No In the SUPREME COURT OF THE UNITED STATES OF AMERICA OCTOBER TERM GOVERNOR OF TULANIA and the CITY OF BON TEMPS,

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1 No In the SUPREME COURT OF THE UNITED STATES OF AMERICA OCTOBER TERM 2014 GOVERNOR OF TULANIA and the CITY OF BON TEMPS, v. Petitioners, NATIONAL FOOTBALL LEAGUE, MAJOR LEAGUE BASEBALL, NATIONAL HOCKEY LEAGUE, NATIONAL COLLEGIATE ATHLETIC ASSOCIATON, and the OFFICE OF THE COMMISSIONER OF BASEBALL, Respondents. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTEENTH CIRCUIT BRIEF FOR RESPONDENTS Team 18R Counsel of Record for Respondents ORAL ARGUMENT REQUESTED

2 QUESTIONS PRESENTED FOR REVIEW I. Whether the Professional and Amateur Sports Protection Act of 1992 (hereinafter PASPA ) is constitutional where it still leaves the states room to regulate sports wagering by employing a narrowly tailored means of disrupting the recognizable evil of the spread of sports wagering. II. Whether the antitrust law exemption enjoyed by Major League Baseball includes matters of club relocation where Major League Baseball follows the long established rule of subjecting the relocation of a Major League team to a two-thirds majority approval of the League members. i

3 TABLE OF CONTENTS QUESTIONS PRESENTED FOR REVIEW... i TABLE OF AUTHORITIES... iii ARGUMENT...1 I. PASPA IS CONSTITUTIONAL AS A MATTER OF LAW AND PROTECTS THE INTEGRITY OF SPORTS FROM WAGERING...1 II. A. In Accordance With The Well-Reasoned Rationale Of This Court s Prior Decisions, PASPA Merely Pre-Empts States From Endorsing Gambling Activities And Thus Does Not Violate The Anti-Commandeering Principle...1 B. PASPA Does Not Violate The Equal Sovereignty Of The States, But Even If It Does, Complete Invalidation Of PASPA Does More Violence To The Statute Than Is Necessary To Remedy Any Concerns With Equal Sovereignty...6 C. As A Matter Of Public Policy, PASPA Protects The Integrity Of Sports From Wagering By Disallowing Private Parties To Skirt The Federal Notion Of Disfavoring Sports Gambling By Resorting To State Law...10 THE ANTITRUST LAW EXEMPTION ENJOYED BY MAJOR LEAGUE BASEBALL INCLUDES MATTERS OF CLUB RELOCATION...12 A. The Relocation Of A Club Falls Squarely Under The Antitrust Exemption Provided By Federal Baseball As Part Of The Business Of Baseball...13 B. Even Considering The Holdings of Piazza and Butterworth, The Antitrust Exemption Covers Matters Of Club Relocation...16 C. As A Matter Of Public Policy, The Antitrust Exemption Should Apply To Club Relocation, As The League Has Relied On This Exemption And This Court Has Deferred Further Action To The Legislature...20 CONCLUSION...22 APPENDIX...23 ii

4 TABLE OF AUTHORITIES UNITED STATES SUPREME COURT CASES Christie v. Nat l Collegiate Athletic Ass'n, 134 S. Ct (2014)...5 Federal Baseball Club, Inc. v. Nat l League of Prof l Baseball Clubs, 259 U.S. 200 (1922)... passim F.E.R.C. v. Mississippi, 456 U.S. 742 (1982)...1, 3, 4 Flood v. Kuhn, 407 U.S. 258 (1972)... passim Hodel v. Virginia Surface Mining & Reclamation Ass'n, Inc., 452 U.S. 264 (1981)...1, 2, 3, 4 New York v. United States, 505 U.S. 144 (1992)...5 Nw. Austin Mun. Util. Dist. No. One v. Holder, 557 U.S. 193 (2009)...6, 7 Printz v. United States, 521 U.S. 898 (1997)...5 Radovich v. National Football League, 352 U.S. 445 (1957)...13, 17 Regan v. Time, Inc., 468 U.S. 641 (1984)...9 Reno v. Condon, 528 U.S. 141 (2000)...4 Shelby Cnty., Ala. v. Holder, 133 S. Ct (2013)...7, 9 South Carolina v. Baker, 485 U.S. 505 (1988)...4 iii

5 Toolson v. N.Y. Yankees, Inc., 346 U.S. 356 (1953)... passim United States v. Int l Boxing Club, 348 U.S. 236 (1955)...13 United States v. Shubert, 348 U.S. 222 (1955)...13 Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976)...1 UNITED STATES APPELLATE COURT CASES Charles O. Finley & Co. v. Kuhn, 569 F.2d 527 (7th Cir. 1978)...17, 18, 19, 21 Nat l Collegiate Athletic Ass'n v. Governor of New Jersey, 730 F.3d 208 (3d Cir. 2013)...5 Prof l Baseball Schools & Clubs v. Kuhn, 693 F.2d 1085 (11th Cir. 1982)...16 UNITED STATES DISTRICT COURT CASES City of San José v. Office of the Comm r of Baseball, 2013 U.S. Dist. LEXIS (N.D. Cal. 2013)...13, 14, 15, 16 Flood v. Kuhn, 309 F. Supp. 793 (S.D.N.Y. 1970)...12 Morsani v. MLB, 79 F. Supp. 2d 1331 (M.D. Fla. 1999)...15, 16 Nat l Collegiate Athletic Ass'n v. Christie, 926 F. Supp. 2d 551 (D.N.J. 2013)...4, 5 New Orleans Pelicans Baseball, Inc. v. Nat l Ass'n of Prof l Baseball Leagues, Inc., 1994 U.S. Dist. LEXIS (E.D. La. 1994)...14, 18 Piazza v. Major League Baseball, 831 F. Supp. 420 (E.D. Pa. 1993)... passim iv

