Cangrejeros de Santurce Baseball Club, LLC v. Liga de Beisbol Profesional de Puerto Rico, Inc.
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Opinion
United States Court of Appeals For the First Circuit
No. 23-1589
CANGREJEROS DE SANTURCE BASEBALL CLUB, LLC; SANTURCE MERCHANDISING LLC; THOMAS J. AXON,
Plaintiffs, Appellants,
v.
LIGA DE BÉISBOL PROFESIONAL DE PUERTO RICO, INC.; CRIOLLOS MANAGEMENT, INC.; RA12, INC.; INDIOS DE MAYAGÜEZ BASEBALL CLUB INC.; GIGANTES DE CAROLINA BASEBALL CLUB INC.; LEONES DE PONCE CF INC.; JUAN A. FLORES GALARZA, in his official and personal capacity; IMPULSE SPORTS ENTERTAINMENT CORPORATION,
Defendants, Appellees,
CONJUGAL PARTNERSHIP FLORES-DOE; JANE DOE,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
[Hon. William J. Young,* U.S. District Judge]
Before
Barron, Chief Judge, Thompson and Gelpí, Circuit Judges.
Jeffrey K. Kessler, with whom Jeffrey J. Amato, Lauren E. Duxstad, Robert S. Pannullo, Lauren Gailey, Carlos A. Rodriguez-Vidal, Winston & Strawn LLP, and Goldman Antonetti & Cordova, LLC were on brief, for appellants.
*Of the District of Massachusetts, sitting by designation. Francisco E. Colón-Ramírez, with whom José F. Cáceres Cardona, José M. Marxuach, Colón Ramírez LLC, Cáceres Law Offices, LLC, and Marxuach LLC were on brief, for appellees.
July 21, 2025
1 BARRON, Chief Judge. More than a century ago, the
Supreme Court of the United States held that the Sherman Act does
not apply to "[t]he business [of] giving exhibitions of base ball
[sic]." Fed. Baseball Club of Balt. v. Nat'l League of Pro. Base
Ball Clubs, 259 U.S. 200, 208 (1922). Since then, the Court has
acknowledged the "aberration[al]" and "anomal[ous]" nature of the
so-called "business of baseball" exemption from this federal
antitrust statute. Flood v. Kuhn, 407 U.S. 258, 282, 285 (1972).
The Court also has acknowledged the persistent criticism that
shielding this "business" from that statute's reach is
"unrealistic, inconsistent, or illogical." Id. at 282 (quoting
Radovich v. Nat'l Football League, 352 U.S. 445, 452 (1957)).
Nonetheless, the Court has "voiced a preference that if any change
is to be made, it come by legislative action." Id. at 283. The
exemption thus remains in place.
There are questions, however, about the exemption's
scope -- questions that are at the heart of this appeal. It arises
from a suit by the former owner-operator of a franchise in a
professional baseball league in the Commonwealth of Puerto Rico
and two limited liability corporations of which he is the sole
member. The plaintiffs named as the defendants, among others, the
league's president, the league itself, and the owners of the
league's other franchises. The plaintiffs allege that, in forcing
- 3 - the former owner of the franchise to relinquish his control over
and interest in that franchise, the defendants violated the Sherman
Act, a federal civil rights statute, Puerto Rico antitrust law,
Puerto Rico fair competition law, and a Puerto Rico tort statute.
The United States District Court for the District of
Puerto Rico dismissed the plaintiffs' Sherman Act claims based on
the "business of baseball" exemption. It further ruled that the
plaintiffs' claims under Puerto Rico's antitrust and fair
competition laws were preempted precisely because those claims
alleged conduct that constituted the "business of baseball." The
District Court also dismissed on res judicata grounds the
plaintiffs' remaining federal claim, which was brought pursuant to
a federal civil rights law. The District Court then exercised its
discretion to dismiss the plaintiffs' other Puerto Rico law claim,
which was before it based on supplemental jurisdiction under 18
U.S.C. § 1367.
We agree with the District Court that the "business of
baseball" exemption applies to the Puerto Rico professional
baseball league involved in this suit. We also agree that the
exemption applies to the conduct that the plaintiffs allege
violated the Sherman Act. We thus affirm the dismissal of the
Sherman Act claims.
We do not agree, however, with the reason that the
District Court gave for dismissing the Puerto Rico antitrust or
- 4 - fair competition claims, which was that they must be dismissed as
preempted under the Supremacy Clause of the United States
Constitution. Nor do we agree with the District Court that res
judicata precludes the plaintiffs' federal civil rights claim. We
therefore vacate the District Court's ruling dismissing the Puerto
Rico antitrust and fair competition claims and reverse its ruling
dismissing the federal civil rights claim. Moreover, because we
reverse the District Court's ruling dismissing the plaintiffs'
federal civil rights claim, we also must reverse its ruling
dismissing the remaining Puerto Rico law claim.
I.
A.
On July 18, 2022, the plaintiffs, Thomas J. Axon
("Axon"), Cangrejeros de Santurce Baseball Club, LLC ("Cangrejeros
LLC"), and Santurce Merchandising LLC filed a complaint (the
"Complaint") in the U.S. District Court for the District of Puerto
Rico. The suit named as defendants Liga de Béisbol Profesional de
Puerto Rico, Inc. (the "League"); Criollos Management, Inc. (the
"Criollos"); RA12, Inc. ("RA12"); Indios de Mayagüez Baseball
Club, Inc. (the "Indios"); Gigantes de Carolina Baseball Club,
Inc. (the "Gigantes"); Leones de Ponce CF, Inc. (the "Leones");
Impulse Sports Entertainment Corporation ("Impulse Sports"); Juan
A. Flores-Galarza, in his capacity as president of the League and
- 5 - his personal capacity ("Flores"); Jane Doe; and the conjugal
partnership existing between Flores and Jane Doe.
The Complaint included seven counts. It alleged:
(1) unreasonable restraint of competition in violation of
section 1 of the Sherman Act, 15 U.S.C. § 1 (Count One);
(2) conspiracy to monopolize in violation of section 2 of the
Sherman Act, 15 U.S.C. § 2 (Count Two); (3) unreasonable restraint
of competition in violation of Puerto Rico antitrust law, P.R.
Laws Ann. tit. 10, § 258 (Count Three); (4) conspiracy to
monopolize in violation of Puerto Rico antitrust law, P.R. Laws
Ann. tit. 10, § 260 (Count Four); (5) unfair methods of competition
and deceptive acts and practices in trade and commerce in violation
of Puerto Rico law, P.R. Laws Ann. tit. 10, § 259; P.R. Laws Ann.
tit. 31, §§ 10801, 10803 (Count Five); (6) the tort of contracts
in prejudice of a third person in violation of Puerto Rico's
General Tort Statute, P.R. Laws Ann. tit. 31, §§ 10801, 10803
(Count Six); and (7) a violation of 42 U.S.C. § 1983 based on the
defendants acting with the Mayor of San Juan to deprive the
plaintiffs of their property without due process (Count Seven).
B.
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United States Court of Appeals For the First Circuit
No. 23-1589
CANGREJEROS DE SANTURCE BASEBALL CLUB, LLC; SANTURCE MERCHANDISING LLC; THOMAS J. AXON,
Plaintiffs, Appellants,
v.
LIGA DE BÉISBOL PROFESIONAL DE PUERTO RICO, INC.; CRIOLLOS MANAGEMENT, INC.; RA12, INC.; INDIOS DE MAYAGÜEZ BASEBALL CLUB INC.; GIGANTES DE CAROLINA BASEBALL CLUB INC.; LEONES DE PONCE CF INC.; JUAN A. FLORES GALARZA, in his official and personal capacity; IMPULSE SPORTS ENTERTAINMENT CORPORATION,
Defendants, Appellees,
CONJUGAL PARTNERSHIP FLORES-DOE; JANE DOE,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
[Hon. William J. Young,* U.S. District Judge]
Before
Barron, Chief Judge, Thompson and Gelpí, Circuit Judges.
Jeffrey K. Kessler, with whom Jeffrey J. Amato, Lauren E. Duxstad, Robert S. Pannullo, Lauren Gailey, Carlos A. Rodriguez-Vidal, Winston & Strawn LLP, and Goldman Antonetti & Cordova, LLC were on brief, for appellants.
*Of the District of Massachusetts, sitting by designation. Francisco E. Colón-Ramírez, with whom José F. Cáceres Cardona, José M. Marxuach, Colón Ramírez LLC, Cáceres Law Offices, LLC, and Marxuach LLC were on brief, for appellees.
July 21, 2025
1 BARRON, Chief Judge. More than a century ago, the
Supreme Court of the United States held that the Sherman Act does
not apply to "[t]he business [of] giving exhibitions of base ball
[sic]." Fed. Baseball Club of Balt. v. Nat'l League of Pro. Base
Ball Clubs, 259 U.S. 200, 208 (1922). Since then, the Court has
acknowledged the "aberration[al]" and "anomal[ous]" nature of the
so-called "business of baseball" exemption from this federal
antitrust statute. Flood v. Kuhn, 407 U.S. 258, 282, 285 (1972).
The Court also has acknowledged the persistent criticism that
shielding this "business" from that statute's reach is
"unrealistic, inconsistent, or illogical." Id. at 282 (quoting
Radovich v. Nat'l Football League, 352 U.S. 445, 452 (1957)).
Nonetheless, the Court has "voiced a preference that if any change
is to be made, it come by legislative action." Id. at 283. The
exemption thus remains in place.
