Minnesota Twins Partnership v. State ex rel. Hatch

Decision Date29 April 1999
Docket NumberNo. C9-98-890,C9-98-890
Citation592 N.W.2d 847
Parties1999-1 Trade Cases P 72,507 MINNESOTA TWINS PARTNERSHIP, petitioner, Appellant, Milwaukee Brewers Baseball Club, Limited Partnership, et al., petitioners, Appellants, v. STATE of Minnesota, by Michael A. HATCH, its Attorney General, Respondent.
CourtMinnesota Supreme Court

Page 847

592 N.W.2d 847
1999-1 Trade Cases P 72,507
MINNESOTA TWINS PARTNERSHIP, petitioner, Appellant,
Milwaukee Brewers Baseball Club, Limited Partnership, et
al., petitioners, Appellants,
v.
STATE of Minnesota, by Michael A. HATCH, its Attorney
General, Respondent.
No. C9-98-890.
Supreme Court of Minnesota.
April 29, 1999.

Page 848

Syllabus by the Court

The business of professional baseball is exempt from federal and state antitrust laws; therefore, Minnesota's Attorney General may not enforce compliance with civil investigative demands served on appellants pursuant to an investigation of potential violations of Minnesota's antitrust laws based on a proposed sale and relocation of the Minnesota Twins baseball team.

Roger J. Magnuson, Peter W. Carter, Dorsey & Whitney LLP, Minneapolis, Gregory P. Joseph, John Sullivan, Fried, Frank, Harris, Shriver & Jacobson, New York, NY, for appellants MN Twins Partnership.

Charles R. Shreffler, Shreffler Law Firm, Mendota Heights, Robert J. Kheel, Wilkie, Farr & Gallagher, New York, NY, for appellants Milwaukee Brewers Baseball Club, et al.

Mike Hatch, Minnesota Attorney General, Thomas F. Pursell, Senior Counsel, Peter B. Hofrenning, Ann Beimdiek Kinsella, Julie Y.

Page 849

Ralston, Assistant Attorneys General, St. Paul, for respondent State of Minnesota.

Stephen F. Ross, University of Illinois College of Law, Champaign, Il, for amici curiae Consumer Federation of America and Fans Inc.

Heard, considered, and decided by the court en banc.

OPINION

PAUL H. ANDERSON, Justice.

We are asked to determine if appellants must comply with civil investigative demands issued by the Minnesota Attorney General's Office. The Attorney General is requesting information on the proposed sale and relocation of the Minnesota Twins baseball franchise to North Carolina and a potential boycott of Minnesota by Major League Baseball 1 in violation of state antitrust laws. The appellants allege that their conduct is exempt from Minnesota's antitrust laws because the United States Supreme Court has held that the business of professional baseball is exempt from compliance with federal antitrust laws. The district court rejected this argument and issued an order compelling compliance with the civil investigative demands. The Minnesota Court of Appeals denied review, holding that the issues presented were "premature." Appellants now ask us to reverse the court of appeals' denial of review and remand the matter to that court to consider the issues on the merits. We instead reverse the district court's order to compel compliance with the civil investigative demands and remand.

The facts are not in dispute. Early in October 1997, Carl R. Pohlad, on behalf of the Minnesota Twins Partnership, announced that he had signed a letter of intent to sell the Twins to North Carolina businessman Donald C. Beaver and the other investors of North Carolina Major League Baseball, L.L.C. (NCMLB). The sale was contingent on the Minnesota Legislature's refusal to authorize public funding for a new baseball stadium by November 30, 1997. Within days of the announcement of the proposed sale, a delegation from Minnesota, including then-Governor Arne H. Carlson and key legislators, traveled to Milwaukee to confer with then-Acting Commissioner of Major League Baseball Allan "Bud" Selig. Selig told the delegation that if a publicly-funded stadium was not authorized and built, the other Major League Baseball (MLB) team owners would approve the Twins' move from Minnesota. The Minnesota Legislature subsequently rejected all stadium bills introduced in the special legislative session called by Governor Carlson.

On December 17, 1997, the Attorney General served the Twins with civil investigative demands 2 (CIDs) as part of an investigation into possible violations of state antitrust laws. The other appellants, Milwaukee Brewers Baseball Club, L.P. (Brewers), the American League of Professional Baseball Clubs, Inc. (American League), the National League of Professional Baseball Clubs, Inc. (National League), the Office of the Commissioner of Major League Baseball, and NCMLB, were also served with the CIDs on that date. 3 The CIDs served on the Twins requested a broad array of documents concerning, among other things, the financial viability of the Hubert H. Humphrey Metrodome (the Twins' current stadium), the methods used by other professional baseball teams to obtain

Page 850

new stadia, the potential purchase of the Twins by Beaver and his group of North Carolina investors, and the 1961 relocation of the Washington Senators to Minnesota. The CIDs also included numerous interrogatories seeking information on the Twins' efforts to procure a new stadium, as well as information on the structure, governance, and revenues of MLB.