6 Salerno v. Am. League of Baseball Clubs, 310 F. Supp. 729 (S.D.N.Y. 1969)...13, 21 STATE COURT CASES Am. Fed n of Technical Eng rs v. La Jeunesse, 347 N.E.2d 712 (Ill. 1976)...21 Butterworth v. Nat l League of Prof l Baseball Clubs, 644 So. 2d 1021 (Fla. 1994)...12, 16, 17, 20 Minnesota Twins P ship. v. State by Hatch, 592 N.W.2d 847 (Minn. 1999)...14, 18, 22 State v. Milwaukee Braves, Inc., 144 N.W.2d 1 (Wis. 1966)...14 CONSTITUTIONAL & STATUTORY PROVISIONS U.S. Const. art. I, 8, cl , 8, 23 U.S. Const. amend. X...4, 5, U.S.C. 26b (2012)....15, 22, U.S.C. 224 (2012) U.S.C (2012) U.S.C (2012)... passim SECONDARY SOURCES Brent J. Goodfellow, BETTING ON THE FUTURE OF SPORTS: WHY GAMBLING SHOULD BE LEFT OFF THE FIELD OF PLAY, 2 Willamette Sports L. Soc'y Online J. 21 (2005), Gambling Awareness, National Association of Basketball Coaches, NABC_Releases/gambling_awareness...10 Gillian Spear, Think sports gambling isn't big money? Wanna bet?, NBC News (July 15, 2013), H. Roy Kaplan, The Convergence of Work, Sport, and Gambling in America, 445 Annals Am. Acad. Pol. & Soc. Sci. 24 (1979), available at Jeffrey Gordon, Baseball s Antitrust Exemption and Franchise Relocation: Can a Team Move?, 26 Fordham Urb. L.J (1999)...14, 18 v

7 Jeffrey S. Moorad, Major League Baseball's Labor Turmoil: The Failure of the Counterrevolution, 4 Vill. Sports & Ent. L.J. 53 (1997)...21, 22 John Guarisco, Buy Me Some Peanuts and Cracker Jack, But You Can t Buy the Team: The Scope and Future of Baseball s Antitrust Exemption, U. Ill. L. Rev. 651 (1994)...19 Joshua P. Jones, A Congressional Swing and Miss: The Curt Flood Act, Player Control, and the National Pastime, 33 Ga. L. Rev. 639 (1999)...19 Latour Rey Lafferty, The Tampa Bay Giants and the Continuing Vitality of Major League Baseball s Antitrust Exemption: A Review of Piazza v. Major League Baseball, 21 Fla. St. U.L. Rev (1994)...20 Les Bernal, Sports Betting Erodes the Integrity of Sports, U.S. News (June 15, 2012), Mark Nagel et al., Major League Baseball Anti-Trust Immunity: Examining the Legal and Financial Implications of Relocation Rules, 4 Ent. & Sports L.J. No. 3, 15 (2006), Richard A. Posner, The Voting Rights Act ruling is about the conservative imagination, The Breakfast Table (June 26, 2013), rt_2013/the_supreme_court_and_the_voting_rights_act_striking_down_the_law_is_all.html...7 SDS, How Did We Get the Principle of Equal State Sovereignty (in the Shelby County Case)?, Law Professor Blogs Network (June 28, 2013), Senate Report No (1992)...8, 9, 10 vi

8 ARGUMENT I. PASPA IS CONSTITUTIONAL AS A MATTER OF LAW AND PROTECTS THE INTEGRITY OF SPORTS FROM WAGERING It is established beyond peradventure that legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality. F.E.R.C. v. Mississippi, 456 U.S. 742, 754 (1982) (citing Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15, (1976)). The decision of the United States Court of Appeals for the Fourteenth Circuit regarding the constitutionality of PASPA was correct because: 1.) in accordance with the wellreasoned rationale of this Court s prior decisions, PASPA merely pre-empts states from endorsing gambling activities and thus does not violate the anti-commandeering principle; 2.) PASPA does not violate the equal sovereignty of the states, but even if it does, complete invalidation of PASPA does more violence to the statute than is necessary to remedy any concerns with equal sovereignty; and 3.) as a matter of public policy, PASPA protects the integrity of sports from wagering by disallowing private parties to skirt the federal notion of disfavoring sports gambling by resorting to state law. Accordingly, this Court should affirm the lower court s decision in its de novo review of this matter. A. In Accordance With The Well-Reasoned Rationale Of This Court s Prior Decisions, PASPA Merely Pre-Empts States From Endorsing Gambling Activities And Thus Does Not Violate The Anti-Commandeering Principle The decision of the Appellate Court should be affirmed because its ruling is consistent with the trending allowance of federal regulation in matters of a pre-emptive nature. The circumstances here therefore do not violate the anti-commandeering principle set forth in Hodel v. Virginia Surface Mining & Reclamation Ass'n, Inc., 452 U.S. 264 (1981) and supported in a significant amount of judicial decisions. 1

9 In Hodel, parties involved in the business of surface coal mining challenged the constitutionality of the Surface Mining Control and Reclamation Act of 1977 (hereinafter SMCRA ). Id. at 264. The purpose of SMRCA was to protect society and the environment from the adverse effects of surface coal mining operations. Id. at 264. In furthering this purpose, SMRCA required that each state either formulate a plan of regulation that met the standards of the federal government or that the states adopt the federal government s regulations. Id. SMRCA did not require the states to regulate surface coal mining unless the states implemented their own federally approved regulations. Id. at 272. The Court in Hodel recognized that SMRCA did not govern the states as states but instead governed only the activities of coal mine operators who are private individuals and businesses. Id. at 288. It further pointed out that the States are not compelled to enforce standards, to expend any state funds, or to participate in the federal regulatory program in any manner whatsoever. Id. In fact, if a State [did] not wish to submit a proposed permanent program that complie[d] with the Act and implement[ed] regulations, the full regulatory burden [would] be borne by the Federal Government. Id. This Court, in upholding the constitutionality of SMRCA, stated that there can be no suggestion that the Act commandeers the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program. Id. Like SMRCA, the plain language of PASPA evinces that the federal government is not regulating the states as states, but rather private individuals. Section 3702(2) of PASPA makes clear that it shall be unlawful for a person to sponsor, operate, advertise, or promote, pursuant to the law or compact of a governmental entity, a lottery, sweepstakes, or other betting, gambling, or wagering scheme.... Professional and Amateur Sports Protection Act of 1992, 28 U.S.C. 2