There are questions, however, about the exemption's
scope -- questions that are at the heart of this appeal. It arises
from a suit by the former owner-operator of a franchise in a
professional baseball league in the Commonwealth of Puerto Rico
and two limited liability corporations of which he is the sole
member. The plaintiffs named as the defendants, among others, the
league's president, the league itself, and the owners of the
league's other franchises. The plaintiffs allege that, in forcing
- 3 - the former owner of the franchise to relinquish his control over
and interest in that franchise, the defendants violated the Sherman
Act, a federal civil rights statute, Puerto Rico antitrust law,
Puerto Rico fair competition law, and a Puerto Rico tort statute.
The United States District Court for the District of
Puerto Rico dismissed the plaintiffs' Sherman Act claims based on
the "business of baseball" exemption. It further ruled that the
plaintiffs' claims under Puerto Rico's antitrust and fair
competition laws were preempted precisely because those claims
alleged conduct that constituted the "business of baseball." The
District Court also dismissed on res judicata grounds the
plaintiffs' remaining federal claim, which was brought pursuant to
a federal civil rights law. The District Court then exercised its
discretion to dismiss the plaintiffs' other Puerto Rico law claim,
which was before it based on supplemental jurisdiction under 18
U.S.C. § 1367.
We agree with the District Court that the "business of
baseball" exemption applies to the Puerto Rico professional
baseball league involved in this suit. We also agree that the
exemption applies to the conduct that the plaintiffs allege
violated the Sherman Act. We thus affirm the dismissal of the
Sherman Act claims.
We do not agree, however, with the reason that the
District Court gave for dismissing the Puerto Rico antitrust or
- 4 - fair competition claims, which was that they must be dismissed as
preempted under the Supremacy Clause of the United States
Constitution. Nor do we agree with the District Court that res
judicata precludes the plaintiffs' federal civil rights claim. We
therefore vacate the District Court's ruling dismissing the Puerto
Rico antitrust and fair competition claims and reverse its ruling
dismissing the federal civil rights claim. Moreover, because we
reverse the District Court's ruling dismissing the plaintiffs'
federal civil rights claim, we also must reverse its ruling
dismissing the remaining Puerto Rico law claim.
I.
A.
On July 18, 2022, the plaintiffs, Thomas J. Axon
("Axon"), Cangrejeros de Santurce Baseball Club, LLC ("Cangrejeros
LLC"), and Santurce Merchandising LLC filed a complaint (the
"Complaint") in the U.S. District Court for the District of Puerto
Rico. The suit named as defendants Liga de Béisbol Profesional de
Puerto Rico, Inc. (the "League"); Criollos Management, Inc. (the
"Criollos"); RA12, Inc. ("RA12"); Indios de Mayagüez Baseball
Club, Inc. (the "Indios"); Gigantes de Carolina Baseball Club,
Inc. (the "Gigantes"); Leones de Ponce CF, Inc. (the "Leones");
Impulse Sports Entertainment Corporation ("Impulse Sports"); Juan
A. Flores-Galarza, in his capacity as president of the League and
- 5 - his personal capacity ("Flores"); Jane Doe; and the conjugal
partnership existing between Flores and Jane Doe.
The Complaint included seven counts. It alleged:
(1) unreasonable restraint of competition in violation of
section 1 of the Sherman Act, 15 U.S.C. § 1 (Count One);
(2) conspiracy to monopolize in violation of section 2 of the
Sherman Act, 15 U.S.C. § 2 (Count Two); (3) unreasonable restraint
of competition in violation of Puerto Rico antitrust law, P.R.
Laws Ann. tit. 10, § 258 (Count Three); (4) conspiracy to
monopolize in violation of Puerto Rico antitrust law, P.R. Laws
Ann. tit. 10, § 260 (Count Four); (5) unfair methods of competition
and deceptive acts and practices in trade and commerce in violation
of Puerto Rico law, P.R. Laws Ann. tit. 10, § 259; P.R. Laws Ann.
tit. 31, §§ 10801, 10803 (Count Five); (6) the tort of contracts
in prejudice of a third person in violation of Puerto Rico's
General Tort Statute, P.R. Laws Ann. tit. 31, §§ 10801, 10803
(Count Six); and (7) a violation of 42 U.S.C. § 1983 based on the
defendants acting with the Mayor of San Juan to deprive the
plaintiffs of their property without due process (Count Seven).
B.
The Complaint alleged the following facts in support of
these claims.
- 6 - 1.
The League is the "only top-tier professional baseball
league in Puerto Rico."1 In October 2019, Axon, through
Cangrejeros LLC,2 purchased operating control of one of the
League's franchises, the Cangrejeros de Santurce (the "Cangrejeros
Franchise").
On February 4, 2022, Axon became the sole member and
chairman of Cangrejeros LLC. That company continued to operate
the Cangrejeros Franchise. The franchise is one of the League's
six, all of which are located within Puerto Rico and each of which
is owned and operated separately.
The League's teams play against one another in Puerto
Rico. The League's champion plays in the Caribbean Series against
teams from the Dominican Republic, Mexico, and Venezuela.
1 As alleged in the complaint, two other professional leagues -- the Puerto Rico Independent Baseball League and the Liga de Béisbol Superior Doble A de Puerto Rico -- operate within Puerto Rico. They "adhere to a semi-professional model," do not attract the same "level of player talent" as the League, and "do not compete in the same relevant markets as the League." 2 The complaint alleged that Cangrejeros LLC was formed on September 16, 2019. "Cangrejeros LLC was established for the purposes of (a) owning and operating the Cangrejeros de Santurce Baseball Team; and (b) transacting any and all lawful business for which a limited liability company may be organized under the Corporations Law that is incident, necessary or appropriate to accomplish the foregoing, including, without limitation, contracting for necessary or desirable services of professionals and others."
- 7 - Flores was at all relevant times the president of the
League. In that capacity, he oversaw all the League's operations.
The Constitution of the Liga de Béisbol Profesional de
Puerto Rico, Inc. (the "League Constitution") governs the League's
operations. Through Section 2.01(A) of the League Constitution,
the League contractually confers the rights to operate its
franchises to private investor-operators.
The League's teams compete against one another on the
field, and the franchises themselves compete "for fans, in-person
attendance, player talent, sponsorships, merchandise sales, radio,
and streaming broadcast rights agreements." The
investor-operators do not share franchise profits with one
another.
As the sole member of Cangrejeros LLC, Axon invested in
the Cangrejeros Franchise. He "measurably increased player
quality, improved fan experience, broadened the fan base, promoted
and established new broadcasts, enhanced sponsorships, and
expanded merchandising opportunities." He also expanded
broadcasting reach in the continental United States, commissioned
a documentary film about his team, offered higher salaries to
players, and proposed a preseason exhibition tournament.
2.
The Cangrejeros Franchise plays its home games at the
Hiram Bithorn Stadium (the "Bithorn") in San Juan, Puerto Rico, by
- 8 - virtue of an Agreement for the Administration and Operation of the
Franchise, dated August 10, 2017. The Bithorn is owned and
administered by the Municipality of San Juan. Miguel Romero Lugo
("Romero") was the Mayor of San Juan at the time that the Complaint
was filed. During the relevant period, the stadium suffered from,
among other things, a broken scoreboard, inadequate running water,
broken toilets, and a failing roof.
On February 18, 2022, Axon's counsel sent a letter to
Mayor Romero on behalf of Cangrejeros LLC. The letter addressed
a leaked communication about the state of the Bithorn. It
explained that Axon's proposals to upgrade the stadium stemmed
from a desire to "make the Bithorn a living and visible monument
to a cornerstone of Puerto Rico's proud history and sports
culture." (Citation modified).
Axon's letter proposed that Cangrejeros LLC make repairs
to the stadium through an estimated $2 million investment in
exchange for an exclusive fifteen-year lease of the venue to the
Cangrejeros Franchise. Mayor Romero, on behalf of San Juan,
rejected this proposal in a press release.
On March 8, 2022, following Romero's press release,
Cangrejeros LLC informed Flores that the conditions at the Bithorn
necessitated considering relocating the franchise to another
stadium in Puerto Rico. Cangrejeros LLC indicated that an option
- 9 - had arisen for the Cangrejeros Franchise to play its games at a
stadium in better shape in the Municipality of Humacao.
At a League Board meeting on February 22, 2022, Axon
advised the teams and the League that he would no longer accept a
municipal sponsorship from San Juan for the Bithorn. He believed
that such a sponsorship would not be adequate to ensure that
necessary improvements to the stadium would be made.
In a press conference held on March 10, 2022, Axon
announced this same message publicly. In this public statement,
he referenced the Bithorn's defects, the negative impact of these
defects on player performance and fan engagement, and San Juan's
failure to correct these defects or provide adequate funds to do
so. He further stated that San Juan's repeated failure to invest
in the Bithorn and San Juan's unwillingness to collaborate with
the Cangrejeros Franchise on proposed solutions had necessitated
the contemplated movement of the team to a different stadium in
another municipality.
Axon hoped the press conference would encourage the
League to work with him to have San Juan fulfill its obligations
to improve the stadium or, if San Juan continued to resist, to
move the team to another municipality. Acting in concert with
Mayor Romero and with the agreement of the other
investor-operators, Flores soon thereafter took steps to force
Axon to relinquish his control over the Cangrejeros Franchise.
