Curtis C. Flood v. Bowie K. Kuhn

443 F.2d 264, 1971 U.S. App. LEXIS 10883, 1971 Trade Cas. (CCH) 73,546

• Court: Court of Appeals for the Second Circuit
• Decided: April 7, 1971
• Docket: 35424_1
• Status: Published

Opinions

WATERMAN, Circuit Judge:

Plaintiff and his able counsel have undertaken a comprehensive attack on professional baseball’s “reserve system,” which, pursuant to nationwide agreements among clubs, effectively restricts a baseball player, if he desires to play professional baseball at all, to contract negotiations with that club in organized baseball which first employs or “reserves” him or with that club’s assignee club, and any subsequent assignee clubs, to which in the parlance of the baseball business he has been “sold” or “traded.” After an extensive trial below the complaint was dismissed and, with the benefit of an all-inclusive record, this appeal followed. Four counts of plaintiff’s complaint are here involved:¹ the first alleges that the reserve system and its boycott sanctions violate the Sherman Act, the second alleges violations of the antitrust laws of the states and the foreign country, Canada, where defendants conduct their business, the third alleges violations of the common law, and the fourth challenges the reserve system under the Thirteenth Amendment. Federal jurisdiction on the second and third counts is premised on diversity of citizenship. For the reasons stated below, we are compelled to affirm the district court’s decision.

I.

In Federal Baseball Club v. National League, 259 U.S. 200, 42 S.Ct. 465, 66 L. Ed. 898 (1922), a unanimous Supreme Court speaking through Mr. Justice Holmes held that the business of organized baseball was not subject to the Sherman Act because it did not constitute interstate commerce, although it was explicitly pointed out in the opinion that the clubs composing the Leagues are in different cities and, for the most part, in different states, and that when the clubs meet to play against one another in public exhibitions for money the clubs cross state lines in order to make the meetings possible. In 1953 the Court, with two Justices dissenting, declined, without any reexamination of the underlying issues, to review its 1922 approach despite the considerable change the Court itself had fostered during the intervening thirty years in the definition of “interstate commerce.” The Court indicated that, inasmuch as those interested in the business of organized baseball had relied for 30 years upon the ruling in Federal Baseball, remedial action was better left to Congress. Toolson v. New York Yankees, 346 U.S. 356, 74 S.Ct. 78, 98 L.Ed. 64 (1953). In 1957, in contrast, the Court held that the Sherman Act was applicable to professional football. Radovich v. National Football League, 352 U. S. 445, 77 S.Ct. 390, 1 L.Ed.2d 456 (1957).

Although faced with the seemingly inconsistent decisions in Toolson and Radovich, our court only last summer refused, in Salerno v. Amercan League, 429 F.2d 1003 (2 Cir. 1970), cert. denied, Salerno v. Kuhn, 400 U.S. 1001, 91 S.Ct. 462, 27 L.Ed.2d 452, 1971,² to depart from the Supreme Court’s holding in Toolson. As we stated in Salerno:

We freely acknowledge our belief that Federal Baseball was not one of Mr. Justice Holmes’ happiest days, that the rationale of Toolson is extremely dubious and that, to use the' 'Supreme Court’s own adjectives, the distinction between baseball and other professional sports is “unrealistic,” “inconsistent” and “illogical.” Radovich v. National Football League, 352 U.S. 445, 452, 77 S.Ct. 390, 1 L.Ed.2d 456 (1957). * * * However, * * * we continue to believe that the Supreme Court should retain the exclusive privilege of overruling its own decisions, save perhaps when opinions already delivered have created a near certainty that only the occasion is needed for pronouncement of the doom. While we should not fall out of our chairs with surprise at the news that Federal Baseball and Toolson had been overruled, we are not at all certain the Court is ready to give them a happy despatch. 429 F.2d at 1005.

We adhere to the sentiments we expressed in Salerno and are compelled to affirm the dismissal of plaintiff’s first count.³

II.

