SAN JOSE, Calif. (CN) - Citing Major League Baseball's antitrust exemption, a federal judge dismissed claims that would have cleared a path for the Oakland Athletics to build a new stadium in San Jose.
The antitrust exemption 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," U.S. District Judge Ronald Whyte noted last week that it has lived on because of congressional inaction.
The finding unravels San Jose's claims that the Office of MLB Commissioner Bud Selig illegally prevented the Oakland Athletics from moving to a new stadium in its city.
San Jose had challenged the league's antitrust exemption as well as the San Francisco Giants' claim to territorial rights in the southern Bay Area.
For years, MLB has unlawfully conspired to control the location and relocation of major league men's professional baseball clubs under the guise of an 'antitrust exemption' applied to the business of baseball," the city claimed in the suit.
Judge Whyte noted Friday, however, that he is "still bound by the Supreme Court holdings, and cannot conclude today that those holdings are limited to the reserve clause."
San Jose had tried to argue that court rulings upholding the exemption applied only to "essential aspects" of the game, like a reserve clause that tied players to their clubs for their entire career and did not apply to aspects of the game that were "related to" but not "essential" to the business of baseball. The city argued that team relocation was one such "related" aspect.
In Flood v. Kuhn, in which player Curt Flood unsuccessfully challenged the reserve system, the Supreme Court held that under two previous rulings the "reserve system, a part of the broader 'business of baseball,' continued to enjoy exemption from the antitrust laws."
Whyte noted that the "court's recognition and holding in Flood that the business of baseball is now interstate commerce cannot override the court's ultimate holding that Congressional inaction (at that time for half a century, but now for over 90 years) shows Congress's intent that the judicial exemption for the 'business of baseball' remain unchanged." (Parentheses in original.)
"The Supreme Court is explicit that 'if any change is to be made, it [must] come by legislative action that, by its nature, is only prospective in operation," Whyte added.
Although an arbitrator struck down the reserve system in 1975, and Congress passed the Curt Flood Act of 1998, that law prohibited courts from relying on the act as a basis to challenge any aspect of baseball other than the direct employment of baseball players.
"Despite the opportunity to do so, Congress chose not to alter the scope of the exemption with respect to any issues other than those 'directly relating to or affecting employment of major league baseball players,'" Whyte wrote.