Oct 11, 2013, 4:22 PM EDT
I’ve taken a few minutes to gather some thoughts on today’s decision in the San Jose-MLB antitrust lawsuit. I have still not read the decision, but it does appear that the status being currently reported is accurate: (1) the argument by San Jose to have Major League Baseball’s antitrust exemption struck down, thereby paving the way for the A’s to move to San Jose over the Giants’ objection has been dismissed; and (2) San Jose continues to have a viable claim against MLB for tortious interference with the city’s contract(s) with the Athletics, which will be pursued under state law.
Let’s take those one-by-one:
San Jose’s Antitrust claim
This was obviously the big target here. And a nice fat one if San Jose could’ve convinced the judge that baseball’s antitrust exemption — which prevents a team from moving into another’s territory — is stupid and wrong. And the judge did, apparently, say that the exemption is stupid and wrong. Unfortunately he also said that he felt bound by Supreme Court precedent to uphold it, so that matter will now likely be the subject of an appeal. Major League Baseball still has risk of losing their exemption on appeal, but they just bought a year at least before an appeals court rules on it and longer than that before the matter might get to the Supreme Court, which would ultimately have to weigh in to overturn the original case which granted the exemption.
With the claims to overturn the exemption gone, at least for now, the A’s will be unable to move to San Jose. The league rule establishing San Jose as the San Francisco Giants’ territory holds, thus preventing the A’s from going to San Jose.
The state tort law claims
This is the claim alleging that MLB tortiously interfered with San Jose’s contract with the A’s. If you recall: the contract is 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 soon. 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.
Of course, since the antitrust exemption is in place, the A’s can’t just decide to move to San Jose. Therefore, unless they are the biggest idiots on the planet, they will not agree to commit to the $7 million land deal. Put differently, no A’s witness will get on a stand and say “yes, we totally want to give San Jose $7 million right now but MLB won’t let us!” As such, the value of the contract that San Jose now has to prove MLB interfered with is $75,000. That’s it.
Where that leaves us
Much of the reaction in the past few hours — including opinion from legal minds I respect, such as FanGraphs’ Wendy Thurm — has it that this outcome gives San Jose leverage to force a deal with MLB to get the A’s to San Jose. I’ll grant that they’re better off now than they would be if the whole suit had been tossed — and I do want to read their thoughts on it and may change my mind on the matter if they point out something I’m totally missing here — but I can’t see how San Jose suddenly has much more leverage than it had before.
One idea is that Major League Baseball might fear discovery and depositions that could take place. I’ll grant that no one wants to have their deposition taken, how threatening is this really? The current claim is limited in scope: $75K on a land option. How much email traffic do you think MLB officials have had on that? And how much of it is damning? Sure, maybe there’s all kinds of stuff about how MLB is “conspiring” to keep the A’s out of San Jose, but so what? The court just ruled that, under the antitrust exemption, such behavior is totally legal!
More broadly: how dumb is Major League Baseball? Not too dumb, usually. The entire purpose of Bud’s famous committee on San Jose was to do … nothing. There are likely reports about city and stadium viability and all of that, but the reason you set up that committee is to funnel everything to it and make it disappear for half a decade. Or at least to have it sit there innocuously. It’s staffed, by the way, in part by lawyers who have worked for MLB before. You think they’re sitting on smoking guns? Hardly.
Any effort by San Jose to dig deeper than the matters specific to the A’s and their option contract is irrelevant and discovery about that stuff will be resisted. Maybe they get some things, maybe they don’t. But they don’t get the keys to all of MLB’s finances and Bud Selig’s health records and the famous list of positive PED players and Larry Baer’s grandmother’s apple fritter recipe. With limits on discovery there are limits on leverage. And with an existing claim this small, the discovery will be limited.
OK, long enough, Craig, sum it up
Having a claim hanging out there is not good for MLB. But having a trial court decision that the antitrust exemption is still the law outweighs it for now. There was pressure on MLB to avoid a bad decision on that in the trial court and that didn’t get them to the settlement table. There is now pressure, to a degree, to resolve this before an appeals court decides differently. But that’s down the road a bit, and if anything the league has more breathing room on that today than it did yesterday.
It’s a partial win for San Jose, sure. But they lost the big claim and have gained nothing in the short term. More importantly, this does nothing to get the A’s any close to San Jose.
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