Between 1913 and 1915, there was a third baseball league, the Federal League, competing with the two established organized leagues we already know, the National League and the American League. Players’ salaries skyrocketed, and the NL and AL ended up breaking up the FL by buying up some clubs and inducing others to leave the League. The sole remaining FL team, from Baltimore, sued the organized leagues and the National Commission, arguing that their action in breaking up the FL violated antitrust law.
In Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs (1922), the Supreme Court said it didn’t violate antitrust law. Justice Holmes, writing for a unanimous Court, said this didn’t fall within antitrust law because it wasn’t interstate commerce (and the presence of interstate commerce is expressly made necessary by the text of the Sherman Antitrust Act). Of course, this is contrary to many decades of later jurisprudence: there’s no way the Supreme Court would have decided this way if the case came up today.
But the Supreme Court reaffirmed its 1922 decision in a short 7-2 per curiam in Toolson v. New York Yankees (1953), saying if baseball’s exemption was wrong, Congress should fix it.
In Flood v. Kuhn (1972), the Supreme Court reaffirmed Federal Baseball again.
Now San Jose wants to challenge the antitrust exemption again. San Jose claims that Major League Baseball has undermined the Oakland As’ desire to move to San Jose. Of course San Jose lost in district court, but the case is being fast-tracked to the Ninth Circuit, which . . . could hear it by May. . . . Interestingly, one of the possible grounds that the Ninth Circuit could use would be to read the baseball exemption narrowly, as limited to labor issues like the reserve clause — which is how the previous cases arose — and not applicable to issues here like restraints on relocation of teams. … Read More
(via Volokh Conspiracy)