San Jose Wins Skirmish in Battle to Move A's
SAN JOSE, Calif. (CN) - A federal judge cleared the way for San Jose to appeal a ruling in its lawsuit that accuses Major League Baseball of illegally blocking the Oakland A's planned move to the city, according to a lawyer involved in the case.
U.S. District Judge Ronald Whyte issued a tentative ruling from the bench today dismissing state law claims for interference with contract, clearing the docket in the federal case.
The decision allows San Jose to immediately appeal Whyte's October decision that dismissed federal claims MLB had illegally conspired to control the relocation of teams.
San Jose can now pursue its interference claims in state court with leave to amend the claims in federal court in the future, according to Phil Gregory, an attorney for the city.
"We believe this is an excellent result for the city because it allows the case to move forward on the antitrust claims to the next level and allows the case for interference with the option agreement to move forward in state court," said Gregory. The lawyer from Cotchett, Pitre & McCarthy LLP in Burlingame stressed that the ruling is tentative and no written ruling has yet issued.
In his October decision Whyte cited MLB's antitrust exemption, which gives Major League Baseball control over broadcast rights, apparel, stadium vendors, team locations and other aspects of the cash cow that is professional baseball. The exemption, which the U.S. Supreme Court upheld in 1922, found that baseball games are local affairs and not interstate commerce.
While agreeing with other jurists that the exemption is "unrealistic, inconsistent, or illogical," and an "aberration" that makes "little sense given the heavily interstate nature of the 'business of baseball' today," Whyte noted in October that it has lived on because of congressional inaction.
San Jose claims that MLB has unlawfully conspired to control the location and relocation of major league men's professional baseball clubs under the guise of the exemption.
Judge Whyte noted however that he is "still bound by the Supreme Court holdings, and cannot conclude today that those holdings are limited to the reserve clause."
In the same ruling, Whyte upheld claims for tortious interference with prospective economic advantage, which do not explicitly require an antitrust violation to survive.
San Jose argued that the MLB Relocation Committee has delayed for over four years a decision whether to approve the A's move, which "caused a disruption of the A's ability to execute an option agreement and disrupted any future negotiation of a purchase agreement, presumably causing damage to the city."
The city also delayed a public vote, at Commissioner Selig's request, on whether the A's could buy land and build a stadium.
Whyte noted that "it is reasonable to infer that the A's and the city entered into an option agreement with the understanding that MLB would return a relocation decision within the two year term of the contract."
The "court finds that the complaint sufficiently alleges a 'disruption' of the contract because, here, the A's are unable to exercise the option due to MLB's delay in conducting the vote pursuant to the MLB constitution to approve or deny relocation," Whyte added. "By asking the city to delay a public vote on the stadium, the city was justified in assuming that MLB would make a decision within a reasonable time which it has not."
While noting that the delay itself does not violate antitrust laws, Whyte concluded that the league "has engaged in acts (or rather, has failed to engage a vote pursuant to the MLB constitution) indicating an intent to frustrate the contract. The court concludes that the allegations in the complaint are sufficient to state a claim for tortuous interference with contract." (Parentheses in original.)
Bradley Ruskin, a partner with Proskauer Rose LLP in New York, represents MLB and Commissioner Selig. Ruskin did not immediately return a request for comment.