10 3702(2) (2012) (emphasis added). In doing so, PASPA, like SMRCA, does not compel the states to enforce its provisions, to spend any state funds, or to become involved in its regulatory scheme. In Hodel, this Court stressed that Congress could constitutionally have enacted a statute prohibiting any state regulation of surface coal mining. Hodel, 452 U.S. at 290. Here, PASPA does not rise to such a drastic level of pre-empting all state regulation, though it constitutionally could, but pre-empts states only from supporting gambling activities. 28 U.S.C In accordance with Hodel, PASPA falls far short of the threshold of being considered an act of federal commandeering. Soon after Hodel was decided, this Court took up a similar challenge to several provisions of The Public Utility Regulatory Policies Act of 1978 (hereinafter PURPA ). F.E.R.C., 456 U.S. at 742. The purpose behind PURPA was to combat the 1980s energy crisis in the United States. Id. For this reason, PURPA required that state utility regulatory commissions consider recommended energy standards and prescribed certain procedures to be followed by the state regulatory authority and the nonregulated utility when considering the proposed standards. Id. at 748. PURPA also directed the Federal Energy Regulatory Commission to promulgate rules and exemptions for the states to implement in accordance with PURPA s policies. Id. at 751. Before rendering an opinion on the matter, this Court explained that in adopting PURPA, the Federal Government attempt[ed] to use state regulatory machinery to advance federal goals and that to an extent, this presented an issue of first impression. Id. at 759. However, in upholding PURPA, this Court stated that there are instances where the Court has upheld federal statutory structures that in effect directed state decisionmakers to take or to refrain from taking certain actions and provided numerous cases supporting its position. Id. at In 3

11 additional comments, this Court stated that PURPA should not be invalid simply because, out of deference to state authority, Congress adopted a less intrusive scheme and allowed the States to continue regulating. Id. at 765. The decision in F.E.R.C. essentially broadens the congressional power allowed by Hodel. The circumstances here fall very short of the more recent and liberal threshold of what constitutes commandeering by the federal government. As further supported by the decision of this Court in F.E.R.C., PASPA cuts well within the congressional boundaries established by the Tenth Amendment. U.S. Const. amend. X. Multiple Supreme Court decisions support the holdings of Hodel and F.E.R.C.. For instance, this Court considered in South Carolina v. Baker, 485 U.S. 505 (1988) whether the Tax Equity and Fiscal Responsibility Act of 1982 violated the anti-commandeering principle. Id. at 513. In deciding that it did not, this Court elaborated that states must take administrative and sometimes legislative action to comply with federal standards regulating that activity and such action is a commonplace that presents no constitutional defect. Id. at 515. In Reno v. Condon, 528 U.S. 141 (2000), this Court unanimously decided that the Driver's Privacy Protection Act of 1994 (hereinafter DPPA ), which required that states keep drivers personal information secure, did not violate the anti-commandeering principle. Id. at 141. DPPA, like PASPA, did not fall into the category of commandeering because it did not require the States in their sovereign capacity to regulate their own citizens[,] did not require the South Carolina Legislature to enact any laws or regulations and did not require state officials to assist in the enforcement of federal statutes regulating private individuals. Id. at 142. Additionally, the United States District Court for the District of New Jersey has recently decided a case of extreme similarity. Nat'l Collegiate Athletic Ass'n v. Christie, 926 F. Supp. 2d 4

12 551 (D.N.J. 2013). There, after the federal enactment of PASPA, New Jersey adopted a law endorsing sports wagering. Id. at 553. Like the circumstances here, various parties filed a complaint in accordance with PASPA and sought permanent injunctive relief. Id. The district court, in finding no violation of the anti-commandeering principle, granted summary judgment for the plaintiffs. Id. at 579. Subsequently, the United States Court of Appeals for the Third Circuit affirmed the lower court and held that nothing in PASPA violates the U.S. Constitution. Nat'l Collegiate Athletic Ass'n v. Governor of New Jersey, 730 F.3d 208, 240 (3d Cir. 2013). The defendants petitions for writ of certiorari were afterward denied by this Court. Christie v. Nat'l Collegiate Athletic Ass'n, 134 S. Ct (2014). The Governor contends that the circumstances at hand match with those presented in New York v. United States, 505 U.S. 144 (1992) and Printz v. United States, 521 U.S. 898 (1997). This Court in New York, however, decided whether the Low Level Radioactive Waste Policy Amendments Act of 1985 (hereinafter LLRWPA ) violated the Tenth Amendment in requiring states to take title to their low-level radioactive waste. Id. at 144. That matter is unrelated to the circumstances here because LLRWPA forced states to take a certain action. Id. Unlike the circumstances there, PASPA merely tells states what they may not do, not what they must do. 28 U.S.C Similarly, this Court in Printz decided whether the Brady Handgun Violence Prevention Act ran afoul to the commandeering principle. Printz, 521 U.S. at 898. Again, the Act in question was one that forced a state s regulation in requiring the states enforcement officials to execute the provisions of the law. Id. For that reason, this Court held the Act unconstitutional and established that the Federal Government may neither issue directives requiring the States to address particular problems, nor command the States' officers, or those of their political subdivisions, to administer or enforce a federal regulatory program. Id. at

