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The San Jose lawsuit against Major League Baseball should be thrown out of court

Jun 18, 2013, 4:32 PM EDT

Screen Shot 2013-06-18 at 4.25.22 PM

So I’ve read over the lawsuit filed by San Jose against Major League Baseball. Initial reaction: it’s more full of crap than Bob Melvin’s office was on Sunday afternoon.

The essence of the suit: Major League Baseball is a monopoly. It should be an unlawful monopoly. This would-be unlawful monopoly is preventing the Athletics from moving to San Jose and that has caused San Jose all manner of financial harm.

Which, yes, sounds reasonable. Major League Baseball is anti-competitive and does have a monopoly that should go the way of the dodo and vaudeville for the simple reason that it serves no purpose as noble and grand as either the dodo or vaudeville did.  But the suit is not anything that should pass legal muster here, and I believe it will go down in flames.

As I said in the earlier post, courts do not entertain lawsuits from parties without standing to sue and the city of San Jose hasn’t asserted anything in this complaint that persuades me that they have standing. Or that they have been damaged in any way that a court will consider worthy of redress. Broadly speaking, they have claimed that (a) they have a contract with the owners of the Oakland A’s with which Major League Baseball’s actions have interfered; and (b) that the city has incurred or will incur — note the “will” — financial damages as a result of the A’s not moving to San Jose. Let’s break those down:

The tortious interference with a contract claim:  The contract claim is baed on an option agreement entered into in 2011 between the A’s owners and San Jose for the purchase of some land on which a ballpark would be built. The A’s paid San Jose $50,000 for the option. It expires this fall. If they want to keep the option open for another year it’s another $25,000. If the A’s owners were to buy the land, they can do it for between $6 million and $7 million. Nothing in the option agreement, however, promises that the A’s will actually move. It doesn’t even promise that they’ll buy the land. Just that they have the option to do so.

San Jose, however, seems to be attempting to bootstrap this option into a promise that the A’s would actually move there and that MLB’s rules preventing the A’s from moving have thus interfered with that expectation. That’s a bridge too far. A bridge longer than the Dumbarton, actually. The only guarantee San Jose gets out of that contract is $50-75K. The only thing it’s giving up is the right to sell that land for the period of the option. Major League Baseball has not stopped the A’s from paying their $50-75K.

San Jose’s insistence that more has been lost here is based on an assertion that the A’s have indicated a willingness to move to San Jose. Well, yes, they have. But they haven’t done anything to act on it yet because they know they can’t. At the minimum, I would think a court would need to have evidence that the A’s actually took a concrete step to pay San Jose $7 million for that land, to actually move to San Jose only to have had Major League Baseball stop that from happening. There is no suggestion, however, that any such evidence exists.

The financial damages: It’s all future tense. San Jose would have gotten increased tax revenue, would have gotten good paying stadium construction jobs, would have seen economic development and would have had a more healthy municipal budget had the A’s moved. Those are all speculative, prospective damages* not actual damages, and courts are not in the business of providing redress for speculative, prospective damages. Tomorrow Lew Wolff could say “you know what? I always wanted to move the A’s to Bakersfield. We’re moving to Bakersfield.” If he did that, San Jose would have no recourse. So they certainly have no recourse against Major League Baseball for preventing a speculative A’s-to-San Jose move.

*Probably also worth noting that the complaint spends a lot of time talking about all the economic benefits of ballpark development. These benefits have been largely debunked. I sorta hope this suit goes far, however, so that MLB would find itself in the odd position of having to explain how such damages are illusory, contrary to their tack for the past 25 years or so.

I think Major League Baseball’s antitrust exemption is abhorrent. I wish it were gone and think, in the right lawsuit, it could be defeated. If the A’s had filed this suit, for example, claiming that MLB is preventing them from moving and that MLB’s insistence that they stay in Oakland has caused them financial damages, I think it would have a puncher’s chance. And I’d be shaking my pompoms, cheering it on. But they didn’t file it. San Jose did. And San Jose has no legal rights that seem remotely impinged upon here.

Which, it should be worth noting, may be the idea. It’s quite possible that this suit is more a political document than a legal one, with San Jose’s mayor trying to focus attention on the languishing A’s-to-San Jose thing and to get public opinion on the side of the A’s and the city.  Maybe this will do that, maybe it won’t. I’d have to know the political dynamics of the Bay Area better than I do to have an idea.

But I do think that for it to have any practical use in creating leverage it has to at least present a legal threat, and this doesn’t do that. Indeed, I think Major League Baseball is way more worried about losing its antitrust exemption than any bad PR that can come out of Oakland, so they’re likely to fight this suit until it’s dead.

Which should be quickly. Because the suit is no better than the stuff bubbling up through the Oakland Coliseum’s pipes and should be thrown out.

