Partee v. San Diego Chargers Football Co.

• Decision Date: 29 August 1983
• Citation: 34 Cal.3d 378,194 Cal.Rptr. 367,668 P.2d 674
• Court: California Supreme Court
• Parties: , 668 P.2d 674, 1983-2 Trade Cases P 65,588 Dennis PARTEE, Plaintiff and Respondent, v. SAN DIEGO CHARGERS FOOTBALL COMPANY, Defendant and Appellant. L.A. 31560.

Page 367

194 Cal.Rptr. 367

34 Cal.3d 378, 668 P.2d 674, 1983-2 Trade Cases P 65,588

Dennis PARTEE, Plaintiff and Respondent, v. SAN DIEGO CHARGERS FOOTBALL COMPANY, Defendant and Appellant.

L.A. 31560.

Supreme Court of California In Bank.

Aug. 29, 1983.

As Modified on Denial of Rehearing Sept. 28, 1983.

Terry Christensen, Andrew M. White, Michael E. Viebrock and Wyman, Bautzer, Rothman, Kuchel & Silbert, Los Angeles, for defendant and appellant.

Hamilton Carothers, Keith A. Teel and Covington & Burling, Washington, D.C., as amici curiae on behalf of defendant and appellant.

Louis E. Goebel, Brian D. Monaghan, James E. Rubnitz and Goebel & Monaghan, San Diego, for plaintiff and respondent.

BROUSSARD, Justice.

The San Diego Chargers Football Company, a California limited partnership, appeals a judgment awarding damages for violation of the California antitrust law. (Bus. & Prof.Code, § 16700 et seq., hereinafter the Cartwright Act.) ¹ In accordance with other decisions considering the applicability of state antitrust laws to national professional sports leagues, we conclude that the Cartwright Act is not applicable to the interstate activities of professional football.

From 1968 to 1976, Dennis Partee, a California resident, played professional football as a punter and placekicker for the Chargers, a member of the National Football League (NFL). In 1974, the World Football League came into existence, and one of its teams offered Partee $50,000 to play for it for a season. He subsequently entered into a contract with the Chargers for three years with a salary of $38,500 in 1974, $44,000 in 1975, and $49,500 in 1976. The agreement was subject to the terms and conditions of the standard NFL players contract. The trial court fixed damages for violation of the Cartwright Act based on the difference between the $50,000 offer and the 1974 salary, awarded for the three years of the contract and trebled for a total award of $103,500.

In 1975, the last full year Partee played for the Chargers, the NFL had 26 teams located in 16 states and the District of Columbia. The league structure is characterized by a basic division into two conferences each having divisions composed of certain teams within the conference, and by play according to an ordered schedule between teams within the various divisions and the two conferences. The Chargers play nearly half their games outside of California, and most of their games are against teams located in other states. NFL games are regularly broadcast coast to coast over network television, and professional football has gained nationwide appeal.

To promote athletic competition by providing a means of keeping the teams on a par with each other and to foster the business success of the member teams, the NFL has certain operating rules, many of which are embodied in the NFL constitution and bylaws. Partee's antitrust action concerns five of these operating rules as they existed in 1974: the draft, option clause, Rozelle rule, tampering rule and one-man rule. ² These rules are applied nationwide to all of the teams in the league. The court found all but the option clause to violate California antitrust laws.

Since 1968, all NFL players have been represented by the NFL Players Association (NFLPA). In 1970, the NFLPA and NFL management entered a second collective bargaining agreement covering the 1970 and 1973 seasons. No new agreement was reached until March 1977, but this agreement was made retroactive to the expiration date of the prior agreement. This new agreement, which was effective into 1982, contains each of the rules or practices challenged by Partee. ³

The Chargers contend that professional football is a unique activity of interstate commerce which requires nationally uniform governance, that only federal antitrust laws apply, that interstate commerce would be unreasonably burdened if state antitrust laws were applied to professional football's interstate activities, and that application of the Cartwright Act was a violation of the commerce and supremacy clauses of the Constitution.

The Chargers do not claim federal antitrust laws, the Sherman and Clayton Acts, "occupy" the field of antitrust regulation, or that the federal and state antitrust laws so conflict as to require preemption of the state scheme. The federal and California antitrust laws, having identical objectives, are harmonious with each other. (See Chicago Title Ins. Co. v. Great Western Financial Corp. (1968) 69 Cal.2d 305, 315, 70 Cal.Rptr. 849, 444 P.2d 481.)