We treat together plaintiff’s second and third counts, alleging violations of state antitrust laws and violations of the common law.⁴ At the threshold we find nothing in Federal Baseball or in Tool-son which would indicate, as defendants urge, that the Supreme Court exempted baseball, from all antitrust regulation. Nor, on the other hand, do these cases hold, as plaintiff urges, that state antitrust laws apply to baseball. These cases speak only to the applicability of federal antitrust policies: whether state antitrust laws might apply was not directly decided. Thus, we are faced with a question of first impression, and we must consider whether application of state antitrust law to professional baseball is barred by a federal pre-emption of the field under the Commerce Clause.

It appears to be without question that, today, professional baseball, with its complex web of franchises, farm teams and recruiters, and its multi-million dollar contracts with television and radio networks, is interstate commerce. Our difficulty lies in determining to what extent, if at all, the states are precluded from antitrust regulation of interstate commerce. See Note, The Commerce Clause and State Antitrust Regulation, 61 Colum.L.Rev. 1469 (1961). The Supreme Court has not, to our' knowledge, expressed any opinion as, to the outer limits of state antitrust policy, although it has clearly held that state antitrust policy is not ousted from the regulation of local matters which may also be affected by federal laws. See Watson v. Buck, 313 U.S. 387, 403-404, 61 S.Ct. 962, 85 L.Ed. 1416 (1941); Giboney v. Empire Storage & Ice Co., 336 U.S. 490, 495, 69 S.Ct. 684, 93 L.Ed. 834 (1949). Therefore, we turn for guidance to cases involving other areas of state regulation.

Plaintiff argues that recent Supreme Court decisions have evidenced a trend toward the requiring of an actual conflict, as opposed to a potential conflict, resulting from differing state regulation if state action is to be precluded under the Commerce Clause.⁵ He asserts that, with reference to control over baseball’s reserve system, there is no actual conflict among the requirements of state antitrust laws. While we recognize this trend, we do not consider this distinction between actual and potential conflicts to be the sole criterion for finding an impermissible burden on interstate commerce. For example, in taxation cases, there is no conflict between two states taxing the same property, but there may well be a burden on interstate commerce. Norfolk & W. R. Co. v. Missouri State Tax Comm., 390 U.S. 317, 323-325, 88 S.Ct. 995, 19 L.Ed.2d 1201 (1968). Also, where the nature of an enterprise is such that differing state regulation, although not conflicting, requires the enterprise to comply with the strictest standard of several states in order to continue an interstate business extending over many states, the extra-territorial effect which the application of a particular state law would exact constitutes, absent a strong state interest, an impermissible burden on interstate commerce. Southern Pacific Co. v. Arizona, 325 U.S.. 761, 774-775, 65 S.Ct. 1515, 89 L.Ed. 1915 (1945).

Professional baseball clubs, although existing as separate legal entities, are organized into so-called leagues for competitive play and are dependent on the league playing schedule to further the ends of their sports competition. Therefore, it is the league structure at which any state antitrust regulation must be aimed if organized professional baseball is not to be severely fragmented. On the one hand, it is apparent that each league extends over many states, and that, if state regulation were permissible, the internal structure of the leagues would require compliance with the strictest state antitrust standard. The consequent extra-territorial effect of necessary compliance would be considerably more far-reaching than that in Southern Pacific Co. v. Arizona, supra. On the other hand, we do not find that a state’s interest in antitrust regulation,⁶ when compared with its interest in health and safety regulation, is of particular urgency. Hence, as 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.

We readily acknowledge that plaintiff is caught in a most frustrating predicament, a predicament which defendants have zealously seized upon with great perspicacity. On the one hand, the doctrine of stare decisis ⁷ binds the plaintiff because of an initial holding that baseball is not “interstate commerce” within the Sherman Act, and, on the other hand, after there have been significant changes in the definition of “interstate commerce,” he is now told that baseball is so uniquely interstate commerce that state regulation cannot apply.⁸ However, in our own defense, we do not consider our decision to be internally inconsistent. In disposing of the Sherman Act count in plaintiff’s complaint, we are bound by Supreme Court decision, while in our disposition of the state and common law counts, we must of necessity decide this question of first impression by present Commerce Clause standards and not the standards applicable in 1922. Any apparent inconsistency results not from faulty logic, but from the vagaries of fate and this court’s subordinate role to the Supreme Court.

