MLB files reply brief in antitrust case, ties in Stand for San Jose lawsuit

MLB filed its initial response in the Ninth Circuit’s antitrust case. The general thrust of MLB’s argument hasn’t changed. They still argue that San Jose doesn’t have standing against baseball because of the flimsiness of the option agreement between San Jose and the A’s and because the sport’s antitrust exemption allows baseball to act however it likes regarding franchise relocation.

A wrinkle was added, in that MLB filed a Motion to take Judicial Notice of the ongoing Stand for San Jose-vs.-City of San Jose case (in Santa Clara County Superior Court). In this motion, MLB points out that the next court date for that case is on August 8, with the deadline for the opening brief set for May 14. Baseball argues that if the option agreement is considered invalid by the lower court, San Jose will lack standing in the bigger case.

If you’re following all of the legal meanderings, you may have noticed that the federal and appeals court proceedings have gone much faster than the county court’s. Much of that is procedural, as the S4SJ group has launched two lawsuits only to have them combined, while San Jose has tried to smoke out the SF Giants as the real instigators of the lawsuit. The important thing is that 8/8 will be the date that the court decides the validity of the option agreement, which could make or break a large part of San Jose’s case.

For its part, San Jose has maintained that the option agreement is completely valid, arguing that baseball’s refusal to allow the move has caused economic damage to the City. Joe Cotchett has repeatedly said that he’d love to take MLB all the way to the Supreme Court regardless of what happens in the lower courts. In an interview with KCBS Radio, he cited the Ninth Circuit’s approval of an expedited appeal as a positive for San Jose. MLB had previously filed a motion against an expedited appeal.

The circular arguments we see related to the case are enough to make one’s head spin. For instance, this from MLB’s reply brief:

In sum, San José uses speculative 30-year and 50-year models of the local economy to seek billions of dollars of damages, all before trebling. This sort of “Economic Impact Analysis” may be appropriate for municipal planning and decisionmaking, but it is far too speculative and judicially unmanageable to create standing for a multi-billion dollar antitrust claim.

Strange that such claims are perfectly fine for baseball when they’re selling a ballpark to a City, but not good enough when being threatened by a lawsuit.

I’d love to able to tell you that all of these legal hijinks will wrap up in a neat, tidy way. But we all know that the loser(s) will inevitably appeal, adding more months and years onto this saga.

25 thoughts on “MLB files reply brief in antitrust case, ties in Stand for San Jose lawsuit

  1. I hope Cochett follows through on his desire to take it all the way to the Supreme Court. It seems that pretty much every analyst and legal scholar believes that there’s no logical way MLB’s antitrust exemption holds water in this day and age.

  2. Great to see San Jose aggravating MLB in this way. San Jose has nothing to lose. A loss of the ATE would be the cherry on top of the desert in Selig’s long, failed career as commissioner.

  3. Lawsuits aside, what would make S4SF think that the option agreement is invalid? Option agreements happen all the time, not just in instances where a sports owner wants to buy land for a stadium. Still irks the hell out of me that the Giants puppet group can use “SJ” in their name; they in NO WAY represent the best interest of our fine city. Quite the opposite…
    BTW, isn’t it ironic that rain has played a big part in the first week of the A’s home schedule…during the worst drought in decades!

  4. I can’t believe MLB tied in the S4SJ case into this one.

    I smell something……smells like fear.

    That argument holds no water as the city can enter option agreements with anyone.

    The agreement is for 7M for the land alone. Not chump change for a city.

    MLB wants to stall and they can’t anymore. The 9th circuit will order discovery after they uphold the appeal.

    The day is almost here….

  5. Did I hear a new nugget there? Per Cotchett, BullShit has refused to ask for a vote unless the stupid blue ribbon recommends a site ? Is that really true ?

  6. Very weak reply by MLB’s defense. That economic impact study was objective and done by a neutral economics firm. How MLB attorneys could critize that is bush league. Also, including the giants
    proganda group “stand for San Jose” lawsuit is bizzare. As Sid suggests – MLB appears desperate.

