- The Washington Times - Monday, April 22, 2002

The events of the last six months have given new hope to Washington finally getting a baseball team. The double switch in team ownership, where Jeffrey Loria went from the Montreal Expos to the Florida Marlins, John Henry went from the Marlins to the Boston Red Sox, and Major League Baseball took over the Expos, raises a tantalizing legal question.
Would it be illegal for Major League Baseball to refuse to sell the Expos to Washington investors at the end of the year as a violation of the Sherman Antitrust Act?
The answer may lie in the decision of the U.S. District Court in Philadelphia. In Piazza vs. Major League Baseball (1993), the court ruled that baseball's antitrust exemption is limited to the reserve clause and that ownership issues are not covered by the exemption.
Baseball's antitrust exemption is well-known. In a trilogy of cases, starting with Oliver Wendell Holmes' decision in 1922, the Supreme Court has ruled that baseball is exempt from the antitrust laws. These cases Federal Baseball Club of Baltimore Inc. vs. National League of Professional Baseball Clubs (1922); Toolson vs. New York Yankees Inc. (1953); and Flood vs. Kuhn (1972) all concerned the reserve clause, which bound a player to the team who held his contract, essentially for life.
Justice Holmes ruled that the business of baseball was giving exhibitions of the game of baseball, which is not susceptible to being transferred between the states. The games are, therefore, "purely state affairs" lacking the character of interstate commerce and thus are exempt from the Sherman Act.
Piazza, however, did not deal with the reserve clause. Rather, it concerned the refusal of the National League to allow the San Francisco Giants to be sold to investors in Florida, who planned to move the team to Tampa Bay. The investors filed suit, alleging violation of the Sherman Act.
The District Court found that baseball's antitrust exemption was limited to the reserve clause, and the investors' claim that Major League Baseball violated the Sherman Act by frustrating their efforts to purchase the Giants and relocate them, was not within baseball's exemption from the antitrust laws.
In Flood, the Supreme Court found that "professional baseball is a business, and it is engaged in interstate commerce." This would seem to overturn the ruling of Federal Baseball that baseball was not interstate commerce. The Supreme Court said though "with its reserve system enjoying exemption from the federal antitrust laws, baseball is, in a very distinct sense, an exception and an anomaly," and even though this might be "unrealistic, inconsistent, or illogical," Federal Baseball and Toolson were entitled to the benefit of stare decisis, the common law principle that courts should follow the precedent of their previous decisions. The Supreme Court concluded that Congress "as yet has no intention to subject baseball's reserve system to the reach in the antitrust statutes."
The District Court found that because the reasoning behind Federal Baseball that baseball was not interstate commerce was overturned by the Flood decision, the precedent was now limited only to the result of the case, that the reserve clause is exempt from the federal antitrust laws.
The ruling in Piazza was followed by the Florida Supreme Court in Butterworth vs. National League of Professional Baseball Clubs (1994). The Florida attorney general had issued civil investigative demands in an antitrust investigation of the National League preventing the sale of the Giants to the Florida investors. Major League Baseball argued that these demands should be quashed because baseball was exempt from the antitrust rules. The court, citing Piazza, ruled the antitrust exemption was limited to the reserve clause, and that the collusion between the National League clubs not to sell the Giants to the Florida investors was not exempt from the Sherman Act.
The Piazza decision appears to be contrary to the ruling of the Seventh Circuit Court of Appeals in Finley vs. Kuhn (1978), where the Supreme Court held that the "business of baseball," not just the reserve clause, was exempt under Federal Baseball.
Further, the Supreme Court of Minnesota, on facts almost identical to Butterworth concerning a state antitrust investigation of the attempt to sell the Minnesota Twins to North Carolina investors for relocation in Charlotte, rejected the Piazza decision, and ruled the sale and relocation of a professional baseball team was covered under the exemption.
What does this mean? First, under Piazza the investors in Washington would have a cause of action to file suit against Major League Baseball if it refused to sell the Expos to them at the end of the year. If the court in Washington, and eventually the Supreme Court, were to uphold the reasoning of Piazza, then it would be illegal for Major League Baseball not to sell the Expos to the Washington investors.
Would Major League Baseball be willing to risk such a suit? If they were to lose and Piazza were upheld, they would lose their antitrust exemption altogether. In the Curt Flood Act of 1998, Congress eliminated the antitrust exemption for labor relations. Major League Baseball players are now protected under the antitrust laws to the same extent as other professional athletes.
If baseball were to win the suit and have Piazza rejected, then they would run the significant risk of Congress finally overturning the antitrust exemption. Major League Baseball would essentially be saying that it would rather play nowhere than play in Washington.
A collusive decision by Major League Baseball not to sell the Montreal Expos to the Washington investors should not be exempt from the Sherman Act. The Piazza decision may yet be Washington's best hope of getting a baseball team.

Donald R. Dinan is a lawyer with Hal Estill, and a former general counsel for the D.C. Democratic State Committee.


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