Major League Baseball is Exempt From the Antitrust Laws — Like it or Not

6/2/2015 Articles

Originally published in Competition - The Journal of the Antitrust and Unfair Competition Law Section of the State Bar of California  Vol. 24, No. 1 (Spring 2015).

Major League Baseball is Exempt From the
Antitrust Laws — Like it or Not:
The “unrealistic,” “inconsistent,” and “illogical” antitrust
exemption for baseball that just won’t go away.
By John L. Cooper and Racheal Turner

The Athletics baseball team has been located in Oakland, California for many years.  Several years ago, the A’s decided they would like to move their franchise to San Jose, which they anticipate would be a more profitable location.  San Jose responded that it would also like to have the A’s relocate to their city.  In 2009, the A’s asked Major League Baseball (MLB) for permission to move its franchise from Oakland to San Jose, but the league essentially shelved the request by sending it to a committee.  San Jose then sued MLB, claiming that the refusal of its relocation request was an agreement among MLB team owners to preserve the San Francisco Giants’ monopoly in violation of the federal and state antitrust laws.

On October 11, 2013, Judge Ronald Whyte of the Northern District of California ruled that under longstanding United States Supreme Court precedent, “MLB’s alleged interference with the A’s relocation to San Jose is exempt from antitrust regulation.”[1]  San Jose appealed to the Ninth Circuit Court of Appeals, arguing that the Court should overrule MLB’s historic exemption from the antitrust laws, which the Supreme Court itself has acknowledged may be described as “unrealistic, inconsistent, [and] illogical.”[2]  On January 15, 2015 Judge Alex Kozinski issued the opinion of the Court affirming the District Court’s decision and refusing to limit or overturn baseball’s antitrust exemption.[3]

Baseball is the only national sport that is exempt from the antitrust laws.  That anomalous exemption has existed for 92 years and withstood numerous court and Congressional challenges.  So how did the judicially-created baseball antitrust exemption—which is widely acknowledged to be bad law—become the law-of-the-land? This exemption is a study in how judicial and legislative events transpire to freeze into the law a rule that is not only “illogical” but if considered afresh on a clean slate would never exist.  As will be discussed in more detail below, the exemption was created in 1922 when the Supreme Court first held that baseball was not subject to the federal antitrust laws because it was not involved in interstate commerce.  Over the years, the federal courts and the public adopted the view, without supporting legal analysis, that baseball was generally exempt from the antitrust laws, regardless of whether it was engaged in interstate commerce.  Since 1953, the Supreme Court has considered this issue several

times and explicitly refused to overturn baseball’s exemption from federal antitrust laws on the grounds that Congress has not seen fit to do so, stating repeatedly that baseball’s exemption can only be altered through legislation.  Then, in 1998, Congress set baseball’s antitrust exemption in stone by passing the Curt Flood Act, which revoked baseball’s antitrust exemption with respect to employment issues, but explicitly maintained it for all other issues.  Stated differently, Congress affirmatively carved out employment issues from baseball’s antitrust exemption, but otherwise left “the business of baseball” exempt from federal antitrust laws.

Because of the Supreme Court’s insistence that any change to baseball’s antitrust exemption had to come from Congress, and because Congress expressly declined to make any change except with respect to employment issues, the federal courts, including the Supreme Court, must now defer to Congress’s determination that baseball should continue to be exempt from antitrust laws.  Regardless of how criticized it may be, if this exemption is to be changed, Congress will have to do the changing.

Read the full article: Major League Baseball is Exempt From the Antitrust Laws — Like it or Not

[1] City of San Jose v. Office of the Comm’r of Baseball (San Jose v. MLB (Dist. Ct.)), No. C-13-02787 RMW, 2013 WL 5609346, at *11 (N.D. Cal., Oct. 11, 2013).

[2] See Radovich v. Nat’l Football League, 352 U.S. 445, 451-52 (1957).

[3] See City of San Jose v. Office of the Comm’r of Baseball (San Jose v. MLB (9th Cir.)), No. 14-15139, 2015 WL 178358 (9th Cir. Jan. 15, 2015).