Sports Law Blog
All things legal relating
to the sports world...
Friday, February 14, 2014
Sports Law History: The Federal Baseball Trial of 1919
Baseball on Trial: The Origin of Baseball's Antitrust Exemption. Click here to read the earlier posts in the series.
Following the dismissal of the Baltimore Terrapins' initial lawsuit in Philadelphia, the club engaged in some limited settlement negotiations with the two major leagues over the next several months. When those efforts ultimately failed, the team then opted to file a second lawsuit against the American and National Leagues in September 1917, this time in Washington, D.C. It is not entirely clear why the team elected to file suit in Washington. Baltimore likely hoped to avoid any potential prejudice from refiling the case in Philadelphia, and therefore simply opted for the closest city hosting a major league team (for service of process reasons).
Because the trial court never issued a formal written opinion in the case, relatively little has been known about the lower court proceedings in the Federal Baseball suit. Baltimore's complaint was divided into two primary sets of allegations, the first dealing with the major leagues' monopolization of the professional baseball industry from 1903-1915, and the second contesting the ultimate destruction of the Federal League in 1915, both of which the team believed constituted violations of both federal antitrust and state law. In particular, Baltimore alleged that the American and National Leagues had monopolized the industry in various ways, not only by securing their claim to nearly all professional players through the use of the reserve clause (thereby tying each player to his current team for the entire length of his career), but also by guaranteeing all major league teams exclusive control over their geographic territories. This latter aspect of the team's case has often gone largely overlooked in modern treatments of the dispute, as courts and scholars have at times believed the case simply involved monopolization allegations relating to the reserve clause.
Due to the Washington court's congested docket, the suit would not be called for trial until March 1919. The parties eventually staged a fourteen day jury trial, featuring testimony from a variety of baseball executives (including legendary Philadelphia A's manager Connie Mack) and former players. Baltimore's newly retained legal counsel was able to present a much stronger case on the team's behalf than was asserted in the Philadelphia suit, emphasizing not only the dissolution of the Federal League in 1915, but also the major leagues' consistent monopolization of the industry for years prior.
Following the completion of the witness testimony, presiding judge Wendell Stafford allowed each side to present dueling motions for directed verdict, with both parties asserting that the undisputed evidence from the trial warranted a verdict in their favor. These arguments ultimately turned on the question of jurisdiction, as the parties disputed whether professional baseball constituted interstate commerce, and thus was subject to federal antitrust law. Baltimore's counsel stressed the fact that major league teams were spread across a number of different states, necessitating the transportation of both players and equipment across state lines, as proof that the leagues were engaged in interstate commerce. The team's counsel was so convinced of the strength of their argument that they opted to voluntarily waive Baltimore's claims arising under state law, resting its case entirely on the applicability of federal antitrust law. This decision would prove to be a critical mistake in hindsight.
Conversely, the American and National Leagues' counsel, George Wharton Pepper, argued that the business of professional baseball did not constitute commerce under the prevailing judicial definition in place at the time. In particular, Pepper stressed a series of precedents holding that commerce only involved the production or sale of tangible goods. Because the major leagues produced no tangible products themselves, but instead merely sold tickets to ephemeral exhibitions of baseball (games that were staged entirely in one state, no less), he did not believe that professional baseball was engaged in interstate commerce. Consequently, Pepper asserted, baseball could not be regulated under Congress's interstate commerce powers and therefore not subject to federal antitrust law.
Judge Stafford adopted the plaintiff's view of the law. He ruled from the bench that the major leagues were engaged in interstate commerce, and that they had illegally monopolized the industry in violation of the Sherman Act. Stafford indicated that he was not entirely convinced that this determination was correct, however, suggesting that he was ruling in Baltimore's favor in part to avoid the potential need for a retrial, thereby allowing the already empaneled jury to resolve the remaining factual issues (namely, whether Baltimore had itself been harmed by the major league's monopoly, and, if so, what the extent of its damages were). Had Stafford instead ruled in the major leagues' favor and dismissed the suit, only to have his decision overturned on appeal, the parties would then have had to stage a new trial to determine the remaining factual issues in dispute.
The jury ultimately returned a verdict awarding Baltimore $80,000 in damages (subsequently trebled to $240,000), much less than the $300,000 in damages the team had sought, but a significant victory nonetheless. The major leagues, of course, immediately vowed to appeal the decision, and were confident that their position would ultimately be adopted by a higher court. Their prediction eventually proved correct.
Labels: Baseball on Trial