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The Scope of MLB's Antitrust Exemption

By Rick Karcher, Michael McCann, Geoffrey Rapp, Greg Skidmore, and Howard Wasserman

With Major League Baseball's Opening Day less than a week away, I thought now would be an appropriate time to mention my new article considering the scope of MLB's antitrust exemption, Defining the 'Business of Baseball': A Proposed Framework for Determining the Scope of Professional Baseball's Antitrust Exemption, slated for publication later this year in the U.C. Davis Law Review.

While baseball's exemption from antitrust law is generally well established, lower courts have struggled to define the boundaries of the exemption following the Supreme Court's 1972 decision in Flood v. Kuhn. As detailed in my article, the majority of courts considering the exemption's scope post-Flood have simply held that the "business of baseball" is exempt from antitrust law without providing any further guidance regarding which specific activities are within the exempted business. In contrast, some courts -- most notably the court in Piazza v. Major League Baseball, 831 F. Supp. 420, 436 (E.D. Pa. 1993) -- have adopted an extremely narrow view of the exemption, limiting it simply to MLB's historic reserve clause, the only restraint at issue in Flood. Finally, two courts -- Postema v. National League of Professional Baseball Clubs, 799 F.Supp. 1475 (S.D.N.Y.1992) and Henderson Broadcasting Corp. v. Houston Sports Assoc., Inc., 541 F.Supp. 263 (S.D.Tex. 1982) -- have taken a different approach by limiting the baseball exemption to only the sport's "unique characteristic and needs," based on a passage in the Flood majority opinion.

In my article, I set aside the general policy arguments supporting or (more commonly) opposing the baseball exemption, and instead examine the scope of the exemption from a purely doctrinal perspective. My article rejects all three of the existing judicial demarcations as being either too broad and vague (in the case of the majority rule), or inconsistent with the Supreme Court's precedent (in the case of the two minority approaches). Instead, I argue that the often overlooked focus of the Supreme Court's majority opinions in Federal Baseball Club of Baltimore and Toolson -- namely the specific business of providing baseball entertainment to the public -- provides a more appropriate standard for future courts to apply. My article concludes by applying this proposed standard to a variety of baseball-related commercial activities, differentiating between those activities which are and are not properly exempt from antitrust law under my interpretation of the baseball exemption.

The article is available here. Any comments or suggestions would be appreciated.

Full post as published by Sports Law Blog on March 30, 2010 (boomark / email).