City of San Jose v. Office of the Commr of Baseball, No. C-13-02787, slip op. (N.D. Cal. Oct.

11, 2013). In City of San Jose v. Office of the Commissioner of Baseball, the District Court for the Northern District of California held that baseballs exemption from the federal antitrust laws barred all of the Plaintiffs antitrust claims but not a related state tort claim. The Court accordingly granted the Defendants motion to dismiss federal and state antitrust and unfair competition claims, but denied Defendants motion to dismiss Plaintiffs tort claim. The Plaintiffs were the City of San Jose and two associated agencies focused on redevelopment efforts in the City of San Jose. The Defendants were the Office of the Commissioner of Baseball, the unincorporated entity that does business as Major League Baseball (MLB), and Commissioner Allan Bud Selig. Plaintiffs alleged that (i) MLBs policy of allocating exclusive team territories and (ii) its failure to act on a territorial dispute between the San Francisco Giants and the Oakland Athletics restrains competition in the bay area baseball market, perpetuates the Giants monopoly over the Santa Clara market, and creates anticompetitive effects that lead to consumer harm. Id. at 6-7. Plaintiffs also brought state antitrust and unfair competition claims related to the same conduct and state tortious interference claims related to purported interference with Plaintiffs development contract with the Oakland Athletics. Defendants moved to dismiss all claims, arguing that Plaintiffs claims are barred by Federal Base Ball Club of Baltimore, Inc. v. National League of Professional Base Ball Clubs, 259 U.S. 200 (1922), and its progeny. Citing Major League Baseball v. Butterworth, 181 F. Supp. 2d 1316, 1331 (N.D. Fla. 2001), Defendants asserted that the longstanding exemption for the business of baseball extends to relocation decisions. In contrast, Plaintiffs argued that the baseball exemption applies only to the reserve clause and the other player employment arrangements specifically addressed in Federal Baseball, Toolson v. New York Yankees, Inc., 346 U.S. 356 (1953), and Flood v. Kuhn, 407 U.S. 258 (1972). In support, Plaintiffs cited two decisions, one from a federal district court and the other from the Florida Supreme Court, related to the San Francisco Giants abortive plan to relocate to Tampa in the 1990s. See Piazza v. Major League Baseball, 831 F. Supp. 420 (E.D. Pa. 1993); Butterworth v. Natl League of Profl Baseball Clubs, 644 So.2d 1021 (Fla. 1994). Plaintiffs also argued that, because the Supreme Courts most recent decision on the baseball exemption Floodwas limited to the reserve clause issue, stare decisis only required the Court to adhere to the exemption when the challenge concerned the reserve clause or similar arrangements. The Court rejected Plaintiffs view, holding that the baseball exemption encompassed a broad range of conduct that includes relocation decisions. In doing so, the Court concluded that the great weight of decisions since Flood have interpreted the business of baseball exemption to extend to team relocation decisions. The Court found that [a]ll federal circuit courts that have considered the issue (the Eleventh, Seventh, Ninth, and Second Circuits) have not limited the antitrust exemption to the reserve clause, but have adopted the view that the exemption broadly covers the business of baseball. City of San Jose, No. C-13-02787, slip op. at 3.

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In doing so, the Court declined to follow the two relocation cases cited Plaintiffs. Instead, the Court credited a subsequent federal district court decision, Major League Baseball v. Butterworth, 181 F. Supp. 2d 1316, in which the district court read baseballs exemption broadly and finding that the Commerce Clause preempts associated state antitrust claims. The Eleventh Circuit affirmed that decision on appeal. Major League Baseball v. Crist, 331 F.3d 1177 (11th Cir. 2003). Because the Court held that baseballs exemption extends to encompass relocation decisions, the Court dismissed Plaintiffs federal antitrust claims. The Court also dismissed Plaintiffs state antitrust and unfair competition claims as preempted. Finally, the Court declined to dismiss Plaintiffs tortious interference claims, finding that Plaintiffs allegations rested on additional MLB actions not related to those underlying the antitrust claims. See City of San Jose, No. C-1302787, slip op. at 22.

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