The commerce clause is a limitation upon the power of the states without implementing legislation by Congress. (A. & P. Tea Co., Inc. v. Cottrell (1976) 424 U.S. 366, 370-371, 96 S.Ct. 923, 927-928, 47 L.Ed.2d 55.) "Not every exercise of state power with some impact on interstate commerce is invalid. A state statute must be upheld if it 'regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental ... unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.' " (Edgar v. Mite Corp. (1982) 457 U.S. 624, 102 S.Ct. 2629, 2640, 73 L.Ed.2d 269; Minnesota v. Clover Leaf Creamery Co. (1981) 449 U.S. 456, 471, 101 S.Ct. 715, 727, 66 L.Ed.2d 659; Pike v. Bruce Church, Inc. (1970) 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174.) The burden on interstate commerce will ordinarily be found unreasonable where the state regulation substantially impedes the free flow of commerce from state to state or governs "those phases of the national commerce which, because of the need of national uniformity, demand their regulation, if any, be prescribed by a single authority." (Southern Pacific Co. v. Arizona (1945) 325 U.S. 761, 767, 65 S.Ct. 1515, 1519, 89 L.Ed. 1915.) The commerce clause permits only incidental regulation of interstate commerce by the states; direct regulation is prohibited. (Edgar v. Mite Corp., supra, 457 U.S. 624, 102 S.Ct. 2629, 2640-2641, 73 L.Ed.2d 269.)

It is settled that the NFL is engaged in interstate commerce and that federal antitrust laws are applicable. (Radovich v. Nat. Football League (1957) 352 U.S. 445, 452, 77 S.Ct. 390, 394, 1 L.Ed.2d 456.)

A number of cases have considered the applicability of state antitrust laws to national professional sports leagues. The leading case is Flood v. Kuhn (S.D.N.Y.1970) 316 F.Supp. 271, affirmed (2d Cir.1971) 443 F.2d 264, affirmed 407 U.S. 258, 92 S.Ct. 2099, 32 L.Ed.2d 728. Considering baseball's reserve system, the trial court found state antitrust laws inapplicable on alternative grounds: preemption and unreasonable burden on interstate commerce. ⁴ Treating the applicability of state antitrust laws to professional baseball as a question of first impression, the Second Circuit affirmed. (Flood v. Kuhn, supra, 443 F.2d 264, 267-268.) The court stated: "[W]here the nature of an enterprise is such that differing state regulation, although not conflicting, requires the enterprise to comply with the strictest standard of several states in order to continue an interstate business extending over many states, the extra-territorial effect which the application of a particular state law would exact constitutes, absent a strong state interest, an impermissible burden on interstate commerce." (Id., at p. 267.)

Analyzing the organization of professional baseball and the effect of state antitrust regulation balanced against its need, the court of appeals reasoned: "Professional baseball clubs, although existing as separate legal entities, are organized into so-called leagues for competitive play and are dependent on the league playing schedule to further the ends of their sports competition. Therefore, it is the league structure at which any state antitrust regulation must be aimed if organized professional baseball is not to be severely fragmented. On the one hand, it is apparent that each league extends over many states, and that, if state regulation were permissible, the internal structure of the leagues would require compliance with the strictest state antitrust standard. The consequent extra-territorial effect of necessary compliance would be considerably more far-reaching than that in Southern Pacific Co. v. Arizona, supra. On the other hand, we do not find that a state's interest in antitrust regulation, when compared with its interest in health and safety regulation, is of particular urgency. Hence, as the burden on interstate commerce outweighs the states' interests in regulating baseball's reserve system, the Commerce Clause precludes the application here of state antitrust law." (443 F.2d at pp. 267-268; fn. omitted.)

Affirming the circuit court, the United States Supreme Court stated: "The petitioner's argument as to the application of state antitrust laws deserves a word. Judge Cooper rejected the state law claims because state antitrust regulation would conflict with federal policy and because national 'uniformity [is required] in any regulation of baseball and its reserve system.' 316 F.Supp., at 280. The Court of Appeals, in affirming, stated, '[A]s the burden on interstate commerce outweighs the states' interests in regulating baseball's reserve system, the Commerce Clause precludes the application here of state antitrust law.' 443 F.2d, at 268. As applied to organized baseball, and in the light of this Court's observations and holdings in Federal Baseball, in Toolson, in Shubert, in International Boxing, and in Radovich, and despite baseball's allegedly inconsistent position taken in the past with respect to the application of state law, these statements adequately dispose of the state law claims." (407 U.S. at pp. 284-285, fn. omitted, 92 S.Ct. at 2112-2113; see State of Wisconsin v. Milwaukee Braves, Inc. (1966) 31 Wis.2d 699, 144 N.W.2d 1, 17-18; cert. den. 385 U.S. 990, 87 S.Ct. 598, 17 L.Ed.2d 451; rehg. den. 385 U.S. 1044, 87 S.Ct. 770, 17...