SUPREME COURT OF THE UNITED STATES OF AMERICA

Transcription

1 No In the SUPREME COURT OF THE UNITED STATES OF AMERICA GOVERNOR OF TULANIA and the CITY OF BON TEMPS, Petitioners, v. NATIONAL FOOTBALL LEAGUE, MAJOR LEAGUE BASEBALL, NATIONAL HOCKEY LEAGUE, NATIONAL COLLEGE ATHLETIC ASSOCIATION and the OFFICE OF THE COMMISSIONER OF BASEBALL, Respondents. ON A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTEENTH CIRCUIT COUNSEL FOR PETITIONERS Counsel of Record: Team # 29

2 ISSUES PRESENTED I. Whether the Court of Appeals properly upheld the constitutionality of the Professional and Amateur Sports Protection Act of 1992 and enjoined Tulania s sports wagering law. II. Whether the Court of Appeals correctly held that the relocation of the N.O. s, a Major League Baseball club, is exempt under antitrust law. i

3 TABLE OF CONTENTS ISSUES PRESENTED... i TABLE OF CONTENTS... ii TABLE OF AUTHORITIES... iv STATEMENT OF JURISDICTION... 1 STANDARD OF REVIEW... 1 STATEMENT OF CASE The Professional and Amateur Sports Protection Act and Tulania s Law The Baseball Exemption and the N.O. s Relocation Efforts... 3 SUMMARY OF ARGUMENT... 5 ARGUMENT... 6 I. THE COURT OF APPEALS ERRED IN FINDING PASPA TO BE CONSTITUTIONAL... 6 A. PASPA Violates the Anti-Commandeering Principle of the Tenth Amendment by Forcing States to Maintain and Enforce Preexisting State-Law Prohibitions PASPA does not preempt state law by comprehensively regulating the field of sports betting PASPA does not give the States any choice between implementation and preemption, and therefore violates the anti-commandeering principle of the Tenth Amendment B. PASPA Violates the Equal Sovereignty of the States by Singling Out Nevada, Oregon, Delaware, and Montana for Preferential Treatment II. THE COURT OF APPEALS ERRONEOUSLY HELD THAT THE RELOCATION OF THE N.O. S, A MAJOR LEAGE BASEBALL CLUB, IS EXEMPT FROM SCRUTINY UNDER ANTITRUST LAW A. The City of Bon Temps has Plausibly Pled, with Sufficient Specificity, that Major League Baseball has Committed Federal Antitrust Violations, to the Detriment of Bon Temps B. The Judicially-Created Baseball Exemption is Limited to Player Labor Issues and Cannot be Extended to the Relocation of a Franchise The baseball exemption was judicially created and therefore must not be expanded beyond its intended target of baseball s reserve clause The original conception of the judicially-created baseball exemption was based on a now defunct notion that the MLB was not engaged in interstate commerce The scope of the baseball exemption does not encompass franchise relocations and never has ii

4 4. Every other major sports league is subject to antitrust laws, and there are no valid reasons for treating the MLB any differently C. The Curt Flood Act did not Preserve or Reserve an Antitrust Exemption Intended to Immunize Baseball from Challenges Based on the Restraint of Franchise Relocation CONCLUSION iii

5 CASES TABLE OF AUTHORITIES ACORN v. Edwards, 81 F.3d 1387 (5th Cir. 1996)... 8 Associated Gen. Contractors of Ca., Inc. v. Ca. St. Cn. of Carpenters, 459 U.S. 519 (1983) Bell Atl. Corp. v. Twombly, 550 U.S. 554 (2007) Bond v. United States, 131 S. Ct (2011)... 6 Butterworth v. Nat l League of Prof l Baseball Clubs, 644 So.2d 1021 (Fla. 1994) Cascade Cabinet Co. v. Western Cabinet & Millwork Inc., 710 F.2d 1366 (9th Cir. 1983) Charles O. Finley & Co. v. Kuhn, 569 F.2d 527 (7th Cir. 1978) Clapper v. Amnesty International USA, 133 S. Ct (2013)... 1 Fed. Baseball Club of Baltimore, Inc. v. Nat l League, 259 U.S. 200 (1922)... 17, 18, 20 FERC v. Mississippi, 456 U.S. 742 (1982)... 7, 11 Flood v. Kuhn, 407 U.S. 258 (1972)... passim FMC v. Seatrain Lines, Inc., 411 U.S. 726 (1973) Gonzales v. Raich, 545 U.S. 1 (2005)... 7 Gregory v. Ashcroft, 501 U.S. 452 (1991)... 6, 7 Henderson Broadcasting Corp. v. Houston Sports Ass n, Inc., 541 F. Supp. 263 (S.D. Tex. 1982) Hodel v. Va. Surface Mining & Reclamation Ass n, Inc., 452 U.S. 264 (1981)... 7, 10, 11 Lee v. Life Ins. Co. of North America, 829 F. Supp. 529 (D.R.I. 1993) Los Angeles Mem l Coliseum Comm n v. NFL, 726 F.2d 1381 (9th Cir. 1984) Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992)... 1 Maryland v. Louisiana, 451 U.S. 725 (1981)... 9 Mich. Canners & Freezers Ass n Inc. v. Agric. Mktg. & Bargaining Bd., 467 U.S. 461 (1984)... 9 Morsani v. MLB, 79 F. Supp. 2d 1331 (M.D. Fla. 1999) Nat l Fed n of Indep. Bus. v. Sebelius, 132 S. Ct (2012)... 6, 8, 11 NCAA v. Christie, 926 F. Supp. 2d 551 (D.N.J. 2013) iv