The defendants also claim that under federal labor law the reserve clause is a subject of mandatory bargaining between the ballplayers and the club owners and, therefore, that federal labor policy exempts the reserve system from state regulation. Because of our disposition of plaintiff’s second and third counts on Commerce Clause grounds, we find it unnecessary to reach this additional contention.

III.

Inasmuch as plaintiff retains the option not to play baseball at all, his Thirteenth Amendment argument is foreclosed by this court’s decision in United States v. Shackney, 333 F.2d 475 (2 Cir. 1964), a decision which we adhere to as sound.

The judgment of dismissal is affirmed.

1 . In his complaint plaintiff named as defendants each of the twelve clubs in each of the two major leagues, and, also, in the antitrust cause of action, the presidents of each league, Charles S. Feeney and Joseph E. Cronin, and the Commissioner of Baseball, Bowie K. Kuhn, individually and in their respective official capacities.

2 . It is well settled that denial of certiorari by the Supreme Court does not indicate any decision with reference to the merits of a case. United States v. Shubert, 348 U.S. 222, 75 S.Ct. 277, 99 L.Ed. 279 (1955); Agoston v. Commonwealth of Pennsylvania, 340 U.S. 844, 71 S.Ct. 9, 95 L.Ed. 619 (1950). This would seem to be particularly true in Salerno where the plaintiffs, being umpires, were not subject to the provisions of a player’s reserve clause and had “exceedingly difficult obstacles” to overcome in addition to Federal Baseball and Toolson. 429 F.2d at 1005.

3 . It should be noted that in 1949 two distinguished members of this court, Judge Learned Hand and Judge Jerome Prank, confidently predicted the overruling of Federal Baseball insofar as that holding dealt with the reserve system. Gardella v. Chandler, 172. F.2d 402 (2 Cir. 1949). In particular, Judge Prank stated:

“This court cannot, of course, tell the Supreme Court that it was once wrong. But ‘one should not wait for formal retraction in the face of changes plainly foreshadowed;’ this court’s duty is ‘to divine, as best it can, what would be the event of the appeal in the case before it.’ L. Hand, C. J., dissenting in Spector Motor Service Co. v. Walsh, 2 Cir., 139 F.2d 809, 823.” 172 F.2d at 409 n. 1.

Inasmuch as shortly thereafter, in 1953, Toolson proved these distinguished jurists’ prediction to be premature, we do not venture to prophesy the Supreme Court’s decision in the present case.

4 . Plaintiff acknowledges that, since Erie R. R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L.Ed. 1188 (1938), the common law to be applied in federal court is tile common law of the individual states. However, he urges that a federal common antitrust law may be appropriate where uniformity among the states is needed. Inasmuch as federal antitrust policy is embodied in Acts of Congress, this approach would seem to be merely an attempt to avoid Toolson by entering through the back door.

With reference to applying state common law to the problem here, it is obvious

tbat the arguments based upon varying state statutory antitrust standards áre equally applicable to the common law of the several states.

5 . Compare Bibb v. Navajo Freight Lines, 359 U.S. 520, 527, 79 S.Ct. 962, 3 L.Ed. 2d 1003 (1959), with Huron Portland Cement Co. v. City of Detroit, 362 U.S. 440, 448, 80 S.Ct. 813, 4 L.Ed.2d 852 (1960).

6 . See Note, supra, 61 Colum.L.Rev. 1469, 1471-1473 (1961).

7 . We leave to the commentators the relevance of Mr. Justice Holmes’ much-quoted comment on precedent to his opinion in Federal Baseball and the decision in Toolson:

It is revolting to have no better reason for a rule of law than that so it was 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.

Oliver Wendell Holmes, Path of tlie Law, 10 Harv.L.Rev. 457, 469 (1897).

8 . Unlike the ballplayers, baseball management lias been quite adept at forecasting legal decisions. In Federal Baseball counsel for the defendants opened his argument : “Organized Baseball is not interstate commerce * * 259 U.S. 200, 206, 42 S.Ct. 465 (1922). Having obtained an exemption from the Sherman Act under the legal standards of 1922, professional baseball can now properly urge that baseball in 1971 is indeed both interstate and international commerce.