## Facts

- Major League Baseball (MLB) assigns each club an exclusive “operating territory” and restricts relocation into another club’s territory absent approval by three-quarters of the clubs.
- The Oakland Athletics sought to relocate to San Jose, a location within the San Francisco Giants’ operating territory.
- San Jose entered into an option agreement granting the Athletics the right to purchase six city-owned parcels for a proposed ballpark in the Diridon area.
- MLB created a relocation committee to evaluate the proposed move but did not approve relocation, and the option could not be exercised; the parcels remained unused.
- San Jose alleged MLB’s delay and refusal to approve relocation preserved the Giants’ territorial monopoly and violated federal and state competition laws.
- The district court dismissed federal antitrust claims (Sherman Act and Clayton Act), state antitrust claims, and a California unfair competition claim based on MLB’s antitrust exemption, and declined supplemental jurisdiction over remaining state tort claims.

## Issues

1. Whether MLB’s judicially recognized antitrust exemption extends to franchise relocation and territorial allocation decisions, barring federal antitrust claims.
2. Whether state antitrust claims and California unfair competition claims may proceed when federal antitrust claims are barred by MLB’s antitrust exemption.

## Decision

- The Ninth Circuit affirmed dismissal of San Jose’s federal antitrust claims, holding the baseball antitrust exemption covers challenges to MLB’s franchise relocation rules.
- The court rejected the argument that the exemption is limited to the player reserve system, relying on controlling circuit precedent treating the “business of baseball” more broadly.
- The court held state antitrust claims were also barred and declined to recognize an end-run around the exemption through state competition law.
- The court held the California unfair competition claim failed because the challenged conduct was lawful under federal antitrust law by virtue of the exemption.
- The district court’s dismissal without prejudice of remaining tort claims for lack of supplemental jurisdiction was left undisturbed.

## Legal Principles

- MLB’s antitrust exemption, preserved by Supreme Court precedent and left largely intact by Congress, applies to core league governance rules, including territorial allocations and franchise relocation approvals.
- The Curt Flood Act’s limited abrogation of the exemption for major league player employment supports continued immunity for other areas, including relocation decisions.
- Where federal antitrust law deems the challenged conduct lawful due to the baseball exemption, parallel state antitrust claims and state-law unfair competition theories cannot be used to impose antitrust liability for the same conduct.

## Conclusion

The Ninth Circuit held that MLB’s longstanding antitrust exemption reaches franchise relocation and territorial rules, requiring dismissal of San Jose’s federal antitrust claims and foreclosing parallel state antitrust and California unfair competition claims based on the same alleged restraint.


City of San Jose v. Off. of the Comm’r of Baseball, 776 F.3d 686 (9th Cir. 2015)