6 NCAA v. Governor of New Jersey, 730 F.3d 208 (3d Cir. 2013)... 9 New Orleans Pelicans Baseball, Inc. v. Nat l Ass n of Prof l Baseball Leagues, Inc., Civ. No , 1994 U.S. Dist. LEXIS (E.D. La. Feb. 26, 1994) New York v. United States, 505 U.S. 144 (1992)... passim NFL, et. al., v. Governor of Tulania and the City of Bon Temps, No. 09-SL-1605 (14th Cir. 2014)... passim Northwest Austin Mun. Utility Dist. No. One v. Holder, 557 U.S. 193 (2009)... 13, 14, 15 Petersburg Cellular P ship v. Bs. of Sup rs of Nottoway Cnty., 205 F.3d 688 (4th Cir. 2000)... 9 Piazza v. MLB, 831 F. Supp. 420 (E.D. Pa 1993)... 17, 21 Postema v. Nat'l League of Prof. Baseball Clubs, 799 F. Supp (S.D.N.Y. 1992) Printz v. United States, 521 U.S. 898 (1997)... 7, 12 Prof l Baseball Schools & Clubs, Inc. v. Kuhn, 693 F.2d 1085 (11th Cir. 1982) Raines v. Byrd, 521 U.S. 811 (1997)... 1 Reno v. Condon, 528 U.S. 141 (2000)... 5, 7, 8 Shelby Cnty., Ala. v. Holder, 133 S. Ct (2013) South Carolina v. Baker, 485 U.S. 505 (1988)... 7 South Carolina v. Katzenbach, 383 U.S. 301 (1966) South Dakota v. Dole, 483 U.S. 203 (1987)... 7, 10 State of Nev. v. U.S. Dept. of Energy, 133 F.3d 1201 (9th Cir. 1998)... 7 Strahan v. Coxe, 127 F.3d 155 (1st Cir. 1997)... 7 Toolson v. New York Yankees, 346 U.S. 356 (1953) United States v. Dege, 364 U.S. 51 (1960) Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 126 (1982) STATUTES 15 U.S.C U.S.C. 26(b) U.S.C , 8 28 U.S.C , 2 28 U.S.C Curt Flood Act of 1998, Pub. L. No , 112 Stat , 24 v

7 H.R. REP. NO (1952) S. REP. NO (1991)... 2, 14 OTHER AUTHORITIES Charles Gray, Comment, Keeping the Home Team at Home, 74 CAL. L. REV (1986) David D. Waddell & Douglas L. Minke, Why Doesn t Every Casino Have a Sports Book?, GLOBAL GAMING BUS., July Holmes, Collected Legal Papers, 187 (1920) Jeffrey Roeske, Comment, Doubling Down on Sports Betting: Why PASPA Would Fail a Constitutional Challenge, 24 MARQ. SPORTS. L. REV. 463 (2014)... 1 Nathaniel Grow, Defining the Business of Baseball : A Proposed Framework for Determining the Scope of Professional Baseball's Antitrust Exemption, 44 U.C. DAVIS L. REV. 557 (2010) Sports Wagering, American Gaming Association, 13 Stephen F. Ross, Antitrust: New Economy, New Regime Second Annual Symposium of the American Antitrust Institute: Antitrust Options to Redress Anticompetitive Restraints and Monopolistic Practices by Professional Sports Leagues, 52 CASE W. RES. 133 (2001) The Federalist No. 45 (J. Cooke ed. 1961)... 6 What Made College Football More Like the Pros? 7.3 Billion, for a Start, N.Y. TIMES, Dec. 31, CONSTITUTIONAL PROVISIONS CONST. amend. X... 6 M.L.B. CONST. art. VIII, vi

8 STATEMENT OF JURISDICTION Respondents and the City of Bon Temps asserted jurisdiction in the district court under 28 U.S.C Tulania maintains, however, that Respondents claim for injunctive relief under PASPA fails to present a case or controversy under Article III. 1 Accordingly, to the extent the issue is preserved before this Court, Tulania argues that Respondents lack standing to challenge Tulania s sports betting law. The United States District Court for the Southern District of Tulania entered its final order on October 1, 2014, and Respondents timely appealed. The United States Court of Appeals for the Fourteenth Circuit asserted jurisdiction under 28 U.S.C After the Fourteenth Circuit entered its opinion, Petitioners timely filed a petition for Writ of Certiorari before the United States Supreme Court. The jurisdiction of this Court, having granted the petition, rests on 28 U.S.C. 1254(1). STANDARD OF REVIEW The Court s review of this case is de novo. 1 Even though PASPA provides a civil action for enjoining a violation of the Act, see 28 U.S.C. 3703, Congress cannot erase Article III s standing requirements by statutorily granting the right to sue to a plaintiff who would not otherwise have standing, Raines v. Byrd, 521 U.S. 811, 820 n.3 (1997). Notably absent from the record is any evidence that a law regulating illegal sports wagering in Tulania, a small state of 1,000,000 residents, would actually or imminently harm the multi-billion dollar Respondents, as is required by this Court s standing precedent. See Clapper v. Amnesty International USA, 133 S. Ct. 1138, 1147 (2013); Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Indeed, Respondents have actually benefited from record profits in recent years, see What Made College Football More Like the Pros? 7.3 Billion, for a Start, N.Y. TIMES, Dec. 31, 2014, at A1, despite Americans spending an estimated $500 billion each year on illegal or online sports betting, Jeffrey Roeske, Comment, Doubling Down on Sports Betting: Why PASPA Would Fail a Constitutional Challenge, 24 MARQ. SPORTS. L. REV. 463 (2014). 1

