# Respondents Brief — Flood v. Kuhn > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0042%3A07 ## Record - **Collection:** Supreme Court brief - **Document type:** Respondents Brief - **Published:** January 1, 1972 - **Citation:** 407 U.S. 258 ## Text 3 Supreme Court, U.S. FILED 31 i972. : aires & ROBERT SEAVER, CLERK FILE COPrY — IN THE r Supreme. Gaurt of the Uri yY OCTOBER TERM, 1971 No. 71-32 Curtis C. Foon, a in “= - Petitioner, v. ‘ . - ey ra) . Bowre K. Kuun, et al., ; Respondents. —3— . BRIEF FOR RESPONDENTS Mark F. Hughes Louis L. Hoynes, Jr. * Wittkie Farr & GALLAGHER . 1 Chase Manhattan Plaza f New York, New York 10005 — Baker, Hostetter & Parte RSON 1956 Union Commerce Building Cleveland, Ohio 44115: Of Counsel — | _ Arvorp & PortER > 1299 Nineteenth’ Street, N.W. Washington, D. €. 20036 7 Of Counsel” ee - Robert J. Kheel Alexander’ H. Hadden James P. Garner , Warren Daane Attorneys for all Respondents ., exeept Bowie K. Kuhn, Commissioner of Baseball Paul A. Porter ‘Jerome I. Chapman | Douglas G. saben Aitorsees for: Respondent Bowié K. Kuhn, - Commtsstoner of Baseball TABLE OF CONTENTS | | PAGE a table of f Citations ae biggies hecelleifias eeu ge itt Opiniéns Below . sayeet atteenecenennasesecctenennersseeessnrcenedes sont ote 2 ( Questions Presented ee hiadnantecs - — Sean eearatnees 1 Constitutional and Statutory Provi isions. Tay ed .. ‘9 Statenient of the Case .. aa rE ee 2 The Parties and Proceedings 15 X Longy Unbroken Line Of Precedent In This Court Holding That Baseball’s Reserve Sys- * tem Is Not Subject To The nena Antitrust Laws g Se Le ee ee 23 e a , PAGE - A. Phis Court, While Consistently Reaffirm. | ing the Nonapplicability of. the’ Federal Antitrust Laws to Baseball’s Reserve System, Has Carefully Eliminated Any . Possjble Adverse Consequences of | This - Long-Standing Precedent -..........2-.2ccceceeeee. B. The Record in This Case Demonstrates | Affirmative Grounds for Continued Adher- ee AS a a er a 30 (1) Baseball’ s Continuing Reliance on n this - Court’s Prior Decisions sdqueessieoeate fascas 30. (2) The Role of Congress ....... esse "atest 39 " (3) The Role of Collective Bargaining sas 38 C. Petitioner Has Shown No Justifications | Which Overcome the Weighty Considera- ~ tions in Favor of Adherence to the Toolson PYOCCCUCWE 25.2 ae 39 II. Federal Labor Poliey Exempts The Reserve © '. Systém.From The Operation Of The Federal Antitrust EWE scicnesnee peiersupbedeateseassetics sseasedouseienin> 4 ) TIL Baseball’s Reserve System Is Not Subject To State Antitrust’ Re ‘gulation eeertannteestlepecanaricanas 33 Conclusion srasteestvinpanctantnsnemegps cites cesslessctisolsspscsstsstestemmerto 60 Addendum A Fa vt En EO asecreneeees Ad _ Addendum B ......... hous tuiingsnetsenLenteennante sstionen eee aren _ BA s SA Na RY Aman, é © TABLE OF CITATIONS “Table of Cases: "PAGE Amalgamated M eqt Cutters v. J ewel Tea Co., 381 U. S. 676 (1965) : : 21, 48- 2. - American League and Association ‘of U ires, 180- : NLRB 190 (1969) -......:..: 55 Blypder-T ongue Laboratories, Inc. v. University of ae Illinois Foundation, 402 U. S. 013 (1971) 2.2... ee 42 Boys Markets, Inc. y. Retail. Clerks Union, Local 770, a US a5 (|) i a ann ar ena 49 California v. Zook, 336 U.S. 725 1949)" ee tig een 57 Canada ‘Packers; Ltd. v. A. PASE R. Co., 385 US. 7 TJ 6) na a nee tee ne ieee an 41 Carroll v. American Federation of Musicians, 372 F.2d" 155 (2d Cir. 1967), aff’d in part and rev'd in part, oe . on other grounds, 391 U.S. 99 (1968) ... 51 City of Atlanta and Fulton County Recreation Au- .thority v. Atlanta Braves, Inc., Case No. B-17638, ° - Atlanta, Ga., Sup. Ct., Feb. 8, 1966 ee: v---+ OO, D6 Clune v. Publishers’ Ass’n of New York City, 214 F: . Supp. 520 (S.D.N.Y. 1963), aff'd, 314 F.2d 343 (2d Cir, 1963): ococeeeeceesessesleceeseeseesesesereseccesecepesresnesnenesneescenes wea * 02 Colorado Anti-Discrimination Comm’n v. "Continental Airlines, Inc. 372 U.S. 14 (1963)! eee cecceeeceseeneeee 56 Corbett v. Chandler, | 346 U.S. 356 (1953) ereeeeeseneeneestne 26 Edward Katzinger Co. v. Chicago Metallic Manisfac- : turing Co., 329 U.S. 394 (1947) 43 Federal Baseball Club of Baltimore v. National _ name, 259 U.S. 200 (1922) oe 20, 23-28, 30, , | . 32, 33,57 Federal Baseball Club of Bultimére’ v. National - Teague, 269 Fed. 681 ee Cir. 1921) ncneeeeveoeeinne 2h Y vy . | PAGE - Fib breboard Paper Brodurts Corp. v. NLRB?379 US.. 3 (1964) aD Se NE re ‘" Flood y. Kuhn, 43 F.2d 264 (2d Cir. oe woeeeeeeeee 1,5; 54, Flood ve Kuh 316 F.Supp. 271 (S. D. N.Y. 1970) a 1,56, | | _ ~ 12, 15, 15, 19,: ahah 43, 44, 45, 54, 55 ; 7, 38 Klood ve. Kuhn, 312 F.Supp. 404 (S:D. x. Y. 1970) _ 99 — Flood vy. Kuhn. 309 F.Supp. i (S.D.N.Y. 1970) 0 1,40 44, 46,50 Gardella v. Chandler, 172 F.2d 402 (2d Cir. 1949) .... 95 . Hart vy. Bt F. Keith Vandeville Exch., 262 US.271 * (1923) seceeceeet bees cecsssewsacscwesssesmssessesecnnasoncqerseselcscesssces--ca- ees. 5 Head v. New Mexico Board, 374 U. s. 424 (1963)... T "-Helvering v. Griffiths, 318 U.S. 371 (1943)... a ae Telvering . Hallock, 309 U.S. 106 (1940) 42. “oceans OF — Joint Industry Board v- Unitegl States, 391 US. 294 (1967) 01... aan een ET en tA tr Sat eee See . 4. ”. Kowalski ¥. Chanter, 346 Uis , 306 (i983 MacGregor v. Westinghouse Electric:.& Manufactr. ing Co., 329 .U. 8.402 (1947) ........ ana Seetoetis Bo Missouri v. Ross; 999 U.S. 72 (1936) 0002... a | Moragne vy, States Marine Lines, Inc., 398 U.S. 375 - (1970) ce dddedidduapersnedieesbesdresednceeveadess¥asesce=de gavceedevssassqsaseuenne 39, 42 . Portland Baseball: Club, des, vy. Frick (Baltimore Base- : bull Club, Inc.), 282 °F. 2d 680° (9th Cir. 1960) ..... 2 Portland Baseball Club, Inc. v. Kuhn, Civil Nos. 71-53, . + Z)- d+ D.C. Ore., December 28, 1971 | sesresecerssesesense’, OB Radovich v. National Football League, 959 U. S. 445 (DOT) csc cerns Lesvenseseeees 23, 24, 27-30, 32,83, 40, 41,55 | Salerno v. American League, 429 F.9d 1003 (2d ) reine = “Léar, Ine. v. Adkins. 295 U.S. 633 (1969)... ers 42-43 Cir. 1970), cert. denied, 400 U. S. 1001. (1971) .. castes 8 | Sola Electric Co. v. . Jefferson Electric Co., 4» BIT a S, 173.°(1942) ear? eee eae ae - Wisconsin v. Milcaukee Braves, Tne., 31: ‘Wis. , 699, 144 N. W.. 2d 1 (1966), cert. denied, “385 — . 990 (49GB) eect leceseessesssssssssesefssesssseserceseetuergep DD, BT, 33, 57, 5S Wisconsin ve Mili dithee Beare es, Inte., 1966 cc H “Trade Cas, & 71,738 (Wis. Cir. Ut, Civil Div., Mil, Cty., 19) svete jpotstneepatgnesrseetnnstsinereestputesreclape [6 Table of Other Citations: National Labor Re lations Act, 49 Stat. 449 (1935); 29 LUA OA) 5) nee a boreesvienecesd 47,52 | Norris-LaGuardia Act, 47 Stat. 70 (1932, 29 UBC. Sa Ae ee eeenin. hae 47 Sports: Broi Weastin iw Nets 75 Stat. (32 (1961), 1B US.G. §$1291-1295.; 80 Stat. 1515, (1966), 15 U.S.C. $1291 ake (hewu ae eueewseas2oepedvcaveeusseceseceardcseurncavenueccaties ss 30; 37. Labor- Management - Relation Act, 6 Stat. 136 (1947), OPUS CED ccttpeco en tatae, Ae a ae ; ° J ‘ > * | PAGE. ' ~ Southern Pacific Co, v. Ariz cond, "825. U. S, “761: | (1945) ------ eRe oe ea en eT aren. 5 4, 55, 59 . Teamsters Union v. Oliver 358 S. 283 (1959) .. ame a1, 48 Toolson v. New York Yankees, Inc., 346 U. S. 3356 . CS) en or ne Re 5,20, 23, 25-34, 37-44, 57, 58 United Wine Workers v. Ponmington, 381 U. S. 657 Se, 05) nen ne nn See eee ee Se 50, 51 Cnited States v. Ingdenatignat Boxing Club, 348 U. | 236 (L9G) oeecccececeeceeceeseseesecvoeseeseceeeeesneseesesee beceseeeeteeee, "93 27 V vnited States x. National Football League, 196 F. Supp. 445 (E.D. Pa. 1961) cee eect eee. veces 36 United States.‘v. National Football. ie lai 116 | F. Supp. 319 (E.D. Pa: 1953) sastseesscyencedsenvte fereneese-peets 36 United States v. Shubert, 348 U. Ss. 999 (2965) ... 23, 26, 32, . 41,58: United ‘States Y South Buffalo Ry. Co., 333 Uv. S. ma . 7) ea me, ee 41 United States v. Wonen’s Sportswear Mfrs Ass'n, _ do U, S. 460 *(1949) ieeaeieesheersrererdinseesseeietes | ieee ae i) | | Walling v. Halliturton Con 331 U.S.17 (1947) AD I . 4 ; Supe Court af the fe Mnta States OCTOBER TERM, 1971, No: 71.32 Curtis. C. Fuoop, | « , Petitioner, \ 0. ° Bowie K. Kuuy, et: al., ees os Respondents. BRIEF FOR RESPONDENTS Opinions Below © * The opinion of the United States District Couré for the - Southern-District of New York (App. 95- 122) is reported at 316 F. Supp. 271. The opinion of. the Court of Appeals for ~ Phe Second Circuit (App. 125-141) is reported at 443 F.2d * . 264. Interlocutory opinions of: the District Court. with. respect to Petitione ys s. application for a temporary i injunc- _ tion (App. 54-82)/and Respondents’ motions to dismiss (App. 83-94) are reported at 309 F. ‘Supp. 793 and 312 F. = - Sapp. 4 404, caer : 2 3 fod Questions Presented - Pid Me Bone | Should this Court abandon ‘its long,’ sehen: line . of decisions holdin'ethat: baseball’s. reserve system is not : ‘subject to the federal antitrust laws; when the record in*- ‘this wits _and the history of Congressional consideration a ey / -*. . of “ ., ON a - 7 oo, Maya ” of baseball both prov ide Seiealag ator for acl, f adher ence to such precedents f | fs “~~. a i) } . *» 2. Doos federal labor policy, preclude appli¢ation of the antitrust laws to baseball’s reserve system, a mnandatory ‘ subject ‘of bar gaining which has been dealt .with in‘a vol lectiv e, bargaining. agreenient and has been under thorough and active consideration ‘i ‘In negotiations between the. major league baseball élubs and the Major ais Baseball Play. ers Association? oe a Fs . F - 3. Should the’ nationwide framework’ of baseball be” vs, made subject td regulation under the antitrust laws of the various states, when such regulation by. its inherent lack ~ -” of uniformity ‘w ould unduty interfere with baseball’s inter: staté operations’ and would be inconsistent with the federal “policy of continued. ‘self. regulation, subject: to the will of Congrege! “rise BY °. ov. * oF 3 ‘ . . “3 “Constitutional ‘and Ristulery Provisions Involved — » The pertine nt. provision of the® ‘Sherman Act (15 US.C. . 61): and excerpts from various state antitrust statutes are “ set. forth in Appendix A to Petitioner’s brief. Also: involved. y, : / are Article T, Seetiori 8. and Article VI, ‘Clause 2 of the -“TTnited States Constitution whieli are set forth i in Adden* * dun A, annexed hereto. : — = U Bo Tp ye . ‘Statement of the Case . j} —~ | oda This « case lavelvea, a dispute over professional haseball’s reserve. system, ‘which is the cornerstone of the game's league structure and competitive ‘stability, and’ a cenfral element..in the ‘employer-emplovee relationship between eluhs and: players. The reserve system is embodied 1 in-sev- ; eral provisions of baseball’s Uniform Player s- Contract and m= ae a \ the Major League Rules and ineludes-various safeguards . ; for the players as well as for the ¢elubs.* . In essence, the _ purpose and effect of these provisions are to enhance com- ‘ petition on the field and preserve the integrity of/play by - promoting continuity in the employment relationship be--*- tween each of the 24 major league clubs and its 40 “reserved” | " players. _ The Parties and Proceedings Below "This action, financed entirely by the Major League Base- _ ball Players Association, the players’ collective bargaining represéntative (App. 169; R. 112-13, 115), was brought, © in the name of Curtis Flood, who, until he departed ‘from baseball in April 1971 for reasons unrelated to this case, had. heen’ a” highly ~ paid» major league player.** In . October 1969, Mr. Flood’s: contract avas assigned by the St. Louis Cardinals to the [Philadelphia Phillies, but he refused _tohonér the assignment. After some meetings with Players “Association leaders, who were then in the midst'of negotia- tions with .the clubs regarding. the reserve system and other employment, matters (App, 167-68; R. 62. 109-10), Mr. Flood.asked the Commissioner of Baseba on December . 34. 1969, to advise all the major league clyds that-he was: . _ * The pertinent provisions are set out in Addendum B to this brief. ** Mr. Flood began his profession&l baseball career.in 1956 under - contract with.the Cincinnati Reds, at a salary of $4,000. When his | contract was assigned to the St. Louis Cardinals‘in 1958, he was given an opportunity to play. regularly.and his salary with’ the Cardinals - Steadily increased from’$Z,000 to $90,000.in 1969. Mr. Flood refused. _ fo plav during the 1970 season at the $100,000 salary .offered by the Philadelphia club, despite Respondents’ offer that he could plav with- out prejudice to this action. (App. 143, 145; R. 122-23, 372-73). After the 1970 season, the Philadelphia club assigned the right. to Mr. . Flood’s contract to the Washington Senators, with whom Mr, Flood ‘igned a contract to play during the 1971 season for $110.000. By agreement among the parties, this was without prejudice to ‘Petitioner's rights-in this action. On April 27, 1971, Mr. Flood left the Wash- ington club for personal reasons and has_not ‘played since thtat date. - 4 free to negotiate with any of them. (PI. Ex. 4; R.72 .). The Commissioner responded that he could not grant the request :; “because Mr. Flood's contract had been propertly assigned in accordance with its provisions and because existing base- ball rules prohibited his negotiating with other than the assignee elab. (PI. Ex. 5: R. 73.)