Hatch v. Minnesota Twins Partnership Reply to Brief in Opposition

    No. 99-414

In The

Supreme Court of the United States

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MIKE HATCH, 
Minnesota Attorney General,

v.
Petitioner,

MINNESOTA TWINS PARTNERSHIP, et al.,
Respondents.

On Petition For Writ Of Certiorari 
To The Minnesota Supreme Court

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REPLY TO BRIEF IN OPPOSITION

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1

ARGUMENT ......................................................................... 1

I. THE MINNESOTA SUPREME COURT 
DECIDED AN IMPORTANT FEDERAL QUES­
TION THAT CONFLICTS WITH A DECISION 
OF THE FLORIDA SUPREME COURT.............. 1

II. BASEBALL'S COMMERCE CLAUSE ARGU­
MENTS ARE WITHOUT M ERIT.........................  2

III. BASEBALL ERRONEOUSLY CLAIMS THE CURT
FLOOD ACT SUPPORTS ITS POSITION................ 6

IV. BASEBALL'S RELIANCE ASSERTIONS ARE
WITHOUT MERIT..................................................... 8

CONCLUSION ..................................................................... 10

TABLE OF CONTENTS
Page



C ases

Butterworth v. National League, 644 So. 2d 1021 (Fla.
1994)....................................................................................2, 8

California v. ARC America Corp., 490 U.S. 93 (1989)........3

Exxon Corp. v. Governor of Maryland, 437 U.S. 117
(1978)......................... .......................................................3, 6

Herbert v. Los Angeles Raiders, 234 Ca. App. 36 
(Calif. Ct. App. 1991), rev. dismissed, 871 P.2d 
1133 (1994)..............................................................................4

HMC Management v. New Orleans Basketball, 375
So. 2d 700 (La. Ct. App. 1979)........................................... 4

Matuzak v. Houston Oilers, 515 S.W.2d 725 (Tex. Ct.
App. 1974) .............................................................................. 4

Morsani v. Major League Baseball, 663 So. 2d 653
(Fla. Ct. App. 1995)............................................................ 4

New Orleans Pelicans v. Nat. Ass'n of Prof 'l Baseball 
Leagues, unreported, 1994 WL 631144 (E.D. La.
Mar. 1, 1994)............................. ... ..................................... 4

Parker v. Brown, 317 U.S. 341 (1943)..................................... 3

Partee v. San Diego Chargers, 668 P.2d 674 (Cal.
1983).........   4

Piazza v. Major League Baseball, 831 F. Supp. 420
(E.D. Penn. 1993)..................................................................8

Pike v. Bruce Church, Inc., 397 U.S. 137 (1970)................5

Robertson v. NBA, 389 F. Supp. 867 (S.D.N.Y. 1975)........4

State Oil v. Khan, 522 U.S. 3, 118 S. Ct. 275 (1997)........9

Union Labor Life Ins. v. Pireno, 458 U.S. 119 (1982)........8

ii

TABLE OF AUTHORITIES
Page



M isc ella n eo u s

ABA Section of Antitrust Law, Antitrust Law
Developments (4th ed. 1997).........................................3, 6

144 Cong. Rec. S9494-03 (July 30, 1998)......................... 7

Marianne McGettigan, The Curt Flood Act: The 
Players' Perspective, 9 Marq. Sports L.J. 379 
(1999)...............................................................   9

Stephen F. Ross, Monopoly Sports Leagues, 73 U.
Minn. L. Rev. 643 (1989)...................................................8

S. Rep. No. 104-231 (1995)...................................................7

S. Rep. No. 105-118 (1997)...................................................7

iii

TABLE OF AUTHORITIES -  Continued
Page



1

ARGUMENT

I. THE MINNESOTA SUPREME COURT DECIDED  
AN IM PORTANT FED ERA L Q UESTIO N  THAT 
CONFLICTS WITH A DECISION OF THE FLOR­
IDA SUPREME COURT.