9 STATEMENT OF CASE 1. The Professional and Amateur Sports Protection Act and Tulania s Law In 1992, Congress enacted 28 U.S.C , the Professional and Amateur Sports Protection Act ( PASPA ), to stop the spread of State-sponsored sports gambling and to maintain the integrity of our national pastime. S. REP. NO (1991), at *4. While PASPA effectively criminalizes sports gambling in nearly every part of the country, see 28 U.S.C. 3702, the Act carves out special exemptions for certain state-authorized gambling schemes that were operated between 1976 and 1991, see 28 U.S.C. 3704(a). This grandfathering provision thus permits Montana to continue its sports gambling pools, allows Delaware and Oregon to sponsor limited sports lotteries they had conducted during that period, and releases Nevada from PASPA s control entirely. David D. Waddell & Douglas L. Minke, Why Doesn t Every Casino Have a Sports Book?, GLOBAL GAMING BUS., July 2008, at PASPA also provides a civil action for private parties to enjoin a violation of the Act. 28 U.S.C Seeking to curtail illegal sports betting in the State and raise additional revenue during a major economic recession, Tulania sought to license gambling on professional and amateur sports. NFL, et. al., v. Governor of Tulania and the City of Bon Temps, No. 09-SL-1605, at *2 (14th Cir. 2014) (hereinafter Fourteenth Circuit Opinion ). Soon thereafter, the National Football League, Major League Baseball, the National Hockey League, and the National Collegiate Athletic Association (hereinafter collectively The Leagues or Respondents ) filed suit to enjoin Tulania from sports betting under 28 U.S.C. 3703, alleging that the proposed law violates PASPA. Id. Tulania moved to dismiss The Leagues complaint, alleging that PASPA is unconstitutional under the anti-commandeering principle of the Tenth Amendment, and 2

10 because PASPA violates the States equal sovereignty. Id. Siding with Tulania, the District Court for the Southern District of Tulania agreed that PASPA was unconstitutional and dismissed The Leagues complaint. Id. at *4. On appeal, the Fourteenth Circuit reversed, upheld PASPA as constitutional, and enjoined Tulania s sports betting law. Id. at * The Baseball Exemption and the N.O. s Relocation Efforts Major League Baseball ( MLB ) is an unincorporated association of thirty-one baseball teams, which are divided between the American and National Leagues. Id. at *3. A once proud organization, the N.O. s are an MLB club in the National League s Eastern Division. Id. The N.O. s play their home games in Cajun, Tulania, where they have been located since Id. In Cajun, the team is forced to share its stadium with the N.O. Raiders of the National Football League. Id. Moreover, the N.O. s operating territory is located in the Uptown and the Garden Districts of Tulania. Id. Operating territories are determined by the MLB, and dictate where teams can play home games and which markets will have certain games televised. M.L.B. CONST. art. VIII, 8. After moving to Cajun in 1978, the N.O. s enjoyed initial success. Fourteenth Circuit Opinion, at *3. This success, however, was short lived, as attendance at N.O. s games has plummeted since Id. For several years, the N.O. s have considered possible alternative locations. Id. Eventually, the N.O. s focused their relocation efforts on Bon Temps, a city in the southeast region of Tulania with a robust population of 100,000 residents. Id. at *2-3. In early 2010, the city of Bon Temps released an Economic Impact Analysis, which outlined benefits of the proposed N.O. s stadium in Bon Temps. Id. at *2. Later that year, the Redevelopment Agency of the City of Bon 3

11 Temps ( RDA ) purchased eight parcels of land in Bon Temps. Id. at *2-3. RDA s intent was to develop the property into an MLB ballpark for the N.O. s. Id. at *3. On November 8, 2012, the Bon Temps City Council entered into a two-year Option Agreement with the N.O. Investment Group LLC. Id. at *4. The Agreement gives the N.O. s an option to purchase the eight parcels of land set aside by RDA for the sole purpose of building a new ballpark. Id. The Investment Group paid $50,000 for the initial two year option, which included an option to renew for a third year at $20,000. Id. If the final option is picked up, the purchase price for all land will be $7,000,227. Id. The MLB Constitution currently designates the City of Bon Temps as within the Blue Devil s operating territory. Id. The Blue Devils have attempted to prevent the N.O. s from moving to Bon Temps in order to preserve their geographic monopoly. Id. at *3 4. Further, the MLB Constitution requires a supermajority vote of approval by the other MLB Clubs for the N.O. s to relocate outside of their current operating territory. Id. Thus, in an attempt to effectively kill the deal, the Commissioner asked the mayor of Bon Temps to delay a public vote for two years on whether the N.O. s could purchase the allocated parcels of land. Id. at *3. Moreover, the MLB approval of the relocation was delayed for over two years, covering the span of the Option Agreement. Id. The MLB moved to dismiss the City s complaint, arguing that a baseball franchise s relocation should be exempt from antitrust laws. Id. at *4. The District Court denied the motion to dismiss, concluding that the baseball exemption from antitrust law does not apply to franchise relocation. Id. The Fourteenth Circuit reversed, holding that the exemption could apply to Petitioners complaint. Id. at *5. Petitioners timely filed a petition for Writ of Certiorari before this Court, which was granted. 4

12 SUMMARY OF ARGUMENT The Professional and Amateur Sports Protection Act, 28 U.S.C , is unconstitutional for at least two reasons. First, rather than directly criminalize sports betting or comprehensively regulate the field of sports betting, PASPA freezes in time preexisting state-law prohibitions and dictates the content of state law. By seeking to control or influence the manner in which States regulate private parties, Reno v. Condon, 528 U.S. 141, 151 (2000), the Act impermissibly commandeers the state legislatures. Second, because PASPA s grandfathering exceptions are not sufficiently related to the national problem of sports betting, see Northwest Austin Mun. Utility Dist. No. One v. Holder, 557 U.S. 193, 203 (2009), the Act violates the equal sovereignty of the States. The Leagues suit should be dismissed and Tulania s law permitted to stand. Disregarding the merits of the City s antitrust claim against the MLB, the Fourteenth Circuit also erroneously granted the MLB an all-encompassing baseball exemption effectively providing baseball with blanket immunity from antitrust compliance. Not only must any exemption be narrowly construed, see Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 126 (1982), but the baseball exemption has itself always been limited to MLB player labor issues. Furthermore, the original justification for the baseball exemption is no longer valid. See Piazza v. MLB, 831 F. Supp. 420, 438 (E.D. Pa 1993). Extending this exemption to cover franchise relocations is inconsistent with the Court s precedent and infringes on Congress s legislative authority. Id. at 438. The Fourteenth Circuit implemented an entirely overbroad interpretation of the judicially-created baseball exemption. The MLB s anti-competitive interference with the N.O. s relocation should not be exempt from antitrust law scrutiny. 5