  1. pmonte3122 - Jun 18, 2013 at 4:40 PM

    Boring

  2. downwithespn - Jun 18, 2013 at 4:40 PM

    Across the couple of posts you’ve made on this matter, you’ve said:

    1. San Jose can’t sue because it lacks standing.

    2. The A’s can’t be a part of the suit because while they would have standing, they are prohibited from suing by the agreements that they have with MLB.

    So, my question is: What currently extant individual, team, business, whatever COULD theoretically challenge MLB’s antitrust exemption in court, and not fall afoul of problems 1 or 2?

    • Craig Calcaterra - Jun 18, 2013 at 5:04 PM

      I think the A’s actually could try to sue, claiming that the provision which prevents them from suing is part of the same anti-competitive structure.

      I also think that the clause could be challenged by a new ownership group that, for example, tried to buy the A’s from Lew Wolff, only to have MLB not approve them as owners.

      Or I think that if MLB slept on its rights for a bit, let Oakland and San Jose get a bit farther down the road where actual commitments were made and only then tried to stop it for some reason, it could get sunk.

      • American of African Descent - Jun 18, 2013 at 5:35 PM

        Craig: I still don’t know that I agree with you on the standing argument as, to my recollection, anti-trust standing is a much lower bar than a traditional standing analysis. Just like freedom-from-religion/first-amendment standing is a lot lower than a traditional standing analysis.

      • American of African Descent - Jun 18, 2013 at 5:36 PM

        How is the City of San Jose not a potential consumer and, therefore, a person with standing?

      • downwithespn - Jun 18, 2013 at 6:30 PM

        Thanks for the answer. I wondered if #1 on your list was a possibility.

        It seems that if the A’s owners REALLY wanted to make something happen, they could. Historically, MLB has been so desperate to protect its antitrust exemption that it has bent over backwards to avoid putting the matter before the courts. A little saber-rattling in that regard by Lew Wolff–that is, the mere threat of a lawsuit–would presumably compel “Bud” Selig to take some sort of action.

      • ltzep75 - Jun 19, 2013 at 11:00 AM

        American:

        While you’re partially correct, Antitrust standing (accdg to the Supreme Court) also requires that there be (i) an antitrust injury; (ii) the injury must be direct; (iii) the damages or injury must not be speculative; (iv) the risk of duplicative injury; and (v) the complexity of damages (apportionment).

        While no one factor is determinative (read: the Court will decide any which way it wants), the alleged speculative nature of damages may – may – preclude a finding of standing.

        Frankly, I think this suit has some merit. San Jose has suffered an injury (despite the statements in the article regarding “economic benefits”). Noteworthy, I believe San Jose hired Al Davis’ old antitrust lawyer – who beat the NFL in a landmark decision.

        That said, most antitrust lawsuits get dismissed as years of precedent have effectively created a bar to recovery in the form of the so-called “rule of reason” analysis. MLB could always come back and claim their conduct has pro-competitive effects/justifications.

  3. giantsninerswarriors - Jun 18, 2013 at 4:57 PM

    Craig, who wrote this article for you? This is some high-quality, insightful writing.

    • sportsdrenched - Jun 18, 2013 at 5:44 PM

      I think Craig waits for law & baseball to collide and when it does you get something spectacular.

    • DJ MC - Jun 18, 2013 at 5:46 PM

      I hear he has a former attorney on staff, ready to offer these kinds of legal analyses.

      • Old Gator - Jun 18, 2013 at 6:13 PM

        It’s his evil twin.

  4. daveitsgood - Jun 18, 2013 at 5:00 PM

    The Dumbarton is only like 1.5 miles long. Had you said the San Mateo, I would have been more impressed, that sucker is around 7 miles long.

  5. youknowwhatsgoodforshoulderpain - Jun 18, 2013 at 5:01 PM

    In other news…

    If you were not sure about how pointless the All-Star game was (due greatly to fan voting), take a gander at this list:

    SHORTSTOP
    J.J. Hardy, Orioles 1,871,010
    Elvis Andrus, Rangers 1,358,412
    Jhonny Peralta, Tigers 1,322,791
    Jed Lowrie, Athletics 1,019,861
    Derek Jeter, Yankees 669,698

    Jeter got over half a million votes and has the same stats in 2013 as I do.

    Just remove fan voting. It onnly serves to give the non-baseball portion of the planet a glimpse into the stupidity levels of some fans.

    • youknowwhatsgoodforshoulderpain - Jun 18, 2013 at 5:08 PM

      Oh, and by “some fans”, obviously I meant “Yankee fans”.

    • DJ MC - Jun 18, 2013 at 5:47 PM

      I was worried you were about to offer a screed on J.J. Hardy, and I would have to hate you forever.

