Major League Baseball Scores Antitrust Victory at Appeals Court

A ruling by the 9th Circuit pertaining to MLB's antitrust exemption could be good news for professional baseball and its broadcast partners

Major League Baseball got the ruling it was hoping for on Thursday when the 9th Circuit Court of Appeals held that its exemption from antitrust laws goes beyond labor matters.

The opinion by 9th Circuit Judge Alex Kozinski pertains to a lawsuit brought by the city of San Jose, which was furious with MLB Commissioner Bud Selig for not approving a move by the Oakland Athletics to a territory dominated by the San Francisco Giants. However, the judge's opinion could also be cause for optimism as the league engages in a high-stakes battle in another courtroom over the way that baseball games are packaged and distributed on television and online.

In that latter dispute, New York federal judge Shira Scheindlin ruled in August that MLB's antitrust exemption didn't apply to television broadcast rights. In a lawsuit brought against MLB, Comcast and DirecTV by fans forced to pay high out-of-market package fees to watch their favored teams, the judge rejected MLB's arguments that its antitrust exemption — which dates back to a 1922 Supreme Court ruling, Federal Baseball Club of Baltimore v. National League — extended to  "the business of baseball," including its TV deals.

Scheindlin wouldn't certify an appeal, but MLB has filed a writ of mandamus to the 2nd Circuit anyway, looking to have a federal appeals court intervene before any trial was held potentially disrupting sports broadcasting. The league is due to present its arguments on January 20. Now, just five days before that date at the 2nd Circuit, MLB has scored welcome news at a different appellate circuit.

In today's opinion, Kozinski points to a 1972 Supreme Court case (Flood) over the league's reserve clause — which once prevented players from becoming free agents — as well as "congressional acquiescence" to find the broad nature of MLB's antitrust exemption. "It is undisputed that restrictions on franchise relocation relate to the 'business of providing public baseball games for profit between clubs of professional baseball players,'" writes the judge in affirming a lower court's dismissal of San Jose's lawsuit.

Kozinski opines that MLB won't escape all antitrust litigation. He writes, "There might be activities that MLB and its franchises engage in that are wholly collateral to the public display of baseball games." But his view of the scope of the exemption is large enough to stop San Jose. "Few, if any, issues are as central to a sports league's proper functioning as its rules regarding the geographic designation of franchises."

San Jose could seek another opinion from the Supreme Court. Given what's happening across the country in a dispute over MLB's TV deals, it's not a given that the league would oppose a review from the highest court.

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner

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