It is ironic that Baseball1 now claims there is no 
federal question when it was Baseball itself that raised 
the federal question below by seeking to quash the Civil 
Investigative Demands (CIDs) based upon its argument 
that the CIDs were "precluded by the baseball antitrust 
exemption [created by the U.S. Supreme Court] and the 
Commerce Clause." Baseball's Opp. Br. at 4; see also Peti­
tioner's Appendix ("Pet. App.") at 5-6. Indeed, all of the 
Baseball Respondents (except the Twins) actually filed a 
complaint in federal district court seeking a declaratory 
judgment that the State's CIDs were invalid based on this 
Court's baseball trilogy.2

1 "B a s e b a ll"  and "O rg a n iz ed  B a se b a ll"  re fer to the 
Respondents. See Petition at 2 n .l.

2 On January 16, 1998, all of the Respondents (except the 
M innesota Twins) filed identical com plaints in the federal 
district court of M innesota seeking a declaratory judgm ent that 
the State's CIDs were invalid due to this Court's trilogy. A copy 
of the Sum m ons and C om plaint of the N ational League, 
Commissioner of Baseball, and the North Carolina Investment 
Group (D. Minn., Court File No. 98-97:D SD /JM M , Jan. 16, 1998) 
is contained in the Appendix of this Reply Brief. Identical 
Summonses and Complaints were filed by the American League 
and the M ilw aukee Brew ers. (D. M inn ., C ourt F ile  Nos. 
98-96:D SD /JM M  and 98-98:D SD /JM M , Jan. 16, 1998). The State 
agreed to Baseball's request that the complaints be dismissed.



2

Further, by claiming that the Florida Supreme Court 
did not decide a federal question, Baseball ignores the 
certified question addressed in Butterworth:

Does the antitrust exemption for baseball recog­
nized by the United States Supreme Court [in 
Federal Baseball, Toolson and Flood] exempt all 
decisions involving the sale and relocation of 
Baseball Franchises from Federal and Florida 
Antitrust law?

Butterworth v. National League, 644 So. 2d 1021, 1021-22 
(Fla. 1994). When the Florida Supreme Court answered 
"this certified question in the negative," id. at 1025, it 
clearly decided a federal question. Similarly, when the 
Minnesota Supreme Court noted that it was "compelled 
to accept the paradox the Supreme Court acknowledged 
in Flood" because it believed that "the Supreme Court 
should retain the exclusive privilege of overruling its 
own decisions," Pet. App. at 20, the court was deciding a 
federal question. The existence of three amici briefs from 
12 States and the Consumer Federation of America 
("CFA") indicate that this is an issue of national impor­
tance. Baseball's claims that the court below "did not 
directly decide any federal question," Baseball's Opp. Br. 
at 6, are meritless.

II. BASEBALL'S COMMERCE CLAUSE ARGUMENTS 
ARE WITHOUT MERIT.

Baseball claims that state antitrust laws cannot be 
applied to a national industry like Baseball without



3

violating the Commerce Clause.3 Baseball's Opp. Br. at 
24-28. While it is true that states cannot "unduly burden" 
interstate commerce, it is well-settled that states can 
apply their antitrust laws to national industries. For 
example, in considering a Commerce Clause and preemp­
tion challenge, this Court held a state can prohibit activ­
ity even if that same activity is permitted under federal 
antitrust laws. Exxon Corp. v. Governor of Maryland, 437 
U.S. 117, 128 (1978) ("we cannot adopt appellants' novel 
suggestion that because the economic market for petro­
leum products is nation-wide, no State has the power to 
regulate the retail marketing of gas"); see also Parker v. 
Brown, 317 U.S. 341 (1943) (indicating that states can have 
economic regulations that conflict with the Sherman Act); 
California v. ARC America Corp., 490 U.S. 93 (1989) (hold­
ing that state antitrust laws are not preempted by federal 
antitrust law). Indeed, the legislative history of the Sher­
man Act indicates that "among the purposes Senator 
Sherman cited for his bill was 'supplementation of the 
enforcement of these state [antitrust] laws.' " ABA Sec­
tion of Antitrust Law, Antitrust Law Developments 741-42 
(4th ed. 1997) (quoting 21 Cong. Rec. 2457 (1890)).