- Thereafter this action was commenced on January 16, 1970, and Mr. Flood de. clined the Commissioner’s’ invitation to discuss the matter further. (R. 136-37.) The defendants named in the. dortiplaint, are Bowie K.- Kuhn, individually and as Commissioner of Baseball,’ Charles S. Feeney, individually and as President of the National League, Joseph E. Cronin, individually and -as - President of the American League, and the twenty-four -elubs which. then comprised the membership of: the two . major leagues. The principal claims in the complaint are that the Te- serve system violates | federal and: various state antitrust: laws.** Petitioner’s ‘brief (pp. 16- 17, 45) asserts that the reserve system is a pes se violation of those laws, and Mr. Flood himself testified at trial that he “would like the whole. ' system to bé struck down and eclar ed illegal” (R. 118).. All of the other witnesses presented at trial hy Petitioner, how. ever, assumed that the continuation of a. reserve, system was necessary. Their testimony fdeused ‘on general player grievances regarding the present system and various modi- * The Commissioner of Baseball is joined asa defendant i in only the first alleged cause of action, the federal antitrust claim. Separate counsel for the Commissioner therefore join in those portions of ‘this brief *which deal with that claim.. The Commissioner has an _ administrative and quasi-judicial role in baseball that, requires him to investigate atid take such action as will preserve the integrity of the game and further the. interests of players, clubs: and fans. _— League Agreement, Art. I (PI. Ex. 6, pp. 501-02). pie Originally Petitioner claimed, as well: violations es anti-peonage :. statutes and the Thirteenth Amendment. Those’ claims, rejected by the District Court, were not asserted on appeal to ie Second Circuit and are not asserted here. ‘ » . . e . . . o* : . . - fications of the system suggested by the Players Associa- tion, most of which had no direct bearing on Mr. Flood or his complaint. . . ie After a three week trial on the merits; the District Court dismissed tht complaint. 316 F. Supp. 271 (App. 95-122). * The federal ‘antitrust claim was dismissed on the authority. of Toolsén v. New ¥ ork Yankees, Inc., 346 U.S. 356 (1953) : and the state law claims were rejected becatise state anti- trust regulation would conflict with federal policy and be- cause “uniformity [is required] in any regulation of base- ball and its reserve system.” 316 F. Supp. at 280 (App. " 111). In its opinion the, District Court set forth such find- - ings of fact as were appropriate to its. determinations. The C ourt of Appeals for the Second Circuit unanimously affirmed the District Court's decision. 443 F.2d°264 (App. 125-41). | | : - : . - c "Factual Background To evaluate propérly the issues here involved it is essential to consider (1) the historical, economic and com- petitive realities which make the reserve system a neces- city and (2) the role of collective bargaining in professional baseball as it relates to the reserve system and to the com- , mencement of the present lawsuit. _ ~ (1) The Reserve System and The Historical, Competitive and Economic Realities = Pro- - fessional Baseball. ; As the District: Court found, the reserve system, we is “perhaps the cornerstone of the present structure” of base- ball; “has been in force for nearly one hundred.years, almost * _ the entire history: of organized professional basehall.” 316 P. Supp. at 273 (App. 98- 99). . The-historical evidence pre-. sented at trial concerning the experiences - professional. _ q : . ° g . s .- each competitor has a ‘strong incentive to-strive to attain ” 6 ~ basehall prior to the adoption of*an effective reserve system 7 showed “that chaotic conditions prevailed.” (App. 243-48. Pl. Ex. 15-a, p. 229.) ‘In those early days, players freely. “revolved” among clubs, balanced competition was impos. sible to achieve, clubs failed—often in midseason—disrupt. ing - league play, and-the game found little public acceptance, . As a product of that climate, gambling and dishonesty were commonplace and “hippodroming” —which involved the fix. | ing of games—hecame a practice. Player salaries were. low and the failure of clubs often meant that salaries were never paid. The turning point in baseball’s history ‘came -with the realization that a reserve system assuring player continuity was necessary. (App. 243-48, 253: R. 868.) | The District Court observed that. with the sole exception — of Mr. Flood, all Petitioner's, witnesses acknowledged that a-reservé svstem “is. a necessary element of the organiza- tion of baseball as‘a league sport... ..” 316 F. Supp. at 275 ff (App. 101). (E.g., testimony of Jackie Robinson, -App. 172: | _ Hank Greenberg, R. 247; and Bill Veeck, App. 384-85.) ° Re- - spondents’ witnesses, the Commissioner of. Baseball, the _ Presidents of the American and National Leagues, club officials, former players, and, John Clark, an economist and management consultant, fiom Arthur D. Little, Ine, all: testified as to the critical importance of the reserve sy stem: to basehall’s existence: (F.7., App. 243-48, 280-89, 337-40.) - Accordingly, the District Court found that “the prepon- derance of credible proof does not favor elimination of the’ reserve clause.” 316 F. Supp. at 276. (App. 103). An analvsis of the rationale of the reserve ‘svstem ‘fully sup- ars this eonelusion _ -(a) The Need. to Maintain ‘Balanced Competition. It is ‘commonly recognized that professional haschall * cannot fanction like the usual commercial enterprise, where . a greater market share, and, if possible, put the others ont ee eo : —t oy ia aoe ee . Rag te . ° 7 7 | ee of business. On the contrary, the interests of the players "and the clubs in baseball require that the strength of the teams in the leagues be reasonably evenly balanced. Thus — there is a blend of competition and partnership among the dubs in hasehafl. which would be both innecessary and im- proper in the normal business world. (E.g., App. 337-40; 399.) os * ae . The record shows that, without the balance provided by - the reserve: systein, fhe elubs with greater financial re- sources would attract the most outstanding players. (E.g., App. 280, 337: R: 1280-81.) The early history of the game —before the adoption of a reserye system—prevides us - with clear evidence of such results. Without the stability afforded- by the reserve system, successful’ and reasonably balanced ‘league play was impossible to maintain. (App. ' 243-48.) [ -.. ef ees oo ' Today, the forces that would create imbalance are at - least'as powerful as ir those early days. The ability to. _ compete for players varies widely from club to elub. “In 1969, for example, according to a study prepared by Arthur Andersen & Co.,* 13 of the 24 major league clubs suffered losses, some of them very substantial. The profitability of the other clubs varied widely, with the clubs in the. larger cities haying a. continuing advantage ‘in. terms of ‘revenue -Potential.** Accentuating this disparity in operating rev- enues, there are also great differences in. the financial: Tesources otherwise available to the | various clubs. - (R. 715-16, 1469-70.) os : | * Pl. Ex. 7, the Arthur Andersen study, is an exhibit submitted by _ Respondents in response ‘to Petitioner’s. pretrjal discovery requests and received by the District Court under seal for the use of court and counsel only. Such-exhibit provides profit and loss data for:the in- ° . dividual clubs and for the aggregate of all clubs for each of the years * 1965-69. “Reference is miade to ‘such exhibit for the financial details. teferred to herein. te _** The aggregate ‘results for all 24: clubs in 1969 showed total losses in the millions. (PL Ex. 7.)-°: ar | : 8° - Francis Dale, tlie President of the -Cincinnati old testi. fied that hjs club could not engage in open competition for play ers with clubs located in the larger cities. “[In such a system the’ poorer or weaker franchises would: -not be able to compete for the better players and therefore: hase. ball would be destroyed. . ..” (R. 1280-81:) — Other club’ and league officials and the Avthie D. Little economist testi- fied to the same, &ffect. (E.g., App. 280-81, 337, 342. 43; R. 880; 1383, 1474.) - ; | There is no way, without a reserve system, to prevent baseball’s inherent gross disparities in income and re. “sources from being translated into even wider disparities in team strength. The 1952 House Comnittee Report on Organized Baseball—an’ exhaustive study of the game an/ _ its lustory—put it quite plainly: “[F ]xperience points to no feasible substitite to . . guarantee a comparatiy ely even” struggle.” House Revert No. 2002, 82d Cong., 2d Sess. (1952), p. 229 (Pl. Ex. 15-a).* bg (b) Preservation of Integrity and Public Confidence. Without public confidence in its integrity, baseball woul! certainly fail. The Commissioner of ‘Baseball, whose prin- ..cipal task it 8 to protect the integrity of the game, testified at length at trial concerning the relationship between the reserve system and integrity. : (App. 253-54.) The uncon- tradicted history reviewed by him shows that in, the era be- . fore the reserve system an unhealthy climate oe: which resulted in rampant dishonesty and public disres ‘for the game. (App. 243-45.) This éarly history: is strong > * Nevertheless, Petitioner argues that baseball’s. reserve syster has not worked, pointing to the fact that “four teams have ‘won 63% of the league championships. in the last half century,” as contrasted to the 25% which four teams would. win in a perfectly balanced 16 team structure. ( Pet.” Br., p. 44.) »-What-Petitioner Bald erp is that “no. system can provide perfectly balanced’ competition, &nd, that the reserve system has provided to the public continuously. stimulating competition to.a degree that would have been impossible without it (App. a: ; (eee ALLE A PLO sae ailenes that an effediiy e reserv e system is necessary to the ’ maintenance of integrity, (App: 253-54. ) Integrity and public confidence are the product of numer- - ’ ous factors, including stable league organization, prosper-. ity for the players, and rules enforced by the Commissioner prohibiting practices which would jeopardize: the game’s - integrity. At the root ‘ofall of these factors is the reserve ~ system, with the-stability and continuity which it ensures. To. eliminate’ the reserve system would be to place jn © jeopardy the goodwill and public ‘confidence which baseball | has earned over the decades. As the 1952 House Committee © sdid about the reserve system in its Report on Organized Baseball : “| E]xperience points to no feasible substitute to : . protect the integrity of the game. . . .” House Report. No. 2002, S2d Cong, : 2d d Sess. (1952), p. 229. -(Pl. Ex. 15- ) , (e) High Costs of F Player Development. . Witnesses for both parties to the present dispute recog- nized that ‘the employment continuity provided ‘by. the reserve system is necessary to protect, and provide incen- + tive for, the,clubs’ extraordinarily high sates development. costs. (E.g., R. 247, 718-20, 1245-46.) . 