Butterworth v. National League of Professional Baseball Clubs

• Citation: 644 So.2d 1021
• Decision Date: 06 October 1994
• Docket Number: No. 82287,82287
• Parties: , 1994-2 Trade Cases P 70,737, 19 Fla. L. Weekly S499 Robert A. BUTTERWORTH, etc., Petitioner, v. NATIONAL LEAGUE OF PROFESSIONAL BASEBALL CLUBS, et al., Respondents.
• Court: United States State Supreme Court of Florida

Page 1021

644 So.2d 1021

63 USLW 2261, 1994-2 Trade Cases P 70,737,

19 Fla. L. Weekly S499

Robert A. BUTTERWORTH, etc., Petitioner, v. NATIONAL LEAGUE OF PROFESSIONAL BASEBALL CLUBS, et al., Respondents.

No. 82287.

Supreme Court of Florida.

Oct. 6, 1994.

Rehearing Denied Nov. 17, 1994.

Robert A. Butterworth, Atty. Gen., and Jerome W. Hoffman and Louis Hubener, Asst. Attys. Gen., Tallahassee, for petitioner.

Gregory A. Presnell and Kathryn B. Nixon of Akerman, Senterfitt & Eidson, P.A., Orlando, and Robert J. Kheel of Willkie, Farr & Gallagher, New York City, for respondents.

Tony Cunningham of Cunningham Law Group, P.A., Tampa, amicus curiae for Frank L. Morsani, individually, and Tampa Bay Baseball Group, Inc.

Stephen F. Ross, University of Illinois, College of Law, Champaign, IL, amici curiae for Consumer Federation of America and Sports Fans United.

HARDING, Justice.

We have for review Butterworth v. National League of Professional Baseball Clubs, 622 So.2d 177 (Fla. 5th DCA 1993), in which the Fifth District Court of Appeal certified the following question to be one of great public importance:

DOES THE ANTITRUST EXEMPTION FOR BASEBALL RECOGNIZED BY THE UNITED STATES SUPREME COURT IN FEDERAL BASE BALL CLUB OF BALTIMORE, INC. v. NATIONAL LEAGUE OF PROFESSIONAL BASE BALL CLUBS, 259 U.S. 200, 42 S.Ct. 465, 66 L.Ed. 898 (1922) AND ITS PROGENY EXEMPT ALL DECISIONS INVOLVING THE SALE AND LOCATION OF BASEBALL FRANCHISES

FROM FEDERAL AND FLORIDA ANTITRUST LAW? ¹

Id. at 178. We have jurisdiction pursuant to article V, section 3(b)(4) of the Florida Constitution. We answer the certified question in the negative and quash the decision below because we find that baseball's antitrust exemption extends only to the reserve system.

This case arose from the unsuccessful attempt of a group of investors to purchase the San Francisco Giants Major League Baseball franchise and relocate it to Tampa Bay, Florida. After the baseball owners voted against approval of the sale to the Tampa investors and the Giants owner signed a contract to sell the franchise to a group of San Francisco investors, Florida Attorney General Robert Butterworth (Attorney General) issued antitrust civil investigative demands (CIDs) to the National League of Professional Baseball Clubs and its president William D. White (National League) pursuant to section 542.28, Florida Statutes (Supp.1992). ² According to the CIDs, the specific focus of the investigation was "[a] combination or conspiracy in restraint of trade in connection with the sale and purchase of the San Francisco Giants baseball franchise."

The National League petitioned the Circuit Court of the Ninth Judicial Circuit to set aside the CIDs, based upon an assertion that the matters under investigation involved a transaction exempt from the application of both federal and state antitrust laws. The Attorney General filed a response asserting that baseball's antitrust exemption is not applicable to activities relating to the transfer of a baseball franchise. The Attorney General also filed a cross-motion to compel compliance with the CIDs. After receiving written memoranda and hearing argument by the parties, the circuit court issued an order quashing the CIDs. The circuit court determined that "[d]ecisions concerning ownership and location of baseball franchises clearly fall within the ambit of baseball's antitrust exemption." On appeal, the district court affirmed that order and certified the question to this Court.

The United States Supreme Court originally recognized some form of antitrust law exemption for baseball in Federal Baseball Club, Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200, 42 S.Ct. 465, 66 L.Ed. 898 (1922). That case involved an antitrust action by a baseball club of the Federal League against the National League and the American League, alleging a conspiracy to monopolize the baseball business. The Supreme Court concluded that the federal antitrust laws were inapplicable because the business at issue, "giving exhibitions of base ball," did not involve interstate commerce. Id. at 208-09, 42 S.Ct. at 466. Although the Supreme Court reaffirmed that exemption in the subsequent case of Toolson v. New York Yankees, Inc., 346 U.S. 356, 357, 74 S.Ct. 78, 98 L.Ed. 64 (1953), it did so "[w]ithout re-examination of the underlying issues." Instead, the Supreme Court affirmed the judgments of the courts of appeals in three consolidated cases brought against baseball owners ³ on the authority of Federal Baseball, "so far as that decision determines that Congress had no intention of including the business of baseball within the scope of the federal antitrust laws." Toolson, 346 U.S. at 357, 74 S.Ct. at 79. The Supreme Court noted that Congress "has not seen fit to bring such business under [the antitrust] laws by legislation" and concluded that any such application "should be by legislation." Id. In a later case, the Supreme Court described Toolson as "a narrow application of the rule of stare decisis." United States v. Shubert, 348 U.S. 222, 230, 75 S.Ct. 277, 99 L.Ed. 279 (1955) (finding that business built around the performance of local theatrical productions is subject to antitrust laws).

