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Wednesday, February 12, 2014
Sports Law History: Judge Landis and the Federal League Antitrust Suit of 1915
Baseball on Trial: The Origin of Baseball's Antitrust Exemption. Click here to read the earlier posts in the series.
Aside from the Supreme Court's decision in the Federal Baseball suit itself, perhaps the most famous legal development arising out of the Federal League challenge was the antitrust suit the Federals filed in 1915 against the major leagues in the Chicago federal court of Judge Kenesaw Mountain Landis (pictured). While many sports law enthusiasts were generally aware of the Federal League's antitrust suit, and Landis's involvement in it, prior to my research little was known about the actual proceedings themselves. Fortunately, most of the original court papers, as well as a transcript of the four-day hearing held before Judge Landis in January 1915, have been preserved by the National Baseball Hall of Fame Research Library in Cooperstown, New York. These materials serve as the basis for the fourth chapter in my book, documenting the Federal League's antitrust lawsuit against the two major leagues.
The Federal League filed its suit on January 5, 1915. The complaint alleged that the American and National Leagues had illegally monopolized the professional baseball industry in violation of both federal and state antitrust law, and had also illegally conspired to destroy the Federal League in violation of state law. The league asked the court to issue an injunction preventing the major leagues from continuing to coordinate their activities under the so-called National Agreement (the document governing professional baseball at the time) and from continuing to interfere with the Federal League's operations (such as by filing any new lawsuits against Federal League players).
Shortly after the suit was filed, Judge Landis scheduled a hearing in the case for January 20th to decide whether to grant the Federal League a preliminary injunction. The first day of the hearing was a significant event, as well over a thousand Chicago-based baseball fans reportedly flocked to the courthouse in hopes of snagging a seat to watch the proceedings. The parties ultimately spent four full days arguing before Judge Landis, with the issue of jurisdiction taking center stage throughout much of the proceedings. In particular, the major leagues alleged that they were not subject to federal or state antitrust law insofar as they did not consider baseball to be commerce. Relying on traditional definitions in place at the time limiting the term "commerce" to the production or sale of physical goods, the leagues argued that they did not themselves produce or sell anything tangible, but instead simply staged intangible amusements, beyond the scope of antitrust law. The Federal League, of course, disputed this characterization, contending that baseball was commerce insofar as the leagues paid to transport both players and equipment across state lines in order to stage their exhibitions.
Although the parties and media anticipated that Judge Landis would issue a ruling in the suit within a few weeks, he ultimately withheld his opinion for over a year. Landis would later explain his inaction by stating that if had he had issued an order it would have severely damaged both sides of the dispute, and potentially the sport itself, and therefore that he believed deferring his decision was the most prudent course of action. In the meantime, all three leagues struggled financially throughout the 1915 season, in the face of both an economic recession and the on-set of World War I. Consequently, both sides agreed to a truce in December 1915. Under the terms of the agreement, the Federal League agreed to cease its operations in exchange for payments totaling over $450,000 from the major leagues. In addition, two Federal League owners were allowed to purchase existing major league clubs (the Chicago Cubs and St. Louis Browns). While the terms of the deal satisfied seven of the eight Federal League teams, the owners of the league's Baltimore Terrapins objected to the agreement on the grounds that they did not receive anything under the deal. Despite the Terrapins' protests, the settlement was ultimately ratified, and as a result the Baltimore club subsequently pursued its own antitrust litigation, eventually culminating in the Supreme Court's Federal Baseball decision.
Judge Landis, of course, would later become baseball's first commissioner in 1920 in the aftermath of the fixing of the 1919 World Series (i.e., the so-called Black Sox scandal). Subsequent scholars have been largely critical of Landis's involvement in the Federal League's antitrust suit, believing that the judge was predisposed to side with the major leagues. For example, these scholars cite abbreviated press reports in which, at one point in the hearing, Landis declared that any "blow at this thing called baseball ... will be regarded by this court as a blow at a National institution." However, as my research reveals, when the exchange is read in its entirety Landis was actually admonishing major league baseball's attorney by explaining that one's personal affection for the game of baseball was irrelevant to the question of whether the major leagues had violated the law.
Moreover, while it is certainly true that Landis could have issued a ruling much sooner in the case, ultimately the delay appears to have had a relatively insignificant impact on the continued viability of the Federal League. Indeed, by the end of the four-day hearing the Federals had simplified their request for immediate injunctive relief to simply an order preventing the major leagues from interfering with the Federal League's players or denigrating the league in the press. With a few minor exceptions, the major leagues largely acceded to these requests throughout 1915 despite the lack of a formal injunction. Therefore, even if Landis had issued a ruling on a more timely basis it is far from certain whether it would have significantly helped the Federal League.
Thus, despite baseball fans' general awareness of the Federal League's 1915 antitrust suit and Judge Landis's involvement in the litigation, I nevertheless believe my book will uncover a number of important new details about the proceedings.
Labels: Baseball on Trial