3 ; Unlike other professional sports. odie: can . select nation- ally. known star players from college campuses where they © have received extensive training, experience and publicity,* "baseball must develop its own talent at great expense and - effort (R, 938-39). According to the report prepared by Arthur D: Little. the plaver dev elopment costs and related “expenses of minor league operations borne. by the major . . leagues for the period 1963-67 totalled $118,000,000 — Feeney Ex7S, App. 482.) ‘ . * & ommigsioner Rozelle of the National Football League anit Com- missioner Kennedy of the National Basketball Association both testi- fied that the’ colleges provided the training grounds for their sports and President Campbell of the National Hockey Teague said much . the same about Canada’s: amateur hockey program. ( tay 229, 238- 39; R. 485-86.) ‘ ’ - ‘This expenditure represents an average of $23,000,000 -each year (almost $1,000,000 for each club), or 25% .of the clubs’ operating revenues. Stated otherwise, during that period the clubs spent $316,000 for each player brought up to fill vacancies on major league rosters. (Def. Feeney Ex. * S, App. 482.) These expenditures support and make possible a large minor league system of over 190 clubs in 21 leagues, a system of player develdpment peculiar to base. ball which affords entertainment to. twelve million fans annually. (Def. Feeney Ex. H; R: 994-95, 1106. ) These costs of player dev Sccaneatt give baseball clubs 4 greater stake in the control of their rosters than clubs in any other professional Sport. ‘Che incentive to continue such — expensive development is dependent upon the continuation of an effective reserve system to alba baseball’s 1 invest- ments. | (a) Benefits hoon Economic: Stability. ‘the stability engendered by the reserve ‘system has per: :; ' mitted most baseball clubs over the years to achieve a mea- sure of economic ‘viability not possible before the reserve : ‘system was adopted. But such stability has not been a one- way: street. The réserve system has also resulted in in- ereased economic benefits to the players. Under the reserve system, major league baseball has grown to a nationwide _ structure of twenty-four clubs employing some six hundred , players. (App. 2494.. For. all of these pare, the eco- nomic rewards: are impressive. In 1970, the average major league player’s basic salary _ Was over $28,000, exclusive,of bonuses, various cash allow- -« gnees and other fringe benefits (R. 1659). Under the re serve system, each player négotiates salary adjustments - 4 11 with his club annually.* The Arthur D. Little report showed that, for all play ers on major league rosters at least.60 days eath year between 1965 j.and 1970, the average aggregate -salary increase during the period was 129. ae (Def. Feeney Ex. S, App. 473.) — Additionally, the 1970. collective - hargaining agreement be- tween the Plavers’ Association agid the elubs resulted in gains for the plavers ageregating approximately £4,000,000 over three vears, exclusive of ee health, eare bene- * fits. (Aepp. 329.) ' Overall, for 1965-69, the' aggregate. amounts paid - in, player salaries end benefits increased sharply, vising by. approximately 50% during the period. (Pl. Ex.- 7.)*** ‘During this same’ period, there was a steady decline i in the * The players’ collectiye bargaining representative. the Plavers | Association. in recognition of the desirability of individual salary negotiation in’ baseball, has relingttished anv role in this area except for the establishment -of minimtim salary lev els. c Det, roeey Ex. “NX, App: 422, 445.) . ™* The plan provides retirement benefits which may be elected as _ early as age 45, disability and, widows’ benefits, ife insurance and accidental, death and dismemberment beriefits, health and dental care benefits and an optional severance allowance. (Def. Feeney Ex. a App. 480: Def. Feeney Ex. M: «App. 333-36, 493-95.) iit Petitioner’ s brief (p. 44) asserts that plaver compensation: tes declineil as a percentage of baseball revenues. Although there has - a decline from the Percentages recorded for the first half, of ; ‘this century, the: players’ percentage of revenues has steadily gins,, : vate he recent years. The decline frotn. percentages: found in an . era is directly attributable to higher stadium and. other opera-. | ting costs and the burden of subsidizing the minor leagues w hich the. earlier major leagues have assumed in recent years. ‘ | . ———— A ec 0 EE Ie aI gE DE NG at a oy rn er net operating inargin—eomputed on the basis of current cash items and considering only baseball operating expense ‘—realized by the clubs, from 12.5% of gross revenues in 1965 to 3.7% in 1969, (Def. Feeney Ex. §, App. 485-86, : ‘Moreover, ona conventional accounting basis, the agg rem * “financial résults for the twenty-four clubs shawed losses j the millions. (Pl. Ex. 7. ): Considering these, haets, ip in con- junction with the increasing share of rev enues, currently’ devoted to player compensation, Le Little report, voneluded that M@seball is at a marginal le¥el in generating operating revenue to pay operatingSexpenses. «Def. Feenéy Ex..§, ..' App: 486) There simply is no evidence that the reserve system has had an adverse impact on the players as a whole. Star players, such as Mr. Flood, enjoy truq,star salaries and even marginal players are extremely well compensated by. ‘any standards. ‘ ) ae "The importance of the reservé ystem 3 baseball—all of -baseball—eannot be ‘seriously challenged. . - But’ Petitioner, ~ despite the record at trial to the-eontrary, continues to ” argue that the reserve system is principalty- an ‘instru. “ment of : oppression employéd against the players.* Tle. District Covfft provided a clear’ answer. to that argument: “Prfor to: trial we gained the impression that there was 4 view, held by many. that: haseball’s reserve ~ * Petitioner’s brief attempts to describe some alleged abuses. It - asserts that @ club cannot release a player ev en if it wants to because - other. clubs have claiming rights to*his contract. (Pet. Bri, p. %) °. ' But, as'a result of collective bargaining, the rile referred. to was woe recently ‘changed to permit,a released: player to refuse any claim and oe thus to choose-his own: ‘club. Petitioner’ § brief also says, that players “may not be accompanied. in contract negotiations, by any attorner. representative, ot translator.’ (Pet. Br,, p. A0.)* But Petitioner's, counsel knows better. The 1970 collective: bargaining agfeement contains a provision expressly recognizing the right of a -player to be accompanied in salary negotiations by the representative of his choice. (Def. ck Ex. x, ~~ 423; Ad 192- es as s ° oe . é rie : f ‘« . , e ‘ Ona ta Fi i 0 digg PRIEST AE Tepe = ae i ; fee. 5 ee Mee ri . . = —_ : aeeeeeemmneenenn ae : . “i ie \- 13 ; : icv 4 system had occasioned rampant abuse and that it shoul@ be abolished:. We were struck by. the fact,. ‘however, that the testimony at trial failed to support ™ _ that criticism; we find: no general: or widespread dis- regard of the extremely important position the player oecuples. Gee Supp. at 276 (App, ~- : (e) ‘Equivalent Practices i in | Other Professional League , i ad _ Sports. - Petitioner’ Ss‘ brief st states that banchallis sivebenn. 3 is the most restrictive ini prof fessional sports and. suggests that base- ball’s antitrust status has enabled it to retain practices not found in the other sports. (Pet. Br., p. 18.) But the evidence? at-trial demonstrated that the rules of football, hockey and basketball are essentially the equivalent of baseball’s rules. Each sport drafts and reserves players, assigns or “trades” player. contracts, prohibits “tampering” with rival players, 3 funetions under a Commissioner or President with powers similar. to the Commissioner of Baseball, and operates with “a system of league rtiles and a Pe as form of ~— contract. “Where there are differences, they are slight and more : eosmetic than real. As to the most, significant -apparent difference, the so-called football option rule, Mr. Miller, the Baseball Players Association Executive Director, testified — - thatthe rule was a “semi- fraudulent” rancor cid for ‘. Teserve system.* (App. 378- 79.) | > With respect to proféssional hockey the only Hoticeatte difference is the procedure—recently ‘adopted as a result *In professional football: a play er may announce at he beginning -of a season that lé intends to be a- free agent at the end of that.’ f is ‘ee season. He then accepfs a 107° salary cut and is free at the en the season to‘contract with a new-club which must cont pensate former club as directed: by the Comntissioner.. The ev idérice at indicatéd that as a result of this latter restriction very little plgver mobility has resulted. (App. 213-15, 386.) Mea ee ey E “* » a‘ ,i Pad ‘ @°- Kee witness and the rules, and player. contracts. of each sport | “ from the current colléctive bargaining process of profes- — basketball: - In any event, Petitioner’s post-trial . , ‘the National Basketball Association is also esseiitially fhe -same.as baseballl’s. ‘Indeed, the NBA renewal option clause ‘ « .is written in language alinost identical to baseball’s. (Pl. ise Exs. 16 and 17; App.:223-24.) -§§ = 9 = Oe Since the. trial of this action, as part of i its ‘Son to : persuade the basketball players Association to join in sup. - porting before Congress thé merger of the two professional _ -basketball leagues, the NBA has’ apparently offered to mod- _ - ify its resegve system im the manner indicated by the letter . _ attached to Petitioner's brief.as Appendix B: The circum- stances ‘surrounding is offer; made in a collective bargain ing context, are not known to Respondents and are ey outside the record of this action. .: Petitioner had adequate opportunity. to stiles the com- _ . plete facts. as to the other professional sports at trial -when 3" the Commissioner « of each sport was present as a plaintiff's - | were pt into evidence. Dissatisfied with the. evidence so — . adduced, Petitioner has turned his back on the record. and - relied instead on newspaper accounts and material taken “evidence” of proposed modifications in the basketball re- *j serve system cannot obscure the basic similarity _ of the ; systems employed by all professional league sports and only , ‘serves to emphasize what Respondents have said from the} . beginning—that collectivé bargaining can pyeiaes accom-/ . modation ——* to all a. ae - i 2) ‘The sannerern > System and Collective Bargaining. - _- Professional, baseball players have an especially potiiat collective bargaining —. As the District Court found: oS * : _ , “The Major League Baseball avin ‘hndoctation, organized in 1954, has proved. a particularly effective bargaining representative obtaining since 1966 high- oo ly significant benefits for the: players in such areas ee pensions, life and disability i insurance, health care, ~—Edinimum, salary, arbitration of grievances, expense >. . JaHlewances, maximum permissible salary cut, term- Pee ~~ ination pay, representation at individual salary: ne-: sh gotiations, negotiation of rule changes affecting player benefits or obligations, due process.in player. aye iia ae ” 316 F. Supp.. at 283 (App. 116-17). - ' Ever sitce 1966, when full scale collective bargaining came — to baseball, the reserve system—recognized by all parties ‘as a mandatory subject of bargaining—has been among thie _ subjects under negotiation between the clubs and the ” acs Players Association. 316 F. Supp. at 283 (App.-117).. In. 1967, as part of the ‘negotiations leading. up to the - adoption in February 1968 of, the. first “Basic Agreement” : _ between the Players ME NESS © and the clubs, the Associa- tion included in its bargaining ‘agenda a general suggestion’ that the reserve clause should be altered (Def. Feeney Ex. ~ O, App. 453-54; App. 503-09.).: As modified in certain par- ' -ticulars,* the reserve system was incorporated into this Basic. Agreement. (See pp. 45-47, infra.) es . a 5 _* For example, the fenewal ‘option clause (Addendum B hereto) ° ‘was amended to limit the salary: reduction permissible upon contract © . renewals thereunder to 20% of the player’s previous salary (Def. Fétney Ex. F, p. 16); the minimum player salary was raised by over . - 40%. (Def. Feeney, Ex. F,-p:.15), and.a formal procedure for.arbi-. ~ tration of player grievances was established (Def. Feeney. Ex. F, pp. - 3, 18-24), . Also, it was agreed that a joint labor-management study , “ of the reserve. system would be undertaken during the term of the agreement. The joint study subsequently took place as a “free-wheel- ing, in depth exploration” which both ates considered “aseful.” 7 (App. 366, 5 510-12; R. 1918-20.) eee % ee ~" “The Players Association presented the clubs with a:list of “problems which stem from or are made more severe by the present reserve clause and related rules.” (Def. Feeney - negotiations began on a new: Basic Agreement. : Ex. Q, App: 462.) “This list was carefully considered in negotiations between the parties eventual accord ‘was. reached with respect to substantially all of the “problems” | Bargaining concerning the core of the reserve system as _- well was conducted by the parties; however, the Players” -’ Association did not make a specific proposal for.a change - in the system until October 31, 1969.