The CIDs served on appellant NCMLB requested information on attempts to obtain a MLB expansion franchise or to purchase and relocate the Twins. The CIDs served on appellants Brewers, American League, National League, and the Office of the Commissioner requested, among other things, information on past MLB expansion, team relocation, and stadia financing, as well as information specific to the Twins' potential sale and relocation. Because all appellants have substantially the same interests before us, we will hereinafter refer to all appellant parties as the "Twins."

The Twins filed a motion for a protective order under Minn. R. Civ. P. 26.03 in Ramsey County District Court in January 1998. The Twins argued (a) that the Attorney General's investigation was precluded by professional baseball's exemption from antitrust laws; (b) that the investigation was precluded by the Commerce Clause of the United States Constitution; and (c) that the CIDs were overly broad and compliance was unduly burdensome. On February 9, 1998, the state filed a motion to compel compliance with the CIDs.

On April 20, 1998, the district court denied the Twins' motion for a protective order and granted the state's motion to compel compliance with the CIDs. The court determined that the issue of whether professional baseball was exempt from Minnesota's antitrust laws under either federal caselaw or the Commerce Clause was a threshold issue that must be considered before the CIDs could be enforced. After a thorough examination of the breadth of the antitrust exemption found in the United States Supreme Court's "baseball trilogy" 4 and the treatment by other courts of professional baseball's exemption, the district court was persuaded by the "painstaking analysis" found in Piazza v. Major League Baseball, 831 F.Supp. 420 (E.D.Pa.1993), and found baseball's exemption to be limited to the "narrow area of the reserve clause." The court also found the Twins' Commerce Clause argument unpersuasive, finding the issue impossible to resolve absent a factual record.

The Twins moved to certify the April 20 order directly to the court of appeals. On May 11, 1998, the district court issued an order denying this request. In the same order, the court also limited the documents necessary for compliance with the CIDs to those generated within the last six years that dealt with (1) revenue sharing within MLB; (2) relocation or sale of MLB teams; and (3) MLB communications regarding "construction of and methods for obtaining new stadia." The Twins petitioned the court of appeals for discretionary review of the April 20 order.

The court of appeals denied review in an order opinion, holding that the question of professional baseball's exemption from antitrust laws under either federal caselaw or the Commerce Clause was "premature." The court's order stated specifically that the Twins retained the right to raise the exemption as an affirmative defense should prosecution occur. The Twins appealed, arguing that the court of appeals erred in not reaching the merits of the argument that professional baseball's exemption from federal antitrust laws precluded prosecution under state antitrust laws.

I.

A district court has broad discretion "to issue discovery orders" and will be reversed on appeal only upon an abuse of such discretion. Shetka v. Kueppers, Kueppers, Von Feldt & Salmen, 454 N.W.2d 916, 921 (Minn.1990). In addressing a challenge to a civil investigative demand, a district court "is not required to weigh evidence and resolve factual disputes in the same manner

Page 851

as at a trial." Kohn v. State by Humphrey, 336 N.W.2d 292, 296 (Minn.1983).

The Attorney General has the authority to investigate and prosecute "violations of the law of this state respecting unfair, discriminatory, and other unlawful practices in business, commerce, or trade." Minn.Stat. § 8.31, subd. 1 (1998). The Attorney General may use civil investigative demands to obtain discovery "from any person regarding any matter, fact or circumstance, not privileged, which is relevant" to the investigation. Minn. Stat. § 8.31, subd. 2. No civil action need be commenced before the issuance of civil investigative demands; all that is required is that the Attorney General have "reasonable grounds to believe that any person has violated, or is about to violate, any of the laws" over which the Attorney General has investigative authority. Id. The scope of the inquiry must be within the authority of the Attorney General, the information requested must be "reasonably relevant," and the demand for documents "not too indefinite." Kohn, 336 N.W.2d at 297 (quoting United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 94 L.Ed. 401 (1950)). A claim of exemption from antitrust laws defeats an otherwise validly issued civil investigative demand only when the activities being investigated are clearly covered by the exemption. See Associated Container Transp. (Australia) Ltd. v. United States, 705 F.2d 53, 59 (2d Cir.1983).

The Attorney General issued the CIDs to the Twins pursuant to an investigation of potential violations of Minnesota laws prohibiting (a) any ...

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