13 Conversely, PASPA does not require the states or their officers to become involved in any federal regulatory program. See generally 28 U.S.C PASPA instead goes beyond this requirement and leaves room for the states and their officers to regulate prevention of sports wagering. Because the circumstance here align closely with those of the several cases decided by this Court that upheld federal laws challenged under the anti-commandeering principle, this Court should find that PASPA merely pre-empts states from endorsing gambling activities and thus does not violate the anti-commandeering principle. B. PASPA Does Not Violate The Equal Sovereignty Of The States, But Even If It Does, Complete Invalidation Of PASPA Does More Violence To The Statute Than Is Necessary To Remedy Any Concerns With Equal Sovereignty The decision of the Appellate Court should be affirmed because even if this Court chooses to apply the new founded equal sovereignty principle, PASPA s goal aims solely toward remedying local evils. Furthermore, in its application, PASPA succeeds in frustrating the spread of sports wagering. Finally, even if this Court finds that PASPA does not meet the requirements of equal sovereignty, invalidating PASPA in its entirety would do more violence to the statute than is necessary. The equal sovereignty principle was offered by Chief Justice Roberts in Northwest Austin Municipal Utility District No. One v. Holder, 557 U.S. 193 (2009) where the Court considered the validity of section 5 of the Voting Rights Act (hereinafter VRA ). Id. at 193. This section of VRA requires states to seek federal preclearance before it can change anything about its elections, even though there is no evidence it has ever discriminated on the basis of race in those elections. Id. at 193. In a remark that fits squarely into the definition of dictum, this Court stated that the Act... differentiates between the States in ways that may no longer be justified. 6

14 Id. at 193. After doing so, this Court proceeded to find an alternative statutory remedy for those that challenged section 5 of VRA and avoided the determination of constitutionality altogether. In its final remarks, this Court stated, [W]hether conditions continue to justify such legislation is a difficult constitutional question we do not answer today. Id. at 211. Several years after Northwest Austin, this Court heard Shelby County, Alabama. v. Holder, 133 S. Ct (2013). In Shelby County, this Court revisited section 5 of VRA and also considered section 4(b) of VRA. Id. at Section 4(b) of VRA provides a formula for determining which jurisdictions fall within the scope of VRA. Id. Again, this Court avoided making a decision on the constitutionality of section 5. Id. at This time, however, Chief Justice Roberts elected to actually adopt the equal sovereignty principle that he only introduced in Northwest Austin. Id. at The Court consequently held section 4(b) unconstitutional because of its nature in treating states differently without justification. 1 Id. at Regardless of the new adoption of the equal sovereignty principle, the circumstances here do not align with those in Northwest Austin or Shelby County. VRA crosses deeply into a realm of power that the Framers believed should be left to the states - the power to regulate elections. Shelby County, 133 S.Ct. at Contrarily, the content PASPA seeks to regulate involves 1 Critics of the adoption of equal sovereignty contend that there is no doctrine of equal sovereignty. The opinion rests on air. Richard A. Posner, The Voting Rights Act ruling is about the conservative imagination, The Breakfast Table (June 26, 2013), s/news_and_politics/the_breakfast_table/features/2013/supreme_court_2013/the_supreme_court _and_the_voting_rights_act_striking_down_the_law_is_all.html. Seventh Circuit Judge Richard Posner supplemented this view when he said, Shelby County v. Holder, decided Tuesday, struck down a key part of the Voting Rights Act... as violating the fundamental principle of equal sovereignty of the states. This is a principle of constitutional law of which I had never heard-- for the excellent reason that... there is no such principle. SDS, How Did We Get the Principle of Equal State Sovereignty (in the Shelby County Case)?, Law Professor Blogs Network (June 28, 2013), lawprofessors.typepad.com/conlaw/2013/06/how-did-we-get-the-principle-ofequal-state-soverei gnty-in-the-shelby-county-case.html (quoting J. Richard Posner). 7

15 interstate commerce, an area of regulation explicitly designated to Congress. U.S. Const. art. I, 8, cl. 3. Application of the equal sovereignty principle in this context is therefore inappropriate. For the sake of argument, in the event this Court sees it fit to apply the equal sovereignty principle to the circumstances at hand, PASPA passes muster. In the district court, Tulania argued that a law in question of violating the equal sovereignty principle may survive if the purpose of that law is to remedy local evils. E.g. R. 13. It further alleged that the regulation must apply in a manner that is sufficiently related to the problem that it targets. Id. The explicit purpose behind the adoption of PASPA was to prevent the spreading of sports wagering. S. Rep. No , at 4 (1992). According to recent data in the United States, more than $8 billion is wagered every year on the Super Bowl alone. Gillian Spear, Think sports gambling isn't big money? Wanna bet?, NBC News (July 15, 2013), think-sports-gambling-isnt-big-money-wanna-bet-f6c An estimated 200 million people mak[e] wagers on the outcome of the game worldwide. Id. Between $60-70 billion is illegally wagered on college football each year according to CNBC. Id. With numbers like this in mind, the Senate Judiciary Committee stated in its discussions surrounding adoption of PASPA that it firmly believes that all such sports gambling is harmful. S. Rep. No , at 8. It is therefore quite evident that sports wagering across the country makes a significantly harmful impact in the territory of interstate commerce. Thus, the spread of sports wagering very justifiably classifies as a local evil for the states not grandfathered-in under PASPA s exception. 28 U.S.C. 3704(a)(2). Because Congress adoption of PASPA was aimed only at its goal of obstructing the spread of sports wagering, it allowed for certain states to permit forms of sports wagering. Id. At the time PASPA was adopted, Nevada was already well known for its promotion of sports 8

