Federal League Tobacco Tin
Gary Hailey’s article continues from yesterday (http://goo.gl/hhR5N1).
THE WAR MOVES TO THE COURTROOM
On January 27, the Baltimore stockholders voted to authorize the club’s directors to spend up to $50,000 on “litigation in such form as they deem advisable” to protect the stockholders’ interests. They eventually filed suit in Washington on September 20, 1917.
After a year and a half of legal skirmishing, a jury was sworn in On March 25, 1919. The testimony summarized above was presented, the judge gave his instructions, and the jury retired to deliberate On April 12. Given the judge’s instructions to the jury–which, in essence, told the jury that O.B. had in fact violated the federal antitrust laws, and that the Baltimore club was entitled to recover for any damages it suffered as a result–the verdict came as no surprise. The jury found in favor of the plaintiff and assessed damages at $80,000. The antitrust laws provide that guilty defendants pay three times the amount of the actual damages plus attorneys’ fees, so the final judgement was for $254,000.
Organized Baseball’s lawyers immediately appealed to the U.S. Court of Appeals for the District of Columbia. They attacked the trial court’s decision on a number of legal grounds, but focused most of their attention on a single key issue:
By far the most important question presented by the assignments of error is whether professional baseball is interstate commerce.
In his memoirs, George Wharton Pepper, O.B.’s top lawyer, described his appeal strategy.
I raised at every opportunity the objection that a spontaneous output of human activity is not in its nature commerce, that therefore Organized Baseball cannot be interstate commerce; and that, it not being commerce among the states, the federal statute could have no application….
… [T]he case came on for argument … on October 15th [, 1920]. I mention the date because of the coincidence that on the same day there was being played the final game in the [Dodgers vs. Indians] World Series of that year ….
George Wharton Pepper at the bat
. . . Counsel for the Federal League made the grave mistake of minimizing the real point in the case (the question, namely whether interstate commerce was involved) and sought to inflame the passions of the Court by a vehement attack upon the evils of [Organized Baseball], a few of which were real and many, as I thought, imaginary. I argued with much earnestness the proposition that personal effort not related to production is not a subject of commerce; that the attempt to secure all the skilled service needed for professional baseball is not an attempt to monopolize commerce or any part of it; and that Organized Baseball, not being commerce, and therefore not interstate commerce, does not come within the scope of the prohibitions of the Sherman [Antitrust] Act.
If the business of professional baseball was not interstate commerce, it was not subject to the Sherman Antitrust Act or any other federal regulation, even if all of the Baltimore club’s allegations of monopoly and conspiracy were found to be true.
On December 6, 1920, the Court of Appeals issued its decision, which was written by its Chief Justice, Constantine J. Smyth. Chief Justice Smyth first stated that interstate commerce “require[s] the transfer of something, whether it be persons, commodities, or intelligence” from one state to another. But, Smyth wrote,
A game of baseball is not susceptible of being transferred…. Not until [the players] come into contact with their opponents on the baseball field and the contest opens does the game come into existence. It is local in its beginning and in its end. Nothing is transferred in the process to those who patronize it. The exertions of skill and agility which they witness may excite in them pleasurable emotions, just as might a view of a beautiful picture or a masterly performance of some drama; but the game effects no exchange of things. . . .
It didn’t really matter that baseball players traveled across state lines, or that the players carried their bats, balls, gloves, and uniforms across state lines with them.
The players, it is true, travel from place to place in interstate commerce, but they are not the game ….
….
The transportation in interstate commerce of the players and the paraphernalia used by them was but an incident to the main purpose of the appellants, namely the production of the game. It was for it they were in business–not for the purpose of transferring players, balls, and uniforms. The production of the game was the dominant thing in their activities ….
. . . So, here, baseball is not commerce, though some of its incidents may be.
Newark Peppers 1915 scorecard
Suppose a law firm in the city of Washington sends its members to points in different states to try lawsuits; they would travel, and probably carry briefs and records, in interstate commerce. Could it be correctly said that the firm, in the trial of the lawsuits, was engaged in trade and commerce? Or, take the case of a lecture bureau, which employs persons to deliver lectures before Chautauqua gatherings at points in different states. It would be necessary for the lecturers to travel in interstate commerce, in order that they might fulfill their engagements; but would it not be an unreasonable stretch of the ordinary meaning of the words to say that the bureau was engaged in trade or commerce?
Chief Justice Smyth then cited with approval cases holding that those who produce theatrical exhibitions, practice medicine, or launder clothes are not engaged in commerce.
