Bloomberg News

MLB Wins Dismissal of San Jose Antitrust Claims in A’s Case

October 12, 2013

Major League Baseball won dismissal of antitrust claims in a lawsuit accusing it of keeping the Oakland Athletics from moving to San Jose, California, to shield the San Francisco Giants from competition.

U.S. District Judge Ronald M. Whyte in San Jose yesterday barred the city from refiling its antitrust claims, saying it hasn’t suggested how they could be successfully argued and “nor does the court see how they could be.” The judge, rejecting an MLB request, allowed the city to pursue claims based on interference with its contract and economic advantage.

Whyte said he was bound by earlier court decisions exempting the major leagues from antitrust laws. Baseball’s exemption has been in place since 1922, when Supreme Court Justice Oliver Wendell Holmes issued a three-page opinion saying the clubs weren’t subject to federal laws because they weren’t engaged in interstate commerce.

“This court agrees with the other jurists that have found baseball’s antitrust exemption to be ‘unrealistic, inconsistent, or illogical,’” Whyte said in yesterday’s ruling, citing previous decisions. “The exemption is an ‘aberration’ that makes little sense given the heavily interstate nature of the ‘business of baseball’ today.”

‘Blatant Conspiracy’

Challenging baseball’s exemption, San Jose alleged in its complaint a “blatant conspiracy” to prevent the A’s from moving, costing the city millions of dollars in new sales-tax revenue. The A’s currently play their home games at the O.co Coliseum in Oakland, on the east side of the San Francisco Bay.

San Jose sought baseball Commissioner Bud Selig’s blessing to relocate the A’s in 2010, according to the complaint. He hasn’t approved the move, which would place the team in the defined territory of the Giants, according to the suit, which names Selig as a defendant.

Major League Baseball sought to block the A’s move using provisions of its rules that unlawfully restrict the transfer and relocation of teams, San Jose said in the complaint. One such rule prohibits teams from moving “within the operating territory of a member without the written consent of such member.”

‘Great Victory’

Philip Gregory, a lawyer for San Jose, called yesterday’s ruling “a great victory.”

“The ruling means that the city’s claims that MLB is interfering with its option agreement to move the A’s can proceed to trial,” Gregory said in a phone interview. “We would hope that baseball would act in a positive way.”

Gregory’s partner, Joe Cotchett, said in the statement that San Jose will appeal Whyte’s antitrust ruling, adding that it is “hard to believe Major League Baseball is not subject to the same antitrust rules that apply to all other sports.”

Major League Baseball said in an e-mailed statement that it was pleased the judge dismissed “the heart of San Jose’s action and confirmed that MLB has the legal right to make decisions about the relocation of its member clubs.”

“We are confident that the remaining state law claims, which assert that San Jose’s costs associated with the option agreement for the sale of real estate were increased by the timing of MLB’s decision-making process, will be decided in MLB’s favor, and that San Jose has not suffered any compensable injury,” according to the statement.

Territorial Rights

A team has exclusive territorial rights in the city where it’s located and within 50 miles (80 kilometers) of the city’s corporate limits, according to the complaint. The proposed site for a new Athletics ballpark in San Jose is 48 miles from the Giants’ AT&T Park in San Francisco. The Giants already have a minor-league affiliate in San Jose.

“The decision is clearly right on the antitrust issues,” Mark Lemley, a Stanford Law School professor, said in an e-mail. “While the baseball exemption doesn’t make much logical sense, the Supreme Court created it, and it is the Supreme Court, or Congress, that has to get rid of it.”

The Oakland A’s lost Game 5 at home yesterday in the playoff series against the Detroit Tigers, who will go on to play the Boston Red Sox in the American League Championship Series.

The dispute over moving a team to San Jose, California’s third-largest city, dates back to the 1980s, when the Giants unsuccessfully tried to get San Francisco voters to approve a new ballpark. After considering a move to San Jose, the Giants got their own stadium in San Francisco in 2000.

“No matter what the outcome of any legal action, the A’s have and will continue to follow the process available to all MLB ownerships in our desire to have a modern and exciting state of the art baseball-only venue,” Lew Wolff, the team’s owner, said in an e-mailed statement.

The case is City of San Jose v. Office of the Commissioner of Baseball, 13-cv-02787, U.S. District Court, Northern District of California (San Jose).

To contact the reporters on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net; Karen Gullo in federal court in San Francisco at kgullo@bloomberg.net; Rob Gloster in San Francisco at rgloster@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Michael Sillup at msillup@bloomberg.net


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