Piazza v. Major League Baseball

• Decision Date: 04 August 1993
• Docket Number: Civ. A. No. 92-7173.
• Citation: 831 F. Supp. 420
• Parties: Vincent M. PIAZZA, et al. v. MAJOR LEAGUE BASEBALL, et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

831 F. Supp. 420

Vincent M. PIAZZA, et al. v. MAJOR LEAGUE BASEBALL, et al.

Civ. A. No. 92-7173.

United States District Court, E.D. Pennsylvania.

August 4, 1993.

Bruce W. Kauffmann, Dilworth, Paxson, Kalish & Kauffmann, Philadelphia, PA, for plaintiffs.

Arthur Makadon, Philadelphia, PA, for defendants.

OPINION

PADOVA, District Judge.

Plaintiffs allege that the organizations of professional major league baseball and an affiliated individual frustrated their efforts to purchase the San Francisco Giants baseball club (the "Giants") and relocate it to Tampa Bay, Florida. Plaintiffs charge these defendants with infringing upon their rights under the United States Constitution and violating federal antitrust laws and several state laws in the process.

Asserting that this Court lacks subject matter jurisdiction over plaintiffs' federal and state claims and that plaintiffs' federal claims fail to state a cause of action, defendants move to dismiss this suit. With regard to plaintiffs' federal antitrust claims, defendants also claim exemption from antitrust liability under Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200, 42 S.Ct. 465, 66 L.Ed. 898 (1922), and its progeny. For the following reasons, I will grant defendants' motion as to plaintiffs' direct claims under the Constitution; but I will deny defendants' motion in all other respects. As to defendants' assertion of exemption from antitrust liability, I hold that the exemption created by Federal Baseball is inapplicable here because it is limited to baseball's "reserve system."

I. BACKGROUND

A. The Allegations¹

Plaintiffs are Vincent M. Piazza and Vincent N. Tirendi, both Pennsylvania residents, and PT Baseball, Inc. ("PTB"), a Pennsylvania corporation wholly owned by Piazza and Tirendi. Pursuant to a written Memorandum of Understanding ("Memorandum") dated August 18, 1992, Piazza and Tirendi agreed with four other individuals, all Florida residents, to organize a limited partnership for the purpose of acquiring the Giants. (The parties to the Memorandum will be referred to collectively as the "Investors".)

The Investors anticipated that they would form individual corporations to serve as general partners of the partnership. Accordingly, on August 26, 1992, PTB entered into a Limited Partnership Agreement (the "Partnership Agreement") with corporations owned by the other Investors. This Partnership Agreement implemented the intent of the Memorandum and created a partnership entity known as Tampa Bay Baseball Club, Ltd. (the "Partnership"). PTB agreed to contribute $27 million to the Partnership, making it the single largest contributor of Partnership capital.

Earlier, on August 6, 1992, the Investors had executed a Letter of Intent with Robert Lurie, the owner of the Giants, to purchase the Giants for $115 million. Pursuant to this Letter of Intent, Lurie agreed not to negotiate with other potential buyers of the Giants and to use his best efforts to secure from defendant Major League Baseball² approval of the sale of the Giants to the Partnership and transfer of the team to the Suncoast Dome, located in St. Petersburg, Florida.³

As required by the rules of Major League Baseball, the Partnership submitted an application to that organization on September 4, 1992 to purchase the Giants and move the team to St. Petersburg. In connection with this application, Major League Baseball and its "Ownership Committee" undertook or purported to undertake a personal background check on the Investors. On September 10, 1992, defendant Ed Kuhlmann, Chairman of the Ownership Committee, stated at a press conference that, among other things, the personal background check on the Investors had raised a "serious question in terms of some of the people who were part of that group" and that "a couple of investors will not be in the group." Complaint at ¶ 53. Kuhlmann elaborated that there was a "background" question about two of the investors rather than a question of financial capability and that something had shown up on a "security check." Id. Khulmann also stated that the "money" of the two investors "would not have been accepted." Id. Immediately following Kuhlmann at the news conference, Jerry Reinsdorf, a member of the Ownership Committee, added that the Ownership Committee's concern related to the "out-of-state" money and that the "Pennsylvania People" had "dropped out." Complaint at ¶ 56.