°* Shortly thereafter, _ * Among the various changes agreed to in the negotiations over the 1970 Basic. Agreement. were the. followirig which are directly related to “problems” ‘listed in the Players Association memorandum: (a) -substantially increased‘ termination pay, including a provision _ _. that after 1971 a player whose contract is terminated by the club -after May -15 of any year will receive his full year’s salary (App. _. _498,-500};—(b) specific acknowledgment of each player’s right to be _ App. 422). accompanied at salary ‘negotiations by a person of his choice (Def. % -Feeney“Ex..N, App. 423; App. 518); (c) moving allowance pro- vided for players whose ‘contracts are assigned durifig the off season (Def. Feeney Ex. N, App. 421); (d)- prohibition against clubs unilaterally changing rules which involve player benefits or impose .” obligations on players (Def. Feeney Ex. N, App. 422); and (e) pro- vision for third-party arbitration of grievances (Def. Feeney Ex. N, _ ** The proposal was that, after every three years of his career, each player may negotiate for a higher salary with any club, with offered. NRRL: FP BERR AR CL ERS Get NOT? LETTE TEAST MII NI ee ee eee ee ome! 4 -. 5 \ a - . . , os ie * . c ‘ ves ° . i‘ 4 hh ; P . ey — . af" F L eae table to sick their own accon modation, ‘with the processes es. " of the National Labor Relations. Board ‘being available to - a insure fair play. Thus, the District Court. concluded that. a - the issue of the reserve* system, concededly a mandatory ; subject of collective bargaining, should be resolved by _ player-club ‘negotiation rather than bythe courts.. The oe : tees 23 | ree eae “The baseball cases donot i impair the cieeaiant of. fed- eral antitrust policy in any other area. This Court has. made clear that the rule established in the baseball cases is strictly limited to organized professional baseball. Rado- , vich v. National Football League, 352 U.S. at 451. Moreover, baseball has always. recognized the naryow, : applicability of such precedents even to it, and has never considered them blanket immunity from, all antitrust regu- lation. Rather, baseball has interpreted the Toolson rule to’ mean only that its historic and evolving internal structure and rules are not subject to antitrust attack. ‘The 1964 memorandum of Paul Porter, counsel for the Commissioner, to Commissioner Frick (referred to in Petitioner’s Brief at p. 25) provides an illustration of this view.* Mr: Porter’s - . Memorandum considered the acquisition of the New York -Yankees by the Columbia Broadcasting System and advised that Toolson did not cover any antitrust issues which might . | Lal by the acquisition by CBS of a baseball ¢lub. e District Court. adopted this. limited _ view- ofthe ~~ scope of the Toolson doctrine (312 | F. “Supp. at 407 n. 3% . App. 86) as did the Wisconsin Supreme Court in 1966. Wisconsin v. Milwaukee Braves, Inc., 31. Wis. 1 699; 725, - 144 N.W.2d 1, 15 (1966), ceft. denied, 385 U.S. (1966). The Wisconsin Court observed that ‘baseball’s “exemption - does not cover every type of business activity to which a baseball club or league might be.a party...” but that cover- age ‘clearly includes at least baseball's “agreements and - rules which provide for the structure of the organization and the decisions which are tiecessary steps in maintaining it.’ Nothing more than these fundamental structural ele- _ ments and rules—the same matters répeatedly considered — * “Background Memo on CBS Acquisition of Yankees,” Oct. 7, 1964, contained in the record of 1965 Senate Hearings on Profes- sional’ Sports Antitrust Bill. Hearings on S..950 Before the Sub-. Comm. on Antitrust and Monopoly of the Senate — Comm., - 89th Cong., 1st Sess. (4969), p. 159. |. iat 30 ee: ; a and bined necessary by tuition of Congress—have ever been presentéd to. this Court; and it is only these essential sports aspects and practices which Toolson shields. _ Despite Petitioner’ s arguments, there are no broad prin- ciples at stake here. The issue is simply whether this Court should abandon its-historie position that the structure and rules of baseball are-not subject to the antitrust laws. The record in this action utterly fails to ee such a: drastic a . eee | Pe B. The Recosd in This Case Demonstrates Affirm- ' ative Grounds for Continued Adherence to », Toolson. t (1). Baseball’s Continuing ee on this Court’s } - Prior\Decisions. | Federal Baseball and Toolson have: for Aionies provided —— —hbaseball clubs with a clear guide for conduct, to enable them ° to plan their affairs with assurance. This judicial guide has been at the very core of the ha a i of baseball -as it is today. | _ The record in this:case shows, without contradiction, that ‘baseball clubs have continued since Toolson and Radovich to invest: millions of dollars in player contracts and other _ baseball assets (Pl. Exs. 10-11), togpila private ‘stadiums « -’and enter into long term leases on public stadiums (App. 290-91; R. 1454-58, 1752), to acquire new fraychises at costs reaching ten million dollars each (PI. Exs. 10-11) and to * /make numerous other commitments, all in reliance upon /_daseball’s antitrust exemption . and in particular upon the validity of baseball’s reserve system.. - The testimony of Francis Dale (App. 291-94), Ewing Kauffman {App. 325-26), John McHale (R. 1313-19) and ‘Robert ns as 1358-60), all men who have Parchased. 3 a | ee oe ' or participated i in ihe purchase’ of major Sine clubs since Toolson, was unanimously and pointedly ‘to the effect that ‘the investments: which they had made in . baseball would never have been made if.the baseball business were not pro- - tected by the Toolson exemption. In each case this reliante 4 on baseball’s historic exemption was quite explicit and sig- . " nificant, not merely a matter of casual interest. i Moreover, Mr. ‘Kauffman, the president—« the new a Kansas City club, testified 1 that_his "understanding of the a ers which he (developed—providea the. rationale for his 5 in: vestment:of well over a million dollars in his new. baseball Player aca my €«R. 1459-67). Mr. Kauffman brings to his - . academy ; y/ oung athletes with little or no baseball experience ’ and little chance to reach college. At the academy the Kan- sas : Lity club evalyates and develops their potential, while at the same time providing them with continuing education . at the college level (R. 1461). Basic to this program is the knowledge that the Kansas City club will enjoy the benefit of the talent which his efforts may produce (R. 1459-67). ‘An- examination of the Milwaukee Braves’ prospectus. of . 1963 (Def. Feeney Ex. K), relating to the only recent public ‘offering of stock in a basgball club, reveals the éxtent of. — investor. reliance on the reserve system. The prospectus — describes the reserve system, discloses that the Braves’ player contracts constitute substantially all of its assets, describes each player under contract, and assures the in- vestor that” such contracts are “subject. to the control of the Braves. ” (Def. Feeney Ex. K, p. 10.) It also observes that “the competitive success of a baseball club, which: bears a strong relationship to its financial success, depends pri- marily upon the playing skill of players under contract ta the club.” (Def. Feeney Ex. K, p. 7.) Obviously, the reserve ' system was critical to any investor analysis of the Braves’. . offering. - Such shales coula, be apiaeit: at agi ‘The fact is 3 that nothing could be more central to investor concern than _ baseball’s-antitrust status; and the continued reliance by baseball investors on Toolson strongly supports adherence . . to that decision. Judge Moore, rene me put it well: : ? “Just as ‘écBapcmn Court in 1955 recognized that ‘ baseball ‘had grown and developed’ and ‘in reliance .on the Federal Baseball precedent,’ United. States v. ’ Shubert, supra, 348 U. S. at 229, so much more has it grown between 1955. and 1971. The eight teams in gach league have’ been expanded to twelve... . The reasons for adopting a ‘hands off’ policy by the courts - _of this particular sport have multiplied. ™ 448 F.2d at 272 (App. aioe aff 2) The Role of: Congress,/ J ‘In the Radovwich ‘decision, this. Court plainly samouneed that. baseball’s stafus was for Congress to consider, not the eourts. This Court held that “as long as the. Congress con-. tinues to acquiesce we should adhere.to. . : the iriterpreta- - tion of the [Sherman] Act made in” the. earlier baseball " cases. 352 U-S. at 451. This Court further. stated: “We, therefore, ‘conclude that the orderly way to ' "eliminate error: or. discrimination, if any there be, is by legislation and not by court decision. Congres- sional processes are more accommodative, affording oe the whole industry hearings and an opportunity to — assist \in the formulation of new legislation. The - resulting product is therefore more. likely to protect - the industry and the public alike .. . .. [T]he doctrine ance.” 352 U. S. at 452. ‘Despite Petitioner’ s efforts to turn this Court’s = — down to impose on ries ara the burden of obtain- ‘ of Toolson and Federal Baseball must yield t@ any congressional action and continues only at its suffer- ‘a Oe Py ‘ 33 ing Osnrenitial action, the Toolsos i Federal Baseball . ryle was plainly intended to stand unless and until dis- turbed: by Congress. ‘Fhe history “of Congressional con-. sideration of this subject not only fails to show that the— rule announced by this Court moe be disturbed, it ie affirmative support for that rule.*: Immediately following the Radovich’ ‘decisia. in 1957,. Congréss began intensive consideration of various legisla-_ ' tive proposals dealing with the antitrust laws ond pro- fessional team sports. ‘hg: ‘Most of’ these proposals “would lave oxiamstin’ antitrist os immunity to the basic sports structure and practices of . football, hockey : and basketball—to match baseball’s im- munity. ' *** Such immunity would have expressly included . : _the employment, selection and eligibility of players and the ~ assignment. of their-contracts. ‘Some proposals would have completely - exempted from the. antitrust laws all profes- : *,. sional league sports, while others would have revoked base-, . ‘pall’s' status under Toolson. * . The record of. this Congres- * Prior to Toolson, Congress was principally poncanaior about ‘the | _ ossification of the major league map which was limited to the north- - east quadrant of the country and did not reflect the westward move- _ ment of population. Since that time, major league baseball has moved =~ west and south: (and to Canada as: er to present the game to the public on a truly national basis. — _** In the House, Emanuel ‘Cellier, Chalet of the ‘House Anti. , trust Subcommittee, said on June 17; 1957, at the opening of hear- . ings: “[T]he obligation rests upon the Congress to determine whether the Supreme Court decisions are discriminatory and, if so, how this. discrimination should be resolved.” Hearings on H-R. 5307, et al., Before the Antitrust Subcomm. of the Comin. on the Judi-- ong., 1st Sess. (1957), ee: ‘ \ * ball has consistently supported such lestilatice. Bg g., testi-« mony of Ford C. Frick, Commissioner of Baseball, Hearings on H.R. 10378 and S. 4070 Before Subcomm. on Antitrust and Monopoly the Senate Judiciary Comm., 85th Cong., 2d Sess. (1958), pp. 9 20 05; Hearings on S. 2391 Before Subcomm. on Antitrust and Mono re aly +e the Senate daar: Comm., 88th Ome, 2d Sess. (1900-9 34 C~# gional seciabaacsitlin As. a, seesuaciead'3 in Defendants’ Kuhn. _ ExA,a stipulation covering the Congressional history dur-. ing the. period. 1951-1970. Since November 1953, when the’ | _ Toolsom opinion was handed;down, there have been over 50 ' - »*' bills introduced into Congress dealing with the appli¢ability or non-applicability of the antitrust lawsto organized base-. . ball; and Congress has held numerous hearings during that : time which have included consideration of the reserve sys- tem 2 and the antitrust laws. : : “ay ‘In 1957, seven bills were ibrodees’: ‘They 3 were of the three types referred to above. Approximately 50 wit- nesses testified in 15 days of hearings before the. ‘House Antitrust Committee concerned with these bills. -H earings on H.R. 10378 Before Antitrust Subcomm. of the! ‘House. : Judiciary Comm., 85th Cong., 1st Sess. (1957). _° (2)-In 1958, the House passed a bill ex€mpting from the © antitrust laws the essential structure and practices of all . professiénal league sports, including their reserve systems (H.R. 1037 8). The bill had been amended on the floor of the _ House to-delete language wen the exempted: activities Rs to those “réasonably necessary.” An identical bill was introduced i in the Senate (S. 4070) and the Senate Antitrust - ‘ Subcommittee; held 12 days of héarings at which 37 wit- , . nesses testified. Hearings on H.R. 10378 and S. 4070. Before Subcomm. on Antitrust and Monopoly of the Senate Judici- ¢ ” ary Comm., 85th Cong., 2d Sess. (1958). No action was cea taken on the Senate bill: before the session ended. 