San Jose Strikes Out at the U.S. Supreme Court

When the city of San Jose, California sued Major League Baseball back in the summer of 2013, the city’s attorneys likely anticipated that they would eventually have to litigate the case all the way to the U.S. Supreme Court in order to prevail in the suit. Indeed, because San Jose alleged that MLB’s refusal to allow the Oakland Athletics to move to the city – territory assigned to the San Francisco Giants under the league constitution – violated the Sherman Antitrust Act, the city was directly challenging MLB’s infamous antitrust exemption. And because it was the Supreme Court that originally created the exemption nearly 100 years ago, that court is the only judicial body that has the power to modify baseball’s antitrust immunity today.

Given all that, it was not particularly surprising that San Jose quickly lost at both the trial and appellate court levels, with both courts basing their dismissals of the city’s lawsuit on the sport’s antitrust exemption. Nor was it surprising to learn in April that San Jose was officially appealing the suit to the Supreme Court.

As I noted at the time San Jose filed its appeal, the city faced long odds of successfully persuading the Supreme Court to take its case. Not only does the Court grant less than 3% of the appeals it receives in any given year, but it has also subsequently reaffirmed baseball’s antitrust exemption on two separate occasions since first creating the doctrine in 1922, both times insisting that any change in the law must come from Congress, and not the courts.

It should come as no surprise, then, that the U.S. Supreme Court officially rejected San Jose’s appeal on Monday, marking the end of the city’s antitrust lawsuit against the league.

In order for the Supreme Court to have agreed to hear San Jose’s case, the city would have needed to convince at least four justices to vote to grant the appeal (the so-called “Rule of Four”). This convention ensures that the majority of the Court’s justices do not have complete control over deciding which cases are placed on the Court’s docket, giving justices in the minority the ability to hear a case raising an issue of interest.

While we do not know exactly how many justices – if any – voted to grant San Jose’s appeal, we can obviously conclude then that no more than three justices were willing to take the case.

This does not necessarily mean that a majority of the Court actually approves of baseball’s antitrust exemption, however. As I’ve previously noted, the the brief that MLB filed with the Court back in June persuasively highlighted a potentially fatal procedural flaw in San Jose’s case, namely the city’s questionable legal standing-to-sue (the requirement that a plaintiff have a personal stake in the outcome of an actual – not merely hypothetical – legal case or controversy). Because a California state court recently determined that the land that San Jose intended to use for the A’s new stadium had been illegally transferred, MLB convincingly argued to the Court that the city had not suffered any legally cognizable injury from the league’s refusal to approve the A’s relocation. In other words, MLB contended, San Jose could not prevail in the case even if the league was technically in violation of the Sherman Act.

It’s quite possible that four or more justices on the Court would have voted to grant San Jose’s appeal had the case not presented such a significant procedural defect. Indeed, because the Court takes such a small number of cases each year, its justices will often elect to pass up an opportunity to decide a disputed legal issue, instead preferring to wait to resolve the matter until a better situated lawsuit eventually emerges.

As a practical matter, then, this means that the Court may very well agree to hear a future challenge to baseball’s antitrust exemption – perhaps the recently dismissed antitrust case challenging MLB’s minor league pay practices – even though it refused to grant San Jose’s appeal.

That having been said, it is also possible that six or more justices on the Court are simply unwilling to disturb baseball’s exemption. For instance, these justices might have concluded that Congress effectively ratified baseball’s antitrust immunity by passing the Curt Flood Act of 1998 – a law repealing the exemption only to allow MLB players to file antitrust suits against the league – and therefore believe that the issue is now out of the Court’s hands.

Until another appeal reaches the Supreme Court, then, it is impossible to know whether Monday’s rejection of San Jose’s suit reveals that the Court is simply unwilling to repeal baseball’s antitrust exemption, or instead merely believed that the city’s case did not present the right opportunity to reconsider the issue.

Regardless of the reasoning underlying the Court’s decision, Monday’s news marks the end of San Jose’s antitrust lawsuit against MLB. That does not necessarily mean that all litigation between the league and city is now finished, however.

As Wendy Thurm noted back in 2013, although the trial court in the case dismissed San Jose’s antitrust claims against MLB, the court allowed the city to proceed on a separate claim that the league had unlawfully interfered with its land-option contract with the A’s, in violation of California state law. That state law claim is now proceeding in California state court.

Even if San Jose were to prevail in state court, however, the city would not be able to force MLB to permit the A’s to move to the city. Instead, the most that San Jose would be able to get out of the case would be monetary damages compensating the city for any harm it incurred from the delay in selling the land dedicated for a potential baseball stadium to another buyer.

So even though the city may still be litigating against MLB, Monday’s refusal by the Supreme Court to hear San Jose’s appeal appears to have marked the end of the city’s hopes of using the legal system to force the league to approve the A’s relocation. Instead, the city must now hope that its litigation efforts against MLB have not permanently spoiled its chances of securing the A’s relocation on terms amenable to MLB.

Meanwhile, from MLB’s perspective, Monday’s news represents a significant victory. Not only does this mean that the league continues to have the authority to decide whether or not to allow the A’s to move to San Jose, but MLB has also beaten back yet another attempt to have the Supreme Court overturn its antitrust immunity. As a result, MLB will continue to be able to rely on its exemption to defend itself from claims that it has engaged in unlawful, anticompetitive behavior.

Unless, that is, a different plaintiff can succeed where San Jose failed, and persuade the Supreme Court to reconsider baseball’s exemption in a future case.

Nathaniel Grow is an Associate Professor of Business Law and Ethics and the Yormark Family Director of the Sports Industry Workshop at Indiana University's Kelley School of Business. He is the author of Baseball on Trial: The Origin of Baseball's Antitrust Exemption, as well as a number of sports-related law review articles. You can follow him on Twitter @NathanielGrow. The views expressed are solely those of the author and do not express the views or opinions of Indiana University.

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Forrest Gumption
8 years ago

This remains, the absolutely most insane thing about MLB. The city with the most people, the most eager local government, and the most money, cannot get their own team and are doomed to be a class A town even though they have more people than Oakland.

Just stop it. Stop it. Move the A’s, or even better, the Rays to San Jose as soon as humanly possible.

8 years ago

The Rays! Now we’re talking. Don’t move the A’s. The A’s are awesome where they are, and Oakland is getting flooded with tech money anyway. But the Rays would be awesome.

8 years ago

That’s interesting. Move the Rays to AL West, Astros back to the NL Central, Pirates to the NL East, and Nationals back to the AL East. That could work.