  7. I heard Joe Cotchett speak to some law school alumni the other night. His case didn’t sound very convincing, but his strategy is that Justice Alito has written so negatively about Oliver Wendell Holmes’ opinion in Federal Baseball vs. National League, which allowed the antitrust exemption, that the leagues will settle before it gets the Supreme Court. In that case, standing does become the key…

    http://sabr.org/research/alito-origin-baseball-antitrust-exemption

  8. The 9th Circuit I believe will use “Rule of Reason” analysis on this because of the Piazza case in 1993. They ruled at that time the ATE did not extend to franchise relocation and upheld Piazza’s appeal.

    They then order a full blown trial where MLB had to open up its books and notes from internal meetings. Of course MLB settled the case as we all know.

    The fact MLB is trying to use S4SJ and the economic report as being bogus shows they are on thin ice. I would have assumed they would have just responded with “we have an ATE”….done deal.

    Precedence favors San Jose here, MLB is going to have to settle this and let the A’s into San Jose.

  9. The recent huge cable tv rights deals have made the MLB anti trust exemption completely outdated and foolish. The Dodgers, for example inked a $325 mil. per year deal with Turner Sports Network (based in Atlanta GA) The Yankees receive $300 mil. annually from Fox Sports (based in LA) These teams make so much revenue from out of state sources they could likely not charge admission to their games and still be profitable. How MLB could still be considered as intrastate business only is silly.

    The Supreme Court made their last ruling in 1976 – it was barely upheld then. This was pre cable tv, the internet, and smart phones. Since the early 80’s (with the start of cable tv) MLB team revenues and player salaries have went up like a rocket. The average 1979 MLB player salary was $113,558 – in 2013 it soared to $3,386,212 – a 2882% increase! All the increases in MLB team revenue and player salaries are linked to the increasing astronomical cable tv rights deals. Defending the MLB as intrastate business only these days is not only inaccurate – it’s laughable, there is no way that the MLB ATE should still be considerated as legitimate legislation.

  10. To me, the biggest bit of news is the ninth giving the case expedited attention. That’s no small thing, especially considering all the issues that come before the court. One has to believe that there is a compelling reason for this sort of attention. I’d say MLB is on VERY thin ice here, and I think they’re starting to get nervous. Any lawyers out there want to speculate on the meaning of the expedited hearings? I’d love to hear their interpretation.

  11. I sure hope there will be the opportunity for MLB to explain the relationship of both the City of San Jose and the City of Oakland, as they relate to the City of San Francisco. I would love to hear MLB’s explanation of San Jose being a suburb of San Francisco, while Oakland is distinctly separate from San Francisco.

  12. Good one, Illpec. The 400,000-population city 8 miles away is not a suburb of Frisco byt the 1 million-person city 40 miles away is, apparently. Maybe they can argue that Frisco is actually a suburb of San Jose, since San Jose is on the Top `10 Largest Cities list and Frisco is not.

  13. I have another question for any attorney’s on this site. It seems to me that MLB is predicating it’s entire case on stare decisis. Am I reading that correctly? Following their reasoning, then no one would ever have standing to sue MLB. Is that accurate?

  14. Coverage of the issue in today’s Wall St Journal:

    http://online.wsj.com/news/articles/SB10001424052702303910404579485612355536676

    Excerpts:

    Baseball’s long-criticized antitrust exemption is the knuckleball of Supreme Court precedent: It appears vulnerable to attack, but challengers keep striking out.

    Now city officials in San Jose, Calif., are taking their turn at bat in the most notable legal challenge to baseball’s exemption in a generation—one that could ultimately swing back to the Supreme Court’s doorstep.

    ***

    Major League Baseball, which hasn’t given the A’s permission to move, says that the land offered by San Jose isn’t enough to build a stadium and notes that the city hasn’t offered to help fund construction.