16 wagering. Therefore, implementing restrictions on states such as Nevada would serve a goal to eliminate sports wagering. Total elimination, as the discussions of Congress represent, is not the fundamental purpose of PASPA. S. Rep. No , at 4. Thus, not only is PASPA a justifiable remedy, but it is also a remedy tailored narrowly to one goal, significantly passing any test under the equal sovereignty principle. Finally, even if this Court finds that the equal sovereignty principle defeats PASPA, ruling the entire statute unconstitutional would do more damage than is necessary. Just as this Court handled the circumstances in Shelby County and severed only the portion of VRA that violated the equal sovereignty principle, in the event PASPA conflicts with equal sovereignty, this Court should only sever a portion of PASPA - Section 3704(a)(2). It is well established that whether an unconstitutional provision is severable from the remainder of the statute in which it appears is largely a question of legislative intent, but the presumption is in favor of severability. Regan v. Time, Inc., 468 U.S. 641, 653 (1984). Here, the legislative intent behind the statute was clear - to stop the spread of sports wagering. S. Rep. No , at 4. With this in mind, eliminating the grandfathering provision of the statute cannot possibly result in a negative impact on the purpose of PASPA. As this Court in Regan further indicated, the invalid part [of the statute] may be dropped if what is left is fully operative as a law. Id. The remainder of PASPA would still serve the same purpose of disturbing the spread of sports wagering and would therefore remain fully operative as a law. Accordingly, because the circumstances here do not align with those in Northwest Austin or Shelby County, this Court should not apply the equal sovereignty principle. However, even if it does, PASPA either passes the test brought forth by the Governor or fails solely based on section 3704(a)(2), in that event, calling only for a severing of this section from PASPA. 9

17 C. As A Matter Of Public Policy, PASPA Protects The Integrity Of Sports From Wagering By Disallowing Private Parties To Skirt The Federal Notion Of Disfavoring Sports Gambling By Resorting To State Law Because PASPA is constitutional as a matter of law, this Court likely will not see the need to consider policy arguments. However, supplementing the explicit policy of the want to prevent the spread of sports wagering, allowing private parties to escape the grasp of federal law by use of state law would severely compromise the integrity of sports. At the time Congress enacted PASPA, it made clear that PASPA was complementary to and consistent with [then] current Federal law with respect to the trivialization of professional and amateur sports. S. Rep. No , at 7. To this day, there are still laws in place aimed specifically at protecting the integrity of sports. For instance, title 18 of the United States Code includes a section dedicated to bribery in sports contests. 18 U.S.C. 224 (2012). It states: Whoever carries into effect, attempts to carry into effect, or conspires with any other person to carry into effect any scheme in commerce to influence, in any way, by bribery any sporting contest, with knowledge that the purpose of such scheme is to influence by bribery that contest, shall be fined under this title, or imprisoned not more than 5 years, or both. Id. See also 18 U.S.C (2012). In conjunction with Congress apparent concern that gambling demeans the nature of professional and amateur sports, the National Collegiate Athletic Association (hereinafter the NCAA ) also offered its position on the idea: Sports wagering demeans the competition and competitors alike by a message that is contrary to the purposes and meaning of sport. Sports competition should be appreciated for the inherent benefits related to participation of student-athletes, coaches and institutions in fair contests, not the amount of money wagered on the outcome of the competition. Gambling Awareness, National Association of Basketball Coaches, NABC_Releases/gambling_awareness (last visited Jan. 10, 2015). 10

18 Commentators have shared the views of Congress and the NCAA in providing that the proliferation of legalized gambling as a consequence of boredom in the world of work not only diverts public attention from critical social issues and constructive methods for handling them, it also demeans sports by subjugating them to materialistic escapist ends. H. Roy Kaplan, The Convergence of Work, Sport, and Gambling in America, 445 Annals Am. Acad. Pol. & Soc. Sci. 24, 24 (Sept. 1979), available at rg/stable/ Others have proposed that sports betting should be illegal. If that form of entertainment continues, the integrity of sports could be forever damaged. If fans believe that sports contests are rigged, they will not attend sporting events, and the leagues will be in jeopardy. Integrity is an important part of what makes sports so intriguing. Brent J. Goodfellow, BETTING ON THE FUTURE OF SPORTS: WHY GAMBLING SHOULD BE LEFT OFF THE FIELD OF PLAY, 2 Willamette Sports L. Soc'y Online J. 21, 43 (Fall 2005), available at tslaw/fall05/goodfellow.pdf. Capping off the concern of gambling in sports are the statements of NBA Hall of Famer and former United States Senator Bill Bradley. Bradley told reporters in 2011: It was an incident in his professional basketball career that helped shape his view: We were ahead by five points or so, the opponent hit a basket to cut the lead to three points, and I heard cheering, Bradley said of the seemingly meaningless basket as the game was ending. I asked why, and someone said they were cheering because [the other team] covered the point spread I know that when I was a player, I certainly didn't like the idea of being a roulette chip. Les Bernal, Sports Betting Erodes the Integrity of Sports, U.S. News (June 15, 2012), -integrity-of-sports. 11

19 Considering this underlying policy of Congress want to protect the integrity of sports along with the explicit policy of its goal of dowsing the spread of sports wagering, this Court should affirm the decision of the court below. II. THE ANTITRUST LAW EXEMPTION ENJOYED BY MAJOR LEAGUE BASEBALL INCLUDES MATTERS OF CLUB RELOCATION As both Justice Blackmun of this Court and Judge Irving Cooper of the United States District Court for the Southern District of New York noted, Baseball has been the national pastime for over one hundred years and enjoys a unique place in our American heritage. Flood v. Kuhn, 407 U.S. 258, 266 (1972) (citing Flood v. Kuhn, 309 F. Supp. 793, 797 (S.D.N.Y. 1970)). Both stressed: It would be unfortunate indeed if a fine sport and profession... were to suffer in the least because of undue concentration by any one or any group on commercial and profit considerations. The game is on higher ground; it behooves every one [sic] to keep it there. Id. at 267 (citing Flood, 309 F. Supp. at 797). Because baseball is on a higher ground, the appellate court was correct in finding that baseball s antitrust exemption applies to club relocation. This is true because: 1.) the relocation of a club falls squarely under the antitrust exemption provided by Federal Baseball Club, Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200 (1922) as part of the business of baseball ; 2.) even considering the holdings of Piazza v. Major League Baseball, 831 F. Supp. 420 (E.D. Pa. 1993) and Butterworth v. National League of Professional Baseball Clubs, 644 So.2d 1021 (Fla. 1994), the antitrust exemption covers matters of club relocation; and 3.) as a matter of public policy, the antitrust exemption should apply to club relocation, as Major League Baseball (Hereinafter MLB or The League ) has relied on this exemption and this Court has deferred further action to the 12