7 ~-(3)' In 1959, hearings w held by the Senate Antitrust ’ Subcommittee. on a bill sfmilar to the 1957 and 1958 bills, providing an antitrust exemption for the essential structure _ e _and practices of league sports.. Hearings on S. 616 and S. 886 Before Subcomm. on Antitrust and Monopoly of the - : Senate Judiciary Comm., a6th. Cong., 1st Sess. (1959). Hear- ings were also held.in the House on comparable bills. Hear- © 4 ‘tm ‘ 7. ‘* - Be i a o- . 6 ings on. H. R. 2370 et a; Before the Antitrust Subcomm. 4 of the House Judiciary Comm., . 95th Cong., 1st Sess. ( 1939). (4) In‘1960, hearings were held by the Seniite Antitrust | Subcommittee on a bill which. would have continued base- ball’s antitrust exemption, with certain limitations, and | granted antitrust immunity to the other league: sports, . . Hearings on S. 3483 Before Subcomm. on Antitrust and . Monopoly of the Senate Judiciary Comm., 86th Cong:; Py 2d Sess. (1960). ‘The bill was reported out, the limitations were ; removed on the floor, but the bill “was: ‘recommitted and no. further action was taken. ; (5). In 1964, hearings \ were , held by. the Antitrust Sub-- : . - committee of the Senate on a bill similar to many of those previously introduced, granting exemptions for the essen- tial structure and. practices of sports. H earagas on S. 2391. ~ ime Before Subcomm. on Antitrust and Monopo jofithe Senate .-. . Judiciary Comm.,:88th Cong., 2d Sess. (1964). The forzial oe ' ~ report of the Committee on the J udiciary concluded: “Phe Committee believes that the’ existing abi of: . . Self-regulation in these team spdrts should. be con- . tinued.” Senate Report No. 13 3; 88th Cong., 2d° Sess. (1964), p. 8. a vi (6). In. 1965, additional bills were introduced, siedias to - . those considered in previous years.’ Hearings Hac -held in the Senate. Hearings on S. 950. Before Subcomr on Anti- ae? trust and Monopoly of the Senate Judiciary Co oth . - Cong., 1st, Sess. (1965). ‘The Senate Antitrust Shalaciliendt vs tee reported favorably on a bill éxempting tlie structure and - fundanterital practices of professional sports. _ Significantly, the Report stated: . " “These exemptions permit thé: use of the aratt ayetenii ZA and the ‘reserve clause’ in addition to regulations © restricting the nateinmermr selection and. assignment *. “s : ietade ae oe % . ‘ ‘ oe ‘ : *, . $ ° bee ae “¢ e ; . i “” ® , . ‘ ‘ ; ; ‘ 36° . . - | of pinyer eoutracts. The committee considers these - exemptions as necessary, to“ maintain competitive . equality among the’ member clubs and leagues in the various sports.” ‘Senate Report No. 462, 89th Cong. +? Ist Sess. (1965), p- 13. Soa w we This bill was subsequently passed by the Sislate: but no _. action was taken by the House: _ Each bill. which has passed either House .of eeceses (H.R. 10378, 85th Cong., 2d Sess. (1958) and Senate S. 950, . ..__ 89th Cong., Ist Sess. (1965) ), provided that the professional . league sports would be exempt from the antitrust laws with | _ Tespect ta “the employment, selection or eligibility of.play- .— , ers, or the reservation, selection, or assignment of player -° contracts”, and provided as well that the franchise and ‘league arrangements of the ‘sports would be exempt. ~ | Moreover, -when. Congress has enacted laws in the profes- sional sports area, the effect of ‘such laws invariably has- ’ been to codify or grant an ‘antitrust exemption, not eliminate it. In 1961, Congress adopted the Sports Broadcasting Act, ’ which permitted professional football, and the other pro- fessional league sports, to adopt joint league telecasting practices. 75 Stat. 732 (1961), 15 U.S.C. SS 1291-95.** In 1966, Congress enacted ‘another measure for. professional : _ * Football had sought legislative action after it had been held in. ; United States-v.-National Football League, 116 F. Supp. 319 (E-D. . Pa: 1953) and 196 F. Supp: 445 (E.D. Pa. 1961), that certain as- , pects of. its television policy were illegal under the Sherman Act. : **15 USC. .§ 1294 provides that: “Nothing contained in this chap- ter shall be deemed to change, determine, or otherwise affect the appli- ‘cability or nonapplicability of the antitrust laws. to any‘ act, contract, agreement, rule,-eourse of conduct or other activity by, between; or . among engaging in, conducting, or participating in the o fessional team sports of football, baseball, basketball, or +f Potkey, ex except the agreements to = section 1291 of this title shall Conapplicabilit . x or indicates that baseball’s 2 antitrust exemption | has not been supplanted by the more limited telecasting exemption. _. This reading- of o the Act.is supported by its legislative history. See ~~, resarhep of, Congressman McCulloch, 107 Cong...Rec. 20,062 i961). es te = . . e a : — e football, this time to authorize the merger of the National © and. American Football Leagues. 80.Stat. 1515 (1966), 15 . U.S.C) § 1291. Consideration is now being given to legisla- tion which would authorize the: merger of the National: Basketball Association with the American Basketball Asso- . ciation and hearings are. in progress béfore the Senate Judi- | _ ciary Committee. In addition to the NBA- ABA. merger proposal, Congress . has under current consideration bills which, like those dis- _ eussed above, would either place baseball under the anti- ~ trust laws or extend to the other professional team sports | _’an immunity for essential sports practices, including the . player reserve system. S. 2499, S.. 2616, H.R. 2305, H.R. 11033 and H.R. 10825, 92nd. Cong., 1st Sess. (1971). ae ‘In the context of this Court’s express invitation to Con- gress to consider the Toolson exemption, this history, of. Congressional aetivity and the failure of Congress to enact legislation disturbing baseball’s exemption is highly signi- . ficant, as the-District Court recognized. 316 F. Supp. at 279 | (App. 110-11). The Wisconsin Supreme Court described this Significance quite clearly: “[S]ilence of Congress in “this. context demon- _ strates congressional recognition that league struc- ture and the related agreements and rules are integral parts of professional baseball as it exists, and that the application of the familiar type of anti- trust legislation to the structural arrangements of organized baseball is inappropriate; . . . there is to be self regulation [of baseball] until such time © as Congress decides that the public interest requires ‘other control.” Wisconsin v. Milwaukee Braves, Tnc., 31 Wis. 2d 699, 730, 144 N.W.2d 1, 17, cert. .~ : denied, 385 U. 8. 990 (1966): ; Congress remains the proper avenue for say reconsid- - eration of baseball’s regulatory status. If regulation were ever found to be desirable, that regulation should take 38 | “other forms in preference to traditional antitrust regula- tion. Only Congress has suffitient flexibility and legislative *._ power to shape regulitory policy for baseball on a. fair -and effective basis. "6 ° ¥ : (3) The Role of Collective Bargaining. - In our Statement of the Case (pp. 15-19), the history and results of the labor negotiations in baseball are set forth. That ‘recital abundantly demonstrates the efficacy of col- lective bargaining in baseball: This new avenue for agree- ment and accommodation between clubs and players pro- vides a cogent additional r reason for this Court to adhere to the Toolson rule.* . Toolson Tecognized that Congress was istorced to the courts as an agency for change in -the’ baseball business. Now,.a demonstrably efféctive player collective bargain- ing organization offers another agency for change in areas ‘which, like the subject of Petitioner’s complaint, are funda- ~ mentally labor-management disputes. . Modification of baseball’s reserve system .is: possible— even likely. The Commissioner of Baseball testified at trial the reserve system is an “evolvi ing” system and that:-he ex- - pected “it to continue to be an ‘evolving system”. (App. 273.) But.such modifications should be worked out by the ‘parties themselv es as part of the entire fabric of baseball. + Petitioner suggests that collective bargaining is only a partial answer here because minor league players are not represented by * ‘the Players Association. But Petitioner is a major league player, Respondents are the major league clubs, and the rules complained of: heré aré the Major League Rules. The reality of the situation _is that. the Players Association and the major league clubs aré the_parties which deal. with the subject of baseball’s. player arrange- _ - ments, and there is no indication that these parties have disregarded minor league interests in resolving their disputes. To the’ contrary, the interests of minor league players—as major league trainees and past and fyture major league payee are eyastantty being advanced ) oy ag Fiayets Association. ; ° The District: Court agreed, and-observed that “the conflicts '... are not irreconcilable and ‘that ‘negotiations could pro. ance an accommodation .. . equitable to all concerned—in ~ essence, what is called for here is continuity with change.” 316 F.Supp. at 282 (App. 115). Antitrust litigation can- ‘not produce such salutary results, it ¢ _ only’ produce 7 harrassment and disruption’ Thus Toolson, in: shielding baseball from antitrust litigation, promotes more rational and constructive evolution of baseball’s reserve sysfem. ‘ ‘C. Petitioner Has. Shown ‘No Justifications Which Overcome “the Weighty Considerations: in . Favor of Adherence to the Toolson Precedent. "As this Court. has recently stated: “Very weighty con- - . siderations underlie the principle that caurts should not | : lightly overrule past decisions.” Moragne v..States Marine. i Lines, 398 U.S. 875, 403 (1970). ' Petitioner sought a trial in order to demonstrate new facts. sl about the baseball business since 1953, the year of Toolson, which he claimed would outweigh all such considerations. -. .But at trial he was unable to do so. _ 2 Petitioner’s main effort in this direction at trial to point to the adoption of the free agent (or amateur) \player draft in 1965 as a drastic additional | restriction which allegedly weighs heavily against Toolson. (Pet. Br., p. 23.) That draft,.to which Petitioner was never subject, permits the clubs to select negotiating rights to amateur players in _ reverse order of their league standing at the’ end of. the preceding season. .Such rights are valid for a six;month period,* after whieh an unsigned player becomes subject to *In the other professional spotts, . all of which have amateur * player drafts, the drafting club receives perpetual — rights to the player. (Pl. Exs. 14, 17, 19-20.) ~~ “ee 4 Se | oo reselection by another-club. The purpose of the draft is to enhance competitive balance by permitting’ the weaker clubs to,have first chance at. the available amateur players.* | - .The record indicates that this purpose has been achieved in that some elubs, especially the recent expansion clubs, _ have through the draft greatly improved ‘their quality (App. 249-50; R.:1203-4). And from the standpoint of — drafted playets, there appear to be no serious drawbacks. The annual aggregate of bonus payments to such players upon the signing of their first professional contracts’ re- “mained virtually the same after the draft rule was insti- | tuted.as before, when. all clubs could bid for a playes’s serv- | ices. - (Def. Kuhn Ex. C.) The District. Court concluded - that the draft did not “fundamentally” add to the restrie- tions of the reserve ‘system and had no significance in: ; considering the Toolson rule. 309 F.Supp. at 803-04 (App. 70-71). In another direction; Petitioner now tries to denigrate. . baseball’s reliance on Toolson, arguing that since Congress could place baseball under the antitrust laws at any time, Toolson offers “little ... assurance.” . (Pet. Br., p. 24.) But Petitioner misses the peint. ‘BasebalW&@onceded: -amenabil- ity to Congressional regulation i is diffetent from—and far less disruptive than—vulnerability to antitrust litigation. This Court clearly recognized the difference in referring i in Radowch to the “orderly” and “more accommodative” processes of Congress as opposed to the “harassment” of a “flood of litigation.” 352 U.S. at 450- 52. * Comimissioner Rozelle of the National Footbalt League testified * that professional football’s college player draft was essential to - league balance ( App. 222), and ‘Commissioner Kennedy of the National Basketball Association said that the adoption of a common college player draft was an important purpose of the proposed NBA- ABA Merger (App. 229). . Zz eo se Petitioner also argues that recent decisions of this Court.’ - have undermined, as supporting pillars of stare decisis, the | importance of both reliance interests and Congressional c approval by inaction. But there i is nothing i in this Court’s decisions which indicates departure. from the traditional | views expressed: i in Toolson, Shubert and Radovich. - For example, in Canada Packers, Ltd. v. A. T. & S. F. R- Co., 385 U.S. 182, 184 (1966), both Congressional approval and reliance interests were plainly recognized. This Court — held that it should not. “disturb”. existing statutory con- — struction when presented with a “long standing” rule, and no showing of “particularly unfortunate. consequences”, y when Congress has not “seen fit to intervene”.. In Joint Industry Board v. United States, 391 U.S. 294, 228-29 (1967). this Court noted that “in every Congress | ‘since [the prior. decision] bills have been introduced to overrule or modify the result, reached in that case” and held that “any new ' Fesolution . . . Should come from~ _. Congress.”* * To the same effect are , United States v. South Buffalo Ry. Co., 333 U..S. 771, 774-75, 784-85 (1948) (On questions of “statutory ' construction, not of constitutional import,” Congress can “rectify” .. judicial mistakes; “Congress has considered the alleged mistake and decided not to change it.”); Walling v. Halliburton. Co., 331 U. S. 17, 25 (1947) ( “Knowing of the [prior] ... decision, the Congress - has: permitted [the statute] .’. . to stand unmodified “and the courts _ have applied it as so construed. Employers and employees . . . have regulated their affairs on the faith of it.”); Helvering v. Grifiths | 318 U. S. 371, 403 (1943) (“To rip oftt of the past seven years . a principle of law ‘on which [the parties] .. . have acted would pro- _ duce readjustments and litigation so: extensive we would contemplate them with anxiety.”); Missouri v. Ross, 299 U. S. 72, 75 (1936) (Congressional inaction considered “persuasive evidence of the oe: tion by [Congress] . - of ‘the judicial constryction.”’). re 4200 _ ‘The cases cited by Petitioner* are all quite distinguish- able from this action in that none of them involves the _ combination of: (1) , opinfon further stated: “To hold that inbadaiore: sallecties, jarraining is completely pratected would effectuate the congres- sional policies of encouraging free .coiiective: bar- gaining, ,subject only to specific restrictions con-:. tained in the labor ‘laws, and of limiting judicial intervention in labor. matters via the antitrust route: ~ —an intervention which necessarily under the Sher-- man Act places on judges and juries the determina- tion of ‘what public policy in regard to ‘the indus- trial struggle demands’.” 381 U. 8. ‘at 710. (Cita- tions oinitted. ) | : The | opinion Gutaend that the. history of the s develop. ment of — labor Policy: | | | . makes clear that Congress intended to foreclose sader and juries from roaming at large in the area. "of collective bargaining, under cover-of the antitrust _ laws, by inquiry into the purpose and motive of the 7 “employer and union bargaining on mandatory~ _jects.. Such roaming at large, experience shows, -.. leads to a. substitution. of judicial for congressional : judgment: as to how collective bargaining should operate.” 381 U. S. at 716. , , | Under this opinion the reserve system, as a mandatory . subject, is outside the réach of the Sherman Act.* — - A somewhat-different approach was taken in the opinion in Jewel Tea of Mr. Justice White, in which Chief Justice Warren and: Mr. Justice Brennan joined. This opinion would not, automatically prevent the application of the anti-’ ~ .trust laws. simply because the subject matter in dispute is a .mandatory subject . of collective: bargaining. It calls instead for a comparative analysis of the impact of the policies of both the federal antitrust and labor laws.. In _ Jewel Tea, there was a plain anticompetitive effect on the pleintiff, an employer member of the multi-employer bar- gaining. unit, hecause. it was not permitted to market pre- packaged meats except during the hours when its fellow | employ er competitors engaged butchers. | _ There. was also. . an adverse effect nbers of the publie | because they were precluded ‘from purchasing prepackaged meats dur- ing evening store hours. But the policy of the labor laws was nevertheless found to be of greater Weight, and an im- portant element in this determination was the fact that a’ ' mandatory subject was involved. 381 U.S. at 689-91. - eae On the other hand, in United Mine Workers v. Penning- ton, 381 U. S. 657 (1965), a.companion case to Jewel Tea, ' antitrust policy: was found (over the dissent of Justices Goldberg, Harlan and Stewart) to outweigh labor policy. In that case, a coal mining company had agreed with a . union to increase wage levels; and the union. agreed to impose those wage levels on the company’s smaller com- - . petitors, regardless of their ability to pay, in order to _ eliminate the smaller companies. The union’s interest in ' * Petitioner’s brief (p. 41) argues that this opinion does not ex- empt “hard-core ‘anticompetitive commercial restraint’”, suggesting. ‘ that such restraints are present here. But the pages cited by Peti- tioner:' (381 -U. S. at 732-33) refer explicitly to “nonmandatory . subjects of bargaining” as distinguished from mandatory subjects — such as the reserve system. ° » . 61 _ the mandatory subject of wages was : plain, bat the wage arrangement was found to be primarily a conspiracy to - curtail competition outside the bargaining area and thus an antitrust violation. : In this case,.as in Jewel Tea, the labor aspects predomi- nate and labor policy should control. The. issue here is purely between employers and employees, it is a mandatory subject, it has been. dealt with in a collective bargaining ~ | agreement,* and it has been the subject. of continued nego- - tiations. The Players Association may not embrace ‘the ‘present system entirely, but it has bargained about it, _ reached accord and lived under it, benefited from the sta- bility-which it has engendered, and even now seeks only its modification—not its destruction. (App. 188- 90.) - Qn the other hand, the only effect of the reserve system on competition is that it prevents-the baseball clubs from freely acquiring each other’s employees. Unlike the situa- tions in United Mine Workers v. Pennington, 381:U. S. 657 (1965) and United States vy. Women’s Sportswear Mfrs. " Ass’n, 336 U. S. 460 (1949), which are. relied upon by Peti- tioner, the effects here are on participants in the bargain- | ing (as in Jewel Tea), and not on competitors of the employer who are strangers | to the bargaining. There is absolutely no antitrust issue here between ecqnomic com- petitors outside of the bargaining area. In such circum-. stances, labor policy should prevail over antitrust policy. * Even if the reserve sy stem were not' part of a’ collective bargain- _ing-agreement_it_would-make no difference. ‘Unilaterally adopted - work rules are exempt from the antitrust laws as long as the stand- . _ . ards of Jewel Tea are otherwise met.: Carroll v. Ayierican,Federa- tion of Musicians, 372 F. 2d 155, 165 (2d Cir. 1967), aff'd in part and rev'd in.part on other grounds, 391 U.S. 99 (1968). The test is . concerned with the subject matter at issue, not whether bargaining - = culminated i in agreement. 52 PXitioner, in his brief (pp. 40-42), dismisses the impor- tance of Jewel Tea for the reason that Respondents are not a labor organization, and thus presumably the “labor ex- emption” cannot be applicable. This ignores the fact that the labor exemption as an expréssion of the policy of the federal labor acts is intended to protect the “practice and 7 : procedure”. of collective bargaining. National Labor Rela- tions Act, Sec. 1, 49 Stat. 449 (1935), 29 U.S.C. § 151. This goal can be accomplished only by exempting from antitrust attack the subjects of collective bargaining, not merely one of the parties. See Clune v. Publishers’ Ass’n of New York City, 214 F. Supp. 520, 528-29 (S.D.N-Y. 1963), aff’d, 314 ‘F.2d 343 (2d Cir. 1963). Petitioner’s one-sided view of the labor ‘relations antitrust exemption, leaving one party vul- _ nerable and the other exempt, would plainly have a ‘chilling effect on collective bargaining ‘i in general; and in particular on the process of bargaining. in baseball ‘about —— _ tions to the reserve system. -— : . It should not be overlooked that the issue of the reserve . system—the sole issue in this case—has been dealt with by - the parties at the bargaining table in the much wider context of the whole gamut of issues which have confronted them. In this context, concessions on one issue are miade in: ex- change for concessions by the other party elsewhere. New. concepts can be adopted on a temporary-or limited basis to test their viability.. Ultimately, matters are resolved by . _the parties who must live and work on a. daily basis with | ' the results of their arrangements. It is considerations of this sort. which underscore the wisdom of federal labor policy and demonstrate why this is an appropriate case for _ application of that policy i in preference to the policy o of the _ antitrust laws. , ~ | Bile _ | a _ Baseball’s Reserve System Is Not Subject to State iy Antitrust Regulation. _ “* sah ‘Neither the District Court nor the Court of Appeals _ found any merit in Petitioner’s. state law claims. Those claims had been fully litigated as recently as 1966-when the Wisconsin Supreme Court riled that the interstate business _ of baseball could not be regulated by state antitrust. law, ecause such regulation was foreclosed by the Supremacy : and Commerce Clauses of the United States Constitution. * Wisconsin v. Milwaukee Braves, Inc., 31 Wis.2d 699, 144 '~ N.W. 2d°1, cert. denied, 385 U. S. 990 (1966). 7 As the District Court Observed in agreeing with the Wis- - _ consin decision: | oe poe . +. “Certain of the majority [of the Wisconsin Su- . preme Court] were of the opinion that state regula- ~ tion was preempted because it would interfere with . a Congressional policy permitting self-regulation for baseball which they saw as implicit from the silence: _ of Congress in this -particular context. Others in the majority preferred the view that the national character of organized baseball and the ‘necessary inter-dependence of the teams requires uniformity of regulation and that ‘since orgatiized baseball oper- “ates widely in interstate commerce, the regulation, . , if there is to be any, must be prescribed by Con- " gress’.” 309 F. Supp. at 807 (App, 77). ~ The dual rationale of the Wisconsin case is fully appli- cable and- controlling here. 7 - Tf is a long-recognrized | imperative of the Commerce :. Clause of the federal Constitution that state and local laws s ' may not unreasonably. and ‘unduly burden interstate com--— ay "merce. Petitioner argues that state antitrust regulation would not be burdensome. But the District Court, after 7 considering the nature of the baseball industry: and.the pro- ' visions of the various state laws Petitioner attached to his post-trial brief, found otherwise :. ” ‘The Court of Appeals agreéd, and rejected Petitioner’ s. “We do not believe that the operation of baseball and its reserve system i§ a matter which admits of” diversity of treatment. State and local laws may not unduly burden interstate commerce. * oe “As wé see it, application of various and diverse state laws here would seriously interfere with league play and the operation of organized pasepetr ” 316 ‘F.Supp. at 280 (App. 111). ° suggestion that the burden could be avoided by — with the strictest state standard: oe “Professional baseball.clubs, althoanh existiag 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 farreaching than that in Southern Pacific Co. v. Arizona, supra. On the other hand, we do not find that a state’s inter- ad 4 est. in- antitrust. regulation, when compared with its © interest in health and safety regulation, is of par- ticular urgency. - Hence, as the burden on interstate commerce outweighs the states’ interésts i egulat- ing baseball’s reserve system, the Comal clause precludes the application here of state antitrust law.” 443 F.2d at 267-68 (App. 130-31). {Footnote omitt&.) . . a age See _ This ruling is entirely consistent with the principles de- veloped in Southern Pacific Co. v. Arizona, 325.U. S. 761 > (1945) in which this Court held that: - i {T]he states have not been deemed to have authority - to impede -substantially the free flow of commerce from state to state, or to. regulate-those phases of the national commerce which, -because of the need of na-. tional uniformity, demand that their regulation, if any, bé prescribed by a single authority.” 