- 10 - Flores sent Axon a letter dated March 14, 2022. It
indicated that Axon had engaged in conduct "detrimental to
baseball" and to the League in violation of § 8.02 of the League
Constitution. Flores then ordered the Cangrejeros Franchise to
remove Axon both from the League Board and as a shareholder of the
Cangrejeros Franchise and threatened to terminate the
investor-operator agreement between Cangrejeros LLC and the
League.
Flores also wrote to the Municipality of Humacao. His
letter stated that the League did not endorse relocating the
Cangrejeros Franchise to Humacao.
Cangrejeros LLC responded to Flores through a letter,
dated March 17, 2022. In that letter, Cangrejeros LLC challenged
the assertion that Axon had engaged in any acts detrimental to
baseball or the League.
On March 18, 2022, Flores called a special meeting of
the League Board to discuss the Cangrejeros Franchise and sanctions
against Axon. Axon requested to attend, but the League Board met
without him.
On March 29, 2022, Flores informed Axon that by
agreement of the League Board, made up primarily of the competing
investor-operators who controlled the other franchises, Axon had
been suspended from all functions and participation in the
Cangrejeros Franchise and the League for two years. He further
- 11 - informed Axon that he was fined $5,000 and placed on probation for
one year after expiration of the suspension.
3.
After learning of these actions, Axon sought a
preliminary injunction and declaratory judgment in the Superior
Court of San Juan against the League and Flores to prevent his
suspension from taking effect. Axon v. Liga De Beisbol Pro. de
Puerto Rico, Inc., No. SJ-2022-CV-02802 (Super. Ct. P.R. May 5,
2022). Axon alleged that permitting his suspension to take effect
would freeze the Cangrejeros Franchise's access to capital and
result in the cessation of club operations.
The Superior Court held a hearing on Axon's motion for
a preliminary injunction on April 22, 2022. Section 3.01 of the
League Constitution states that "shareholders and official
representatives must be accepted by the Board" to be "members" of
the League. The Superior Court interpreted this provision to mean
that Axon was not a "member" of the League at the time of his
suspension.3 The Superior Court then concluded that because Axon
3This outcome, according to the pleadings, resulted from Axon inadvertently removing himself from the League Board. On February 14, 2022, Axon's personal counsel informed Flores that Lino Rivera, the Chief Operating Officer of the Cangrejeros Franchise, and Saúl Suárez, who the Complaint describes as a "Cangrejeros employee," would be the franchise's representatives to the League Board. On February 22, 2022, the League Board confirmed Rivera and Suárez as members representing the Cangrejeros Franchise on the League Board. Axon's counsel believed
- 12 - was not a member of the League, he was not entitled to the
protections and procedures of § 3.05 and § 3.06 of the League
Constitution. Those provisions specify the grounds for
termination of membership and procedures for member separation.
The Superior Court thus ruled that the League Board had the power
to suspend Axon, as a nonmember of the League, and that Axon was
not entitled to protections under the League's constitution.
Accordingly, the Superior Court denied Axon's motion for a
preliminary injunction.
4.
Following the Superior Court's ruling, Flores informed
the plaintiffs on May 17, 2022, that the League was seizing the
interests of Cangrejeros LLC in the Cangrejeros Franchise pursuant
to § 3.06 of the League Constitution. Flores indicated to them
that Axon's filing of a legal action -- in which Axon allegedly
made false representations regarding his membership in the
League -- violated the investor-operating agreement and permitted
the League Board to permanently terminate the interests of
Cangrejeros LLC in the Cangrejeros Franchise.
The League Board met virtually on May 31, 2022. The
attendees included many of the defendants: Raul Rodríguez of the
that Axon held permanent Board membership in his role as sole member of Cangrejeros LLC; however, the League Board's confirmation of Rivera and Suárez as representative members in fact revoked Axon's position on the League Board.
- 13 - Criollos; José Feliciano and Juan Carlos Ramírez of the Indios;
Javier Hernández of the Gigantes; Roberto Alomar and Marisol
Irizarry of RA12; and Oscar Misla of the Leones.
The meeting also included Rivera and Suárez as
representatives of the Cangrejeros Franchise. The League Board
denied Axon's request to testify at the meeting.
Rivera argued at the meeting on behalf of Cangrejeros
LLC. He indicated that Axon would accept a two-year suspension in
exchange for the League not terminating the investor-operator
rights of Cangrejeros LLC. The League Board, however, voted to
terminate the investor-operator agreement of Cangrejeros LLC and
to seize all of the plaintiffs' economic and operation rights in
the franchise without any compensation.
On June 5, 2022, Flores reported that the League was
seeking a new investor-operator for the Cangrejeros Franchise.
Flores acknowledged that two entities had expressed interest in
becoming the investor-operator for the franchise in February 2022,
several months before Axon had been suspended.
On or about June 13, 2022, the League announced that
Impulse Sports had been selected as the new investor-operator of
the Cangrejeros Franchise. Impulse Sports had filed for
incorporation in Puerto Rico on May 20, 2022, eleven days before
the League Board terminated Cangrejeros LLC's interests in the
Cangrejeros Franchise as an investor-operator.
- 14 - After Impulse Sports gained control of the Cangrejeros
Franchise, it publicized its intention to strengthen the
Franchise's ties to Mayor Romero. On July 7, 2022, when Impulse
Sports was introduced as the new owner of the Cangrejeros
Franchise, Mayor Romero participated in the announcement and sat
alongside Impulse Sports in a show of government support.
At the press conference, Impulse Sports stated that it
would be "strengthening ties with the mayor." In response, Mayor
Romero stated that the Bithorn stadium would be made ready for the
upcoming season.
C.
Some weeks after the press conference, Axon, Cangrejeros
LLC, and Santurce Merchandising LLC filed the Complaint that gives
rise to this appeal in the United States District Court for the
District of Puerto Rico. On September 12, 2022, the League, later
joined by some of the competing franchises, moved to dismiss the
Complaint for failure to state a claim under Federal Rule of Civil
Procedure 12(b)(6). That motion argued (1) that the plaintiffs
are contractually bound to litigate their claims in the local
courts of Puerto Rico; and (2) that the plaintiffs' action is
barred by res judicata after the plaintiffs lost their prior case
filed in the local court of Puerto Rico.
Then, on October 27, 2022, the defendants moved under
Federal Rule of Civil Procedure 12(b)(1) to dismiss the Complaint
- 15 - for lack of subject matter jurisdiction. They argued that the
District Court lacked subject matter jurisdiction over the federal
antitrust claims, because the relevant conduct constituted the
"business of baseball," and the state claims brought under Puerto
Rico antitrust law and fair competition law, for the same reason.
The plaintiffs timely opposed these motions.
On June 27, 2023, the District Court granted the
defendants' motions and dismissed the case. It dismissed for want
of jurisdiction the federal antitrust claims and the claims brought
under Puerto Rico antitrust and fair competition laws because of
the "business of baseball" exemption. It dismissed the § 1983
claim for failure to state a claim based on the doctrine of res
judicata. It then declined to exercise supplemental jurisdiction
over the remaining Puerto Rico law claim.
With respect to the federal antitrust claims, the
District Court noted that it was "boldly go[ing] where no lower
court has gone before" by applying the "business of baseball"
exemption to the League. The District Court explained that it was
doing so because it rejected the plaintiffs' arguments that the
baseball exemption applies only to Major League Baseball (MLB) and
MLB's direct affiliates, thereby becoming the first lower court
since Federal Baseball to hold that the exemption may apply to a
professional baseball league other than MLB or an affiliate of it.
- 16 - The District Court then addressed, still with respect to
the Sherman Act claims, whether "the conduct averred in the
Complaint still falls outside of the 'business of baseball'"
because of the nature of the alleged conduct. The plaintiffs
argued that the conduct did. The District Court rejected that
argument and reasoned that:
the [p]laintiffs['] claims involve an alleged conspiracy involving an owner of a professional franchise that was dismissed under the League's regulations. This involves the business of baseball. . . . The Sherman Act baseball exemption applies to the [League] and the Cangrejeros [Franchise] since they are a [sic] professional baseball team, and the antitrust claims arise in the context of the business of baseball.
After concluding that the baseball exemption barred the
Sherman Act claims, the District Court also dismissed the claims
under Puerto Rico antitrust and fair competition law. As to those
claims, the District Court stated, in full:
[The Puerto Rico antitrust and fair competition claims] are consequently dismissed based on the Supremacy Clause as the Supreme Court held in Flood [that] "state antitrust regulation would conflict with federal policy and . . . national 'uniformity (is required) in any regulation of baseball.'" 407 U.S. at 284 (quoting Flood v. Kuhn, 316 F. Supp. 217, 280 (S.D.N.Y. 1970)).
(Second alteration in original). The Court thus dismissed Counts
Three, Four, and Five.
- 17 - The District Court next addressed the plaintiffs' § 1983
claim and concluded that claim "must be dismissed under the
doctrine of res judicata." (Citation modified). The District
Court applied § 3343 of the Puerto Rico Civil Code, P.R. Laws Ann.
tit. 31, § 3343, and noted that to satisfy § 3343, a party must
show "(i) the existence of a [final] judgment on the merits . . .;
(ii) a perfect identity of thing or cause between both actions;
and (iii) a perfect identity of the parties and the capacities in
which they acted." (Quoting R.G. Fin. Corp. v. Vergara-Nuñez, 446
F.3d 178, 183 (1st Cir. 2006)). The District Court concluded that
the earlier judgment from the San Juan Superior Court satisfied
these requirements and thus barred adjudication of the plaintiffs'
§ 1983 claim.