20 legislature. Accordingly, this Court should affirm the decision below in its de novo review of this matter. A. The Relocation Of A Club Falls Squarely Under The Antitrust Exemption Provided By Federal Baseball As Part Of The Business Of Baseball First recognized in Federal Baseball Club, Inc. v. National League of Professional Baseball Clubs, 259 U.S. 200 (1922), baseball has enjoyed an exemption from antitrust laws in all areas as [t]he business [in] giving exhibitions of baseball... are purely state affairs. Id. at 208. When later reconsidering the holding of Federal Baseball, this Court affirmed the fact that the business of providing public baseball games for profit between clubs of professional baseball players was not within the scope of the federal antitrust laws. Toolson v. N.Y. Yankees, Inc., 346 U.S. 356, 357 (1953). Finally, in 1972 when asked specifically about baseball s reserve clause, this Court held, [W]e adhere once again to Federal Baseball and Toolson and to their application to professional baseball. Flood, 407 U.S. at 284. As the court in City of San José v. Office of the Commissioner of Baseball, 2013 U.S. Dist. LEXIS (N.D. Cal. 2013) held, [A]lthough in Flood the Court was asked to overrule Federal Baseball and Toolson, the Court explicitly declined to do so, holding instead that the business of baseball was exempt from the antitrust laws, just as Federal Baseball and Toolson had said. Id. at * The courts have also continually put Congress in the position to change the status of the antitrust exemption. As stated in Salerno v. American League of Baseball Clubs, 310 F. Supp. 729 (S.D.N.Y. 1969), [T]he United States Supreme Court has clearly stated that any action involving the expansion or contraction of the exemption of baseball from the federal anti-trust laws must come from Congress. Id. at 731 (citing Radovich v. National Football League, 352 U.S. 445, 451 (1957); United States v. International Boxing Club, 348 U.S. 236, 243 (1955); United States v. Shubert, 348 U.S. 222, 230 (1955)). 13

21 Various courts have addressed the question of whether club relocation falls within the business of baseball, and have found that it is covered by the antitrust exemption. In State v. Milwaukee Braves, Inc., 144 N.W.2d 1 (Wis. 1966), the Wisconsin Supreme Court reviewed whether a violation of antitrust laws occurred when the Milwaukee Braves relocated to Atlanta. It reversed the circuit court s decision with instructions to dismiss the complaint pleading antitrust law violations and concluded that because the organization of the league goes to who is allowed in the league as well as where franchises are located baseball's federal antitrust exemption extends to all decisions concerning league structure and organization. Jeffrey Gordon, Baseball s Antitrust Exemption and Franchise Relocation: Can a Team Move?, 26 Fordham Urb. L.J. 1201, 1216 (1999). The court emphasized that we are dealing here with a decision by the league as to the number and identity of its members... [a]nd a decision by the league on such a matter is a necessary incident of existence as a league. State v. Milwaukee Braves, Inc., 144 N.W.2d at 12. Also in New Orleans Pelicans Baseball, Inc. v. National Ass'n of Professional Baseball Leagues, Inc., 1994 U.S. Dist. LEXIS (E.D. La. 1994), the court stated in its Order and Reasons on April 30, 1993, The defendants are in the business of baseball. Their business is a legally sanctioned monopoly. One of the central features of that monopoly is the power to decide who can play where. Id. at *27 (footnote omitted); see also Minn. Twins P ship. v. State by Hatch, 592 N.W.2d 847, 856 (Minn. 1999) (holding that the sale and relocation of a baseball franchise, like the reserve clause discussed in Flood, is an integral part of the business of professional baseball and falls within the exemption ). In City of San José v. Office of the Commissioner of Baseball, the United States District Court for the Northern District of California also reviewed whether the antitrust exemption covered club relocation. In that case, the Oakland Athletics (Hereinafter A s ), a Major League 14

22 Baseball club, considered relocating to another city. Id. at * One of the most heavily pursued cities was the City of San Jose. Id. at *11. In March, 2011, the City of San Jose purchased property intending to use that property to build a new ballpark for the A s. Id. San Jose, however, fell within the territory of the San Francisco Giants, another Major League club. Id. In order to relocate to San Jose, the A s would need to gain the approval by two-thirds of the Major League clubs. Id. The City of San Jose accused MLB of purposefully delaying the approval of the A s move which prevented the A s from purchasing the land bought by the city for a new ballpark. Id. at *13. The City of San José court first looked at the effect Flood had on baseball s antitrust exemption, and whether the exemption was limited to the reserve clause. The court concluded that the exemption was not limited to the reserve clause as that would be contrary to the holdings of a vast majority of the courts that have addressed the issue. Id. at *5. The court reasoned that [a]ll federal circuit courts that have considered the issue (the Eleventh, Seventh, Ninth and Second Circuits) have not limited the antitrust exemption to the reserve clause, but have adopted the view that the exemption broadly covers the business of baseball. Id. The court then looked to the Curt Flood Act of 1998 (Hereinafter CFA ). CFA clarified baseball s exemption by providing [n]o court shall rely on the enactment of this section as a basis for changing the application of the antitrust laws to any conduct, acts, practices or agreements other than those set forth in subsection (a). Curt Flood Act, 15 U.S.C. 26b(b) (2012). CFA, as the court further noted, does not create, permit, or imply a cause of action by which to challenge the antitrust laws. Or otherwise apply the antitrust laws to... (3)... franchise expansion, location or relocation. City of San José, 2013 U.S. Dist. LEXIS at *35. (citing 15 U.S.C. 26b(b)(3)) (emphasis added); see also Morsani v. MLB, 79 F. Supp. 2d 1331, 1336 n.12 (M.D. 15

