The city of San Jose lost its appeal in the Ninth Circuit Court of Appeals on Thursday. They were challenging Major League Baseball’s (MLB) long-held exception to federal antitrust laws. The Oakland Athletics are looking to make a location move and had their sights set on San Jose. However, the MLB’s constitution requires clubs to play games within a designated operating territory. Moving a team’s home into another club’s territory is prohibited unless approved by at least three quarters of all MLB clubs.

Currently, the San Francisco Giants claim San Jose as part of its exclusive territory. In order to make a move, the Oakland Athletics need the approval of the MLB clubs, which it did not receive. As a result, the city of San Jose brought suit against the Office of the Commissioner of Baseball alleging violations of state and federal antitrust laws. The MLB moved to dismiss, which the district court granted on the basis of baseball’s exemption from the antitrust laws. Thursday, the Ninth Circuit affirmed, stating “San Jose has struck out here.”

Baseball’s exemption was first stated in Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, which held that the Sherman Act did not apply to baseball games because baseball exhibitions are a “purely state affair.” This holding was reaffirmed, though on different grounds, in Toolson v. New York Yankees, Inc. The court stated that “the business of providing public baseball games for profit between clubs of professional baseball players was not within the scope of the federal antitrust laws.” Flood v. Kuhn again upheld this exemption, in part because of Congress’s legislative inaction to change the baseball industry’s reliance on this antitrust exemption.

The Ninth Circuit now has further explained the scope of the long-established antitrust exemption for professional baseball. Federal Baseball and Toolson clearly apply the exemption to the entire business of professional baseball, including what is at issue here, franchise relocation. The Ninth Circuit believes that “few, if any, issues are as central to a sports league’s proper functioning as its rules regarding the geographic designation of franchises.” With this explanation of the scope of MLB’s antitrust exemption, the court dismissed San Jose’s suit.

Baseball is the only sport in America that benefits from this antitrust exemption, which has greatly influenced the way the MLB does business. However, this suit has created the opportunity for the Supreme Court to revisit this topic and legal anomaly. The city of San Jose now has to decide whether to appeal to the Supreme Court of the United States and challenge the league’s antitrust exemption at the highest level for the first time in over 40 years. If the Supreme Court decides to hear the case, the legal landscape of professional baseball could completely change or the exemption could be confirmed, solidifying MLB’s current business and legal model.

Andrea Scheder

One Response to San Jose Strikes Out Again in Suit Against MLB

  1. William Roberts says:

    It is weird that MLB is the only sport that is given this exemption. I wonder why the court would take on this case if its goal wasn’t to change the legal landscape MLB’s business model is based on? I look forward to see what happens!