As the only principals of the Partnership who reside in Pennsylvania, Piazza and Tirendi aver that the clear implication of Kuhlmann's and Reinsdorf's comments, combined with the fact that Piazza and Tirendi are of Italian descent, was that the personal background check had associated them with the Mafia and/or other criminal or organized criminal activity. Piazza and Tirendi further allege that they have never been involved in such activity; nor had they "dropped out" of the Partnership. They also allege that they were never apprised by Baseball or anyone else of the charges against them nor given an opportunity to be heard.

On September 11, 1992, plaintiffs' counsel sent letters to Major League Baseball, Kuhlmann, and Reinsdorf requesting immediate correction of these statements and their implications. Plaintiffs' counsel never received a response to these letters, but on September 12, 1992, defendant Kuhlmann admitted to some members of the media that "there was no problem with the security check." Complaint at ¶ 63.

On the same day that the Partnership submitted its application to purchase and relocate the franchise, Kuhlmann directed Lurie to consider other offers to purchase the Giants, in knowing violation of Lurie's exclusive agreement with the Partnership. On September 9, 1992, Bill White, President of the National League, invited George Shinn, a North Carolina resident, to make an alternative bid to purchase the Giants in order to keep the team in San Francisco. An alternative offer was ultimately made by other investors to keep the Giants in San Francisco. Even though this offer was $15 million less than the $115 million offer made by the Partnership, Major League Baseball formally rejected the proposal to relocate the Giants to the Tampa Bay area on November 10, 1992.

Plaintiffs allege that Baseball never intended to permit the Giants to relocate to Florida and failed to evaluate fairly and in good faith their application to do so. They claim that to avoid relocation of the Giants, Baseball set out to "destroy the financial capability of the Partnership by vilifying plaintiffs." Complaint at ¶ 65. And in addition to preventing plaintiffs' purchase and relocation of the Giants, plaintiffs allege that Baseball's allegedly defamatory statements cost them the loss of a significant contract in connection with one of their other businesses, which depends upon "impeccable personal reputations." Complaint at ¶ 69.

B. The Claims

1. Federal claims

Plaintiffs first claim that the above actions of Baseball violated the First and Fifth Amendments to the United States Constitution by (1) depriving them of their liberty and property interests and privileges without due process of law, (2) denying them equal protection of the laws, and (3) impairing their freedom of contract and association. In this connection, plaintiffs claim that Baseball's actions should be attributed to the federal government, to which the constraints of the U.S. Constitution apply, because the federal government has granted Baseball a unique exemption from the federal antitrust laws.

Plaintiffs next assert a claim under 42 U.S.C.A. § 1983 (West 1981),⁴ alleging that Baseball acted under color of state law in unlawfully depriving them of the rights, privileges, immunities, freedoms, and liberties secured by Article IV, Section 2 of the U.S. Constitution, as well as the First, Fifth and Fourteenth Amendments. Plaintiffs claim that Baseball's actions took place under color of state law because (a) Baseball is exempt from liability under state antitrust laws; (b) there is a close nexus and symbiotic relationship between Baseball and state and local governments; and (c) Baseball acted in concert with the City of San Francisco to prevent the Giants from being relocated.

Plaintiffs' final federal claim asserts violations of sections 1 and 2 of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1 and 2 (West 1973 & Supp.1993).⁵ Plaintiffs claim that Baseball has monopolized the market for Major League Baseball teams and that Baseball has placed direct and indirect restraints on the purchase, sale, transfer, relocation of, and competition for such teams. Plaintiffs allege that these actions have unlawfully restrained and impeded plaintiffs' opportunities to engage in the business of Major League Baseball.

2. State claims

Plaintiffs also assert claims against Baseball under Pennsylvania law for slander, libel, invasion of the right of privacy, false light, tortious interference with existing and prospective contractual business relations, unlawful restraint of trade, and civil conspiracy.

II. DISCUSSION

Plaintiffs aver that this Court has jurisdiction over their federal claims pursuant to 28 U.S.C. §§ 1331, 1337, and 1343, and supplemental jurisdiction over their state law claims pursuant to 28 U.S.C. § 1367. Defendants move under Fed.R.Civ.P. 12(b)(1), lack of subject matter jurisdiction, and Fed. R.Civ.P. 12(b)(6), failure to state a claim upon which relief can be granted, for an order dismissing plaintiffs' federal claims and, in the event the federal claims are dismissed, for an order directing dismissal of plaintiffs' state claims for lack of supplemental jurisdiction.

A. Standard of Review

The standards for dismissal of a claim under Fed.R.Civ.P. 12(b)(1) and 12(b)(6) are different. Dismissal is proper under Rule 12(b)(1) "only when the claim `clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or ... is...