Appellate Court Upholds MLB Antitrust Exemption in San Jose Lawsuit

The Ninth Circuit Court of Appeals issued its long-awaited ruling in the appeal of San Jose’s lawsuit against Major League Baseball today. The lawsuit involves the proposed relocation of the Oakland Athletics to the city. As Wendy Thurm has previously discussed quite extensively (here, here, and here), after MLB delayed its approval of the relocation for a number of years, San Jose filed suit in June 2013 claiming that the league’s refusal to approve the move violated federal antitrust law.

In October 2013, the district court dismissed the lawsuit, finding that MLB’s historic antitrust exemption shielded the league’s relocation policy. The city then appealed that decision to the federal court of appeals, resulting in today’s decision. The Ninth Circuit’s opinion is available here.

Like the district court, a three-judge panel of the Ninth Circuit unanimously held that baseball’s antitrust exemption generally protects the “business of baseball,” including matters involving the league’s relocation policy. Indeed, the appellate court concluded that relocation issues are central to the baseball business, as MLB’s relocation policy is “designed to ensure access to baseball games for a broad range of markets and to safeguard the profitability – and thus viability – of each ball club.”

In addition, the Ninth Circuit also determined that the Curt Flood Act of 1998 – a law passed to revoke MLB’s antitrust exemption only for labor disputes with major league players – itself supports the application of baseball’s antitrust exemption to relocation matters. In particular, the court noted that the law specifically states that it “does not create, permit or imply a cause of action by which to challenge under the antitrust laws . . . franchise … relocation.”

As a result, the court’s opinion concluded that “Like Casey, San Jose has struck out here.”

So what’s next for San Jose? The city will likely appeal the decision to the U.S. Supreme Court. Whether the Court will agree to take the case, though, is uncertain. In general, the Supreme Court only accepts around one percent of appeals.

That having been said, because baseball’s antitrust exemption remains highly controversial, some believe that the Court could be receptive to the opportunity to overturn the nearly century old judicial doctrine. Along these lines, the Ninth Circuit’s opinion helps increase the city’s chances of getting its appeal granted. Rather than ruling on less noteworthy grounds – such as an opinion concluding that the city lacked the legal standing to sue MLB – the appellate court’s decision rests entirely on the antitrust exemption. This should help the city’s case.

Still, though, the city’s odds of having the Supreme Court take the case remain rather low. As the Ninth Circuit’s opinion notes, Congress has seemingly ratified baseball’s antitrust exemption – and its applicability to franchise relocation issues – through its passage of the Curt Flood Act. As a result, the Court may very well determine that it no longer has the authority to repeal baseball’s antitrust exemption, even if a majority of the court were so inclined.

Moving forward, assuming the city files its appeal on a timely basis, the Supreme Court could decide whether to accept or deny the appeal sometime before its present term ends in June. And if the the Court were to decide to take the case, then an oral argument would likely be held sometime this fall, with a decision issued in early-2016.  Again, though, the more likely scenario is that the Supreme Court will refuse to hear San Jose’s appeal, effectively ending the case.

We hoped you liked reading Appellate Court Upholds MLB Antitrust Exemption in San Jose Lawsuit by Nathaniel Grow!

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Nathaniel Grow is an Associate Professor of Business Law and Ethics at Indiana University's Kelley School of Business. He is the author of Baseball on Trial: The Origin of Baseball's Antitrust Exemption, as well as a number of sports-related law review articles. You can follow him on Twitter @NathanielGrow. The views expressed are solely those of the author and do not express the views or opinions of Indiana University.

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Matthew
Guest
Matthew

The court follows stare decisis to the point to which it is embarrassing. The world has changed since 1922 and baseball is CLEARLY interstate commerce. But who cares about modern realities and the constitution when you can rely on 100 year old court case and be lazy.

Sheryl Ring
Member
Member

It’s not embarrassing. The Ninth Circuit has no choice but to follow what the Supreme Court says. The only court which can overrule a Supreme Court decision is the Supreme Court.

Matthew
Guest
Matthew

They couldn’t overrule it, but they could reccomend it for review and strongly help the case

attgig
Guest
attgig

It’s not lazy. Courts aren’t here to re-write laws.

RichW
Member
RichW

It’s not re-writing to decide a law is unsuitable or unfair or several other uns

Matthew
Guest
Matthew

It isn’t re-writing the law. It is correcting an interpretation from a reality that no longer exists.

Baseball is a multi-billion dollar industry and somehow isn’t interstate commerce is just wrong