By Platon Elias, Esq.
A distinguished person (such as an owner of a major sports team in the host city) gives a speech during the Friday luncheon at the Annual Sports Lawyers Conference. For the 41st Annual Conference held at the Marriott Waterfront in Baltimore, Maryland, (May14-16, 2015), the attendees were treated to a very special guest speaker. John Paul Stevens, Associate Justice of the Supreme Court, retired, spoke about his involvement with Major League Baseball’s (MLB) antitrust exemption.
Justice Stevens limited most of his comments to two periods in his life where he was involved with the baseball prior to joining the bench. The first occurred in 1951 when, as a young lawyer, he served as associate counsel to the House of Representative’s Subcommittee on the Study of Monopoly Power (also known as the Celler Committee for long time Congressman Emanuel Celler, who represented Brooklyn, New York in the House of Representatives and, by reason of his long tenure, chaired the subcommittee) when it conducted an investigation of Baseball. In his role, Justice Steven’s had the opportunity to interview the then Commissioner of Baseball, Happy Chandler, the former governor of Kentucky, as well as Hall of Famers Ty Cobb and Pee Wee Reese. When interviewing Branch Rickey, the young Stevens, expecting to learn about the signing of Jackie Robinson, was surprised to hear Rickey’s philosophy on a winning formula. According to Stevens, Rickey said “keep them hungry — don’t overpay your players.”
In Stevens’ estimation, George Trautman, the executive in charge of the minor leagues, made the case for preserving the exception for the reserve clause because it was essential to protecting the minor leagues. Back then, MLB, unlike professional football and basketball, did not rely on colleges to prepare players for the major leagues. Instead, it had an elaborate minor league system (somewhat streamlined today) which was costly to maintain (and still is today). He pointed out that the subcommittee acknowledged that all four bills that had been introduced in Congress focused on extending the antitrust exemption to other professional sports rather than limiting baseball’s immunity. After “the voluminous record compiled during the hearings,” as Justice Stevens put it, the subcommittee recommended that no legislative action be taken. Ironically, this inaction would lead Justice Blackman, who authored the majority in Flood v. Kuhn (1972), to write that, “[w]e continue to loath, 50 years after Federal Baseball and almost two decades after Toolson, to overturn those cases judicially when Congress, by its positive inaction, has allowed these decision to stand for so long and, far beyond mere inference and implication, has clearly evinced a desire not to disapprove them legislatively.”
Perhaps more importantly, Justice Stevens provided insight into his mindset on the subject. Interestingly, he believed that a limited exemption regarding the reserve clause was warranted because it is expensive to maintain a minor league system. With respect to the broader exemption, he believed there was “zero” evidence to support it. It appears, therefore, that Justice Stevens, had he been on the Court when Flood was decided, may have had an interesting concurring opinion. He very well may have voted with majority to hold the reserve clause in players’ contract exempt from the antitrust laws, while voting with the minority with respect to the broader exemption.
The second personal involvement in baseball came in 1967. Charlie Finley, who was the owner of the Kansas City A’s, wanted to move the team to a new city. The Braves had been sued by the City of Milwaukee when the team moved to Atlanta. Finley, concerned about such a lawsuit against him by Kansas City, hired Stevens’s law firm to represent the team. According to Stevens, Finley was considering moving to Dallas or Seattle in addition to Oakland. After Finley decided to move the team to Oakland, MLB agreed to award Kansas City an expansion team in 1969 and Finley’s fear of litigation by the City never materialized.
Justice Stevens helped Finley negotiate a long term contract with the Oakland-Alameda Coliseum and obtain approval from the American League owners to relocate the A’s. Stevens, based on his work on the Congressional subcommittee sixteen years earlier, believed that protecting the Giants from competition by the A’s in the same territory was a clear violation of the antitrust laws. Based on that conviction, he argued to the owners that rejecting the move to Oakland to protect the Giants’ economic interest was unjustifiable both as a matter of business judgment (since the A’s could play home games when the Giants were away and be on the road when San Francisco was home) and also as a matter of law. Stevens, the attorney, apparently was confident that if the matter were litigated, baseball’s broad exemption would have been limited by the courts. Five years later, the Supreme Court in Flood ruled the MLB is exempt from the antitrust laws without limitation.
Justice Steven briefly commented on the Curt Flood Act of 1998. Without explanation, he reached the seemingly unsupportable conclusion that Congress “overruled” the Supreme Court decisions in Toolson v. New York Yankees, Inc. (1953) and, Flood [he could have added Federal Baseball Club of Baltimore v. National League (1922)].
The reality is that both the players and the owners encouraged Congress to pass the Flood Act, which only eliminated baseball’s exemption as it relates to major league labor matters. The players believed the law would have a positive effect on labor negotiations in the future. The owners agreed to support the enactment of the law. The Act is very narrow in scope. It allows for the application of the antitrust laws only to matters “directly relating to or affecting employment of major league baseball players to play baseball at the major league level.” The ability of MLB to protect territorial rights remains undisturbed. All minor league activities (including labor matters) remain exempt.
In concluding his remarks, Justice Stevens quoted from a lecture by Oliver Wendell Holmes, the author of the Federal Baseball unanimous decision upon which the precedent was established. Entitled The Path of the Law, the lecture was printed in the Harvard Law Review in 1897. Justice Holmes stated:
It is revolting to have no better reason for a rule of law than that it was so laid down in the time of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished long since and the rule simply persists from blind imitation of the past.[1]
Unfortunately, Justice Stevens did not take questions. It would have been interesting to hear his responses to questions about his other sports related decisions, particularly American Needle v. National Football League, 2010.
Professor Elias teaches Sports Law and other courses at the Hagan School of Business at Iona College and practices law in New York.
1. Oliver Wendell Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 459.