325 U.S. ~ at 767. | ae There can be no doubt, that uniformity of regulation is ~ required insofar as baseball is concerned. To permit appli- | ~ Cation of the. various state laws, as Petitioner seeks, would - “seriously interfere” with the operation of baseball, because | nonuniform regulation would make league ‘play impracti- cable.* 316 F. Supp. at'280 (App. 111). - In fact, there has never been any state antitrust regula-’ tion of baseball. Only the State of Wisconsin has attempted - local regulation, and that attempt spawned nothing but con-. flict and'disruption. The Wisconsin trial court ordered the Braves baseball club to return to Milwaukee from Atlanta -- where it had relocated, the federal district court in Houston — enjoined the enforcement of the order: of the Wisconsin * The NLRB, in asserting jurisdiction over- baseball, noted that: - “[I]t is apparént. that the Employer [baseball], whose operations are so clearly national in scope, ought not. to have ‘its: labor rela- tions problems subject to diverse state labor laws.” American Le, and Ass'n of Umpires, 180 NLRB 190, 192 (1969). (Footnote omitted. ) 56 court, and a Georgia state court ordered the same club to remain in Atlanta. City of Atlanta and Fulton County Rec- . reation Authority v, Atlanta Braves, Inc., Case No. B-17638,. _ Atlanta, Ga., Sup. Ct. (Feb. 8, 1966). The Wisconsin trial court (or a board or. commission to be created by it) was also prepared. to preside over the creation of a new major league club and to determine the players to be assigned to’ - that new chib from other eclubs,-and the tonsideration to be paid for-them, as well as other details of thé entry of the new club into the baseball structure. Wisconsin v. Mil- -’ waukee Braves, Inc., 1966 CCH Trader§as. J 71,758 at pp. 82.411-12 (Wise. Cir. Ct., Civil Div., Mil. Cty., 1966). The ‘ power of state courts 1 in .this area, once unleashed, could be disastrous.*. > The Wisconsin attempt at repalatipe. property foreclosed . by the Supreme Court of that state, indieates the kind of state conflict which: is quite probable** and illustrates the * Petitioner asserts in his brief (Pet. Br., p. 35) that the Court of Appeals, below held that state antitrust regulation would not involve ~ any conflicts. On this point, he plainly. misreads that court’s opinion. 443 F. 2d. at 267 (App. 129-30). Moreover, Petitioner has himself {in his brief to the Court of Appeals) indicated conflict by stating that the rule of reason would apply te the reserve system in several ‘states while in others there would be a per se violation. .If Petitioner - were right, a finding of reasonableness under the laws of the rule-of- reason states would be in total and irreconcilable conflict with ‘those | of the per se states. It should also be noted that the antitrust laws ~ of Texas, Missouri and Massachusetts appear to be inapplicable to. the activities of baseball, either because they do not apply to service © businesses or because’ they are inapplicable to interstate commerce, | and the Wisconsin Supreme ‘Court has specifically barred ‘the appli- cation of Wisconsin antitrust law to baseball. > : ” Petitioner contends that under present law actual conflict of regu- lation must: be shown to invalidate state regulation under the Com- merce Clause. (Pet: Br., p. 35.) But Petitioner is demonstrably ° wrong. in. this contention. The authorities all agree that - the _ logical. possibility or probability of diverse or conflicting regula- - tion must be considered in determining whether the Commerce Clause . is a bat to state regulation. E.g., Colorado Anti-Discrimination — Comm'n v. Continental Airlines, 372.U. S..714, 721 (1963); Cali- 57: wisdom of the District Court’s determination that the appli- cation of diverse state laws would “seriously interfere with . ; . the operation of organized baseball.” 316 F.Supp. — at 280 (App. 111). S tale S eee st ‘The other rationale of the Wisconsin decision provides a separate controlling reason for the denial of state regula- _. tory.power. That rationale is not, as Petitioner continues “*- to assert, that the Sherman Act has pre-empted state anti- _ trust law. “Rather, the rationale: is that the policy of the federal government has been consistently to exempt . baseball from the operation of all antitrust laws. There- fore, Petitioner seeks to contradict federal policy when he seeks state regulation of baseball. eee es As the court in the Wisconsin case observed, in coming to the conclusion that federal policy precluded state regu- lation: | 1 th 3 3 “Some members of this Court, including the writer of this opinion, conclude that the silence of Congress in this context sufficiently impliés ‘such policy, and that application and enforcement ofa state antitrust law to decisions of the league as to the location of ~~ _. franchises and membership in “he league would ¢on- .. ’ flict with the national policy in this segment of inter- t = commerce.” 31 °Wis. 2d at 730, 144 N. W. 2d - at 17... cos a : : The District’ Court echoed this analysis, indicating that . | it was necessary to do so in order to give effect to the rationale of Toolson:. © | te “We believe it unlikely that the Supreme Court would have held, as’ it did, that -baseball’s reliance . interests precluded overruling Federal Baseball and , that ‘Congress had no intention of including the busi- ' ness of baseball within the scope of federal antitrust fornia v. Zook, 336 U. S. 725, 735 (1949); Head v. New Mexico. : Board, 374 U.S. 424, 429 (1963). In any event, actual conflict arose - in ‘the Wisconsin. case, and such conflict would be repeated if the. Wisconsin rule were abandoned. | ; Teta _ | oye ‘Nevertheless, Petitioner continues to argue that this Court | 58 laws,’ if. it considered baseball ea nea to itn regulation. Enforcement of such state laws would appear to produce a result inconsistent with the objective of the federal antitrust laws interpreted by the Supreme, Court as excluding the business of: baseball.”,316 F.Supp. at 279 (App. 109). in Toolson was inviting state regulation. Point I of this brief is a complete answer to that argument. Petitioner — K simply refuses to accept the fact that Toolson, Shubert — M and Radovieh referred baseball’s' tatus kee the © | ‘more accomodative processes of- Ooygr ‘The reserve system has been Bey. by Congrei s to represent the very.fabric of the interstate business of base- _ ball.. "fo expose that reserve system to attack under state ‘ law would be to run ‘directly contrary “to the national pol which is “so evident .in the history of Caner coh- sideration f. baseball. below, Petition laws should apply #hd\why; he merely generalized about state law in the abstract as counterpoint to his federal anti-. trust arguments. Despite this, both courts had before them a complete record of the baseball industry and the texts of numerous state antitrust laws. After considering the ‘impact these laws would have on the industry before. them, . both courts concluded that state antitrust regulation was impermissible. 22 Finally, Petitioner aheieohe to avoid the dual vellonsle of the Wisconsin ease” and the opinidge of —_ courts eH to undermine the. decisions of ‘the courts\ r complains that neither the District. Court ~ ° nor the Court: of, Appeals made a particularized inquiry | into state law. But Petitioner never gave either court . assistance, for he failed to assert at any’time which state’s 59 below, by comparing -baseball’s intricate web of leagues, _ Schedules,- rules and regulations to} the operations of a ' “door-to-door seller” and -by implyikg that if baseball is _ exempt from the state antitrust laws then the self-interest — _ of the peddler might also enable him to avoid state regu- lation. (Pet. Br., p. 37.) But this ignores the basis’ for, and the clear language of,.this Court’s opinion in Southern Pacific where the Court held that state regulation is per- . | 2 ‘mhissible so long as it “is local in character and effect, and — its impact on the national commerce does not seriously in- terfere with its operation : . .”, but not if “the need of na-. . tional uniformity” requires that “regulation, if any, be pre- _ scribed by a single authority.” 325 U. S’at 767... : _ Baseball has demohstrated its obvious need for uniform | a nationwide regulation and has shown that ‘serious inter- ference would result from fragmentary and conflicting state _ regulation... Recognition of this by ‘the courts below, and — their faithful application of the: principles of Southern Pacific, can have no adverse impact’ on valid ‘state regula- tory measures, in the field of antitrust law or otherwise. s . ” For ‘the reasons ne stated, the decision of the court below’ Mula b be affirmed. samedi a > : as | ce my sit, > “Jamuary 81, IM te ~“ 7 % . X Wriac: ‘Pak &@ ALBAGHER | ‘Mark F. Hughes i" is “1 Chase’ aris Riaza:: Louis: L. ‘Hoynes, Jr.. ‘ier . New York, New York “10005 - ‘Robert J. Kheel bi Bares, Hosterier: & Pxtrexson 3 Alexander H. Hadden 4 : 1956 Union Commerce Building ‘James P. Garner | Ha: Se. Cleveland; Ohio. 44115. -.. Warren Daane 7 . . Of Counsel : > rn 20S Attorneys for all PO ew tee ts os Respondents. Ga Se ee ORNS a oe 2 Seppe Bowie K. Kulm, barf oe PR: : te? ee st Commissioner: of AS hore ot te PE Ae aes : : Baseball , fe “Agnotb me Pinran = \» Paul A: Porter _ . ADDENDUM B_ “Set’ forth below .are those portions of the Uniform Player’s Contract, Regulations. included as a part thereof, and Major League Rules which constitute baseball’s reserve system: Uniform Player's Contract (Plaintif’s Ex. 3°): The renéwl option “10. (a) On or before January 15 (or if a Sun- . day, then the next preceding business day) of the — year next following the last playing season covered -by this contract, the Club may tender to the Player. a contract for the term of that year by mailing: the same to the Player at his address following his signa- ture hereto; or if none be given, then at. his last address of record with the Club. If prior to the | March 1 next succeeding said Ja anuary 15, the Player - and the Club have not agreed upon the terms of such . contract, then on or before 10 days after said March _ 1, the: Club shall have the right by written notice to the Player at said address’ to renew this contract for the period ‘of one year on ‘the same terms, except. that the amount ‘payable to the Player shall be such _ as the Club shall fix in said notice; provided, how- | ever, that said amount, if fixed by a Major League Club, shall be an amount payable at a rate not less .°.” than 80% of the rate — for the preceding year. ee” _ (b) The Club’s right to renew this contract, as pro- vided in sub-paragraph (a) of this paragraph 10. and * The Uniform Player’s Contract entered in ev idence as Pl. Ex. 3 was substantially modified by: the 1970 baseball collective bargainin 7 agreement. (Def. Feeney, Ex.. N, App. 418-47.): Footnote refer- ences will therefore be made to indicate significant modifications... _. ** The maximum salary cut permissible under this paragraph has -. been reduced. A player’s salary may be cut only 20% in any one year and 30% in any two consecutive years. (Def. Feeney Ex. N, App. 422.) - PT AN NTS OAL TE OTN eT ° CEA WUE) PSE TSS ORI LRTI ea een INURE MMIII TALE NIST NOT HF TA / 4 . . oe CELUI IS ES ; ve om. — BQ the promise of the Player not to play otherwise than © _ with the Club have been taken “into consideration in | — the amount ‘peyene under paragraph 2 | hereof. ” ‘ Minimum salary requirements “62. - Notwithstanding. the rate of payment stipn- lated above, the minimum rate of payment to the Player for each day of serv ice. on a Major League . Club shall be at the rate of $10,000 per year; except, © if a Player physically joins a Major. League Club . on or after September 1,. he shall be paid-during - ~ September at the rate. of $8,500 per year for each day of service until he has accumulated a total of 60 days of Major League service, after which ‘he shall be paid at the rate of $10,000 per year for each day of service. with such Major League Club.* - Payment to the Player at the rate. stipulated above shall be continued ‘throughout any period in which -a Player is required to attend a regularly scheduled. military encampment af the Reserve of. the Armed Forces or of the National Guard — the Club’s * ‘ playing season.’ Requirement ‘that ‘player may ita for pa one club “5. (a) The Player agrees that, while under con-.