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Sunday, September 08, 2013
Recent Developments in the San Jose v. MLB Lawsuit
The city of San Jose's federal antitrust lawsuit against Major League Baseball -- challenging the league's refusal to approve the proposed relocation of the Oakland Athletics to the city -- has continued to progress since being filed in June (for earlier Sports Law Blog coverage of the suit, click here). MLB announced in July that it has retained noted antitrust attorney John Keker to lead its defense in the suit, with assistance from Bradley Ruskin of Proskauer Rose. Meanwhile, San Jose will be represented in the suit by long-time Bay Area attorney Joe Cotchett. Cotchett previously helped represent the NFL back in the 1980s in its unsuccessful attempt to block the Oakland Raiders' relocation to Los Angeles. Also in July, it was announced that San Jose's lawsuit had formally been assigned to Senior Judge Ronald M. Whyte. Judge Whyte has presided over a number of high-profile lawsuits since being appointed to the federal bench in 1992 by President Bush.
More substantively, MLB then filed a motion to dismiss the case on August 7th. The league asserted a series of defenses in its brief, perhaps most notably contending that San Jose's suit must be dismissed pursuant to baseball's historic exemption from antitrust law. In particular, MLB argued (correctly, I believe) that the exemption clearly protects the league's relocation and territorial allocation polices from antitrust challenge. Not only did MLB contend that its antitrust exemption forecloses San Jose's federal antitrust law claims, but it also claimed that all of the city's state antitrust and common law causes of action also fail in light of the doctrine. Specifically, the league noted that the U.S. Supreme Court's 1972 decision in Flood v. Kuhn held that the exemption effectively preempts any state antitrust law claims. Similarly, characterizing San Jose's unfair competition and tort law claims as being premised entirely on MLB's alleged violation of antitrust law, the league argued that those claims must also be dismissed. Finally, for good measure, the league also asserted that the city lacks standing to sue for any antitrust violations given the speculative nature of its alleged injuries (I previously discussed the standing issues in the case in greater detail back in June).
San Jose responded to MLB's motion on Friday (the brief can be found at the bottom of the link). As expected, the city attempted to defeat the league's antitrust exemption argument by relying on the 1993 case of Piazza v. Major League Baseball, in which the Eastern District of Pennsylvania held that following Flood, the exemption only shields baseball's reserve clause from antitrust scrutiny. Given the Piazza holding, San Jose asserts that MLB's relocation and territorial restrictions do not fall within the scope of baseball's exemption, and therefore that its suit should be allowed to proceed.
There are several problems with San Jose's reliance on Piazza. First, as I argued in a 2010 law review article, the Piazza court's logic was highly suspect, overemphasizing a few passing references to the reserve clause in the Flood opinion in order to reach the conclusion that the exemption only protected the long since disregarded provision. Consequently, most subsequent courts to consider Piazza have rejected its reasoning.
Perhaps more importantly, however, the Piazza court also erroneously believed that the U.S. Supreme Court's 1922 decision in Federal Baseball Club of Baltimore v. National League, the case giving rise to baseball's antitrust exemption, only dealt with the reserve clause. As I document in a forthcoming book chronicling the history of the Federal Baseball litigation (scheduled to be released in March by the University of Illinois Press), the plaintiff's claims in the 1922 case went well beyond just challenging the reserve clause. Indeed, the Baltimore club specifically asserted in its complaint that the American and National League's exclusive control over their teams' geographic territories violated the Sherman Act. Thus, even if one were to conclude that the exemption only shields those facets of the baseball business at issue in Federal Baseball, the doctrine would still apply to San Jose's suit.
San Jose's brief also attempts to avoid the application of baseball's antitrust exemption by citing the Curt Flood Act of 1998, a Congressional statute that revoked the exemption simply to allow current MLB players to file antitrust suits against the league. Although the city asserts that the CFA endorsed the Piazza court's narrow interpretation of the precedent, in reality the Act is agnostic regarding the scope of the exemption, as the legislative history to the bill makes clear.
In addition to the antitrust exemption issue, San Jose's opposition goes on to defend its state law claims, arguing that baseball's exemption does not preempt the application of state antitrust law to the case, and that its unfair competition and tort claims stand independent of the antitrust allegations. Finally, it disputes the league's standing argument, alleging that only reason the Athletics have not yet moved to San Jose is because MLB has refused to approve the relocation, thus inflicting an actual injury on the city.
Moving forward, MLB's reply brief is due on Friday September 20th. Judge Whyte will then hold a hearing on the matter on Friday October 4th, with a decision likely handed down sometime in late-2013 or early-2014.