    ***

    In October, U.S. District Judge Ronald Whyte dismissed San Jose’s lawsuit, saying he was bound to follow a trilogy of Supreme Court cases…[b]ut even as he tossed the case, [he] said he agreed with past critics who found baseball’s antitrust exemption “an aberration that makes little sense” today.

    Baseball is the only sport with an exemption from the antitrust laws, the product of a unique run through the legal system that began in a different era of the sport—and the courts. In 1922, the Supreme Court held that federal antitrust law didn’t apply to baseball because the game was a local affair, not interstate commerce.

    ***

    The court’s baseball rulings are among the most widely criticized decisions that remain good law. The 1922 opinion “has been pilloried pretty consistently in the legal literature since at least the 1940s,” Justice Samuel Alito said in a speech to the Supreme Court Historical Society in 2008, though he suggested the ruling was consistent with the legal thinking of the time. One justice who sided with baseball in the 1953 ruling later said he had “lived to regret it.”

    Unlike past cases, the San Jose lawsuit comes to the courts after Congress in 1998 applied antitrust law to baseball in one respect: the employment of major-league players. The move was designed to reduce the likelihood of future baseball strikes. The league says that targeted legislation signaled clearly that Congress wanted to keep the rest of baseball’s exemption in place.

    University of Georgia business-law professor Nathaniel Grow, author of “Baseball on Trial,” a new book about the exemption, says the optics of the San Jose case aren’t good for Major League Baseball because the Athletics’ current stadium situation in Oakland is “such a mess.” But he says baseball’s antitrust exemption has produced public benefits, providing stability to franchises and keeping teams from leaving their communities.

    Even with the exemption, he says, baseball’s business conduct on everything from stadium rights to broadcasting negotiations is largely indistinguishable from other sports leagues subject to antitrust law: “For the most part, their operations are identical.”

    But while Mr. Grow defends the exemption, he said that if the stars ever align and the Supreme Court agrees to consider the issue again, “I’d be surprised if baseball wins.”

  15. It will be interesting to see what MLB does if and when the SJ vs MLB case reaches the Supreme Court (if MLB doesn’t settle with San Jose before that) When dealing with the SCOTUS, one must believe that once they choose to take on a case – they will see it through. One would believe they wouldn’t drop the case if MLB decides to settle with San Jose before the case goes to trial (there likely is a point of no return for MLB) So MLB might be required to settle with San Jose before the Supreme Court even hears SJ vs MLB.

  16. Does MLB truly believe that it is worth the risk of jeopardizing their sacred ATE in order to restrict the movement of one their own franchises within its very own existing market? MLB is looking like a bunch of damn fools.

  17. @Steve- Thank you for posting that WSJ article as this statement sums up this mess:

    “Major League Baseball, which hasn’t given the A’s permission to move, says that the land offered by San Jose isn’t enough to build a stadium and notes that the city hasn’t offered to help fund construction.”

    Help fund construction? MLB wants San Jose to give them a free stadium or a partially subsidized one a la Washington DC. That is the great equalizer for the A’s to move to San Jose or any other city for that matter.

    MLB cannot argue that point, if San Jose is “smart” enough to coax the A’s to build privately then that is just “good business” from the point of San Jose.

    You cannot use a “free handout” as an argument if your MLB in court. That is a clear violation of anti-trust law and anti-competitive behavior. This would not pass a “Rule of Reason Analysis”.

    @IIpec- It seems more and more like that every day. MLB wants a “handout” from San Jose or Oakland and they are not going to get one in the State of California.

    MLB wants an Oakland miracle like what happened with the Raiders and Warriors. The Warriors were about to leave to SJ and then Oakland ponied up $$. The Raiders came back once Oakland did the same thing.

    Perhaps the Kings getting $$ from Sacramento made MLB want to delay more thinking they could get Oakland to move. Problem is Oakland has 3 teams not 1 like Sac, that is 3 times the problems.

    Since San Jose will not pony up any $$ Selig has nothing to barter between the teams.