Having dismissed all the plaintiffs' claims arising
under federal law, the District Court declined to exercise
supplemental jurisdiction over the remaining claim arising under
Puerto Rico law, which was a contract law claim, and dismissed the
case. See Roche v. John Hancock Mut. Life Ins. Co., 81 F.3d 249,
257 (1st Cir. 1996); 28 U.S.C. § 1367. The plaintiffs thereafter
timely appealed the District Court's judgment.
II.
We review de novo a district court's grant of a motion
to dismiss for failure to state a claim under Rule 12(b)(6) or for
lack of subject matter jurisdiction under Rule 12(b)(1). Legal
- 18 - Sea Foods, LLC v. Strathmore Ins. Co., 36 F.4th 29, 34 (1st Cir.
2022); Lyman v. Baker, 954 F.3d 351, 359 (1st Cir. 2020). Although
dismissals under Rules 12(b)(1) and 12(b)(6) are "conceptually
distinct, . . . the same basic principles apply in both
situations." Lyman, 954 F.3d at 359 (quoting Hochendoner v.
Genzyme Corp., 823 F.3d 724, 730 (1st Cir. 2016)).
In both contexts, we accept as true the complaint's well-
pleaded factual allegations and draw all reasonable inferences in
the plaintiffs' favor. Id.; Cheng v. Neumann, 51 F.4th 438, 443
(1st Cir. 2022). We disregard "conclusory legal allegations" and
factual assertions that are "too meager, vague, or conclusory to
remove the possibility of relief from the realm of mere
conjecture." Legal Sea Foods, 36 F.4th at 33 (first quoting
Cardigan Mountain Sch. v. N.H. Ins. Co., 787 F.3d 82, 84 (1st Cir.
2015); and then quoting SEC v. Tambone, 597 F.3d 436, 442 (1st
Cir. 2010) (en banc)).
To survive a Rule 12(b)(6) motion, "a complaint must
contain sufficient factual matter, accepted as true, to 'state a
claim to relief that is plausible on its face.'" Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible
"when the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for
the misconduct alleged." Id.
- 19 - Under Rule 12(b)(1), we also disregard "statements in
the complaint that simply offer legal labels and conclusions or
merely rehash cause-of-action elements," and consider whether the
non-conclusory, non-speculative facts support the existence of
subject matter jurisdiction. Lyman, 954 F.3d at 360 (quoting
Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st
Cir. 2012)). We may consider information attached to or
incorporated into the complaint, along with facts subject to
judicial notice. Id.
III.
The plaintiffs contend that the District Court erred in
dismissing their Sherman Act claims because the "business of
baseball" exemption applies only to conduct that involves MLB and
its affiliates. They argue in the alternative that the District
Court erred in dismissing the claims because the nature of the
specific conduct alleged would not constitute the "business of
baseball" even if MLB and its affiliates engaged in it. We are
not persuaded by either contention.4
The plaintiffs bring two claims under the Sherman Act.
They bring the first under section 1 of that statute. That section
The District Court held that the applicability of the 4
exemption deprived it of subject matter jurisdiction and dismissed the federal antitrust claims under Rule 12(b)(1). The plaintiffs
- 20 - makes unlawful "[e]very contract . . . or conspiracy, in restraint
of trade or commerce among the several States, or with foreign
nations." 15 U.S.C. § 1. In support of this claim, the plaintiffs
allege that the "[d]efendants have entered into a continuing
conspiracy in unreasonable restraint of trade to boycott and
exclude [the plaintiffs] from the relevant markets and to replace
them with a more malleable competitor." They also allege that the
conspiracy "will reduce product quality and output in the relevant
markets" and that "[i]t also has no procompetitive justification."
The plaintiffs bring their second Sherman Act claim
under section 2 of that statute. That section provides that
"[e]very person who shall monopolize, or attempt to monopolize, or
combine or conspire with any other person or persons, to monopolize
any part of the trade or commerce among the several States, or
contend on appeal that "there is no jurisdictional issue in play" because the exemption is a merits issue, not a jurisdictional one. We agree. See Garber v. Off. of the Comm'r of Baseball, 120 F. Supp. 3d 334, 339 (S.D.N.Y. 2014) ("[T]he scope of the baseball exemption is not a jurisdictional issue. It is a threshold merits issue."); Arbaugh v. Y&H Corp., 546 U.S. 500, 511 (2006) ("Subject matter jurisdiction in federal-question cases is sometimes erroneously conflated with a plaintiff's need and ability to prove the defendant bound by the federal law asserted as the predicate for relief -- a merits-related determination." (quoting 2 Moore's Federal Practice § 12.30[1] (3d ed. 2005))). To the extent that the Eleventh Circuit has suggested that the exemption imposes a jurisdictional bar, Pro. Baseball Sch. & Clubs, Inc. v. Kuhn, 693 F.2d 1085, 1085 (11th Cir. 1982), we disagree. We thus proceed to address whether the plaintiffs' claims must be dismissed pursuant to Rule 12(b)(6). See Lin v. TipRanks, Ltd., 19 F.4th 28, 36 (1st Cir. 2021) ("We, of course, may affirm the District Court's ruling on any ground manifest in the record.").
- 21 - with foreign nations, shall be deemed guilty of a felony" and
subject to a fine. 15 U.S.C. § 2.
The plaintiffs allege that the defendants violated
section 2 of the Sherman Act because they "entered into a
continuing combination or conspiracy with the specific intent of
acquiring and maintaining monopoly power in the relevant markets."
They also allege that the "league and its investor-operators have
a 100 percent share of the relevant markets and exercise their
monopoly power by controlling entry into those markets" and that
the defendants unlawfully "exclud[ed] [the plaintiffs] from the
relevant markets."
The plaintiffs are right that, after Federal Baseball,
"[n]o other case has ever broadly interpreted the exemption to
apply to entities not part of MLB." They also are right that the
exemption has received significant criticism. Flood, 407 U.S. at
282. But neither the exemption's past application nor the
longstanding criticism that it has engendered supports the
conclusion that it applies only to MLB and its affiliates and so,
for that reason alone, not the League.
1.
Federal Baseball did not describe the "business of
baseball" exemption in terms of the specific professional baseball
leagues that were parties to that case or to any specific league
- 22 - at all. 259 U.S. at 208-09. It defined the exemption in terms of
an activity -- the activity being "the business [of] giving
exhibitions of base ball [sic]." Id. at 208.
The Supreme Court's subsequent treatment of the
exemption has been no different. In Toolson v. New York Yankees,
Inc., for example, the Court characterized its own precedent as
holding "that the business of providing public baseball games for
profit between clubs of professional baseball players was not
within the scope of federal antitrust laws." 346 U.S. 356, 357
(1953) (emphasis added) (citing Fed. Baseball, 259 U.S. 200).
Similarly, in Flood, the Court quoted that same language to
reaffirm the exemption, 407 U.S. at 273 (quoting Toolson, 346 U.S.
at 357), and so again made clear that the exemption protects the
"business of providing public baseball games for profit between
clubs of professional baseball players," see id. (quoting Toolson,
346 U.S. at 357), rather than a particular entity engaged in that
business.
The plaintiffs point to language from National
Collegiate Athletic Ass'n v. Alston that observes that the
"[Supreme] Court has refused to extend Federal Baseball's
reasoning to other sports leagues." 594 U.S. 69, 95 (2021). In
context, though, the Court was referring in that passage to leagues
involved in sports other than baseball, not professional baseball
leagues other than MLB. See, e.g., United States v. Int'l Boxing
- 23 - Club of N.Y., 348 U.S. 236, 242, 245 (1955) (recognizing the
exemption applies to the "business of baseball" and declining to
extend exemption to professional boxing without mentioning the
MLB); Radovich, 352 U.S. at 451 (noting precedent "restrict[ed]
Toolson's coverage to baseball" but not mentioning MLB); Haywood
v. Nat'l Basketball Ass'n, 401 U.S. 1204, 1205 (1971) (noting that
"[b]asketball . . . does not enjoy exemption from the antitrust
laws" notwithstanding the Court's "decisions exempting baseball
from the antitrust laws" (emphases added)); see also United States
v. Shubert, 348 U.S. 222, 229-30 (1955) (characterizing the
exemption as applying to "the baseball business" and declining to
extend the exemption to other live presentations).
The plaintiffs also point to language from Radovich that
indicates that the Court "specifically limit[ed] the rule" of
Federal Baseball "to the facts there involved," 352 U.S. at 451.
They contend that this language shows that the exemption does not
apply to a league -- like the one involved in this case -- that
was not a party to Federal Baseball itself or a successor to such
a party.
Radovich referred, however, to "the business of
organized professional baseball" as being synonymous with "the
facts there involved." Id. As we have explained, the Court has
consistently defined the "business of baseball" in terms of the
nature of activity undertaken, rather than the identity of the
- 24 - entity engaged in that activity. So, we do not understand Radovich
to hold that the "business of baseball" concerns only the exact
conduct involved in Federal Baseball and, for that reason, to
exclude conduct involving the League. Indeed, Flood held that the
MLB's reserve clause constituted the "business of baseball," 407
U.S. at 285, even though that league's reserve clause obviously
was not at issue in Federal Baseball.
