A federal appeals court panel at a hearing in San Francisco Tuesday appeared dubious of a bid by the city of San Jose to reinstate an antitrust lawsuit against Major League Baseball.
The city claims MLB has violated antitrust laws by allegedly blocking a possible move by the Oakland A’s to San Jose. The A’s, which recently signed a lease extension to remain in Oakland, are not participating in the lawsuit, but have held a three-year, $75,000 option to buy city land in San Jose for a stadium for about $7 million. The option expires on Nov. 8.
MLB claims it is protected from the lawsuit by a U.S. Supreme Court ruling in 1922 and two later high court rulings that exempted “the business of baseball” from antitrust laws. A federal trial judge in San Jose agreed and dismissed the antitrust claims.
In today’s hearing, lawyers for the city argued their appeal of the dismissal before a three-judge panel of the 9th U.S. Circuit Court of Appeals. The city has contended in filings that the antitrust exemption is “antiquated” and “the product of a bygone era.”
But because only the Supreme Court can overturn its own rulings, San Jose has focused its appeal-level arguments on a claim that the high court decisions concerned only the now-abolished reserve clause that preceded baseball’s free agency era.
San Jose Attorney Philip Gregory began his arguments at the 9th Circuit courthouse at Seventh and Mission streets in San Francisco:
“San Jose is not asking this court to overrule the Supreme Court trilogy.”
Chief Circuit Judge Alex Kozinski quipped:
“That’s a relief.”
But “simply, those cases don’t apply,” Gregory argued.
Kozinski and fellow judges Richard Clifton and Barry Silverman then immediately began questioning Gregory about a 1974 decision in which the 9th Circuit itself broadly affirmed the exemption, according to the judges, in a case concerning a minor league team in Portland.
“Your argument is that the exemption is limited to the reserve clause. Our court didn’t do that” in the Portland case, Clifton said.
“We have a case reading it more broadly than that. We know it is not just the reserve clause.”
The panel took the case under submission after hearing 40 minutes of arguments and will issue a written decision at a later date. It has no deadline for a ruling.
After the hearing, San Jose attorney Joseph Cotchett said that if the appeal later reaches the Supreme Court, the city will then ask the high court to overturn the antitrust exemption:
“The answer is yes.”
San Jose’s lawsuit, filed in 2013, claims MLB’s constitution and actions violate antitrust laws in two ways.
One is the territorial rights rule, under which the San Francisco Giants team has the right to block an A’s move to the South Bay and can be overridden only by a three-fourths vote of all teams. The second is alleged stalling by an MLB relocation committee assigned to study a possible move.
MLB attorney John Keker argued at the hearing, “There can be no doubt that the relocation of the franchise is squarely in the business of baseball” exempted by the high court.
In addition to the question of the scope of the exemption, a second issue in the case is whether San Jose has standing, or a legal basis, to challenge MLB. Keker asked the court to rule against San Jose on both issues.
Keker said there was no proof San Jose would suffer any economic injury from the alleged violations:
“This is land and they’re going to make big money on it anyhow. … They don’t have the A’s, they don’t have a team, they don’t have a stadium and they don’t have any indication a stadium is going to be built.”
But Kozinski told the attorney it would be “a little difficult” for the court to rule on the second issue if it decides in favor of MLB on the exemption. If the exemption applies, Kozinski said:
“There can’t possibly be any antitrust injury.”
Cotchett argued during a rebuttal:
“This is a segregated market because there is an economic wall built around the city of San Jose, the 10th largest city in the nation, because you have this document, the constitution of MLB, that says you can’t move to San Jose. … That’s about as clear an economic injury as you can get.”