In response to attempts to extend the reasoning of Federal Baseball beyond the context of baseball, the Court specifically limited the antitrust exemption to "the business of organized professional baseball." Radovich v. National Football League, 352 U.S. 445, 451, 77 S.Ct. 390, 1 L.Ed.2d 456 (1957) (refusing to extend the antitrust exemption to football); Haywood v. National Basketball Ass'n, 401 U.S. 1204, 1205, 91 S.Ct. 672, 673, 28 L.Ed.2d 206 (1971) ("Basketball ... does not enjoy exemption from the antitrust laws."); United States v. International Boxing Club, 348 U.S. 236, 75 S.Ct. 259, 99 L.Ed. 290 (1955) (same as to boxing business).

The Supreme Court directly addressed the baseball exemption for the third and most recent time in Flood v. Kuhn, 407 U.S. 258, 92 S.Ct. 2099, 32 L.Ed.2d 728 (1972). In Flood, a player challenged professional baseball's reserve system, ⁴ whereby the player was traded to another franchise without his knowledge or consent. The Supreme Court affirmed the lower court's judgment dismissing the complaint based upon the controlling authority of Federal Baseball and Toolson. The Supreme Court also made a number of findings, including the following: professional baseball is a business engaged in interstate commerce; the exemption from antitrust laws is an exception, an anomaly, and an aberration confined to baseball; the exemption is an established one that is entitled to the benefits of stare decisis; and any change in the exemption should come through legislative action and should be prospective only in operation. Flood, 407 U.S. at 282-83, 92 S.Ct. at 2111-12.

Based upon the Supreme Court's trilogy of baseball cases, baseball clearly enjoys some form of exemption from antitrust laws. However, there is some disagreement as to the scope of that exemption. Compare, Charles O. Finley & Co. v. Kuhn, 569 F.2d 527, 541 (7th Cir.), cert. denied, 439 U.S. 876, 99 S.Ct. 214, 58 L.Ed.2d 190 (1978) ("[T]he Supreme Court intended to exempt the business of baseball, not any particular facet of that business, from the federal antitrust laws.") with Piazza v. Major League Baseball, 831 F.Supp. 420, 438 (E.D.Pa.1993) ("[A]ntitrust exemption created by Federal Baseball is limited to baseball's reserve system.").

The parties in the instant case view the parameters of the exemption from equally differing perspectives. The Attorney General contends that the exemption only applies to the reserve clause system. The National League asserts that the exemption applies broadly to "the business of baseball," which includes decisions regarding the sale and location of franchises.

Several federal courts have interpreted the scope of the exemption broadly. For example, the United States Court of Appeals for the Seventh Circuit concluded that the "Supreme Court intended to exempt the business of baseball, not any particular facet of that business, from the federal antitrust laws." Finley, 569 F.2d at 541; accord Professional Baseball Schs. & Clubs, Inc. v. Kuhn, 693 F.2d 1085, 1086 (11th Cir.1982) (concluding that business of baseball, including franchise location system, is exempt from antitrust laws); Salerno v. American League of Professional Baseball Clubs, 429 F.2d 1003 (2d Cir.1970), cert. denied, 400 U.S. 1001, 91 S.Ct. 462, 27 L.Ed.2d 452 (1971) (finding exemption applicable to former umpires' claim of antitrust violation following umpires' discharge).

However, in a recent decision involving two Pennsylvania citizens who were part of the same investment group as the Tampa Bay investors in the instant case the United States District Court for the Eastern District of Pennsylvania stated that the "antitrust exemption created by Federal Baseball is limited to baseball's reserve system". ⁵ Piazza, 831 F.Supp. at 438. ⁶ After an extensive analysis of the Supreme Court's baseball trilogy, the Piazza court concluded that Flood invalidated the rule stare decisis of Federal Baseball and Toolson and left only the result stare decisis under the facts of the case, namely the exemption of baseball's reserve system from federal antitrust law. ⁷

Even though the Piazza court is the only federal court to have interpreted baseball's antitrust exemption so narrowly, the language of the Flood opinion supports such an interpretation. In Flood, the Supreme Court itself characterized the trilogy of cases in this manner: "For the third time in 50 years the Court is asked specifically to rule that professional baseball's reserve system is within the reach of the federal antitrust laws." Flood, 407 U.S. at 259, 92 S.Ct. at 2103 (emphasis added). In discussing the reasons why the Supreme Court followed Federal Baseball in Toolson, the Court cited baseball's development...