The plaintiffs separately argue that the exemption
cannot apply to the League because "the Supreme Court's
justification for continuing to adhere to the Federal Baseball
exemption in Flood was stare decisis -- a rationale that only
applies to MLB's reliance interest." The need to protect the MLB's
reliance interest, however, was only one of the grounds that the
Court gave in Flood for reaffirming the exemption.
In discussing Toolson, the Flood Court noted
"Congressional awareness for three decades of the Court's ruling
in Federal Baseball, coupled with congressional inaction" and "[a]
professed desire that any needed remedy be provided by legislation
rather than by court decree." 407 U.S. at 273-74. The Court noted
as well that Federal Baseball had been "cited, not unfavorably,
with respect to the practice of law; with respect to out-of-state
contractors; and upon a general comparison reference." Id. at
271-72 (citations omitted). Additionally, the Court in Flood
- 25 - indicated that the exemption "rests on a recognition and an
acceptance of baseball's unique characteristics and needs." Id.
at 282 (emphasis added).
That last rationale focuses on the attributes of the
professional sport of baseball, not the specific professional
league that was a party to Flood. The various grounds offered in
Flood for supporting the exemption therefore fail to support the
plaintiffs' argument that the exemption's "rationale . . . only
applies to MLB's reliance interest." Accordingly, we reject the
plaintiffs' contention that the Supreme Court's only justification
for maintaining the exemption was MLB's reliance interest.
The plaintiffs alternatively contend that, even if the
exemption applies to the League, the exemption "does not cover
every type of anticompetitive conspiracy engaged in by a baseball
league and its teams simply because the commerce restrained happens
to be part of the baseball business." They go on to argue that
this "limited" exemption applies only to activities that are
"'central' to organizing and operating a baseball league" and that
the alleged conspiracy here does not fall within that more limited
conception of the exemption's scope. As we will next explain,
however, we conclude that, even under the "central to" formulation,
the plaintiffs have failed to show that the District Court erred
- 26 - in holding that the exemption applies to the plaintiffs' Sherman
Act claims.
Before the District Court, the defendants took a
seemingly sweeping view of the exemption's scope. They appeared
to argue that, insofar as the exemption applies to the League and
not just MLB and its affiliates, it applies in this case simply
because the League is itself a professional baseball league. As
the defendants put it below, "[T]here is no doubt that [the League]
is a professional baseball league in Puerto Rico . . . and thus
the exemption applies."
The plaintiffs responded by arguing that "the mere fact
that the parties are involved in the baseball business . . . does
not shield all of [the d]efendants' conduct under
the . . . exemption." They argued that the "exemption only
applies to protect conduct that qualifies as the 'business of
baseball,' in the narrow manner by which that term has been defined
by the courts." The plaintiffs then asserted that the "business
of baseball" only includes conduct central to the operation of
professional baseball leagues -- and so not to all conduct in which
the League engages -- as this understanding "is consistent with
how courts have interpreted the exemption for decades."
In fleshing out this argument, the plaintiffs cited
lower court decisions from other circuits that, in their view,
- 27 - apply the exemption in this more limited manner. See, e.g.,
Henderson Broad. Corp. v. Hous. Sports Ass'n, Inc., 541 F. Supp.
263, 265 (S.D. Tex. 1982) ("[B]roadcasting is not central enough
to baseball to be encompassed in the baseball exemption."). The
plaintiffs then contended that the "anticompetitive conspiracy
alleged" here falls outside the scope of the exemption because it
"does not involve conduct that is 'central' to operating a baseball
league." In their view, the alleged conspiracy "has nothing to do
with player rules, rules of the game, or any other League rule or
bylaw that could even arguably fall within the 'business of
baseball.'" (Emphasis added).
The District Court did not adopt the defendants'
seemingly categorical view that the exemption applies to any
conduct by the League. It explained that the exemption applied in
this case because the "alleged conspiracy involv[es] an owner of
a professional franchise that was dismissed under the League's
regulations" and so "involves the business of baseball." It then
also observed that "the antitrust claims arise in the context of
the business of baseball."
The District Court relied on two of the precedents that
the defendants cited, namely Right Field Rooftops, LLC v. Chicago
Baseball Holdings, LLC, 87 F. Supp. 3d 874 (N.D. Ill. 2015), and
Wyckoff v. Office of the Commissioner of Baseball, 211 F. Supp. 3d
615 (S.D.N.Y. 2016). In concluding that the exemption applied,
- 28 - the courts in those cases considered the nature of the conduct
alleged to violate the Sherman Act and determined that it was
"central to the public display of baseball games," Right Field
Rooftops, 87 F. Supp. 3d at 885, or "an integral part of" and
"central to the 'business of baseball,'" Wyckoff, 211. F. Supp. 3d
at 626-27. They also contrasted conduct of that sort with conduct
that falls outside the exemption because it is "incidental" or
"wholly collateral to" to the public display of baseball games.
Id. at 626 (first quoting Right Field Rooftops, 87 F. Supp. 3d at
885; and then quoting City of San Jose v. Off. of the Comm'r of
Baseball, 776 F.3d 686, 690 (9th Cir. 2015)).
It is arguable that, by invoking Wyckoff and Right Field
Rooftops, the District Court implicitly deemed the alleged anti-
competitive conduct here to be "central" or "integral to" the
public display of baseball games and so, for that reason, the
"business of baseball." The District Court did not expressly
characterize the conduct in those terms, however. Nor did it
elaborate on why either of the cases it cited supported the legal
proposition that claims fall within the exemption if they merely
"arise in the context of the business of baseball," "involv[e] an
owner of a professional [baseball] franchise," or
"involve[e] . . . [l]eague regulations." It also did not
otherwise explain why those cases show that the exemption applies
to the alleged conspiracy here, except by stating that "the
- 29 - [p]laintiffs['] argument . . . is overly narrow, as was the
[plaintiffs'] reading of the exemption in the Right Field Rooftops
case."
In our view, therefore, it is not entirely clear that
the District Court assessed the conduct alleged to violate the
Sherman Act here along a "central to" versus "wholly collateral
to" axis. As a result, it is not entirely clear that, in ruling
that the exemption applied, the District Court determined that the
conduct satisfied the "central to" test that the plaintiffs ask us
to embrace.
Nonetheless, we may affirm the District Court's
dismissal of the plaintiffs' Sherman Act claims on any ground
manifest in the record. See Brox v. Hole, 83 F.4th 87, 98 (1st
Cir. 2023). And, as we will next explain, we conclude that, even
if we were to apply the "central to" test that the plaintiffs
derive from the lower court precedents, the plaintiffs' arguments
on appeal fail to show that, under that test, the exemption has no
application here.
We recognize that extensions of the exemption beyond the
factual context that gave rise to it are not permitted, because
the Supreme Court has "specifically limit[ed] the rule" of Federal
Baseball "to the facts there involved." Radovich, 352 U.S. at
451. And while Radovich makes clear that those "facts" are ones
- 30 - that constitute "the business of baseball," id., rather than the
precise facts involved in Federal Baseball itself, we can see how
a decision to extend the exemption to allegedly anti-competitive
conduct by a professional baseball league or its affiliates with
respect to broadcasting agreements, see Henderson, 541 F. Supp. at
265, or agreements with concessionaires at league games, see Twin
City Sportservice, Inc. v. Charles O. Finley & Co., 512 F.2d 1264
(9th Cir. 1975), might be thought to violate that directive.
Such conduct is arguably "incidental" to the business of
putting on games for public display in a way that, say, a
professional baseball league's enforcement of a reserve clause in
players' contracts is not, see Flood, 407 U.S. at 282. The latter
type of league conduct -- unlike the former type -- directly
impacts the product on the field because it directly impacts who
the players on the field are.
Moreover, precisely because the former type of conduct
does not have such a direct on-the-field impact, extending the
exemption to such conduct has no obvious stopping point. It is
not easy to distinguish the markets for broadcast rights in
professional baseball games or concessions in the live exhibition
of such games from the markets in trading cards, video games, or
league-related merchandise.
Extending the exemption to the former type of conduct
thus risks expanding an already much-criticized exemption to wide
- 31 - swaths of economic activity just because such activity relates in
some way to professional baseball. No similar risk of exemption
creep appears to be presented by applying the exemption to the
factual context presented here. Such an application merely shields
from federal antitrust scrutiny the League's decisions to enforce
its established rules for determining who will run, own, and
control the League's own teams.
It is true, of course, that owners -- unlike
players -- do not take the field. But the plaintiffs do not appear
to be of the view that this fact in and of itself precludes the
exemption's application. But see Postema v. Nat'l League of Pro.
Baseball Clubs, 799 F. Supp. 1475, 1489 (S.D.N.Y. 1992) (explaining
that "baseball's relations with non-players are not a unique
characteristic or need of the game" and thus do not fall within
the scope of the exemption), rev'd on other grounds, 998 F.2d 60
(2d Cir. 1993). As the plaintiffs recognize, the Wyckoff court
held that professional baseball league personnel -- in that case,
team scouts -- can be involved in the "business of baseball" due,
in part, to the integral role that they play in selecting the
talent that then participates on the field during those games.
See 211 F. Supp. 3d at 626-27. Yet, scouts do not directly
participate in the public display of the game itself, and the
plaintiffs do not develop an argument that Wyckoff was wrongly
- 32 - decided because it treated scouts as being involved in the
"business of baseball."
