City of San Jose v. Office of the Comm'r of Baseball - 776 F.3d 686 (9th Cir. 2015)

Rule:

The caselaw clearly extends the baseball exemption to the entire business of providing public baseball games for profit between clubs of professional baseball players.

Facts:

Under the Major League Baseball’s (MLB) constitution, each of the league’s 30 member clubs must play their home games within a designated operating territory, and relocation to another franchise’s territory was prohibited unless approved by at least three-quarters of MLB’s clubs. The Oakland Athletics wanted to move to San Jose, which they considered a more profitable venue; however, San Jose fell within the exclusive operating territory of the San Francisco Giants. The Oakland Athletics built a stadium in San Jose by entering into an option agreement with the city that gave them the right to purchase six parcels of land the city had set aside. However, even after four years, the move was not yet approved by MLB. Believing that the delay was MLB's attempt to stymie the relocation and preserve the Giants' local monopoly, San Jose filed suit, alleging violations of state and federal antitrust laws, of California's consumer protection statute and of California tort law. Relying on the baseball industry's historic exemption from the antitrust laws, the district court granted MLB's motion to dismiss on all but the tort claims. San Jose appealed, arguing that the baseball exemption did not apply to antitrust claims relating to franchise relocation. 

Issue:

Did the baseball exemption apply to antitrust claims relating to the relocation of a major league baseball franchise? 

Answer:

Yes.

Conclusion:

The court held that the baseball industry's historic exemption from the antitrust laws, upheld in Flood v. Kuhn, 407 U.S. 258, 92 S. Ct. 2099, 32 L. Ed. 2d 728 (1972), barred San Jose's antitrust claim regarding franchise relocation under the Sherman and Clayton Acts and state law. The court held that under Portland Baseball Club, Inc. v. Kuhn, 491 F.2d 1101 (9th Cir. 1972), Flood was not limited to baseball's "reserve clause." Rather, antitrust claims against Major League Baseball's franchise relocation policies were in the heartland of those precluded by Flood's rationale. Accordingly, judgment was affirmed.