The Baseball Trust
California Lawyer

The Baseball Trust

A History of Baseball's Antitrust Exemption

August 2013

The Baseball Trust:
A History of Baseball’s Antitrust Exemption
by Stuart Banner
Oxford University Press, 304 pages, $29.95, hardcover

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For lawyers who are baseball fans, Stuart Banner's new book about professional baseball's antitrust exemption is a delight that should make for ideal summertime reading. The author's express purpose is to debunk the conventional wisdom that judges created and have maintained the exemption because of love and nostalgia for the game. But it hardly matters whether the UCLA law professor proves his thesis. The strength of The Baseball Trust is its rich retelling of more than a century of legal, lobbying, and public-relations maneuvering by Major League Baseball club owners and their lawyers to keep player salaries down and to protect each team's local-market monopoly (or duopoly), along with the reactions of the players, politicians, and courts.

Banner begins by explaining not only the origin of baseball's reserve clause in 1879 limiting players' ability to jump teams for higher pay, but also how courts up to World War I regularly struck down the clause for its lack of mutuality and indefiniteness. Consequently, team owners believed that they had to - and did - conspire to honor each other's player contracts, i.e., not to raid each other's players, to keep the industry stable and profitable.

In the early 20th century, a time of widespread fear of the power of big business, the press labeled the owners "old-time monopolists" and baseball a trust. Then, in response to the antitrust challenge of one team from the upstart Federal League, came the U.S. Supreme Court decision, written by Oliver Wendell Holmes Jr., that the federal Sherman Antitrust Act (15 U.S.C. §§ 1-7) could not reach professional baseball, which supposedly did not constitute interstate commerce. (Fed. Baseball Club of Baltimore v. Nat'l League, 259 U.S. 200 (1922).) Banner points out that this ruling, which seems so obviously wrong today, did fit into its era's understanding of the Commerce Clause.

Three decades later, at the behest of two players and a minor-league team owner, the Supreme Court revisited its prior holding and ended up affirming it by changing rationales, declaring that Congress had the power to subject baseball to antitrust law, but implying that the courts did not. (Toolson v. N.Y. Yankees, 346 U.S. 356 (1953).) That decision, along with another one about pro football's lack of an antitrust exemption (Radovich v. Nat'l Football League, 352 U.S. 445 (1957)), prompted a decade of congressional activity about baseball's antitrust exemption, including many hearings on several proposed bills, and club-owner lobbying to maintain the status quo. In the end, Congress did not change one word in the statutory law. Professional basketball and football teams and other observers protested the special treatment afforded baseball, but the exemption was never extended to other sports, by Congress or the courts.

One of the next major events in the history of baseball's antitrust exemption was the early-1970s lawsuit brought by Curt Flood, center fielder for the St. Louis Cardinals. Calling himself a "well-paid slave," Flood's practical goal was to abolish the reserve clause so that he could have some control over which team he played for. Banner presents this case as emblematic of that era's civil-rights and labor activism.

Justice Harry A. Blackmun wrote the decision in Flood's case, in an opinion that began with an emotional ode to baseball, typified by the following line: "[T]here are the many names, celebrated for one reason or another, that have sparked the diamond and its environs and that have provided tinder for recaptured thrills, for reminiscence and comparisons, and for conversation and anticipation in-season and off-season..." (Flood v. Kuhn, 407 U.S. 258, 262 (1972).) Not surprisingly, the high court preserved the antitrust exemption, and, it seemed, the reserve clause, primarily on the basis of congressional inaction to reverse the exemption.

Ironically, around the same time as this big victory, the owners made a few critical missteps - either induced or seized on by the players' union - and in 1975 a labor arbitrator was finally able to terminate the reserve clause, launching free agency and astronomical player salaries.

The newly empowered players then saw antitrust law as a tool to block owner collusion to depress player salaries. Therefore, after the 1994 strike, the players and the owners jointly and successfully lobbied Congress to enact what Banner calls a "shrunken" exemption that, benefiting players, applies antitrust law to baseball's labor relations only - and, benefiting owners, implicitly exempts other aspects of the business. The new statute was designated the Curt Flood Act of 1998 (15 U.S.C. § 26b).

Happily, Banner has scattered throughout his book plenty of interesting tidbits for law-and-baseball buffs, such as that Ty Cobb brought an antitrust suit against baseball as leverage for a $2,000 salary boost in 1913. The author also explodes the myth that Justice Thurgood Marshall had to pressure Justice Blackmun to include a few African-American ballplayers in the latter's list of the all-time greats in Flood v. Kuhn. In fact, Justice Blackmun's original draft included Jackie Robinson, Roy Campanella, and Satchel Paige.

Although Banner presents a fairly comprehensive history of baseball's antitrust exemption, the book has a few curious omissions. It hardly mentions the 1980s collusion scandal, when club owners had a "gentlemen's agreement" not to sign free agents, forcing those players to return to their original teams for less-than-market-rate compensation. Also, the book is somewhat shallow in describing how baseball as an industry actually benefits (or perhaps doesn't benefit) from having the antitrust exemption, and correspondingly how fans are affected. Other writers have addressed these issues, often by comparing baseball to non-exempt sports, such as football and basketball. But it's a shame that the erudite Banner did not explicate his positions on these issues.

Very recently, after Banner's book was published, the city of San Jose filed a lawsuit squarely challenging MLB's antitrust exemption yet again, apparently to try to force MLB to permit the Oakland A's to move to San Jose. (See City of San Jose v. Office of the Comm'r of Baseball, No. 13-CV-2787 (N.D. Cal. filed June 18, 2013).) In that case, San Jose surely will have to contend with the Curt Flood Act of 1998, the significance of which Banner deftly discusses.

In the end, The Baseball Trust's many wonderful qualities outweigh its mild shortcomings. Reading this book is even more fun than reading briefs, opinions, or deposition transcripts with a game on in the background.

Jonathan M. Eisenberg is a deputy attorney general with the government law section of the California attorney general's office.

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