Federal Court Hearing In San Jose vs. MLB Could Move Process Forward

The federal judge overseeing the antitrust lawsuit by the City of San Jose against Major League Baseball held a case management conference Friday morning. But the hearing dealt with weightier issues as compared to the usual case management conference. Most particularly, the court is deciding whether to dismiss the two remaining state law claims for interference with contract and allow those claims to be re-filed in state court. If so, the court would enter final judgment in the federal case, and San Jose would have the right to immediately appeal to the Ninth Circuit Court of Appeals.

The hearing came two months after Judge Ronald M. Whyte issued an order that dismissed San Jose’s antitrust claims based on the court-created antitrust exemption for MLB. In the same order, the court held that San Jose had adequately pled two claims for interference with contract, on the theory that MLB’s delay in making a decision on the A’s proposal to move to San Jose had interfered with the A’s option agreement with San Jose to purchase five acres of land in downtown San Jose on which to build a new ballpark. My previous post on the Court’s ruling is here.

Judge Whyte began Friday’s hearing by stating that he was tentatively inclined to dismiss the state court claims. He then heard arguments by attorneys for the parties: John Keker for MLB and Philip Gregory for San Jose.

MLB asked Judge Whyte to hold onto the state law claims and then stay the case, while the Santa Clara Superior Court decides a different lawsuit challenging, among other things, the validity of the option agreement. That action, filed by a group called Stand for San Jose, is believed to be an effort by the San Francisco Giants to have the option agreement invalidated. You can read more on that state court action here, here, and here. There will be a hearing in the state court case next Friday, December 20.

Keker argued that if the option agreement is invalid, then San Jose doesn’t even have standing to sue MLB on antitrust grounds, which would make an appeal of the exemption ruling moot. Keker also raised concerns of a three-court circus that would arise if the federal action is dismissed, but appealed, and San Jose proceeds with the interference claims in state court.

Once they heard Judge Whyte’s tentative ruling, attorneys for San Jose essentially submitted the matter. San Jose wants the opportunity to get the exemption issue before the appeals court and, eventually, the U.S. Supreme Court as quickly as possible. Joe Cotchett, lead attorney for San Jose, spoke to reporters after the hearing and expressed confidence that tide has turned in courts against the antitrust exemption and it’s only a matter of time before the U.S. Supreme Court limits or eliminates the exemption.

Amid the procedural skirmishing, Judge Whyte asked MLB about the letter the league apparently sent in April rejecting the A’s proposal for a San Jose ballpark. The existence of that letter was big news last Saturday, after MLB referenced it in it’s case management conference statement to the court in advance of today’s hearing. My post on it is here.

Keker told the Court that the letter should remain confidential because it contains proprietary business information about the A’s proposal and finances. Keker then said: “The proposal by the A’s was unequivocally denied. There is no other proposal by the A’s pending before the Commissioner.”

Judge Whyte concluded the hearing by stating that he was leaning toward adopting his tentative ruling to dismiss the state law claims without prejudice and enter final judgment.

Some have questioned why attorneys for San Jose would want the case dismissed from federal court now. The big issue in the case has been and will be baseball’s antitrust exemption. The fastest way to get an appeals court and the Supreme Court to limit or eliminate the exemption is by appealing Judge Whyte’s order immediately.

Yes, San Jose wants discovery into MLB’s decision-making process, but it can seek that discovery in a state court action if it chooses to pursue the interference claims. Indeed, from San Jose’s perspective, the maximum amount of chaos it can cause in the courts the better, in the hopes that MLB will be concerned enough about losing its exemption and its control over the relocation process that it would agree to let the A’s move to San Jose. That’s a long shot strategy, but that’s all San Jose has at this point.

Judge Whyte is likely to issue an order before the Christmas.





Wendy writes about sports and the business of sports. She's been published most recently by Vice Sports, Deadspin and NewYorker.com. You can find her work at wendythurm.pressfolios.com and follow her on Twitter @hangingsliders.

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Owen

I sincerely hope you forgot the space in ‘For War’ instead of just missing a ‘d’ at the end ‘forward’…