    No other sport or business would this be allowed. The 9th Circuit better open this thing up to discovery. That will be the end of this nonsense once and for all.

  18. Multibillion-dollar MLB whining for a free ballpark is about as pathetic as it gets.

  19. Just as MLB has a history of kicking this down the road, so does the Supreme Court. They made a questionable decision in the 1922 ruling and courts have continued to use that as standing to keep the status quo. The Court argues that it’s now Congress’ job to explicitly state that MLB is not exempt from Anti Trust. MLB has too much money and this issue only effects a small number of markets that I doubt it would pass.

    All these articles and legal experts say that if this gets to the Supreme Court the case will be decided on San Joses side, but despite common sense, that hasn’t been the case yet.

    I highly recommend “The Baseball Trust” by Stuart Banner.

  20. @Michael – Google “Giants move to Tampa lawsuit”.

  21. @Michael Angeno: That comment that implies that – since Congress passed the MLB ATE, Congress should also overturn it – is incorrect. Back in 1890, Congress passed the Sherman Anti-Trust legislation, designed to eliminate monopolies and monopoly trading practices. In 1922, the Supreme Court interpreted that the Sherman Anti Trust Act did not apply to MLB, because the SCOTUS believed that MLB was intra-state commerce only and anti-trust legislation should thus not apply to MLB. Actually, the SCOTUS should be responsible for cleaning up their own mess – not Congress.

    Also, back in 1922, the MLB ATE made sense. There was no television, cable tv, internet, smart phones, etc. – even radio likely was not a practical media form then. Gate receipts were the only way MLB teams could make a profit. These days, especially since cable tv’s inception in 1979 – technology and the way MLB teams make profit has made the MLB ATE completely obsolete. For example, the Dodgers receive $325 mil. annually from Turner Sports (from Atlanta), the Yankees receive $300 mil. yearly from Fox Sports (located in Los Angeles)These teams earn more revenue from out of state sources than they do with gate receipts – the MLB ATE has now become a complete farce and should be overturned.

    Furthermore, the Supreme Court is not exactly bombarded with requests to overturn the MLB ATE. Since 1922, the SCOTUS has ruled on the MLB ATE twice, in 1953 and 1976 (twice in 92 years)It’s quite likely that the members of the SCOTUS would not be bothered by taking another whack at it.

    Judges are instructed to use logic and weigh all factors, such as technology, when making their judgements – they won’t likely continue using “Stare Decisis” when making their judgements about the MLB ATE. MLB must believe that the MLB ATE is in trouble – lately they have been cutting deals to avoid the SCOTUS hearing MLB Anti Trust cases – the MLB ATE is indeed on shaky ground.

  22. @ duffer
    Once again, you are over-thinking this.

    The Court’s Commerce Clause interpretation changed dramatically in the 1930’s. For the last 80 years, even the 1922 version of MLB would be ruled interstate commerce. It doesn’t even matter about all the newer interstate bells and whistles; the old, 1922 version of baseball would be enough under modern law.

  23. @Jeopardydd:

    Technically, the 1922 Supreme Court ruling was wrong. However, lately, the MLB ATE has really become outdated – now MLB teams are getting more revenue from out of state sources than they are from intrastate sources – as SJ’s attorney Cotchett commented, it has become silly.

  24. No, you are not understanding what I am telling you.

    It matters not in what ways MLB has changed since 1922, because there was a seismic shift in how the Court interprets the Commerce Clause int he 1930. No Supreme Court would rule after the 1930’s that MLB, even in the form it existed in at the time, was outside of the Commerce Clause and therefore the anti-trust act.

    What I’m telling you is that tv or no tv, internet or no internet, big out-of-state revenues or not, no modern Supreme Court would rule in favor of MLB on that point. Your points are completely irrelevant. The main difference is the difference in the law and the Court between 1922 and 1935-present, not the difference in MLB.

  25. The MLB ATE is a joke, and is an outdated, obsolute ruling, and should be overturned, technicalities aside (which you appear to be knowledgeable about)

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