MLB Urges U.S. Supreme Court to Deny San Jose Appeal

Overshadowed by last week’s series of momentous decisions by the U.S. Supreme Court, Major League Baseball recently filed a brief with the Court urging it to reject an appeal by the city of San Jose, California in the on-going dispute over the future home of the Oakland Athletics. As I noted at the time San Jose filed its appeal back in April, the city is hoping to challenge MLB’s refusal to approve the proposed relocation of the A’s to the city in court under the Sherman Antitrust Act.

Over the last two years, however, both the trial court and court of appeals have dismissed San Jose’s suit in light of professional baseball’s nearly century-old antitrust exemption. The city is now asking the Supreme Court to take its appeal and overturn the controversial doctrine in order to hold MLB accountable under the Sherman Act, like all of the other major U.S. professional sports leagues.

As one might expect, MLB’s brief instead argues that San Jose’s appeal should be rejected for several reasons. In particular, MLB devotes much of the first half of its brief to the contention that San Jose lacks standing to sue — a requirement in which the plaintiff must show that it has a personal stake in the outcome of an actual legal case or controversy (as opposed to a hypothetical, future dispute) — and therefore can’t sustain its case against the league.

MLB challenges San Jose’s standing on several grounds. The primary basis of MLB’s attack, however, focuses on a recent California state court decision holding that an option agreement between the city and the A’s for the land on which a new stadium is to be built is invalid under various state and municipal laws. Specifically, the California court determined that San Jose had illegally transferred the land to a governmental authority in an attempt to circumvent laws requiring that a public referendum be held to approve the use of any tax dollars to build a sports facility.

While San Jose has announced that it will appeal this decision, MLB nevertheless emphasizes the opinion heavily in its brief to the U.S. Supreme Court. The league argues that because the city’s agreement with the A’s has been declared legally invalid, even if MLB were to approve the relocation the city still would not be able to sell the land to the team as planned. As a result, MLB contends, its failure to approve the relocation has not actually inflicted any harm on San Jose.

This is a potentially disastrous argument for San Jose’s appeal. Because the Supreme Court only accepts roughly 1-2% of all appeals it receives, the Court is extremely demanding when deciding which cases to hear. So with significant questions regarding whether the Court even has the power to hear San Jose’s case, this standing issue could very well be enough to convince the Court to deny the appeal, even if a majority of justices were inclined to re-examine baseball’s antitrust exemption.

After challenging San Jose’s standing to sue, MLB’s brief then turned its attention to defending the sport’s antitrust exemption. In particular, the league urged the Court to continue to defer to Congress on the matter, rather than acting to repeal baseball’s immunity itself.

As I’ve previously explained, in two prior decisions the Supreme Court suggested that any change to baseball’s exemption should come from Congress, rather than the Court, since the legislative branch is better positioned to repeal the immunity only on a going-forward basis. Otherwise, if the exemption were to be repealed retroactively by a court, MLB could potentially face a financially devastating series of antitrust lawsuits for past activities that had been legal at the time they were conducted.

MLB’s brief argues that this same concern still holds true today. The league contends that its owners have invested billions of dollars in their franchises in reliance on the sport’s antitrust immunity. Had the owners known that they would one day be held liable under the Sherman Act, then they may have acted quite differently, potentially reducing their investments in the minor-league system or MLB Advanced Media — baseball’s digital content provider — for instance.

Moreover, MLB argued that it would be particularly inappropriate for the Court to repeal the antitrust exemption today because Congress has taken steps to limit baseball’s immunity since the Supreme Court last considered the issue in 1972. Specifically, in 1998, Congress passed the Curt Flood Act, a law that partially revoked the exemption to allow major-league players to file antitrust suits against MLB.

Because the Flood Act did not repeal baseball’s immunity in any other areas, MLB argues that the Supreme Court should interpret the law as a sign that Congress implicitly approves of the exemption in all other respects. As a result, the league contends that it would be improper for the Court to revoke the sport’s immunity after Congress opted not to do so itself.

Looking ahead, San Jose will have an opportunity to respond to MLB’s arguments in its final brief to the Court. Once that document has been filed, the parties will then have to wait until the Court reconvenes in October to learn whether the city’s appeal will be granted.

Upon reopening for business in October, the Supreme Court’s nine justices will meet in a private conference to decide whether to grant the appeal. If four or more justices vote to take San Jose’s case, then the appeal will be placed on the Court’s docket for the 2015-16 term. This means that the parties would then have to file another round of legal briefs, followed by an oral argument before the justices, with a final decision in the case likely coming sometime next spring or summer.

On the other hand, if there are fewer than four justices willing to hear San Jose’s case, then the appeal will be rejected and the city will have officially lost its lawsuit. In light of the standing issues highlighted in MLB’s brief, this is the more likely outcome. As noted above, even those justices who might be inclined to repeal baseball’s exemption will probably be persuaded to reject the city’s appeal since it is unclear whether San Jose could even move forward with its stadium plans should the city receive a favorable ruling in the present case.

Instead, the Supreme Court will likely wait until a cleaner case eventually emerges to reconsider the issue.