23 Fla. 1999) (stating Congress specifically preserved the exemption for all matters relating to or affecting franchise expansion, location or relocation.... ). Because CFA specifically mentions the Act does not apply antitrust laws to franchise expansion, location or relocation, the court held the federal antitrust exemption for the business of baseball remains unchanged, and is not limited to the reserve clause. City of San José, 2013 U.S. Dist. LEXIS at *36. The court concluded that the alleged interference with a baseball club's relocation efforts presents an issue of league structure that is integral to the business of baseball, and thus falls squarely within the exemption. Id. at *36-37; see Prof'l Baseball Schools & Clubs v. Kuhn, 693 F.2d 1085, 1086 (11th Cir. 1982). Here, the City took a similar line of action as the City of San Jose. Both cities purchased land with the intent to develop the land into a MLB ballpark. R. 3. Both cities also required a two-thirds majority vote to approve the move and believed the MLB delayed approval of the relocation to prevent the respective teams from buying the land set aside for development. R Because of the factual similarities between the circumstances here and City of San José v. Office of the Commissioner of Baseball, this Court should look to the holding of City of San José and find that club relocation falls under baseball s antitrust exemption as a part of the business of baseball. B. Even Considering The Holdings of Piazza and Butterworth, The Antitrust Exemption Covers Matters Of Club Relocation Furthermore, even in light of the decisions in Piazza v. Major League Baseball, 831 F. Supp. 420 (E.D. Pa. 1993) and Butterworth v. National League of Professional Baseball Clubs, 644 So. 2d 1021 (Fla. 1994), matters pertaining to club relocation are still covered under baseball s antitrust exemption, as these courts misconstrued the holding in Flood. The City points to the holdings in Piazza and Butterworth in asserting that this Court in Flood limited 16

24 baseball s antitrust exemption to the reserve clause. 2 In Piazza, the court reasoned that the reading of Flood is buttressed by (1) the reaffirmation in Flood of a prior statement of the Court that Toolson was a narrow application of the doctrine of stare decisis, Piazza, 831 F. Supp. at 436 (internal citations omitted), as well as (2) the Flood Court's own characterization, in the first sentence of its opinion, of the Federal Baseball, Toolson, and Flood decisions: For the third time in 50 years the Court is asked specifically to rule that professional baseball's reserve system is within the reach of the antitrust laws. Id. In Butterworth, even though the Florida Supreme Court recognized [t]here is no question that Piazza is against the great weight of federal cases regarding the scope of the exemption, Butterworth, 644 So. 2d at 1025, the court reasoned that baseball s exemption only applies to the reserve clause. The court rested on the fact that [t]he Piazza opinion includes a thorough analysis of what this rejection of the analytical underpinnings of Federal Baseball means to the precedential value of Federal Baseball and Toolson[,] Id. at 1024, and none of the other cases [addressing the question of the exemption s scope] have engaged in such a comprehensive analysis of Flood and its implications. Id. at While the City relies on Piazza and Butterworth to set forth the idea that Flood applied the exemption only to the reserve clause, this belief is misplaced. Several courts, as well as commentators, revealed the flaws in this reasoning. In Charles O. Finley & Co. v. Kuhn, 569 F.2d 527 (7th Cir. 1978), the Seventh Circuit noted that [d]espite the two references in the Flood case to the reserve system, it appears clear from the entire opinions in [Federal Baseball, Toolson and Flood] as well as from Radovich, that the Supreme Court intended to exempt the 2 The Reserve Clause was included in a player s contract that restricted the player with one team. A player would not be allowed to play for another team in any league unless he was released from his contract by the team holding his rights or if his contract was sold to another team. The Reserve Clause was later replaced by the free agency system. 17

25 business of baseball, not any particular facet of that business, from the federal antitrust laws. Id. at 541. In New Orleans Pelicans Baseball, Inc. v. National Ass n of Professional Baseball Leagues, Inc., the court took Piazza into account and remarked that [e]ven with the assistance of Piazza, [it was] not convinced that the baseball exemption to the antitrust laws [did] not apply in [that] case. Id. at *27. Even though the court found the Piazza reasoning to be thorough, it did not believe that Piazza [warranted] ignoring the strong precedent to the contrary. Id. at *28. As the court noted, at least one circuit court has addressed and rejected the same argument that the court in Piazza accepted--that the two references in the Flood case to the reserve system limited the baseball exemption to that aspect of baseball alone. Id. In Minnesota Twins Partnership. v. State by Hatch, the Minnesota Supreme Court also considered Piazza in deciding the scope of baseball s antitrust exemption. The court reasoned [a]s intellectually attractive as the Piazza alternative is, we are compelled to accept the paradox the Supreme Court acknowledged in Flood when it declined to overrule Federal Baseball. Id. at 856. Ultimately the court chose to follow the lead of those courts that conclude the business of professional baseball is exempt from federal antitrust laws. Id. The court concluded that the sale and relocation of a baseball franchise, like the reserve clause discussed in Flood, is an integral part of the business of professional baseball and falls within the exemption. Id. This was not the first court to see franchise relocation as an integral part of baseball. Even in Piazza, the court recognized that such decisions could implicate matters of league structure and be considered [the business of baseball]. Jeffrey Gordon, Baseball s Antitrust Exemption and Franchise Relocation: Can a Team Move?, 26 Fordham Urb. L.J. 1201, 1230 (1999) (citing Piazza, 831 F. Supp. at 441). 18