13 ARGUMENT I. THE COURT OF APPEALS ERRED IN FINDING PASPA TO BE CONSTITUTIONAL A. PASPA Violates the Anti-Commandeering Principle of the Tenth Amendment by Forcing States to Maintain and Enforce Preexisting State-Law Prohibitions It is incontrovertible that the Founders intended the federal government to be one of limited and enumerated powers. See The Federalist No. 45, p. 313 (J. Cooke ed. 1961) ( The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. ). By explicitly reserving all power to the States not expressly delegated by the Constitution to the federal government, CONST. amend. X, the federalist system is a check on abuses of government power, Gregory v. Ashcroft, 501 U.S. 452, 458 (1991). Indeed, the Tenth Amendment does not simply protect the States own interests. Rather [f]ederalism secures the freedom of the individual [by] allow[ing] States to respond, through the enactment of positive law, to the initiative of those who seek a voice in shaping the destiny of their own times without having to rely solely upon the political processes that control a remote central power. Bond v. United States, 131 S. Ct. 2355, 2364 (2011) (emphasis added). Federalism also ensure[s] that powers which in the ordinary course of affairs, concern the lives, liberties and properties of the people [are] held by governments more local and more accountable than a distant federal bureaucracy. Nat l Fed n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2578 (2012) (internal citation and quotation marks omitted). Within this context, the Court has articulated certain parameters by which Congress must abide. 6

14 To be sure, Congress would be well within its Commerce Clause authority to directly criminalize sports betting, see Gonzales v. Raich, 545 U.S. 1, 22 (2005), to comprehensively regulate the field of sports betting, see State of Nev. v. U.S. Dept. of Energy, 133 F.3d 1201, 1207 (9th Cir. 1998); Strahan v. Coxe, 127 F.3d 155, 168 (1st Cir. 1997), or to enact legislation that offers States a choice between regulating their own licensing of sports betting or having state law preempted by a federal regulatory scheme, see Hodel v. Va. Surface Mining & Reclamation Ass n, Inc., 452 U.S. 264, 288 (1981); see also FERC v. Mississippi, 456 U.S. 742, (1982). Congress may also undoubtedly attach conditions on the receipt of federal funds to incentivize States to implement their own sports betting regulatory regimes. South Dakota v. Dole, 483 U.S. 203, 206 (1987). In fact, [a]s long as it is acting within the powers granted it under the Constitution, Congress may impose its will on the States [and] legislate in areas traditionally regulated by the States. Gregory, 501 U.S. at 460. On the other hand, this Court has made plain that Congress may not simply commandeer the legislative process of the States by directly compelling them to enact and enforce a federal regulatory program. Hodel, 452 U.S. at 288 (emphasis added); see also Printz v. United States, 521 U.S. 898, 935 (1997); New York v. United States, 505 U.S. 144, 161 (1992). And, while Congress may regulate the States as participants in the interstate market or through laws of general applicability, see Reno, 528 U.S. at 155; South Carolina v. Baker, 485 U.S. 505, (1988), the Commerce Clause does not authorize Congress to regulate state governments regulation of interstate commerce, New York, 505 U.S. at 166 (emphasis added). In other words, even where Congress has the authority under the Constitution to pass laws requiring or prohibiting certain acts, it 7

15 lacks the power directly to compel the States to require or prohibit those acts. Id.; see also Sebelius, 132 S. Ct. at ( [T]he Constitution has never been understood to confer upon Congress the ability to require the States to govern according to Congress s instructions. ) (internal citation omitted); ACORN v. Edwards, 81 F.3d 1387, 1394 (5th Cir. 1996) (Congress may not force States to regulate according to Congressional direction ). Rather than criminalize sports betting, enact a comprehensive federal scheme, or provide States with some alternative to a federal mandate, PASPA directly compels the States to maintain and enforce their own preexisting prohibitions on sports gambling. See 28 U.S.C (making it unlawful for a governmental entity to license, or authorize by law or compact any form of gambling on professional or amateur sports). Thus, PASPA seek[s] to control or influence the manner in which States regulate private parties. Reno v. Condon, 528 U.S. at 151. This, Congress may not do PASPA does not preempt state law by comprehensively regulating the field of sports betting In a split decision, the Fourteenth Circuit mistakenly concluded that PASPA preempts state laws in the field of sports betting. Fourteenth Circuit Opinion, at *10. As Judge Sanchez reasoned, PASPA makes clear that the federal policy with respect to sports gambling is that such activity should not occur under the auspices of a state license. 3 Id. (emphasis added). Since Tulania s proposed law would permit licensed 2 Apparently foreseeing a challenge to the constitutionality of PASPA, the Department of Justice wrote Judiciary Committee Chairman Biden before passage of the bill in 1991 to express concern that, to the extent the bill can be read as anything more than a clarification of current law, it raises federalism issues. S. Rep , at *13. 3 In support of this position, Judge Sanchez also noted that Congress enacted PASPA to be complementary to and consistent with then current Federal law relating to sports betting. Id. (citing Senate Report at 3557). But see NCAA v. Governor of New Jersey, 8