* tract, and prior’to expiration of the Club’s right to renew this contract, he will not play baseball other- wise than for the Club, except that the Player may’ , participate in post-season games under the conditions. prescribed in the Major League-Rules. Major League Rule 18(b) is set forth on ‘page 4 hereof.” a Participation i in other sports prohibited ve “5. (b) The Player and ‘the Club. recognizé and -agree that the Player’s participation in other sports * The minimum salary has been increased as follows: fost the 1970 season, $12,000, for’the’ 197 1 season, $12;750 and for the ee season, $13, 500. (Def. Feeney Ex. N, App. 419. se ., ht ; . ° , ~ . P : ' ’ . a 2 . ' ‘may impair or destfoy his ability and skill as a base- ball player. ‘Accordingly the Player agtees that he will not engage in professional boxing or wrestling; . _ and that, except with the written consent of the Club, | _- he-will not engage jn: any game or exhibition of football, basketball, hockey or other. athletic sport.”* Assignment of player contract : “6. (a) The player agrees that this contract may be assigned by the Club (and reassigned by any assignee Club) to any other Club in aecordance with “the Major League Rules and the Professional Base- “ball Rules. © - 2. oe To . (b) The amount stated ‘in paragraph 2 hereof ~ which is. payable to the Ptayer for the period stated in paragraph 1. hereof shall not he diminished by "any such assignment, except for failure to report as provided in the next sub-paragraph ( ) (c) The Player shall report to the assignee Club promptly (as provided in the Regulations) upon Teceipt of written notice from the Club of the assign- ment of this contract. If the Player fails so to * report, he shall not ‘be entitled to any: payment for the period from the date he receives written notice _Of assignment until he reports to the assignee Club.” Termination of pléyer contract. | cy f (b) The Cluh-may terminate this ,contract | upon written notice to the Player (but only after requesting and obtaining waivers of this contract from all.other Major League Clubs) if the Player . ‘Shall: at any time: oP oe (1) fail,"refuse or neglect .to conform his personal . ° ‘ ° . RRR AS MEK SRO Ree eet mF ce ROR RT aap ee nce pe OREN UAT . . i EONAR pee PAY bap peeeumet on a a ad YG bai haha aa ae ae v este i) Sat ast RAO uS oulg Ep tte . e'; conduct to the standards of good citizenship ‘and. -. good sportsmanship or to keep himself in first-class « * This provision has been modified to prohibit only sports “involv- ing a .substantial risk of personal injury.” (Def. Feeney Fx. -" N? App. 423:) —@e 4 3s MENS tae emtN en weenie scr " . . ‘ e s | physical : condition or to ‘obey the Club’s ‘training ' ‘rules; or . (2) fail, in the opinion of the Club’s pianapement ‘to exhibit sufficient skill or competitive ability to qualify or continue as a member of the Club’s team ; ; or. ; (3) fail, refuse or neglect. to render his services: _ hereunder or in any other manner materially. breach ' this contract. (c) If this contract is eras tnatell by the Club by | reason of the Player’s failure to render his services | ‘hereunder due to disability resulting directly from . injury sustained in the course and within the scope of his employment hereunder and written notice of -such injury is given by the Player as provided in the Regulations on page 4 hereof, the Player shall - be entitled to receive his full salary for the season ‘ in which the injury was sustained, less all workmen’s - compensation payments sal or payable by reason -. of said “injury. | (d) If this contract is terminated by the Club Aas a ing the training season, payment bythe Club of. the Player’s board, lodging, .and“expense allowance ~ during the training season to the date of termination and of the reasonable: traveling expenses of the Player, . indluding first-class jet air fare and’ meals en route to his home city, and thé expert training . | and coaching provided by: the Club.'to the Player. +. during the training season shall be full peal to. the Player.* (e) If this ‘sient is terminated by the Club dur- ‘ing the playing season, then, except in the case ‘pro-. vided for in sub-paragraph (c) of this paragraph 7, © the Player shall be entitled“to receive as full pay-— ment hereunder such portion of the amount stipu- _ * The Club must’ now pay 30 days termination pay toa player ‘terminated under subparagraph (b) (2) during the hide’ — season. (App. 498.) - lated in paragraph hereof as the number of days of his: actual employment~in the Club’s playing“season bears to the total number of days jn said soltom, _\, provided, however, that if this contract is terminated ~~ under sub-paragraph (b) (2), of this paragraph 7 for failure to exhibit sufficient skill or competitive ability, e a FOUL RES t 2 : the Player shall be entitled to an additional amount i equal to thirty (30) days payment at the rate stipa-| lated in paragraph 2 hereof and ‘the: reasonable traveling expenses of the Player including first-class jet air fare and meals-en route to his home. city.* —. (f) If the ‘Club’ proposes to terminate this con- tract in accordance with sub-paragraph (b) of this paragraph 7, the procedure shall be as follows: : 2 (1) The Club shall request waivers ‘from all other Major League Clubs. Such waiver request ~ must state that it-is for the purpose of terminating this contract and it may not be withdrawn. (2) Upon receipt of..the waiver request, any’ other Major League Club may claim agSsignment ©“ - | of this contract at:a waiver price of $1.00, the priority of claims to be determined in accordance with the Major League Rules. : _ (3) If-this contract is so claimed, the Club shall, . _ promptly and before any assignment, notify the . Player that it had requested waivers for the pur- pose of terminating this contract and that the con- tract had been claimed... Soe ' _ (4) Within 5 days after receipt of notice of such - claim, the Player shall be entitled, by written notice .to the Club, to terminate this contract on the date. of his notice of termination: If the Player fails so. _ to notify the Club, this eontract shall be assigned to. the claiming Club. . - Bas Ad rc LN ia ss Agha ohm a PRE Oe COLNE OS Pipe ae . ‘ * The termination pay provided .in subsection 7(e) has been in-» ..’ _ creased from 30 days to 60 days for the 1970 séason and, with respect to any terminations occurring on or after May 15 in the 1972 season and thereafter, the player shall be entitled to the full balance of salary payments due under his contract to the end of the. season. (Def. Feeney Ex. N, App. 421; App. 498.) _ PETRY Sete OR INS PROM: @x i’) .(5) If the contract is ae claimed, the Club shall promptly deliver written notice of termination to the Player at the expiration of the waiver period.” Incorporation of Major League Rules “9. (a) The Club and the Player agree to accept, abide by. and comply with all provisions of the Major League Agreement, the Major League Rules, the Rules or Regulations of the League of which the _ Club is a member, and the. Professional Baseball . Rules, in effect on the date of this Uniform Player’s . - Contract, which are not inconsistent -with the. pro-. visions of this contract or the provisions of any agreement between the Major League Clubs-and the -, Major, League. Baseball’ Players Association, . pro- _ vided ‘that. the Club, together with the’other Clubs’ ~ ‘of the American. and National Léagues andthe Na- _tional Assoqiation, reserves the right to modify, sup- ~ plement or repeal any provision of said Agreement, Rules and/or Regulations in a manner not incon- _ sistent with this contract or the provisions of any _ then existing agreement between the twenty. Clubs - and the. Major ‘League Baseball: Players Association. _. A copy of thé Major League Agreement, the Major "League Rules, the Rules or Regulations of the League of which the Club is a member, and the Pro- fessional Baseball Rules, as in effect on the date of this Contract has been delivered to the — prior to execution of this Contract.” a Regulation 5: Discipline “For violation by the Player of any regulation or other provision of this contract, the Club may impose a reasonable fine and deduct the amount. . thereof from the Player’s salary or may suspend the. - ‘Player without: salary for a period not exceeding — thirty days, or both. Written notice of the fine or hos i > o suspension or both and the réasons therefore shall in every case be given to the Player.”*. , Regulation 7: Reporting on assignment Pe fe _ q In case of assignment of this contract the Player a - Shall report promptly. to the assignee club within 72 — -- hours from the date he receives written notice from — _ the Club of. such assignment, if the Player is then not more than 1600. miles by most direct available: railroad route from the assignee Club, plus an addi- tional 24 hours for each additional 800 miles.” alana \ SOME Fron peetaser ea gemimeraeraye Fee ANIM RENAE: FEET I RCRA See cee RRR Enna tons ' ene Major League Rules (Plaintiff's Ex.6): ‘The no tampering rule—Ridle 3(g) “TaMPERING. To preserve discipline and ecompeti- tion, and. to. prevent the enticement: of players, - coaches, managers and umpires, there shall be no _ negotiations or dealings respecting employment, either present or prospective, between’ any player, — coach or manager and any club other than the elub _ with which he is under contract or acceptance of | terms, or by which he is reserved, or which has the player on its Negotiation List, or between any sumpire and any league other than the league with — _ which he is under contract or acceptance of terms, ~ unless the club or league with which he is connected - shall have, in writing, expressly authorized’ such ' negotiations or dealings prior to- their commencé- ment.” | . | . The reserve lists—Rule 4-A(a) “On or before November 15 in each year, each Major League Club shall transmit to the Commissioner and _ to its Leagye President a list of not exceeding forty. ** Such discipline. may now be submitted by the player to arbitra- . tion’ -before a third-party arbitrator in accordance with the terms of the grievance procedure contained in the 1970 collective bargain- '. ing agreement. (Def. Feeney Ex. N, App. 422, 429-44.) . ‘ . PORE aE EN Ee ee Oe ET RI ss ‘ . “| — ~~ — r ” eo. BS (40). itive and éligible players, hein the netib . desires to reserve for the ensuing season; and also ~ a list of all its players. who have.been promulgated | ‘as placed on the Military, ‘Voluntarily Retired, Re- ’- -stricted, Disqualified, Suspended or Ineligible Lists; and: play ers signed under Rule 4 who do not count ‘in the club’s under control limit, On or'before No- vember 30 the League, Presidet# shall transmit all _ of said lists t6 the Secretary-Treasurer of the Exetu-. tive Council, who shall thereupon promulgate same, and thereafter: ‘no player on any list shall be eligible to play fpr or negotiate with any other club until his contract has been assigned or he has been released. - _ The asbignment rule—Rule ee “A ‘club may assign to another elub an existing contract with a player. The player, upon receipt. of written notice of such assignment, is by his contract bound to serve the assignee. ~ The date of assignment shall be deena to be the date upon which notice of assignment is delivered to. the player. - After the date of ‘such assignment all rights as f ; "obligations of the* assignor. clubs thereunder shall become the rights and obligations of the assignee club except as otherwise provided in Rule 4 and the - _ assigneé club shall be liable to the plager for pay- ments accruing from the date of assignment and shall not be liable (but the assignor club shall remaizi liable) for payments accrued —- to and metoting: - that date.” » : The. rule seouiving player contracts to be uniform a —Rule 3(a) _“UntForM Contract. To ‘preserve morale and to produce the similarity of conditions necessary to - keen competition, the contracts between all clubs: and their players in the Major — shall be in a. ‘ single form. which shall be prescribed by the mnie League Executive Council. No club shall abs a contract different from the uniform contract/or a . /contract containing a non-reserve clause, except with “ the written approval. the Commissioner, All con- ~~ tracts shall be -in-duplicate and: the player shall retain a counterpart original. . The making) of any .. © | agreement between.a'¢lub and a player not émbodied in the contract shall subject both parties to disci- ‘pline; arid no. such agreement, whether written or Verbal, shall be oe or enforced.” ! SRIRAM ONT SRL PAE OTN | --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0042%3A07. Public record. Not legal advice.