenue streams, while tapping public coffers and resources in new and innovative ways. The owners did, however, sign a 10-year lease with a four-year opt out last year.

–Ken Broder


To Learn More:

San Jose v. MLB: Appeals Court Rejects City's Antitrust Case over A's Move (by Howard Mintz, San Jose Mercury News)

Court Says MLB Can’t Be Forced to Let A’s Move to San Jose (by Bob Egelko, San Francisco Chronicle)

San Jose's Appeal Over Oakland A's Struck Out (by Tim Hull, Courthouse News Service)

Appellate Court Upholds MLB Antitrust Exemption in San Jose Lawsuit (by Nathaniel Grow, FanGraphs)

Baseball Successfully Invokes Anti-Trust Exemption to Block Move by Oakland A’s (by Ken Broder, AllGov California)

City of San Jose et al v. Office of the Commissioner of Baseball (U.S. Ninth Circuit Court of Appeals) (pdf)

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