16 gambling on professional and amateur sporting events, id. at *2, the majority reasoned Tulania s law stands as an obstacle to the... accomplishment and execution of the full purpose and objectives of Congress, id. at *10 (citing Mich. Canners & Freezers Ass n Inc. v. Agric. Mktg. & Bargaining Bd., 467 U.S. 461, 469 (1984). The majority therefore concluded the proposed law conflicts with PASPA, and is preempted. Id. at *10; see also id. at *20 ( PASPA operates simply as a law of pre-emption, via the Supremacy Clause.... ). The majority opinion reflects a misapplication of the doctrine of preemption, which is a rule of priority that gives federal law primacy over state law. Id. at *23 (Smith, J., dissenting). Contrary to Judge Sanchez s reasoning, preemption does not simply ask whether or not Congress intended to promote a federal policy through legislation. Id. at *10. Rather, [p]reemption involves the direct federal governance of the people in a way that supersedes concurrent state governance of the same people. Petersburg Cellular P ship v. Bs. of Sup rs of Nottoway Cnty., 205 F.3d 688, 703 (4th Cir. 2000) (emphasis in original). Moreover, when a federal statute preempts state law, it does not alter or change state law. Instead, the preempting federal command merely displace[s] the preexisting state enactment, and renders a relevant state law without effect or void. Maryland v. Louisiana, 451 U.S. 725, (1981). In order to displace a preexisting state enactment, Congress must therefore provide some federal alternative to override that state law. PASPA, however, does not seek to replace state 730 F.3d 208, 247 (3d Cir. 2013) (Vanaskie, J., dissenting) ( [C]ontrary to the majority opinion s suggestion, other federal statutes relating to sports gambling do not aggregate to form the foundation of a federal regulatory scheme that can be interpreted as preempting state regulation of sports gambling. ). 9

17 laws with anything. The Act simply forces most States to maintain and enforce their own preexisting state-law prohibitions of sports wagering. PASPA freezes in time state-law prohibitions on sports betting from two decades ago and prohibits State governments from changing their own laws in perpetuity. That is not preemption, as the United States recently conceded at oral argument. See Transcript of Oral Argument, NCAA v. Christie, 926 F. Supp. 2d 551 (D.N.J. Feb. 14, 2013) (No ). That is a direct command. 2. PASPA does not give the States any choice between implementation and preemption, and therefore violates the anti-commandeering principle of the Tenth Amendment Where Congress could directly regulate or occupy a given field, but instead opts to direct the States conduct through a federal law targeting the States as regulators, Congress must give the States some choice between implementation of federal standards and preemption. Hodel, 452 U.S. at 288; New York, 505 U.S. at 167. Unlike other statutes upheld by this Court as constitutional, however, PASPA does not give the States any choice. One way the federal government may incentivize State conduct is through Congress s Spending Power. Dole, 483 U.S. at 206. In Dole, this Court held that Congress could condition the grant of federal funds in a way reasonably calculated to address the particular impediment to a purpose for which the funds are expended. Id. at 209. On the other hand, the Court maintained, in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which pressure turns into compulsion. Id. at 211 (internal citation and quotation marks omitted). In such instances where Congress crossed the line distinguishing 10

18 encouragement from coercion, New York, 505 U.S. at 175, this Court has found that Congress unconstitutionally conscripted state agencies into the national bureaucratic army, Sebelius, 132 S. Ct. at 2607 (internal citation and quotation marks omitted); see also id. at (holding Medicaid provision of Affordable Care Act to be unconstitutional). Thus, in the Spending Power context, States must be given a meaningful choice when deciding whether or not to accept conditioned federal funds. Congress may also, through its Commerce Clause authority, provide States with the option of implementing federal standards or having the federal government step in to do so. Hodel, 452 U.S. at 272. In Hodel, for example, the Surface Mining Act was a comprehensive statute designed to establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations. Id. at 268. Under the Act, this Court observed, The States are not compelled to enforce the steep-slope standards, to expend any state funds, or to participate in the federal regulatory program in any manner whatsoever. If a State does not wish to submit to a proposed permanent program that complies with the Act and implementing regulations, the full regulatory burden will be borne by the Federal Government. Id. at 288 (emphasis added). Since the States were given a choice between implementation and preemption, the Court held there can be no suggestion that the Act commandeers the legislative process of the States by directly compelling them to enact and enforce a federal regulatory program. Id.; see also FERC, 456 U.S. at 764 (holding that, because the Public Utility Regulatory Policies Act required only consideration of federal standards, the Act provided the States with a meaningful choice, and is only one step beyond Hodel ) (emphasis added). 11

19 On the other hand, where Congress directly compels the States to regulate their own citizens without providing a meaningful alternative to implementation of federal standards, this Court has held that Congress unconstitutionally commandeers the State legislatures. See New York, 505 U.S. at 177. In New York, for example, the take title provision of the Low Level Radioactive Waste Policy Amendments Act provided States with two options: either take title to the nuclear waste and assume liability for any damages caused by waste generators or regulate pursuant to Congress s direction. Id. at 176. As the Court observed, however, both choices required the States to follow the orders of Congress. Id. at 176 ( In this provision, Congress has not held out the threat of exercising its spending power or its commerce power; it has instead held out the threat, should the States not regulate according to one federal instruction, of simply forcing the States to submit to another federal instruction. ). Since the States were not given a meaningful choice of whether or not to administer a federal program, this Court held that the take title provision of the Act unconstitutionally commandeered the State legislatures. Id. at 177; see also Printz, 521 U.S. at 935 (holding that Congress may not conscript State officials to directly administer or enforce a federal regulatory program). As Judge Smith correctly identified, this case is an even more egregious example of commandeering than New York. Fourteenth Circuit Opinion, at *22. At least the federal statute in New York presented States with some choice albeit an illusory, Hobson s choice between two unconstitutionally coercive regulatory techniques, New York, 505 U.S. at 176. PASPA, meanwhile, levels a single, direct command on the States Thou shall keep in place and enforce state-level sports betting bans in perpetuity without allowing for any alternative. By giving the States no choice, let alone a 12