    • beebopthearcher - Jun 18, 2013 at 5:53 PM

      You know what…that’s actually an improvement from year’s past.

      In 1989, Jose Canseco was voted in by the fans to the All-Star game. He played 0 games in the first half. None…zip…not one.

      I’m sure there are other, similar cases of things like this happening, but this is just the one that I know of. The fact that Jeter isn’t leading the voting says shows that fans have grown a bit in the past 20 years.

      *Note: Mike Schmidt was also elected to by the fans to the 1989 All-Star game, despite having retired in May. Schmidt, in an act of pure class, elected not to play in the game but participated in the opening ceremony to tip his cap to the fans. In summary, I love Mike Schmidt.

    • downwithespn - Jun 18, 2013 at 6:32 PM

      What they really should do is let the Gold Glove voters choose. Those guys would never give Derek Jeter votes that he doesn’t deserve.

  6. amhendrick - Jun 18, 2013 at 5:01 PM

    So, a frivolous tortious interference claim with no real damages? The biggest challenge for MLB’s lawyers will be coming up with arguments that can’t be used against themselves in the Biogenesis case.

    • Craig Calcaterra - Jun 18, 2013 at 5:05 PM

      Hahahaha, yes.

  7. flamethrower101 - Jun 18, 2013 at 5:08 PM

    I realize this is me being a cynic, but I think San Jose has a better chance of their suit succeeding than MLB does of its Biogenesis investigation nailing Braun & A-Rod.

  8. bluesoxbaseball - Jun 18, 2013 at 5:15 PM

    amhendrick – That was going to be my comment. San Jose took a page out of the MLB handbook. Perhaps the San Jose suit will force/shame MLB into finally doing something with the A’s situation.

  9. spideysdog - Jun 18, 2013 at 5:20 PM

    ok,can’t resist…..

    what does O.co and attorneys have in common?

    • DJ MC - Jun 18, 2013 at 5:49 PM

      If you dumped them on the ocean floor you would have a good start?

  10. spideysdog - Jun 18, 2013 at 5:21 PM

    their both full of SH*T!!!!!!

  11. richyballgame - Jun 18, 2013 at 5:27 PM

    This lawsuit is designed to gain media attention,probably in hopes of forcing the MLB’s hand.

  12. wogggs - Jun 18, 2013 at 5:29 PM

    I am a CA attorney. I say not so fast on the impending dismissal of this lawsuit. San Jose has sued for interference with prospective economic advantage. While the damages part is a little weak, the city may be able to plead around this. The B&P Code § 17200 claim may also get them somewhere, as may the anti-trust claims. My anti-trust law is rusty, but I think negatively impacted parties can sue under those statutes. Regardless, this is really a ploy by San Jose to force MLB’s hand. MLB does not want a trial, or anything close to it, on its anti-trust exemption. That is a sure loser (read the Federal League case, it is shockingly brief and lacking in credibility even for a 1920 case) for MLB. If San Jose can get past the pleading stage it will force a settlement, which will be allowing the A’s to move to San Jose. I have personally thought San Jose (and the A’s) should do this for a long time.

    • bigsuede - Jun 18, 2013 at 5:47 PM

      This Craig guys seems to be always wrong. These decisions are not made in a vacuum. The suit will be adjudicated in California and it is hard to believe a hometown judge (even in district court) is going to dismiss.

      There is a real argument for damages here and Wolf has made many real steps toward moving the A’s to San Jose even going in front of camera’s to announce the move back in aughts.

      The fact that the A’s cannot legally sue over the territorial restriction makes it more likely a court will go along with San Jose.

    • DJ MC - Jun 18, 2013 at 5:54 PM

      MLB already had two challenges to Federal Baseball Club, and won both.

    • billybawl - Jun 18, 2013 at 6:01 PM

      Agree completely (and also a CA attorney). This lawsuit isn’t a joke.

    • Craig Calcaterra - Jun 18, 2013 at 7:38 PM

      I would just like to hear a viable argument for damages for San Jose. No case goes forward with nothing more than speculative damages.

      Can the guy who owns the bar next to the property in San Jose sue because his business was going to go up?

      Can the people who own parking garages near there?

      If the Padres start making noises about moving to Malibu, how long until the city of Malibu can sue MLB for protecting the Dodgers territory?

      • crackersnap - Jun 18, 2013 at 8:30 PM

        Well, what about costs already incurred by the city of San Jose for things like technical studies, out of pocket expenses for outside consultants, architects, space planners, market research, etc., plus administrative expenses for all time spent on the potential project – and all spent in good faith with an MLB franchise as their venture partner, and all on behalf of that MLB franchise?