Most of the cases cited by Baseball as supporting a 
broad Commerce Clause preclusion of application of state 
antitrust law to sports leagues actually deal with player- 
team-league relations, and their holdings are obviously

3 The Ramsey County D istrict Court found that it was 
premature to address the Commerce Clause issue without a 
factual record. Pet. App. at 38. The M innesota Supreme Court 
did not address this issue, Pet. App. at 20 n.19, and this issue is 
not before this Court.



4

limited to these facts.4 Only one of the cases cited by 
Baseball, New Orleans Pelicans v. Nat. Ass'n of Prof'l Base­
ball Leagues, unreported, 1994 WL 631144, *9 (E.D. La. 
Mar. 1, 1994), actually supports the proposition that state 
law cannot be applied to sports leagues. Another Louisi­
ana decision cited by Baseball dismissed state antitrust 
claims against an NBA team on procedural grounds, and 
was not based on the Commerce Clause as Baseball 
implies. See HMC Management v. Neiv Orleans Basketball, 
375 So. 2d 700, 707 (La. Ct. App. 1979) ("These [antitrust] 
allegations are simply conclusions and do not state the 
necessary facts upon which a cause of action should rest 
under Louisiana [fact-pleading] procedural law."). More­
over, a Florida court has ruled that "state antitrust laws 
not in direct conflict with federal antitrust laws are nei­
ther preempted nor precluded by any federal consider­
ations." Morsani v. Major League Baseball, 663 So. 2d 653,

4 See, e.g., Partee v. San Diego Chargers, 668 P.2d 674, 678 
(C al. 1983) (fin d in g  the n atio n al u n ifo rm ity  req u ired  in 
regulation of baseball's reserve system was likewise required in 
football player-team -league relationships, thus state antitrust 
laws did not apply to those relationships); H erbert v. Los Angeles 
Raiders, 234 Ca. App. 36 (Calif. Ct. App. 1991), rev. dismissed, 871 
P.2d 1133 (1994) (fo llow ing Partee  and h old in g  that state 
an titru st law  is not applicab le to NFL p layer co n tracts); 
Robertson v. NBA, 389 F. Supp. 867, 880 (S.D.N.Y. 1975) (finding 
that because the National Basketball A ssociation practices in 
dispute were similar to Baseball's reserve system, such practices 
could not be regulated by state antitrust law s); M atuzak v. 
Houston Oilers, 515 S.W.2d 725, 729 (Tex. Ct. App. 1974) (holding 
that Texas antitrust law could not be applied to NFL player 
contract). The instant facts do not implicate the reserve clause or 
any other aspect of baseball related to p layer-team -league 
relationships.



5

657 (Fla. Ct. App. 1995). Thus, Baseball's claim that the 
Commerce Clause precludes "application of state anti­
trust laws to all professional sports leagues," Baseball's 
Opp. Br. at 25, is unpersuasive.

The correct legal standard for assessing Commerce 
Clause challenges was articulated by this Court as fol­
lows:

Although the criteria for determining the val­
idity of state statutes affecting interstate com­
merce have been variously stated, the general 
rule that emerges can be phrased as follows: 
Where the statute regulates evenhandedly to effectu­
ate a legitimate local public interest, and its effects 
on interstate commerce are only incidental, it will be 
upheld unless the burden imposed on such commerce 
is clearly excessive in relation to the putative local 
benefits. If a legitimate local purpose is found, 
then the question becomes one of degree. And 
the extent of the burden that will be tolerated 
will of course depend on the nature of the local 
interest involved, and on whether it could be 
promoted as well with a lessor impact on inter­
state activities.

Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970) (cita­
tions omitted; emphasis added). Here, Baseball makes no 
attempt to address this Court's balancing test, perhaps 
because its interests in collusive, anti-competitive behav­
ior cannot outweigh the states' interests in promoting free 
market principles.

Moreover, in this case, application of Minnesota's 
antitrust law would be consistent with federal antitrust 
law -  collusive boycotts, price fixing, and monopolization 
are illegal under both state and federal law. Furthermore,



6

the antitrust laws of the nation's states are also substan­
tially similar. See ABA Section of Antitrust Law, Antitrust 
Law Developments 742-43 (4th ed. 1997). Thus, Organized 
Baseball seems to be more concerned about the possibility 
that all the states may enforce their laws against it in the 
same way. However, this Court has rejected such an 
argument:

The evil that appellants perceive in this litiga­
tion is not that the several States will enact 
differing regulations, but rather that they will 
all conclude that divestiture provisions are war­
ranted. The problem thus is not one of national 
uniformity.

Exxon, 437 U.S. at 128. Consequently, Baseball's Com­
merce Clause arguments are meritless.

HI. BASEBALL ERRONEOUSLY CLAIMS THE CURT 
FLOOD ACT SUPPORTS ITS POSITION.

Baseball erroneously claims that passage of the Curt 
Flood Act proves Congress's "acquiescence in the exemp­
tion." Baseball's Opp. Br. at 24. However, it is clear from 
the legislative history that Baseball actually took the 
opposite position when it lobbied Congress for passage of 
the Curt Flood Act:

Both the parties [i.e., Major League Baseball, the 
minor leagues, and the Players' Union]5 and the

5 The term "parties" refers to "M ajor League Baseball," the 
"N ational Association of Professional Baseball Leagues," {i.e., 
the "m inor leagues") and the "M ajor League Baseball Players' 
A ssociation." See Pet. App. at 71. All the parties were very active



7

[Senate Judiciary] Committee agree that Con­
gress is taking no position on the current state of 
the law one way or the other.

144 Cong. Rec. S9494-03, *S9496 (July 30, 1998) (remarks 
of Senator Hatch prior to vote) (Pet. App. 71) (emphasis 
added). Because Congress, and Baseball itself, took no 
position on the current scope of the exemption, Senator 
Hatch rightly noted that the scope of the exemption out­
side labor relations "depend[s] upon judicial interpreta­
tion of the law." Id. at *S9497 (Pet. App. 73). Indeed, in a 
Senate Judiciary Committee Report on a predecessor bill 
of the Curt Flood Act, the Committee made clear:

that by supporting these particular modifica­
tions of baseball's judicially created antitrust 
exemption in S. 627, it does not intend to imply 
that more comprehensive change is not also jus­
tified -  or to imply that the courts should not act 
decisively themselves to limit further baseball's 
exemption in appropriate cases. Indeed, a Fed­
eral court and the highest court of a state have 
already taken such action. Piazza, 831 F. Supp.
420; Butterworth, 644 So. 2d 1021.

S. Rep. No. 104-231, at 15 (1995).6 Thus, it is appropriate 
for this Court to clarify the scope of Baseball's exemption, 
if any, from the antitrust laws.

lobbying Congress on the Curt Flood Act. See, e.g., Pet. App. at 
66-71.

6 See Pet. App. at 65-66 for a discussion of the history of S. 
627 and S. 53 ("the Curt Flood A ct"). See also S. Rep. No. 105-118, 
at 4 (1997) (describing S. 627 as "predecessor" of S. 53).