20 meaningful one, the federal government has commandeered the State legislatures and dictated the content of state law. PASPA therefore violates the Tenth Amendment. B. PASPA Violates the Equal Sovereignty of the States by Singling Out Nevada, Oregon, Delaware, and Montana for Preferential Treatment PASPA granted Nevada, Oregon, Delaware, and Montana a virtual monopoly over revenues generated from state-sponsored sports betting in perpetuity. 4 As such, Judge Smith aptly observed, PASPA plainly gives disfavored States less sovereign power with respect to sports wagering than it gives to the favored States because the favored States have the power to decide whether to permit such wagering. Fourteenth Circuit Opinion, at *25 (Smith, J., dissenting). Yet, as this Court has made clear, a departure from the fundamental principle of equal sovereignty requires a showing that a statute s geographic coverage is sufficiently related to the problem that it targets. Northwest, 557 U.S. at 203 (emphasis added); see also Shelby Cnty., Ala. v. Holder, 133 S. Ct. 2612, 2623 (2013). Since no such showing has been made in this case, PASPA violates the States equal sovereignty. The Fourteenth Circuit incorrectly applied this Court s recent precedent in Northwest Austin and Shelby when upholding PASPA against Petitioner s equal sovereignty challenge. In particular, Judge Sanchez improperly relied on the fact that the Voting Rights Act at issue in Northwest and Shelby is fundamentally different from PASPA. Fourteenth Circuit Opinion, at *12. Nowhere in Northwest or Shelby did this Court limit the equal sovereignty principle to the regulation of elections pursuant to the Reconstruction Amendments, as Judge Sanchez suggested. Id. at *13. Rather, the exact 4 In 2012, for example, $3.45 billion was legally wagered in Nevada, which generated roughly $170 million in gross revenue for Nevada s sports books. Sports Wagering, American Gaming Association, 13

21 opposite appears true. See Shelby, 133 S. Ct. at 2624 ( [A]s we made clear in Northwest Austin, the fundamental principle of equal sovereignty remains highly pertinent in assessing subsequent disparate treatment of States. ) (emphasis added). More telling, in reflecting on this Court s expansion of equal sovereignty s sway, Justice Ginsberg explicitly identified a number of non-voting right statutes, starting with PASPA, which would likely be rendered unconstitutional by the logic of Shelby. Id. at 2649 (Ginsburg, J., dissenting). In light of the supposed purpose of the Act, to stop the spread of State-sponsored sports gambling and to maintain the integrity of our national pastime, S. REP. NO , at *4, there is simply no rational basis, as a matter of Federal policy, for allowing sports wagering in three States, while prohibiting it in the other 47, id. at *13. 5 Indeed, the only justification Congress ever provided for exempting certain States from PASPA is the simple fact that those States had some form of sports betting scheme in place at some point in time between 1976 and See id. at *8 (concluding that Congress has no wish to apply [PASPA] retroactively to Oregon or Delaware nor to threaten the economy of Nevada ). Moreover, because PASPA was enacted to solve a national problem with effects felt beyond the borders of those States that sanction it, id. at *5, the Act cannot be defended as a remedy for local evils, Fourteenth Circuit Opinion, at *25 (quoting South Carolina v. Katzenbach, 383 U.S. 301, 328 (1966)). If Congress s intent were truly to rid the country of the supposed evils associated with sports betting, the only rational approach would be to outlaw sports gambling entirely. Singling out four States for preferential treatment, at the expense of forty-six 5 Curiously, while the exemption applies to four States (Nevada, Oregon, Delaware, and Montana), Senator Grassley only referred to three (Nevada, Oregon, and Delaware). Id. 14

22 others, is simply not rational. Since the grandfathering exceptions are neither rational nor sufficiently related to the national problem of sports betting, see Northwest, 557 U.S. at 203, the Act plainly violates the equal sovereignty of the States. II. THE COURT OF APPEALS ERRONEOUSLY HELD THAT THE RELOCATION OF THE N.O. S, A MAJOR LEAGE BASEBALL CLUB, IS EXEMPT FROM SCRUTINY UNDER ANTITRUST LAW The City of Bon Temps has adequately pled that Major League Baseball engaged in anti-competitive behavior, in violation of federal antitrust law. The MLB s interference with the N.O. s relocation to Bon Temps impedes competition in the market for Major League Baseball contests and restricts the sale of land for the development of major league baseball stadiums. Ignoring the merits of the City s antitrust claim, the Fourteenth Circuit improperly held that the obsolete and highly controversial baseball exemption not only applies to franchise relocations, but also precludes almost all antitrust claims against the MLB. In so doing, the lower court embraced an entirely overbroad interpretation of the so-called baseball exemption. Under this Court s precedent, the judicially-created exemption was always intended to be limited to baseball s player labor issues, and therefore cannot apply to the geographic relocation of teams. The MLB cannot shield itself with the tattered cloak of the baseball exemption. A. The City of Bon Temps has Plausibly Pled, with Sufficient Specificity, that Major League Baseball has Committed Federal Antitrust Violations, to the Detriment of Bon Temps Liability under 1 of the Sherman Act [ ] requires a contract, combination..., or conspiracy, in restraint of trade or commerce. Bell Atl. Corp. v. Twombly, 550 U.S. 554, 548 (2007). Thus, in order to state a claim under Section 1, a plaintiff must plead 1) the existence of a contract, combination, or conspiracy among two or more persons or 15

23 entities; 2) that unreasonably restrains trade or competition; and 3) which affects interstate or foreign commerce. See Lee v. Life Ins. Co. of North America, 829 F. Supp. 529, 535 (D.R.I. 1993), aff d, 23 F.3d 14 (1st Cir. 1994), cert. denied, 513 U.S. 964 (1994). The claimant must also demonstrate an injury in business or property by reason of anything forbidden in the antitrust law. Associated Gen. Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 521 (1983). In making out a Section 1 claim, Petitioners have argued that the MLB clubs, including the Blue Devils, conspired to delay approving the N.O. s relocation for over two years, effectively preventing relevant parties from exercising the option to purchase the land in Bon Temps. Fourteenth Circuit Opinion, at *4. This intentional delay was done to perpetuate the Blue Devil s monopoly over the geographic market. Id. By preventing the N.O. s from competing in a new market, the MLB interfered with interstate commerce and proximately caused Bon Temps to lose revenue reasonably expected under the Option Agreement. Id. To be clear, the city of Bon Temps is harmed by the MLB s and the Blue Devil s anti-competitive behavior in two ways. First, under the Option Agreement, the city is unable to collect the purchase price of the land until the MLB approves the N.O. s relocation. Second, as was uncovered in the City s Economic Impact Analysis, the relocation of the N.O. s is likely to bring about significant economic benefit. Preventing or delaying the N.O. s relocation blocks such economic growth, as Bon Temps loses potential revenue every day the plot of land remains vacant. Despite all of this, the lower court overlooked the MLB s injurious and anti-competitive behavior by misinterpreting and then misapplying an archaic exemption to the law. 16