      • Shayna - Jun 19, 2013 at 7:45 AM

        Claims for tortious interference with contractual relations are inherently speculative and future-based. You don`t think a store can sue a union from blocking shoppers from entering!? The store doesn’t need to prove that any particular shopper would actually have entered and spent money. It’s the deprivation of the opportunity to form a contract that is the damage suffered and the basis of the suit.

        Ditto here. SJ is suing because their opportunity to enter into a contract with the A’s is being impeded, not because MLB is interfering with an existing contract. (That would be a separate cause of action and perfectly valid, but not what applies in this case.)

      • Shayna - Jun 19, 2013 at 8:10 AM

        Phnoo! What I meant to say was:

        SJ is suing because their opportunity to enter into a contract with the A’s is being impeded, not because MLB is interfering with an existing contract. (That is a separate cause of action and perfectly valid; it could be the basis of another part of the lawsuit, but even without it, the action for interference with future contracts could be viable.)

      • elyinewman - Jun 19, 2013 at 4:36 PM

        perhaps SJ can make the same BS arguments that selig & his cronies used (re the value of franchises to host cities) to extort new publicly-financed stadiums.

        i must say if i was a SJ taxpayer, i’d be pissed about the cost of suing mlb on behalf of a privately-held business (the a’s)!

      • wogggs - Oct 23, 2013 at 5:14 PM

        Well, the judge let the damages claims stick. He also questioned the viability of the anti-trust exemption. That sounds like an invitation to appeal to me. I have a hard time believing the Supreme Court would uphold such an exemption today. If you’ve ever read the Federal League case (both pages), it is hard to believe it has ever been upheld, for that matter.

  13. waiverclaim - Jun 18, 2013 at 6:04 PM

    Why do the Giants territorial “rights” still hold water when they did not move to San Jose. They were only given those rights on the basis that they were going to move there, and they did not, so those rights should be null and void.

    • keepthisrealbro - Jun 18, 2013 at 10:47 PM

      It’s not like the giants have a minor league ball club down in san jose… oh wait they do

      • jkcalhoun - Jun 19, 2013 at 12:05 AM

        The minor league club is irrelevant; minor league clubs do not prevent major league teams from occupying a city. This should be clear enough from the history of baseball in San Francisco, from which the Seals were forced to move when the Giants made their move from New York.

        But waiverclaim is also incorrect. The territorial rights were not granted provisionally, even though Lew Wolff has suggested as much.

        Previous posters have also been wrong about the history of the rights. The A’s never “gave” the rights to the Giants and could not have done so, since they never held them. In fact they were never assigned to any club before they were assigned, non-provisionally, to the Giants.

        Which is not to say that Oakland A’s fans don’t deserve better and don’t deserve sympathy. I look forward to seeing them move into their new waterfront ballpark. In Oakland.

      • eaglesnests50 - Jun 19, 2013 at 3:59 AM

        see attached link-inside baseball rules 1C – it does matter that the Giants have a minor league team in San Jose.

        http://roadsidephotos.sabr.org/baseball/02-4rules.htm

      • jkcalhoun - Jun 19, 2013 at 10:30 AM

        i don’t see anything there that suggests that the existence of the San Jose Giants has any bearing on whether the A’s can move to San Jose or not. What am I missing?

  14. Innocent Bystander - Jun 18, 2013 at 6:13 PM

    Maybe the city will win the same $1 the USFL won in their anti-monopoly lawsuit against the NFL.

  15. jpash42 - Jun 18, 2013 at 6:25 PM

    I don’t think you’re smart enough to read legal documents.

  16. eaglescoony24 - Jun 18, 2013 at 8:56 PM

    I thought the doctrine of “imminent domain” was based on future tax revenue….. I realize this isn’t an imminent domain issue, but future revenue is an idea that is used in both government and the courts.

  17. chill1184 - Jun 18, 2013 at 10:11 PM

    I personally would love to see MLB’s anti-trust broken. More competition to it’s product would only make it better IMO. However I agree Craig this looks like based on your article that its doomed from the start but then again when a thief can sue a home owner for getting hurt in the house he tried to rob and win anything is possible.

    • flamethrower101 - Jun 19, 2013 at 11:10 AM

      I don’t think it’ll ever be broken. Seems like it was given that exemption for a reason. But I wouldn’t mind seeing its authority challenged – if nothing else than to just see Bud Selig and MLB’s reaction to it. For all its efforts on bring down steroid users, they’ll probably go nuts it an outside force challenge its authority for an extended period of time.

  18. amuccigr - Jun 20, 2013 at 10:27 AM

    Craig’s overstating the damages argument. Not all future damages are speculative, though those claimed in this suit may be. Future earnings, e.g., are awarded as a matter of course. They are “prospective” and not speculative in the legal sense of that term.

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