The plaintiffs do attempt to distinguish Wyckoff. They
do so on the ground that a scout's "role [is] 'so extraordinarily
unique' to the game that it [is] 'an integral part of' and 'central
to the "business of baseball."'" (Quoting id.). But that ground
for distinction fails because Wyckoff did not limit the
applicability of the exemption to conduct that is -- or roles that
are -- "'extraordinarily unique' to the game of baseball." Id. at
626. In referring to that strict potential formulation of the
"central to" test, the Wyckoff court was just quoting the
characterization that the plaintiffs there had offered of the role
that scouts played. Id.
In addition, Wyckoff ultimately concluded that the
exemption applied because the scouts' role was not "incidental" to
the "business of baseball," and not because that role was
"extraordinarily unique" to baseball. See id. The court came to
that conclusion, in part, because "scouts' identification and
targeting of particular players greatly influences the Franchises'
decisions about which players to hire and what team to field."
Id. at 626-27.
That reasoning is no less applicable here. If an
individual's role is "central" to, or at least more than
"incidental" to, the public display of baseball games when that
- 33 - individual's role "greatly influences the Franchise's decisions
about which players to hire and what teams to field," id., then it
is hard to see why the role of an owner of a professional baseball
franchise would be "incidental." Owners of professional baseball
franchises -- from Walter O'Malley, who owned the Brooklyn Dodgers
when the team signed Jackie Robinson, to Harry Frazee, who owned
the Boston Red Sox when the team traded Babe Ruth -- have been
foundational figures in the development of professional baseball
precisely because of their decisions "about which players to hire
and what teams to field," id.
The plaintiffs themselves appear to recognize the
centrality and importance of owners to, as Toolson put it, the
"business of providing public baseball games for profit between
clubs of professional baseball players." 346 U.S. at 357. They
allege in their own Complaint that the former owner who was ousted
here "measurably increased player quality," "invested resources to
entice higher-quality baseball players to play," and "proposed
essential renovations to improve the conditions of the stadium for
fans."
We recognize that, in Piazza v. Major League Baseball,
831 F. Supp. 420 (E.D. Pa. 1993), the district court suggested
that "the market for ownership interests in existing baseball
teams" may not fall within the scope of the exemption. Id. at
439-440; see also id. at 441 ("[A]cquiring an ownership interest
- 34 - in a team may very well be no more unique to the exhibition of
baseball games than is moving players and their equipment from
game to game."). But, in that case, the court also acknowledged
that ownership decisions that "implicate matters of league
structure . . . [could] be covered by the exemption." Id.
In any event, the plaintiffs do not appear to deny that
a league's efforts to enforce its rules about team ownership may
fall within the exemption. The plaintiffs contend only that the
enforcement of the rules here is not within the exemption because,
as they described it to the District Court, the enforcement does
not involve a "League rule or bylaw that could even arguably fall
within the 'business of baseball.'" They do not explain, though,
why the League rules at issue here are not "central" to the
business of a professional baseball league. They instead merely
assert -- in conclusory fashion -- that the rule that the League
is alleged to have enforced in harming the plaintiffs is not within
the "business of baseball" because it "had nothing to do with the
necessary rules for operating a baseball league or its 'unique
characteristics.'" Yet, as we have explained, a professional
baseball league's established rules for determining who may
operate one of the teams in a baseball league would appear to have
quite a lot to do with "operating a baseball league."
The plaintiffs also invoke an amicus brief filed by the
U.S. Department of Justice (DOJ) in another case that touched on
- 35 - the scope of the exemption. In that filing, the DOJ advanced the
view that the challenged conduct in a case must be "central to the
business of offering professional baseball games to the public" to
fall within the scope of the exemption. Brief of the United States
as Amicus Curiae in Support of Neither Party at 7, Nostalgic
Partners v. Off. of the Comm'r of Baseball, 637 F. Supp. 3d 45
(S.D.N.Y. 2022) (No. 21-cv-10876).
We do not take issue here, however, with the "central
to" formulation. We take issue only with the plaintiffs' arguments
that the conduct here falls outside the exemption because it fails
the "central to" test. It is thus significant to us that the DOJ
does not suggest in the filing at issue that the efforts of a
professional baseball league to enforce its own rules for owning
and controlling one of its teams is merely incidental to that
Insofar as the plaintiffs mean to make the distinct
argument that the exemption does not apply here because the alleged
conspiracy "involv[ed] the Mayor of San Juan" -- and so involved
someone who was not employed by the League -- we also are not
persuaded. The plaintiffs' Complaint alleges that Mayor Romero
conspired with the League to "force Axon to relinquish his control
over the Cangrejeros Franchise" because Axon had criticized the
city's "repeated failure to invest in the Bithorn [stadium] and
- 36 - San Juan's unwillingness to collaborate with the Cangrejeros
Franchise" and because Axon had threatened to move the team to
another city. The Complaint further alleges that the Bithorn is
"emblematic of the island's rich baseball history" and that the
stadium conditions affected "players, fans, and sponsors."
Moreover, the plaintiffs acknowledge that "franchise relocation
rules" are covered by the exemption.
We do not see how the involvement of the Mayor of San
Juan -- the city that owns the Bithorn stadium -- makes the
challenged conduct in this case any less "central" to the
operations of the League, given the evident centrality of franchise
location and a franchise's stadium to the "public display of
baseball games." In addition, the plaintiffs identify no authority
that suggests that a conspiracy by a professional baseball league's
franchise owners that constitutes the "business of baseball"
necessarily ceases to constitute such "business" so long as a
single participant in the conspiracy is not a member or employee
of the league. See Major League Baseball v. Crist, 331 F.3d 1177,
1184 (11th Cir. 2003) (rejecting argument that the involvement of
public entities in a professional baseball league's activity would
take that activity out of the scope of the exemption).
D.
Stepping back, we recognize that the "business of
baseball" exemption has its origins in the Supreme Court's
- 37 - determination that professional baseball games "are purely state
affairs," Fed. Baseball, 259 U.S. at 208, for purposes of assessing
Congress's powers under the Commerce Clause. We recognize as well
that modern Commerce Clause doctrine does not support that same
conclusion. Indeed, it offers even less support for the conclusion
that Congress's Article I powers do not extend to the sport of
baseball even though they extend to other sports.
Nonetheless, the "business of baseball" exemption "has
survived the Court's expanding concept of interstate commerce,"
and the Court has declined to overrule the relevant precedent
despite acknowledging "that it [is] out of step with subsequent
decisions reflecting present-day concepts of interstate commerce."
Flood, 407 U.S. at 275, 282; see also id. at 286 (Douglas, J.,
dissenting) (describing the Court's 1922 view of commerce as
"narrow" and "parochial" and recognizing that "the whole concept
of commerce has changed"). We thus must apply that exemption,
which, as we have explained, is for the "business of baseball"
rather than for any specific professional baseball league. For
the reasons we have set forth, we reject the plaintiffs' challenge
to the District Court's decision to dismiss the Sherman Act claims
based on the "business of baseball" exemption.
IV.
We now turn to the plaintiffs' challenge to the District
Court's dismissal of the two claims that they brought under Puerto
- 38 - Rico's antitrust law, P.R. Laws Ann. tit. 10, §§ 258, 260, and the
one claim that they brought under Puerto Rico's fair competition
law, P.R. Laws Ann. tit. 10, § 259. In these three claims, the
plaintiffs challenge the same conduct that provides the basis for
their two Sherman Act claims.
In addressing these three Puerto Rico law claims, the
District Court noted that "[t]he baseball exemption bars any
federal antitrust claims issued from the complaint . . . ." It
then went on to conclude that the claims "are consequently
dismissed based on the Supremacy Clause as the Supreme Court held
in Flood [that] 'state antitrust regulation would conflict with
federal policy and . . . "national uniformity (is required) in any
regulation of baseball."'" (Quoting Flood, 407 U.S. at 284).
The plaintiffs argue that the District Court erred in so
ruling. The defendants defend the District Court's reasoning and
argue that the "antitrust claims under Puerto Rico law are
preempted by the Supremacy Clause (or the Commerce Clause)."
The defendants contend that "exempting the business of
baseball from federal antitrust law . . . does not mean it is
subject to state antitrust law." In support of this contention,
they point out that the Supreme Court in Flood, 407 U.S. 258, and
the Eleventh Circuit in Major League Baseball v. Crist, 331 F.3d
1177, dismissed the state antitrust claims in those cases after
concluding that the "business of baseball" exemption applied. They
- 39 - also contend that the reasoning of those cases applies here because
the League is engaged in the "business of baseball."
The defendants separately contend, too, that "[t]he
Commerce Clause prohibits the application of state antitrust laws"
in professional sports generally. (Citing Robertson v. Nat'l
Basketball Ass'n, 389 F. Supp. 867, 880 (S.D.N.Y. 1975)). They
urge us to affirm the dismissal of these three claims on that
alternative basis as well.
The disagreement between the parties appears to stem
primarily from their divergent views about Flood's treatment of
the state law claims at issue there. We therefore begin by
reviewing the relevant analysis in Flood, before then explaining
why the analysis there does not support the District Court's
dismissal ruling. Accordingly, for the reasons we will set forth,
we vacate the portion of the District Court's judgment dismissing
the claims brought under Puerto Rico's antitrust and fair
competition laws and remand for further proceedings.5
5 The District Court appears to have held that the applicability of the exemption deprived it of jurisdiction over the claims brought under Puerto Rico's antitrust and fair competition laws and to have dismissed those claims under Rule 12(b)(1). As we have explained, however, we disagree that the exemption presents a jurisdictional bar rather than a threshold merits issue. See Garber, 120 F. Supp. 3d at 339; Arbaugh, 546 U.S. at 511. We thus proceed to evaluate the dismissal of these claims under Rule 12(b)(6). See Lin, 19 F.4th at 36. For our current review, though, it makes little practical difference for us as we would review the applicability of the exemption to these claims de novo under Rule 12(b)(6) or Rule 12(b)(1).