24 B. The Judicially-Created Baseball Exemption is Limited to Player Labor Issues and Cannot be Extended to the Relocation of a Franchise This Court s precedents consistently hold that exemptions from the antitrust laws must be construed narrowly. Union Labor, 458 U.S. at 126 (citing FMC v. Seatrain Lines, Inc., 411 U.S. 726, 733 (1973)). By clinging to the 1922 Federal Baseball decision, the MLB attempts to gain a blanket exemption from any antitrust laws, so long as the matter tangentially touches upon the business of baseball. Lower courts have confirmed, however, that the antitrust exemption created by Federal Baseball is limited to baseball s reserve system and is inapplicable to franchise relocation. See, e.g., Piazza, 831 F. Supp. at 438. Moreover, in accordance with Union Labor and Piazza, there are a number of distinct and compelling justifications for not expanding the application of the baseball exemption, as the Fourteenth Circuit imprudently did below. 1. The baseball exemption was judicially created and therefore must not be expanded beyond its intended target of baseball s reserve clause Congress did not take any affirmative action to exempt baseball or any of its aspects from antitrust law. Rather, the so-called baseball exemption was generated from a trilogy of Supreme Court cases. The first, Federal Baseball, dealt with the issue of whether the American and National Leagues had exploited a player reserve clause in order to prevent the Federal League from securing enough players to play games. In that case, the Court held that the business is giving exhibitions of base ball, which are purely state affairs. Fed. Baseball Club of Baltimore, Inc. v. Nat l League, 259 U.S. 200, 208 (1922). Since the Sherman Act only covers interstate commerce, see 15 U.S.C. 1, MLB s reserve clause was found to be exempt from federal antitrust laws. The second case, Toolson, addressed whether players could bring suit for harm created by the reserve 17

25 clauses in their contracts. Toolson v. New York Yankees, 346 U.S. 356 (1953). In a succinct opinion, the Court affirmed Federal Baseball and perpetuated the notion that baseball exhibitions only involve intrastate commerce. Id. The Court further opined that, because Congress understood that baseball s reserve clause was exempt from antitrust laws and had not introduced disapproving legislation, Congress had effectively endorsed a baseball exemption. Id. The final case, also covering the reserve clause, involved a player s request to be made a free agent that was denied by the commissioner following his trade to another major league club. Flood v. Kuhn, 407 U.S. 258 (1972). In the very first sentence of the opinion, this Court made clear that it was asked specifically to rule that professional baseball s reserve system is within the reach of the federal antitrust laws. Id. at 259. The Court then followed Federal Baseball and Toolson and found that baseball s reserve system was exempt from antitrust laws. Id. at 285. The City does not contend that no baseball exemption exists; this Court has undoubtedly created a limited antitrust exemption for baseball s reserve system. With its reserve system enjoying exemption from the federal antitrust laws, baseball is indeed an exception and an anomaly. Federal Baseball and Toolson have become an aberration confined to baseball. Id. at 282. Recognizing that many regard the reserve system exemption as unrealistic, inconsistent, or illogical, the Court clarified that the justification behind the exemption rests on a recognition and an acceptance of baseball s unique characteristic and needs. Id. While the reserve system fits within baseball s unique characteristics and needs, the relocation of a franchise has never been unique to baseball. Consequently, the baseball exemption is really a misnomer because the exemption created by these three cases was never intended to extend beyond baseball s 18

26 reserve clause. If anything, it should be referred to as the reserve clause exemption, and baseball s reserve clause exemption has never been stretched to cover franchise relocation. Throughout the Federal Baseball-Toolson-Flood trilogy, the Court has displayed a reluctance to act on behalf of Congress; consistently holding that altering the scope of the reserve clause exemption is for congressional, and not judicial, action. Id. at 285. This Court has never exempted the MLB from antitrust laws with regard to franchise relocation. Doing so now would expand the scope of an already judicially-manufactured exemption an exemption, that under Union Labor, is required to be construed narrowly. Moreover, doing so now would be inconsistent with the Court s espoused preference for Congress to set the parameters of the exemption s scope. If judicial elimination of the reserve clause exemption would usurp Congress s legislation power, then expanding the reserve clause exemption to include a franchise relocation exemption would certainly be usurpation. 2. The original conception of the judicially-created baseball exemption was based on a now defunct notion that the MLB was not engaged in interstate commerce The Court, in Flood, unequivocally pronounced that [p]rofessional baseball is a business and it is engaged in interstate commerce. Id. at 282. Federal Baseball s original holding that baseball s reserve clause was exempt from federal antitrust law was premised on the understanding that baseball exhibitions were purely state affairs. Fed. Baseball, 259 U.S. at 208. Specifically, Federal Baseball rested its laurels on an argument that induc[ing] free persons to cross state lines and... arrang[ing] and pay[ing] for their doing so is not enough to change the character of the business the 19

