Friday was the last day that the City of San Jose had to file a response to MLB’s filing from a month ago. And so they did, as Joe Cotchett went after baseball’s antitrust exemption. He also brought renowned sports economist Roger Noll to back him up.
The thrust of Cotchett’s argument is that the ATE is limited to the reserve clause and goes no further, citing the Flood, Piazza, and Federal Baseball cases. Naturally, that runs counter to MLB’s argument back in August that the exemption was enshrined by virtue of its long standing and couldn’t be changed except by an act of Congress. What view Judge Ronald Whyte takes when the first hearing is held October 4 is unclear. I’m eager to find out.
In addition to the attack on the ATE, Cotchett argues that the motion to dismiss the case should be denied, because the plaintiff’s claim is ” ‘plausible’ in light of basic economic principles.” Now remember that the original claim was that MLB colluded to prevent San Jose’s competitive bid to get the A’s. The case essentially rests on this particular argument. If Judge Whyte believes the argument is plausible, the case moves forward. If not, the City goes back to square one.
MLB claimed in its filing that the San Jose’s assertion that California’s Unfair Competition Law wasn’t violated because it the supposed violation was an antitrust violation, but because of the ATE, there is no violation. San Jose countered Friday that this ignores the UCL’s additional definitions of “unfair”. Historically, state courts have had difficulty properly codifying what “unfair” truly means, making this yet another test. It’s that very test that should push the case forward, according to Cotchett. Moreover, a chronology of actions/non-actions that have led up to this point was provided. They outline the various stalling measures MLB and the Commissioner’s office have taken to prevent a timely decision regarding an A’s relocation to San Jose, including Commissioner Bud Selig asking San Jose Mayor Chuck Reed to delay a stadium vote.
Cotchett also brought out California Business and Professions Code section 17204, which especially points out unfair competition against cities whose population is larger than 750,000. Of course, that means the statute only applies to four cities: Los Angeles, San Diego, San Jose, and San Francisco. All other California cities have less than 500k population. Does that mean anything? We’ll see.
Finally, Stanford professor emeritus Roger Noll provided a declaration of support for the lawsuit. While it probably won’t have any material bearing on whether or not the case will go to trial, Noll’s presence could become important as a witness if the case does go to trial. Noll’s quote:
“there is no pro-competitive justification for MLB’s refusal to allow the Athletics to San José…There is no conceivable economic justification for protecting the market for one of MLB’s most successful teams (the San Francisco Giants) at the expense of one of the MLB’s least successful teams (the Athletics).”
Noll is referring to the teams’ off-field and box office success, not their respective on-field exploits. I’d like to see which sports economists MLB brings out to argue for the preservation of the antitrust exemption. Then again, even if the case goes to trial, it seems more likely that MLB will be forced to make a deal, instead of the alternative of airing a bunch of dirty laundry and threatening the ATE in earnest. Whoever wins, I’m excited for October 4. It’s a step, even if it’s a halting one.
Armchair antitrust experts, have at it.