## Facts

- Major League Baseball (MLB) operated under a constitution authorizing “contraction” upon a three-fourths club vote.
- In November 2001, MLB clubs voted 28–2 to contract from 30 teams to 28 for the 2002 season.
- The Florida Attorney General, invoking state authority to investigate antitrust violations, issued civil investigative demands (CIDs) to MLB, the Commissioner, and the two Florida franchises, seeking information about the planned contraction.
- MLB, the Commissioner, and the Florida franchises sued in federal court for declaratory and injunctive relief, asserting that the “business of baseball,” including contraction decisions, is exempt from federal and state antitrust laws.
- The Attorney General argued the exemption should be limited to the player-reserve system (or otherwise not extend to contraction).
- Plaintiffs moved for a preliminary injunction to stop enforcement of the CIDs while the case proceeded.

## Issues

1. Whether baseball’s judicially recognized antitrust exemption extends broadly to the “business of baseball,” rather than being limited to the player-reserve system.
2. Whether the exemption covers MLB’s decision to contract teams, barring application of federal antitrust law to that decision.
3. Whether the exemption also precludes state antitrust enforcement and investigation tools (including CIDs) directed at exempt baseball conduct.
4. Whether plaintiffs satisfied the requirements for a preliminary injunction against enforcement of the CIDs.

## Decision

- The court granted a preliminary injunction prohibiting the Florida Attorney General from enforcing the CIDs concerning MLB’s contraction decision.
- The court concluded that binding Supreme Court precedent recognizes a broad antitrust exemption for the “business of baseball,” not limited to the reserve clause.
- The court held that team contraction is part of the exempt “business of baseball.”
- The court determined that, because federal antitrust law does not apply to exempt baseball conduct, state antitrust law likewise cannot be used to regulate or investigate that same exempt conduct.
- Applying preliminary-injunction standards, the court found plaintiffs likely to succeed on the merits, would suffer irreparable harm from being compelled to respond to and endure an investigation premised on inapplicable antitrust laws, and that the balance of harms and public interest favored injunctive relief.

## Legal Principles

- Lower courts must apply the Supreme Court’s baseball antitrust exemption as articulated, even if characterized as an “anomaly,” unless and until changed by the Supreme Court or Congress.
- The baseball antitrust exemption protects the “business of baseball” broadly, not merely the player-reserve system.
- League-structure decisions, including whether to reduce the number of clubs, fall within the exempt “business of baseball.”
- Where conduct is categorically exempt from federal antitrust law under the baseball exemption, state antitrust law cannot be used to regulate (or investigate as potentially unlawful) the same conduct.
- A preliminary injunction may issue to prevent enforcement of investigative demands when plaintiffs show a strong likelihood of success on a legal exemption, irreparable harm from compelled compliance and disruption, and that the balance of equities and public interest favor enforcement of controlling federal law.

## Conclusion

The court enjoined Florida’s antitrust investigation into MLB’s planned contraction, holding that Supreme Court precedent and congressional action left a broad “business of baseball” antitrust exemption intact, that contraction falls within that exempt sphere, and that the exemption forecloses both federal antitrust scrutiny and parallel state antitrust enforcement and investigation.


Major League Baseball v. Butterworth, 181 F. Supp. 2d 1316 (N.D. Fla. 2001)