Nathaniel Grow is an assistant professor of legal studies at the University of Georgia’s Terry College of Business. He answered some questions about his new book Baseball on Trial: The Origin of Baseball’s Antitrust Exemption.

Q: Why do you think so many other commentators have failed to place the U.S. Supreme Court’s Federal Baseball decision in its appropriate historical context?

Nathaniel Grow: I think there are a couple reasons.  First, the Court interprets the phrase “interstate commerce” differently today than it did in 1922, defining the term much more broadly now than it did back then (today, almost any business activity qualifies as interstate commerce). So legal commentators trained in recent decades will naturally find it difficult to understand how the Court could have concluded that Major League Baseball (MLB) wasn’t engaged in interstate commerce in 1922—and thus wasn’t subject to the Sherman Antitrust Act—when the Court would clearly reach a different result today.

Another explanation, though, lies in the fact that prior to Baseball on Trial relatively little was known about the Federal Baseball proceedings themselves. I contend in the book that the Court’s resolution of the case can be explained in part by the parties’ respective legal strategies. In particular, the plaintiff in the Federal Baseball suit did not effectively rebut MLB’s argument on the interstate commerce issue, and therefore failed to present the Supreme Court with sufficiently compelling grounds to rule in its favor. Thus, many commentators have judged the decision simply by looking at the final outcome, without fully understanding the strategic decisions by counsel that help explain the ultimate result in the case.

Q: You mention that baseball is the only professional sport that benefits from antitrust immunity. Briefly, what are some of the reasons baseball’s exemption from federal antitrust law was correct at the time of the case?

Grow: Federal antitrust law only applies to those engaged in “interstate commerce.” At the time the Federal Baseball case was decided in 1922, courts adhered to a narrow definition of the phrase under which the term “commerce” was limited to the production or sale of tangible goods. Because professional baseball at that time did not produce any physical products, but instead merely staged ephemeral baseball exhibitions for the public, the Supreme Court held that the defendants were not engaged in commerce and thus were not within the scope of the Sherman Act (MLB’s merchandising activities of the sort we see today—hats, t-shirts, etc.,—originated several decades after Federal Baseball was decided). Meanwhile, because all of the industry’s revenue was generated within a single state (i.e., ticket sales to a particular baseball game), Justice Holmes also determined for good measure that the business was not “interstate” in nature. I ultimately conclude in the book that both holdings were entirely reasonable given the applicable legal precedents in place at the time.

Q: Why have the complete records of the Federal Baseball litigation never been brought to light?

Grow: Many of the documents I relied on in Baseball on Trial were only first made publicly available in 2010 at the National Baseball Hall of Fame Library in Cooperstown, NY. Before then, the files resided in the private holdings of MLB’s Office of the Commissioner. These documents included many of the court records and much of the attorney correspondence I reference in the book, files that were critical in understanding and explaining the litigation’s outcome.

Q: How has baseball’s antitrust exemption been challenged in the courts since the initial Supreme Court decision?

Grow: MLB has fought off a number of challenges to its antitrust exemption over the years. Perhaps the most notable of these lawsuits was the 1972 case of Flood v. Kuhn, in which major league player Curt Flood challenged the so-called “reserve clause” under the Sherman Act (the reserve clause was the provision in place at the time granting MLB teams the right to their players’ services for the entire length of their careers). Despite acknowledging that baseball was engaged in interstate commerce as of the 1970s, and that the 1922 Federal Baseball decision was an “exception and an anomaly,” the Supreme Court nevertheless rejected Flood’s claim. In particular, the Court reasoned that because Congress had never subsequently acted to revoke the exemption, it would be improper for the judiciary to repeal it 50 years later. Subsequent courts have largely abided by this ruling up to the present day.

Q: What implications do you think your book will have for the current legal challenges to baseball’s antitrust exemption?

Grow: I believe Baseball on Trial provides important insight into the proper scope of baseball’s antitrust exemption. Because so little was previously known about the proceedings, subsequent courts interpreting the Supreme Court’s decision in the Federal Baseball suit have been forced to rely on the relatively terse opinion in the case by Justice Oliver Wendell Holmes, along with the appellate court’s earlier decision, to understand the basis of the lawsuit. In some cases, these later courts have misinterpreted the breadth of the original proceedings, and therefore held that the scope of baseball’s antitrust exemption is much narrower than I believe to be correct. Accordingly, my book could potentially impact the city of San Jose, California’s on-going antitrust lawsuit against MLB over the proposed relocation of the Oakland Athletics, in which the city has asserted the erroneous, narrow view of the exemption’s scope.

 

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