26 Commentators have also weighed in on whether the reasoning in Piazza is sound. One noted that [i]f [Piazza were] retried today, the Curt Flood Act of 1998 would reinforce MLB s legal position that it is exempt from antitrust laws on issues of relocation.... Mark Nagel et al., Major League Baseball Anti-Trust Immunity: Examining the Legal and Financial Implications of Relocation Rules, 4 Ent. & Sports L.J. No. 3, 15 (2006) available at (internal citation omitted). In fact, another commentator noted CFA would only partially change the disposition of [the cases covering franchise relocation under the exemption] by making antitrust laws applicable to baseball in the labor setting. Other league governance policies [would] not be affected by the Flood Act. Joshua P. Jones, A Congressional Swing and Miss: The Curt Flood Act, Player Control, and the National Pastime, 33 Ga. L. Rev. 639, 671 (1999). Another commentator concluded that Piazza was incorrect as: [I]t misconstrues the reasoning of Toolson. The Toolson Court did not hold that the business of baseball was not interstate commerce. Instead, it affirmed Federal Baseball so far as that decision determines that Congress had no intention of including the business of baseball within the scope of the federal antitrust laws. John Guarisco, Buy Me Some Peanuts and Cracker Jack, But You Can t Buy the Team: The Scope and Future of Baseball s Antitrust Exemption, U. Ill. L. Rev. 651, 661 (1994) (citing Toolson v. New York Yankees, Inc., 346 U.S. 356, 357 (1953)). While Piazza s reasoning is thorough, the result misses the mark. Even this Court in Flood stated, Since Toolson more than 50 bills have been introduced in Congress relative to the applicability or nonapplicability of the antitrust laws to baseball... Those that [passed one house but not the other] would have expanded, not restricted, the reserve system's exemption to other professional league sports. Flood v. Kuhn, 407 U.S. 258, 281 (1972). This shows the intent that if any change to baseball s exemption were to occur, the result would be an expansion, 19

27 not a limitation of the exemption. Commentators recognized that [t]he Eastern District Court of Pennsylvania was the first federal court to specifically limit MLB's antitrust exemption to professional baseball's reserve clause. Latour Rey Lafferty, The Tampa Bay Giants and the Continuing Vitality of Major League Baseball s Antitrust Exemption: A Review of Piazza v. Major League Baseball, 21 Fla. St. U.L. Rev. 1271, 1284 (1994). Because Piazza was the first court to limit the exemption and the majority of other courts have found the exemption covers franchise relocation, this Court should find the exemption applies to franchise relocation even in light of the decisions in Piazza and Butterworth. C. As A Matter Of Public Policy, The Antitrust Exemption Should Apply To Club Relocation, As The League Has Relied On This Exemption And This Court Has Deferred Further Action To The Legislature Finally, as a matter of public policy, matters of franchise relocation should be covered by baseball s antitrust exemption, as the League has relied on the exemption with these matters, and has deferred further action on the exemption to Congress. After this Court s decision in Federal Baseball, in reliance on the Federal Baseball precedent, the baseball business ha[s] grown and developed. Flood, 407 U.S. at 275. This Court in Toolson recognized that since Federal Baseball, [t]he business [of baseball] has thus been left for thirty years to develop, on the understanding that it was not subject to existing antitrust legislation. Toolson, 346 U.S. at 356. Again in Flood, this Court repeated this sentiment that the exemption remained unchanged years after Federal Baseball and almost two decades after Toolson, Flood, 407 U.S. at 283. The League, based on the protection given to baseball by this Court, has developed rules for operation and guidelines for clubs to follow. One of these rules is the rule requiring a two-thirds majority approval for a club to move into another club s territory. The court in Charles O. Finley & Co. in looking at the commissioner s authority to block a trade of players concluded: 20

28 [A]nyone becoming a signatory to the Major League Agreement was put on ample notice that the action ultimately taken by the Commissioner was not only possible but probable. The action was neither an abrupt departure nor a change of policy in view of the contemporaneous developments taking place in the reserve system, over which the Commissioner had little or no control, and in any event the broad authority given to the Commissioner by the Major League Agreement placed any party to it on notice that such authority could be used. Charles O. Finley & Co. v. Kuhn, 569 F.2d 527, 540 (7th Cir. 1978). Much like in Charles O. Finley & Co. v. Kuhn, the N.O. s, as members of MLB knew that the move of the club hinged on league approval. This rule, which has developed over the course of 90 years based on MLB s reliance on the holdings of this Court, is now being challenged by those who had the most adequate of notice. The court in Charles O. Finley & Co. also noted that [e]ven in the absence of a waiver of recourse provision in an association charter, it is generally held that courts... will not intervene in questions involving the enforcement of bylaws and matters of discipline in voluntary associations. Id. at 542 (citing Am. Fed n of Technical Eng rs v. La Jeunesse, 347 N.E.2d 712, 715 (Ill. 1976)). MLB is a voluntary association of teams. While the City asks that the exemption not apply to matters of club relocation, the long history of applying the exemption allows for only one fair result - the continued application of the exemption to matters of franchise relocation. Additionally, this Court set forth specifically how the exemption should be changed, if necessary. In ruling that the exemption exists, the United States Supreme Court... clearly stated that any action involving the expansion or contraction of the exemption of baseball from the federal anti-trust laws must come from Congress. Salerno, 310 F. Supp. at 731. Because of the problems this Court foresaw in overruling Federal Baseball, this Court voiced a preference that if any change is to be made, it [should] come by legislative action that, by its nature, is only prospective in operation. Jeffrey S. Moorad, Major League Baseball's Labor Turmoil: The 21