The Baltimore club tried to persuade the United States Supreme Court to reinstate the original verdict in its favor. But Justice Oliver Wendell Holmes, writing for a unanimous Court, upheld the decision of the Court of Appeals.
[E]xhibitions of base ball … are purely state affairs. It is true that, in order to attain for these exhibitions the great popularity that they have achieved, competitions must be arranged between clubs from different cities and States. But the fact that in order to give the exhibitions the League must induce free persons to cross state lines and must arrange and pay for their doing so is not enough to change the character of the business…. [T]he transport is a mere incident, not the essential thing. That to which it is incident, the exhibition, although made for money would not be called trade or commerce in the commonly accepted use of those words. As it is put by the defendants, personal effort, not related to production, is not a subject of commerce. That which in its consummation is not commerce does not become commerce among the States because the transportation that we have mentioned takes place. To repeat the illustrations given by the Court below, a firm of lawyers sending out a member to argue a case, or the Chautauqua lecture bureau sending out lecturers, does not engage in such commerce because the lawyer or lecturer goes to another State.
U.S. Supreme Court, 1922
The Supreme Court’s decision was issued on May 29, 1922–almost seven years after the Baltimore Federals played their last game.
Given the legal doctrines of its day, the Federal Baseball case was correctly decided. The courts of that era applied the federal antitrust laws only to businesses that were primarily engaged in the production, sale, or transportation of tangible goods.
It is popularly believed that Organized Baseball was given immunity from the antitrust laws because baseball was a sport, not a business. That belief has grown out of a passage in the Court of Appeals opinion:
If a game of baseball, before a concourse of people who pay for the privilege of witnessing it, is trade or commerce, then the college teams who play football where an admission fee is charged, engage in an act of trade or commerce. But the act is not trade or commerce; it is sport. The fact that [Organized Baseball] produce[s] baseball games as a source of profit, large or small, cannot change the character of the games. They are still sport, not trade.
Lee Magee, manager, Brooklyn Tip-Tops, Federal League
But a close reading of that language and the rest of Chief Justice Smyth’s opinion shows that the key to the decision was not the fact that baseball was a sport. The more crucial fact was that baseball–as well as the practice of law or medicine, the production of grand opera, and the other nonsporting activities cited in the opinion–was not commerce.
Antitrust doctrines have changed radically since Federal Baseball was decided in 1922. The cases that the Supreme Court relied upon in holding that baseball wasn’t interstate commerce have long ago been overruled. By 1960, the Supreme Court had held that doctors, theatrical producers, boxing promoters, and even the National Football League were subject to the federal antitrust laws.
But baseball has somehow retained its uniquely privileged status. In 1953 and again in 1972, in the celebrated Curt Flood case, the Supreme Court affirmed the holding of Federal Baseball. Justice Blackmun, in Flood vs. Kuhn, noted that baseball’s antitrust immunity was “an anomaly” and “an aberration.” But, he noted,
Remedial legislation has been introduced repeatedly in Congress but none has ever been enacted. The Court, accordingly, has concluded that Congress as yet has had no intention to subject baseball’s reserve system to the reach of the antitrust statutes….
…. If there is any inconsistency or illogic in all this, it is an inconsistency and illogic of long standing that is to be remedied by the Congress and not by this Court.
Is the Federal Baseball ruling of any consequence today? After all, the players’ union has managed to decimate the reserve clause through collective bargaining. Free agency, arbitration, limits on trades without consent–no longer is the major league player, in Curt Flood’s words, “a piece of property to be bought and sold irrespective of [his] wishes.”
But what about the owners? Al Davis and Robert Irsay could move away from Oakland and Baltimore because the antitrust laws prevent the other NFL owners from taking concerted action against such moves. What if Calvin Griffith, rather than selling the Twins, had decided to move them to Tampa–or back to Washington, D.C.–without American League approval? If the other owners simply refused to schedule any games with the Twins and Griffith sued them, would Federal Baseball still control?
Or what if the USFL owners decided to start a baseball league, too? (Perhaps they would play in the fall and winter.) If Organized Baseball threatened NBC that it would never again sell broadcast rights to that network if it televised the new league’s games, would the “USBL” win the antitrust suit that would undoubtedly follow?
Surely then Federal Baseball--a case decided over sixty [today ninety–ED.] years ago, long before television, jet airplanes, free agents, and night baseball–would finally be laid to rest. Of course, that was what Curt Flood’s lawyers thought would happen in 1972. Federal Baseball may be an anomaly and an aberration–but it may also outlive us all.