27 transport is a mere incident, not the essential thing. Id. at 209. Because this interstate commerce was deemed to be incidental, the Federal Baseball Court was able to justify holding the reserve clause to be exempt from federal antitrust laws. This justification, however, is no longer applicable given the Flood Court s appropriate characterization of professional baseball as being engaged in interstate commerce. Yet, despite judicial recognition of this fact, Flood affirmed baseball s reserve clause exemption under what appears to be a historical gloss argument. Flood, 407 U.S. at 283. The Flood Court explained that because Congress as yet has had no intention to subject baseball's reserve system to the reach of the antitrust statutes, and because [r]emedial legislation has been introduced repeatedly in Congress but none has ever been enacted, there is something other than mere congressional silence and passivity. Id. Justice Holmes, who authored the Federal Baseball opinion, famously asserted that [i]t is revolting to have no better reason for a rule of law than that so it was laid down in the time of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished long since, and the rule simply persists from blind imitation of the past. United States v. Dege, 364 U.S. 51, (1960) (quoting Holmes, Collected Legal Papers, 187 (1920)). Seemingly, Justice Holmes would not want the exemption he created to persist after its justification had vanished. Despite Justice Holmes s admonishment, baseball s reserve clause exemption need not be abolished altogether by the instant case. Rather, having acknowledged that the exemption is judicially created, and having accepted that the original justification for the exemption is now invalid, the Court must simply take extra precaution in scrutinizing Congress s inaction and 20

28 understanding of the baseball exemption. Given that Federal Baseball, Toolson, and Flood limited their holdings to baseball s reserve clause, it would be inappropriate to presume, as the Fourteenth Circuit did, that Congress s inaction occurred with the understanding that a franchise relocation exemption somehow existed. 3. The scope of the baseball exemption does not encompass franchise relocations and never has Piazza is almost identical to the instant case. In that case, the Eastern District of Pennsylvania held that any antitrust exemption created by Federal Baseball is limited to baseball s reserve system. Piazza, 831 F. Supp. at 438. After the MLB refused to approve the relocation of the San Francisco Giants to Tampa Bay, the court confirmed that the baseball exemption did not cover franchise relocations. Id. As the court explained, the Court in Flood v. Kuhn stripped from Federal Baseball and Toolson any precedential value those cases may have had beyond the particular facts there involved, i.e., the reserve clause. Id. at 436. Indeed, the Supreme Court of Florida reached the same conclusion, finding that the baseball exemption does not apply to franchise relocation. Butterworth v. Nat l League of Prof l Baseball Clubs, 644 So.2d 1021 (Fla. 1994). Following the Flood decision, the cases that have found aspects of baseball to fall within an exemption concerned characteristics and needs that were unique to baseball, such as anti-competitive behavior regarding the minor leagues. See, e.g., Prof l Baseball Schools & Clubs, Inc. v. Kuhn, 693 F.2d 1085 (11th Cir. 1982) (challenge to minor league structure); Charles O. Finley & Co. v. Kuhn, 569 F.2d 527 (7th Cir. 1978) (challenge to Commissioner order regarding sale of player contracts); New Orleans Pelicans Baseball, Inc. v. Nat l Ass n of Prof l Baseball Leagues, Inc., Civ. No , 21

29 1994 U.S. Dist. LEXIS (E.D. La. Feb. 26, 1994) (challenge to minor league franchise location rules). Meanwhile, a lower court has explicitly held that the baseball exemption does not apply to radio broadcasting of baseball, nor does it apply to agreements between baseball teams and non-baseball business enterprises. Henderson Broadcasting Corp. v. Houston Sports Ass n, Inc., 541 F. Supp. 263 (S.D. Tex. 1982). The exemption also does not apply to antitrust claims about employment relations with umpires. Postema v. Nat l League of Prof. Baseball Clubs, 799 F. Supp. 1475, 1489 (S.D.N.Y. 1992). When read together, Henderson and Postema help to provide the outer-most boundaries of the baseball exemption. Following Flood, the scope of the exemption must not only be limited to matters associated with player labor, but those matters must also fall under the even narrower scope of baseball s unique characteristics and needs. Unlike the league structure or the reserve system, baseball's relations with non-players are not a unique characteristic or need of the game. Anti-competitive conduct toward [non-players] is not an essential part of baseball and in no way enhances its vitality or visibility. Id. at Similarly, anti-competitive conduct towards cities competing to relocate struggling MLB Clubs is not an essential part of baseball and in no way enhances its vitality or visibility. In fact, it does the opposite. Fourteenth Circuit Opinion, at *31 (Smith, J., dissenting). 4. Every other major sports league is subject to antitrust laws, and there are no valid reasons for treating the MLB any differently All other sports are governed by the Rule of Reason analysis when it comes to efforts to restrict franchise relocations. The NFL, for example, had a very similar franchise relocation rule to the MLB s current rule of requiring a league approval to 22

30 move to occupied territory. See Los Angeles Mem l Coliseum Comm n v. NFL, 726 F.2d 1381 (9th Cir. 1984). The court there conducted a Rule of Reason analysis through investigation of the industry at issue and a balancing of the arrangement s positive and negative effects on competition. Id. at 1391 (quoting Cascade Cabinet Co. v. Western Cabinet & Millwork Inc., 710 F.2d 1366, 1373 (9th Cir. 1983)). In doing so, the Ninth Circuit held that relocation impairments in the NFL Constitution could be an unreasonable restraint on trade, and that the ultimate decision was a jury question based on the facts of the case. Id. at Moreover, Congress itself has consistently refused ardent requests from NFL owners to exempt franchise relocation rules from antitrust laws. See Stephen F. Ross, Antitrust: New Economy, New Regime Second Annual Symposium of the American Antitrust Institute: Antitrust Options to Redress Anticompetitive Restraints and Monopolistic Practices by Professional Sports Leagues, 52 CASE W. RES. 133, (2001) (citing Charles Gray, Comment, Keeping the Home Team at Home, 74 CAL. L. REV (1986)). There is nothing materially different about baseball, as compared to football, that could possibly justify a logical rationale for exempting baseball franchise relocations, but not football franchise relocations, under antitrust law. C. The Curt Flood Act did not Preserve or Reserve an Antitrust Exemption Intended to Immunize Baseball from Challenges Based on the Restraint of Franchise Relocation Congress has never recognized an antitrust exemption for the MLB with regard to franchise relocation. To be sure, Congress passed the Curt Flood Act of 1998, which elucidates, [i]t is the purpose of this legislation to state that major league baseball players are covered under the antitrust laws (i.e., that major league baseball players will 23