San Jose antitrust claims dismissed, state claim allowed to continue

Yes, it did.

In filing this lawsuit, San Jose went with a shotgun approach, throwing as much against the wall as it could to see what would stick. In this case, everything connected to MLB’s antitrust exemption came off the wall, and the state tort claim stuck. Getting a shot at MLB’s antitrust exemption would have been a huge win, but as described below, the odds of success on that were slim from the get-go.

Where San Jose did win was in getting part of the case past the dismissal stage. The state claim is not as big a deal as the antitrust claims, but getting a chance to go to court on that claim means a chance for discovery. Discovery occurs before trial, and is when each side has the opportunity to demand evidence. This can include requests for answers to interrogatories, production of documents or depositions. More importantly, the evidence requested does not require the same level of relevance as it does once trial starts. It is basically an opportunity for each side to explore what the other side might have. Much of the information gained could prove useless for trial, but the information can get out there.

For Major League Baseball, discovery is the last thing it want. It would allow the city of San Jose to go poking around in MLB’s business as it relates to the process of the Oakland A’s relocation. MLB has legal maneuvers with which it can attempt to defend itself, but it would be in a tough position. Aside from losing a court case, sports leagues’ biggest fear can be the discovery leading up to any case.

Does this mean MLB lost?
The discovery issue will be of some concern to MLB, and very well could lead to some kind of settlement with San Jose. That was probably the primary goal of the San Jose attorneys: Force a settlement and potentially work out a deal that maybe gets the A’s down there in the future.

That being said, MLB continues to run up its pristine record against defending its antitrust exemption. We could discuss the antitrust exemption for days and not get to the bottom of it. Simply put, in 1922, the United States Supreme Court ruled in Federal Baseball Club v. National League that MLB was exempt from the Sherman Antitrust Act because it was in the business of “giving exhibitions of base ball, which are purely state affairs.” Federal antitrust law requires the involvement of interstate commerce, and the Supreme Court decided that was not involved.

In [Federal Baseball], this Court held 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. Congress has had the ruling under consideration but has not seen fit to bring such business under these laws by legislation having prospective effect. The business has thus been left for thirty years to develop, on the understanding that it was not subject to existing antitrust legislation.

The Court believed that baseball was able to flourish specifically because it was exempt from antitrust law. The Court said it was up to Congress to enact legislation that would change this, but since Congress had not done so over the course of 30 years, it clearly was fine with MLB remaining exempt.

This has been the basis for subsequent rulings at the Supreme Court level and down to the district court level. Baseball is the only sport with this full antitrust exemption, and courts have openly acknowledged it is illogical and an aberration. The Supreme Court has since acknowledged that baseball is in fact engaged in interstate commerce, but have shown deference to the 1922 ruling.

We often hear the term stare decisis used in discussing precedent. Stare decisis is Latin for “let the decision stand.” Precedent is a frequent topic of inquiry when Supreme Court justices are appearing before Congress. Some justices firmly believe in the importance of precedent. Others, often referred to as “activist judges” believe the Court should change with the times.

Past Courts have made it clear that it is up to Congress to deal with MLB’s antitrust exemption. There is not a legal push for change in part because it is not an inflaming social issue. On Congress’ side, I imagine MLB lobbyists have done what they can to keep the legislative branch off their backs.

Attorneys for the city of San Jose and MLB will meet with the judge for a case management conference. This is when the parties will lay out the schedule for the case. This will include potential trial dates, the start of discovery and a variety of other issues.

The judge will also strongly encourage the two sides to work toward a settlement. Judges are tasked with managing a case, and that includes doing what they can to get a settlement to save court resources. This is a perfect example of a case that should and probably will be settled. San Jose’s ideal settlement would involve figuring out how to get the A’s to town, but I imagine a healthy cash settlement would be a second-best option.

In the meantime, San Jose does have have the opportunity to appeal the decision to the Ninth Circuit Court of Appeals. A motion to dismiss assumes the facts most favorable to the party not filing the motion. In this case, even if you assume all facts in favor of San Jose, MLB antitrust precedent is well established, and will not be changing anytime soon.

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