Friday, January 16, 2015
Ninth Circuit Upholds Ruling That San Jose Cannot Sue Baseball Commissioner Under Antitrust Laws
From Staff and Wire Service Reports
The Ninth U.S. Circuit Court of Appeals upheld the dismissal of antitrust claims in a lawsuit by the city of San Jose against Major League Baseball and Commissioner Bud Selig, whom the city accused of illegally blocking a proposed move of the Oakland Athletics to the area.
MLB has insisted that the San Francisco Giants have exclusive territorial rights to Santa Clara County, and that the Athletics would need a three-fourths vote to override MLB’s constitution and move across San Francisco Bay. San Jose argues that territorial exclusivity violates state and federal antitrust laws, but the appellate panel cited U.S. Supreme Court decisions in 1922, 1953 and 1972 holding the sport exempt from antitrust laws.
San Jose sued MLB in June 2013 for conspiring to block the relocation. U.S. District Judge Ronald M. Whyte dismissed most of San Jose’s claims in October 2013 but ruled the city could move forward with its count that MLB illegally interfered with an option agreement between the city and the A’s for land.
“The city of San Jose steps up to the plate to challenge the baseball industry’s 92-year old exemption from the antitrust laws,” Judge Alex Kozinski wrote. “It joins the long line of litigants that have sought to overturn one of federal law’s most enduring anomalies.”
City’s Argument Rejected
Kozinski said only Congress or the Supreme Court could determine the fate of the exemption. He rejected the city’s argument that the most recent high court case on the subject, Flood v. Kuhn, 407 U.S. 258 (1972), dealt only with the “reserve clause” in standard player contracts that prevented players from changing teams or objecting to the transfer of their contracts to new teams.
Flood, he noted, has been cited as authority in non-reserve-clause cases, including a Ninth Circuit case barring a former minor league club owner’s claim that MLB’s monopolization of the industry prevented the minor league owners from negotiating fair compensation for the invasion of their territories by major league clubs.
In concluding, Kozinski gave a nod to Ernest Thayer’s poem “Casey at the Bat,” writing:
“Like Casey, San Jose has struck out here.”
Judges Barry G. Silverman and Richard R. Clifton concurred in the opinion.
Supreme Court Appeal
San Jose Mayor Sam Liccardo said the city “has nothing but upside to continue to pursue this to the Supreme Court.”
He said in a statement:
“When the City Council decided to pursue this lawsuit, we knew that success would likely require a ruling from the U.S. Supreme Court, because only the Supreme Court can revisit its century-old decision that created an anti-trust exemption that no American industry other than Major League Baseball enjoys, San Jose should be allowed to compete with other cities for major league teams, and I expect the U.S. Supreme Court to affirm the nation’s fundamental predisposition toward fair and free competition.”
Selig called the decision a win for baseball. Rob Manfred, who succeeds Selig on Jan. 25, said he hoped the ruling would lead to an end of the lawsuit.
“Litigation often distracts people from what the real issue is,” he said. “The real issue for us going forward is that Oakland needs a new ballpark, and we need to get focused on making sure that we get that done as fast as we can.”
Joseph Cotchett argued the appeal for San Jose, and John Keker for MLB. Scott P. Cooper, Sarah Kroll-Rosenbaum, Jennifer L. Roche, and Shawn S. Ledingham Jr. of Proskauer Rose LLP’s Los Angeles office assisted on MLB’s brief.
The case is City of San Jose v. Office of the Commissioner of Baseball, 14-15139.
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