- 40 - A.
In addressing the state law antitrust claims, the
Supreme Court in Flood stated:
The petitioner's argument as to the application of state antitrust laws deserves a word. [The District Court] 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 reserved system." 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." As applied to organized baseball, and in the light of this Court's observations and holding 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 284-85 (citations omitted) (first quoting Flood v.
Kuhn, 316 F. Supp. 271, 280 (S.D.N.Y. 1970); and then quoting Flood
v. Kuhn, 443 F.2d 264, 268 (2d Cir. 1971)).
As this passage shows, the Supreme Court in Flood favorably
quoted the conclusion that the court of appeals in that case had
reached based on its Commerce Clause analysis: "[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." Id. (first alteration
in original) (quoting Flood, 443 F.2d at 268). Specifically, the
- 41 - court of appeals had explained that, with respect to the National
and American Leagues that form MLB, "each league extends over many
states, and . . . if state regulation were permissible, the
internal structure of the leagues would require compliance with
the strictest state antitrust standard." Flood, 443 F.2d at 268.
The court of appeals in Flood further noted that "the
clubs composing the Leagues are in different cities and, for the
most part, in different states" and that "the clubs cross state
lines in order to make the [exhibitions] possible." Id. at 265-66.
And the court of appeals in Flood concluded that "[t]he consequent
extra-territorial effect of necessary compliance [with state
regulation] would be considerably more far-reaching than that in
Southern Pacific Co. v. Arizona," Flood, 443 F.2d at 268, which
was a case in which the Supreme Court had ruled that the extra-
territorial effects of state regulation were impermissible under
the Commerce Clause, S. Pac. Co., 325 U.S. 761, 774-75 (1945).
That same passage from the Supreme Court's decision in
Flood also shows that the Supreme Court favorably cited to the
district court decision there. 407 U.S. at 284-85 (quoting Flood,
316 F. Supp. at 280). The district court in Flood, like the court
of appeals in that case, had relied in relevant part on a Commerce
Clause-based theory tied to the specific nature of MLB to conclude
that the state law antitrust claims could not go forward. 316 F.
Supp. at 280. It noted that "[s]tate and local laws may not unduly
- 42 - burden interstate commerce" and that "diverse state laws here would
seriously interfere" with MLB's national operations. Id. In doing
so, it observed that "[t]here exist no competitive professional
teams in North America outside" MLB and its minor leagues, and
that "all [teams] . . . are subject to the broad powers of the
Commissioner of Baseball."6 Id. at 273. It further emphasized
the "single," "unified," and "nationwide" structure of "organized
baseball." Id. at 273, 279-80.
The district court in Flood also undertook a
preemption-based analysis of the state law antitrust claims and
relied on that analysis to dismiss them. Id. at 279. In doing
so, it relied on the Supremacy Clause to hold that, because
Congress had occupied the field of antitrust regulation of the
"business of baseball" via the Sherman Act, the state law antitrust
claims were preempted. Id.
The Supreme Court in Flood, however, cited to and quoted
from only the portion of the district court's decision in that
case that addressed the dismissal of the state law claims under
the Commerce Clause. Flood, 407 U.S. at 284 (quoting Flood, 316
F. Supp. at 280). And, in Flood, the district court had conducted
the Commerce Clause analysis under the explicit assumption that
6 There are no allegations in the Complaint that concern when the League was established, but as far as we are aware, the League predates the Flood decision.
- 43 - the "business of baseball" exemption "fail[s] to establish or
indicate a national policy regarding baseball sufficiently certain
to rise to the level of federal preemption." 316 F. Supp. at
279-280.
In contending that the District Court rightly dismissed
the three Puerto Rico law claims at issue, the defendants rely in
significant part on the Eleventh Circuit's decision in Crist. They
emphasize that Crist determined that "[a] careful reading" of the
passage quoted above from Flood "yields two different theories"
for why the state antitrust claims in that case had to be
dismissed. 331 F.3d at 1185.
Crist first concluded that the Supreme Court's reliance
in Flood on the "statement" of the district court in that case
supported "a preemption theory." Id. Crist then concluded that
the Supreme Court's reliance in Flood on the "statement" of the
court of appeals in that case supported a Commerce Clause-based
theory. Id.
Under the "preemption theory," Crist concluded that
"federal antitrust policy . . . precludes the application of state
antitrust law to the business of baseball." Id. at 1185 n.19.
Accordingly, Crist held that the state law claims at issue there
had to be dismissed because those claims alleged violations of
- 44 - state law based on conduct that constituted the "business of
baseball." Id. at 1185-86.
Were we to understand Flood as Crist understood it, we
would be obliged to affirm the District Court's dismissal of the
Puerto Rico law antitrust and fair competition claims here. Those
three claims, like the state law antitrust claims in Crist, allege
violations of law based on conduct that constitutes the "business
of baseball."
We do not see, however, how the "statement" from the
district court in Flood on which the Supreme Court relied in that
case supports "a preemption theory." As our earlier analysis of
that "statement" explained, the Court there adopted the reasoning
of the lower courts that concluded that the state law antitrust
claims were prohibited under the Commerce Clause because state
regulation of conduct that would constitute the "business of
baseball" -- the MLB's enforcement of the reserve clause -- in
relation to an interstate professional baseball league would
impose impermissible burdens on interstate commerce.
Indeed, if the Court in Flood did rely on the "preemption
theory," then we see little reason for it to have referenced the
Commerce Clause or to have embraced an analysis under that
constitutional provision, as it unmistakably did. See Flood, 407
U.S. at 284. In addition, the Sherman Act normally coexists
with -- rather than displaces -- state antitrust regulation, see
- 45 - California v. ARC Am. Corp., 490 U.S. 93, 101 (1989), as the
defendants acknowledge.
True, the Supreme Court acknowledged in Flood that the
district court there also found that "state antitrust regulation
would conflict with federal policy." 407 U.S. at 284. True, too,
the district court engaged in an analysis of field preemption.
Flood, 316 F. Supp. at 280. But Flood quoted from and cited to
only the portion of the district court decision that addressed the
viability of the state law claims under the Commerce Clause. 407
U.S. at 284 (quoting Flood, 316 F. Supp. at 280). So, we do not
see how the Supreme Court's reliance in Flood on the district
court's rationale in that case shows that the Supreme Court adopted
a theory of field preemption as to all claims alleging a state
antitrust law violation based on conduct that constitutes the
We are aware that the Supreme Court in Flood dismissed
the state law claims "in light of th[e Supreme] Court's
observations and holding in Federal Baseball, in Toolson, in
Shubert, in International Boxing, and in Radovich." Id. But this
feature of the Supreme Court's decision in Flood does not alter
our view that the Court based its conclusion that the state-law
antitrust claims in that case had to be dismissed based on the
Commerce Clause rather than Congress having occupied the field
- 46 - through the Sherman Act and thereby having preempted state
antitrust laws from applying to the "business of baseball."
In referencing its "observations and holdings" in the
line of cases starting with Federal Baseball, the Supreme Court is
best read to have been reinforcing the conclusion that the
"business of baseball" exemption does not "creat[e] a mere vacuum
in national policy, leaving the states free to regulate the
membership of the baseball leagues," Flood, 316 F. Supp. at 279
(quoting State v. Milwaukee Braves, Inc., 144 N.W.2d 1, 17-18 (Wis.
1966)). Accordingly, to the extent that Flood invoked its Sherman
Act line of cases in rejecting the state law antitrust claims, it
appears to us that it did so only after it concluded that
enforcement of state antitrust regimes as to the conduct at issue
would substantially burden interstate commerce. It thus appears
to have invoked that line of cases only for the purpose of
confirming that Congress had not authorized states to impose those
burdens. See S. Pac. Co., 325 U.S. at 769 ("Congress has undoubted
power to . . . . permit the states to regulate [interstate]
commerce in a manner which would otherwise not be permissible
[under the Commerce Clause].").
Of course, the Court held in Flood that the state
antitrust claims there were barred because state regulation of
conduct that would constitute the "business of baseball" -- the
MLB's enforcement of the reserve clause -- in relation to an
- 47 - interstate professional baseball league would impose impermissible
burdens on interstate commerce. It did not address the distinct
question of whether there would be any basis for prohibiting a
state law antitrust or related claim -- even if targeting conduct
that would constitute the "business of baseball" -- brought against
a professional baseball league that, like the League, has
franchises located solely within a single state or territory.7
The defendants do contend that the Commerce Clause
nonetheless "prohibits the application of state antitrust laws not
only in baseball . . . but also in other professional sports."
They rely for this contention on Robertson v. National Basketball
Association, 389 F. Supp. 867, 880 (S.D.N.Y. 1975). That case
concerned state antitrust claims against the National Basketball
Association ("NBA") that the district court dismissed based on
what it deemed to be the "unquestionably applicable and
controlling" court of appeals' decision in Flood. Id.
