United States: 9th Circuit Applies Antitrust Exemption In San Jose MLB Team Relocation Case

In City of San Jose v. Office of the Commissioner of Baseball, Case No. 14-15139 (9th Cir. Jan 15, 2015), the 9th U.S. Circuit Court of Appeals applied the judge-made antitrust exemption for baseball to bar a challenge by the City of San Jose, California to a rule adopted by Major League Baseball (MLB) that three-quarters of MLB teams must approve a baseball franchise relocation.

San Jose planned to welcome the Oakland A's to a new stadium in San Jose, which is within the geographic territory allocated by MLB to the San Francisco Giants. That fact required, under league rules, approval of the relocation by three-quarters of MLB's members. After MLB―in San Jose's view―delayed a vote, San Jose sued MLB, arguing, among other things, that the delay was an attempt to stymie the relocation and preserve the Giants' local monopoly. MLB argued that the baseball exemption barred San Jose's suit.

The 9th Circuit agreed. Although it acknowledged that the baseball exemption originated in a 1922 U.S. Supreme Court case erroneously decided on the basis that baseball is not in interstate commerce, the 9th Circuit refused to set aside what it described as an anomalous exemption. The court noted that MLB has built its business in reliance on the decision, and that the U.S. Congress has not acted to change the law in light of the Supreme Court's precedents. "Like Casey [at the Bat], San Jose has struck out here," wrote the 9th Circuit. "Only Congress and the Supreme Court are empowered to question [prior Supreme Court decisions'] continued vitality, and with it, the fate of baseball's singular and historic exemption from the antitrust laws." The court also rejected San Jose's argument that the exemption should be limited to the subject matter of some of the prior cases (e.g., limits on movements of players between teams). San Jose city leaders have voted to seek review in the U.S. Supreme Court.

The 9th Circuit's opinion is here.

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