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Wednesday, June 25, 2008
Justice Alito’s Comments on Holmes’s Opinion in Federal Baseball

"That to which it is incident, the exhibition, although made for money would not be called trade or commerce in the commonly accepted use of those words. As it is put by the defendants, personal effort, nor related to production, is not a subject of commerce."

Justice Holmes, Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200, 209 (1922).

Howard Wasserman posted a reference on June 3 to comments by Justice Samuel Alito before a Supreme Court Historical Society gathering on the opinion of Justice Holmes in Federal Baseball that established the foundation for baseball’s antitrust exemption. In reading the linked post by Tony Mauro at The BLT: The Blog of LegalTimes, I found the following statement:

"Alito said the Supreme Court's decision has been pilloried by scholars and judges alike in the decades since it was issued. More recently, he said, some commentators have been 'less harsh,' fitting it into a more modest view of the scope of the Constitution's commerce clause. Alito indicated that he is in the camp that views the case more kindly."

I do not have access to Justice Alito’s comments or his references. However, after teaching the case for years, I think that one aspect of Holmes’s decision is commonly overlooked. If you notice the second sentence in the quotation at the beginning of this post, you will see the hook for my argument. To support this reading of the case, I have spent some time analyzing the briefs of counsel. The position that a baseball game was the result of human labor and not production or manufacturing of goods was argued by counsel and accepted by Justice Holmes for deciding that baseball was not within "trade" - the second of the three prongs of a Sherman Act § 1 violation with "contract, combination, or conspiracy" and interstate commerce.

The defendants (the member teams of the two leagues and the three members of the National Commission) were represented by George Wharton Pepper, Benjamin S. Minor, and Samuel M. Clement, Jr. In their brief, the attorneys offered three reasons why organized baseball was "not within the Sherman Act." The presentation of the first of these three reasons begins on page 46. Counsel advanced the following statement - "(a) Personal effort, not related to production, is not a subject of commerce; and the attempt to secure all the skilled service needed, for professional baseball contests is not an attempt to monopolize commerce or any part of it. It is believed that in no decided case has it ever been held that personal effort, considered apart from production, is a subject of commerce." This is the point of Holmes’s opinion that has long been ignored. Notice that in the quotation above, Justice Holmes specifically refers to the position taken by the defendants that personal effort apart from production (e.g. manufacturing) does not constitute commerce. After citing § 6 of the Clayton Act ("That the labor of a human being is not a commodity or article of commerce."), counsel proceeds to discuss a number of cases supporting their basic position.

The first cited case, Paul v. Virginia, 75 U.S. 168 (1868) involved the sales of contracts for fire insurance, and counsel followed that with a reference to Hooper v. California, 155 U.S. 648 (1894) that marine insurance sales could not be distinguished from fire insurance sales. Hooper was one of the two cases cited by Holmes in the opinion, and it would be overruled by the Court in 1944 by United States v. South Eastern Underwriters Ass’n., 322 U.S. 533 (1944). Counsel proceeded to distinguish Paul and Hooper from one involving correspondence school instruction, International Textbook Co. v. Pigg, 217 U.S. 91 (1909). Unlike a baseball game played locally between two teams, the main point of the transaction in Pigg was the shipment of educational materials from Pennsylvania to students in various states.

Counsel turned next to a discussion of Metropolitan Opera Co. v. Hammerstein, 147 N.Y.S. 532 (1914):

The production of opera or other theatrical exhibition before an audience in exchange for the price of tickets involves none of the elements of trade or commerce as commonly understood. There is no dealing with an article of trade or commerce nor any use made of the instrumentalities of commerce. The holder of the ticket pays a certain price as a consideration for the privilege of experiencing the gratification of an artistic sense."

The three attorneys continued to pile on more precedent. In In re Duff, 4 F. 519, 521 (1880), they quote the court: "This bankrupt was a theatrical manager ... I think he cannot be considered a merchant or tradesman within the meaning of the statute;" In re Oriental Society, 104 F. 975 (1900): "A corporation engaged in giving theatrical performances is, of course, not engaged in manufacturing, printing, or publishing;" People v. Klaw, 106 N.Y.S. 341 (1907), determining that booking arrangements by theatre owners did not constitute trade.

In examining American Baseball Club of Chicago v. Chase, 149 N.Y.S. 6 (1914), counsel provided a quotation from the opinion citing a definition of "commerce" from the Century Dictionary ("‘interchange of goods, merchandise or property of any kind; trade, traffic") together with a definition of "commodity" before concluding that

The foundation of the National Agreement is the game of baseball conducted as a profitable business, and if this game were a commodity or an article of merchandise and transported from State to State, then the argument of the defendant’s counsel might be applicable.

Gary Hailey, an attorney and author of "Anatomy of a Murder: The Federal League and the Courts" in the spring 1985 edition of the Society for American Baseball Research’s National Pastime concluded that "given the legal doctrines of the day the Federal Baseball case was correctly decided. The courts of that era applied the federal antitrust laws only to businesses that were primarily engaged in the production, sale or transportation of tangible goods."

Although I do not think that either reading of Federal Baseball was an appropriate reason for the per curiam opinion upholding the decision in Toolson v. New York Yankees that really established the reliance on stare decisis that was critical for Justice Blackmun’s opinion in Flood v. Kuhn, I do think that it provides an important point of jurisprudential context for the 1922 opinion by Justice Holmes.


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