"We readily acknowledge," as the court of appeals did in 7
Flood, the tension inherent in a ruling that the "business of baseball" exemption to federal antitrust scrutiny precludes some state regulation. See 443 F.2d at 268. On the one hand, the exemption has its roots in a determination that baseball is not interstate commerce. Fed. Baseball, 259 U.S. at 208-09. Yet that same exemption may now preclude some state regulation because a state thereby may impermissibly burden interstate commerce under the modern interpretation of the Commerce Clause. See Flood, 443 F.2d at 268 (explaining that "we are bound by [Federal Baseball], while in our disposition of the state and common law counts, we must of necessity decide this question . . . by present Commerce Clause standards and not the standards applicable in 1922").
- 48 - In following that intermediate appellate decision in
Flood, however, Robertson did not adopt a per se rule against state
antitrust regulation of sports leagues. Id. It noted that "[w]hen
Flood was decided, [MLB] had 24 teams operating in 24 'home' cities
with the teams divided into two leagues. NBA has 18 teams
operating in 18 'home' cities, and those teams are divided into
two conferences." Id. at 881. It also indicated that the parties
agreed that "professional basketball involves substantial volumes
of interstate trade and commerce." Id.
Thus, Robertson comports with our conclusion that Flood
requires a Commerce Clause analysis of the particular league at
issue in the case. It also comports with our conclusion that the
Commerce Clause analysis in Flood rested in significant part on
the geographic distribution of the teams involved in the league at
issue in that case.
In sum, we do not agree that, because the conduct alleged
to violate Puerto Rico's antitrust and fair competition laws
constitutes the "business of baseball," it follows necessarily
that the claims under Puerto Rico antitrust and fair competition
laws must be dismissed as preempted under the Supremacy Clause.
The question remains, though, whether the application of the Puerto
Rico antitrust and fair competition laws to restrain the
- 49 - defendants' alleged conduct would impermissibly burden interstate
commerce.
In this case, those Puerto Rico laws would be applied to
a professional baseball league that -- unlike the interstate
MLB -- has franchises that are located solely within Puerto Rico
and thus that does not "extend[] over many states," 443 F.2d at
268. Flood, however, does not make clear whether state antitrust
regulation of a league operating within a state or territory could
be said to impose an impermissible burden on state commerce.
Accordingly, we vacate the portion of the District Court's ruling
that dismisses the Puerto Rico law antitrust and fair competition
claims and remand so that the District Court may consider whether
those claims are precluded by the Commerce Clause. In doing so,
the District Court may consider the parties' arguments as to this
issue, as well as any issues of waiver.
We also must address the plaintiffs' challenge to the
District Court's judgment that their § 1983 claim "must be
dismissed under the doctrine of res judicata." (Citation
modified). With this claim, the plaintiffs allege that the
defendants, "acting in concert with the mayor of the Municipality
of San Juan, operated under the law and color of government
authority in depriving [the plaintiffs] of their property
interests in the Cangrejeros Franchise without due process of law."
- 50 - As a reminder, the District Court ruled that, under Puerto Rico
law, the § 1983 claim was precluded by the prior judgment that the
San Juan Superior Court issued against Axon after he challenged
his temporary suspension from the League in that Commonwealth
Court. We agree with the plaintiffs that this ruling cannot stand.
The plaintiffs contend, in part, that the District
Court's ruling must be reversed because, although Puerto Rico law
requires perfect identity between the parties and between the
causes of action of the two suits for res judicata to apply, there
was not perfect identity between the two suits at issue. The
plaintiffs recognize that P.R. Laws Ann. tit. 31, § 3343, the law
on which the District Court relied for its res judicata analysis,
was repealed in November 2020 and so before the conduct in this
case took place. They also recognize that, as the defendants
explain, "[t]he 2020 edition of the Puerto Rico Civil [Code],"
which by its enactment replaced and repealed § 3343, "does not
contain the requirements that existed under the 1930 Civil Code"
and that "the requirements set forth in the old Civil Code no
longer apply."
The plaintiffs nonetheless contend that "[i]n the
district court, [the defendants] relied on case law applying
§ 3343" and so "cannot now renounce their position" on appeal.
They also point out that the defendants "do not identify how the
- 51 - tests for res judicata have purportedly been changed by the 2020
Puerto Rico Civil Code or what those new tests are" and "do not
cite a single case setting forth any new test." And, finally they
maintain that the same test for res judicata that § 3343
required -- "the most perfect identity between the things, causes,
and persons of the litigant," P.R. Laws Ann. tit. 31,
§ 3343 -- still "lives on in the common law." In support of this
contention, they point to Santiago Ruiz v. Municipio de San Juan,
No. SJ2023CV01413, 2023 WL 8615779, at *2–3 (P.R. Cir. Nov. 28,
2023); García-Navarro v. Hogar La Bella Unión, Inc., No. 3:17-cv-
01271, 2022 WL 11266460, at *33 (D.P.R. Oct. 18, 2022); and
HibiscusPR 322, LLC v. Lorenzo, No. CV 19-1854, 2021 WL 8993846,
at *8 (D.P.R. June 10, 2021).
The plaintiffs did not themselves alert the District
Court to the fact that § 3343 was not operative at the time that
the District Court ruled on the defendants' motion to dismiss based
on that measure. Ordinarily, we do not permit parties on appeal
to raise issues that they failed to raise below. See, e.g., Camara
de Mercadeo, Industria y Distribucion de Alimentos, Inc. v.
Emanuelli-Hernandez, 72 F.4th 361, 365 (1st Cir. 2023). However,
the defendants do not identify the plaintiffs' failure to point
out to the District Court that § 3343 was no longer the law as a
ground for affirming the District Court's ruling. To the contrary,
they concede that the measure in question was not operative at the
- 52 - time of the District Court's ruling, and they make no argument
that, under § 3343, the District Court correctly concluded that
res judicata applied.
In addition, it is not evident that the District Court
did correctly apply § 3343. As the plaintiffs point out, neither
the parties nor the cause of action were identical between the
prior suit and this suit, and § 3343 appears to require "perfect
identity" in those elements across the two cases. P.R. Laws Ann.
tit. 31, § 3343.
In such circumstances, we see no reason to let the
District Court's ruling stand based on a statute that it is agreed
by both parties was not operative at the time that the District
Court relied on it and that the District Court appears to have
misapplied in any event. We thus cannot affirm the District
Court's ruling insofar as it rests on § 3343.
Seemingly cognizant of the difficulties presented by
dismissing the § 1983 claims based on § 3343, the defendants urge
us to affirm the District Court's judgment on alternative grounds,
as we may, see Brox, 83 F.4th at 98. Neither alternative ground
has merit.
The defendants first contend that the plaintiffs
forfeited their challenge to the District Court's ruling that
- 53 - determined that the § 1983 claim was precluded by failing to raise
it below. They acknowledge that the plaintiffs did argue "that
res judicata does not bar the present action," but they contend
this argument related to the case as a whole and not to the § 1983
claim specifically. We are not persuaded.
It is unsurprising that the plaintiffs responded to the
defendants' motion to dismiss on grounds of res judicata in the
categorical fashion that they did. The defendants themselves
contended to the District Court only that the entire action was
barred on res judicata grounds, and they did so without making any
more particularized assertion about the § 1983 claim.
In any event, the plaintiffs did assert the argument
that they now advance about the parties and causes of actions not
being identical between the current and prior suits. Specifically,
they argued to the District Court, among other things, that the
"[p]laintiffs' claims do not share a perfect identity of thing or
cause with the prior state court action" and that the "plaintiffs'
claims do not share a perfect identity of parties with those in
the Superior Court action." (Citation modified).
The defendants also assert that we may affirm the
District Court's ruling dismissing the § 1983 claim on grounds of
issue preclusion, even if res judicata does not apply. But the
defendants did not assert this ground for dismissing the claims
- 54 - below, so we decline to consider it now. See In re Fin. Oversight
& Mgmt. Bd., 16 F.4th 954, 962 (1st Cir. 2021) ("It is a
well-settled principle in this circuit that a party may not raise
on appeal issues that were not seasonably advanced (and, hence,
preserved) below." (citation modified) (quoting Toren v. Toren,
191 F.3d 23, 29 (1st Cir. 1999)).
In sum, the sole ground that the District Court gave for
dismissing the plaintiffs' § 1983 claim is the sole one that the
defendants advanced but that they themselves no longer defend.
That ground rests, however, on a law that was not operative at the
time that the District Court relied on it to dismiss the claim.
Accordingly, we reverse the District Court's dismissal of the
plaintiffs' § 1983 claim.
VI.
In consequence of our ruling as to the § 1983 claim, a
federal claim remains in the plaintiffs' case. The authority of
the District Court to dismiss the remaining Puerto Rico law claim,
however, kicks in only if all federal claims have been dismissed,
at least given that none of the other bases for dismissal
identified in 28 U.S.C. § 1367(c) are presented on appeal as
grounds for affirming that claim's dismissal. See 28 U.S.C.
§ 1367(c). We thus reverse the District Court's dismissal of the
remaining Puerto Rico law claim as well.
- 55 - VII.
For the foregoing reasons, we affirm the District
Court's grant of the motion to dismiss with regard to the federal
antitrust claims. We vacate the District Court's grant of the
motion to dismiss with regard to the claims brought under Puerto
Rico's antitrust and fair competition laws. We reverse the
District Court's grant of the motion to dismiss with regard to the
claim brought under the federal civil rights statute. We also
reverse the District Court's dismissal of the remaining claim
brought under Puerto Rico law. The parties shall bear their own
costs.
- 56 -
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