8

IV. B A S EB A LL'S  R ELIA N C E A SSER T IO N S ARE  
WITHOUT MERIT.

Baseball argues that it is entitled to a broad, blanket 
antitrust exemption based on a "reliance" interest. How­
ever, if the State's position is correct, Baseball's reliance is 
in error because Flood limited the exemption to the facts 
of that case -  i.e., only the reserve system is exempt.7 
Indeed, it is well-settled that exemptions from the anti­
trust laws are to be narrowly construed. See Union Labor 
Life Ins. v. Pireno, 458 U.S. 119, 125 (1982) ("exemptions 
from the antitrust laws must be construed narrowly"). In 
any event, the Piazza and Butterworth decisions, and Sen­
ate Report 104-231, supra, for example, show that there is, 
and has been, considerable uncertainty regarding the 
scope of any antitrust exemption for Baseball. Under such 
circumstances, Baseball can hardly claim reliance on set­
tled legal doctrine.

Interestingly, in the Flood case, after a full evidentiary 
trial, Baseball alleged reliance with respect to the reserve

7 Similarly, Amici Utah and ten other states note that this 
Court need not overturn Flood. Rather, the Court can merely 
clarify that under a proper understanding of stare decisis, the 
exem ption is limited to the reserve system. U tah's Am ici Br. at 
4-5. See also Piazza v. M ajor League Baseball, 831 F. Supp. 420 (E.D. 
Penn. 1993). Even Baseball admits that a separate and distinct 
industry, like radio broadcasting of baseball gam es, is not 
covered by the exemption. Baseball's Opp. Br. at 12. In this case, 
Baseball's collusive activities involve the separate m arket of 
baseball stadia. See Stephen F. Ross, M onopoly Sports Leagues, 73 
U. Minn. L. Rev. 643, 647 (1989) ("sports leagues and their 
m ember teams operate in a variety of m arkets". . . . including 
stadia). Thus, even under Baseball's broad definition of the 
exem ption, it is unclear, in the absence of a factual record, 
w hether Baseball's conduct is exempt.



9

system, claiming that the "historical, competitive, and 
economic realities . . . make the reserve system a neces­
sity."8 Respondents' Supreme Court Br. in Flood v. Kuhn at 
5; see also Amicus CFA Br. at 16-17. However, in the 
instant case, Baseball makes no specific claim of reliance9 
-  perhaps because it cannot credibly claim that it is 
necessary for Baseball to collude and extort subsidies 
from communities.

Finally, in a case involving the role of stare decisis and 
reliance when reconsidering antitrust precedents, this 
Court stressed the importance of the "competing interest, 
well represented in this Court's decisions, in recognizing 
and adapting to changed circumstances and the lessons of 
accumulated experience." State Oil v. Khan, 522 U.S. 3,
___/ 118 S. Ct. 275, 284 (1997). Consequently, any alleged
reliance interest by Baseball does not supersede the

8 Ironically, just four years after Baseball argued that the 
reserve system was necessary for the survival of Baseball, a 
labor arbitrator effectively eliminated the reserve system for 
m ajor leag u e p la y ers , and C on gress, w ith  su p p ort from  
Baseball, elim inated any antitrust im m unity for the reserve 
sy ste m  by p a ss in g  the C u rt F lo od  A ct. See  M arian n e  
M cGettigan, The Curt Flood Act: The Players' Perspective, 9 Marq. 
Sports L.J. 379, 382 (1999). Baseball has thrived without the 
reserve system.

9 Amicus Florida discusses Baseball's General Counsel's 
discussion of reliance and concludes that Baseball has no valid 
reliance argument. See Amicus Florida Br. at 10-11. Additionally, 
Amicus CFA argues that Baseball would not be harm ed by being 
fully subject to the antitrust laws because the "rule of reason" 
allows cooperation on essential league matters. Amicus CFA Br. 
at 5-9.



10

Court's responsibility to "reconsider its decisions con­
struing the Sherman Act when the theoretical underpin­
nings of those decisions are called into question." Id.

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CONCLUSION

For the reasons set forth in Petitioner's Brief and the 
Briefs of Amici, the State of Minnesota requests that its 
Petition for a Writ of Certiorari be granted.

Respectfully submitted,

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