SPORTS LAW OUTLINE –
Professor Allen- Fall 2011
Chapter 1 – Best Interests of the Sport: The Role of the Commissioner and Other Governing Authorities
· Pete Rose v. Giamatti
o 1989: Commissioner Giamatti hired lawyer to investigate allegations about Rose’s betting while acting under the Major League Agreement Art. 1, §2
o April 1990: Giamatti sent letter to US District Judge Carl Rubin who then sent copy of letter to Rose’s attorney
o Rose filed suit to prohibit commissioner from disciplinary proceeding; Rose won a restraining order
o Giamatti sought to remove to federal court on diversity grounds
§ Players’ contracts included a clause in which parties agreed to submit themselves to discipline of Commissioner; Judge read this clause as establishing a Commissioner’s office with power independent of Reds organization
§ Rose and Giamatti were the real parties in interest and there was diversity
o Rose facing pressure from IRS settled the case and accepted Commissioner’s jurisdiction and faced permanent ineligibility to associate with baseball
o Who are the parties?
§ Rose: player (selling his services to one buyer in the market place: monopsony)
§ Commissioner: oversees the league (the employer)
o How did case get to federal ct.? diversity b/w Rose and Giamatti
o Dealing with a private sector and parties who make agreements with each other (ie. Constitution). Kind of like the 14th amendment.
Parties agreed that Comm. have broad powers (ie. investigate matters for the best interests of baseball). Rose argues that the commissioners’ powers are vague and ambiguous.
What recourse do players have with arbitration
Labor law applies to employer/employee relationships
Gambling has a detrimental affect on baseball b/c it looks bad on MLB and affects potential sponsorships/ affects the market value of the product. If Rose had succeeded, the commissioner’s office would have been irreparably damaged.
Issue: To what extent should public law, speaking through judges, venture to overturn decisions made by private leagues, speaking through their commissioners?
Legal Scope of the Commissioner’s Authority
Time Line
1919: American League Baseball Club of NY v. Johnson Commissioner Johnson suspended pitcher Carl Mays for walking off the field. Yankees sued Johnson for this suspension.
Holding: Judge interpreted §24 of league Const. as the each club having the right to regulate its own affairs when it comes to suspending players and thus issued a permanent injunction
Late 1919: Owners decide to dismantle the tripartite commission and replace with a single, powerful commissioner
Kenesaw Landis, a federal judge, took position but only if he had sweeping powers
1931: Milwaukee Am. Ass’n v Landis: Commissioner did not approve of transaction btwn Browns and Milwaukee b/c they were all secretly controlled by Brown’s owner. Milwaukee brought suit against Landis
Issue: Does Comm. have jurisdictional powers to make player a free agent?
Holding: Commissioner has wide powers and discretion pursuant to the MLA which was the intent of the parties when they selected Landis as Commissioner. Commissioner has jurisdiction to decide the free agent matter. Commissioner has discretion to determine if a situation is detrimental to the national game of baseball.
1933: Farm system develops and major league can use reserve system to stock pile players on a minor league team
1976: Baseball players were no longer tied to their baseball for life; Free agency began
1976: Ct. determined in action brought by Ted Turner of Braves against Kuhn that Comm. still has brought authority but now has to be read in tandem with the new Labor Agreement btwn owners and the Players Association.
Ct. ruled that Comm. went beyond authority by taking away the Braves first pick
1978: Charles Finley v. Bowie Kuhn: Owner of Oakland A’s sold off his assets with free agency pending and developed a farm system. He also sold off his star players, Rudi and Fingers to Red Sox and Blue to Yankees. Comm. Kuhn disapproved of assignments as inconsistent with interests of baseball. Finley brought suit against Comm. challenging his authority
Issue: Does Comm. have power to disapprove of player assignments?
Holding: The 1964 Amends to MLA restored the Comm’s power that was limited by the 1944 Amends. In the 25 years as Comm. he has found other actions detrimental that did not violate per se Rules. The history of the MLA evidences that Comm. has authority to determine whether any act, transaction, or practice is not in the best interests of baseball and to take whatever remedial or preventative action that deems appropriate
“Best interest of the sport”-commissioner makes ultimate decision.
1992: 2 expansion teams with an effort to shift Cubs to the West Division and the Cubs strongly opposed. A number of teams asked Comm. Vincent to order realignment pursuant to his powers under Art. 1, §2 of MLA. Cubs argued his authority was limited by Art. VII. Comm. Vincent ordered realignment. (p.21)
Chicago Cubs v. Vincent: Ct. concluded that Comm. authority was preempted by Art. VII b/c specific language in NL Const. provided that no team may be transferred to a different division without consent. The Comm. long history of authority was not decisive and an injunction was granted.
· Gambling
o Molinas v. NBA
· Facts: Jack Molinas was drafted to the Pistons. In 1954 he admitted in writing to betting on his Pistons team to win. League Pres., Podoloff, acting pursuant to §15 of Molinas contract and §79 of League Const. indefinitely suspended the Molinas from league
· Issue: Whether the NBA’s continued ban against Molinas was an “unreasonable” restraint on trade in his services.
· Holding: Not every disciplinary rule which a league may invoke runs afoul of the anti-trust laws. A DR against gambling seems reasonable and to conclude that Molinas conduct cannot be tolerated seems reasonable. At the time the confidence in the league had been shattered due to a series of gambling incidents and in order to effectuate policies against gambling, it was necessary to enforce its rules strictly.
· Drug Use
o MLB Players and the Comm. of MLB
· Facts: Comm. Ueberroth in 1986 wrote a policy memo placing drug testing under the control of Comm.’s Office. Steve Howe, a pitcher, was hospitalized for drug related treatment on 6 occasions and suspended 6 times. Medical recommendations said that Howe needed to be in a strict program if he was to return to baseball which required frequent drug testing for remainder of career, however, these requirements were not implemented when he returned. After returning Howe was arrested in off season for possession of cocaine. Comm. imposed a life time ban which was challenged by
talian team. Shaw retained an agent who said his market value is worth more and that he should not leave the Italian team. Arbitrator ruled that Shaw had to terminate his contract with Italian team and district ordered the enforcement. Shaw appealed
Issue: Was Arbitrator’s decision unlawful? Did Celtics meet the standards for a preliminary injunction? Did Celtics come into the contract with “unclean hands”?
Rule: (1) Arbitration award is valid so long as it draws its essence from the labor contract; (2) Irreparable harm can be found in the loss of services of a star athlete to a team
Holding: Shaw barred from playing anywhere but Boston
Arbitrator’s award was lawful:
Shaw Argues: Promise not to cancel a contract to play with a different team is null and void b/c the Collective Bargaining Agreement does not apply to Amend. that do not deal with compensation
Ct’s Response: Promise is related to compensation b/c it defines the beginning of the compensation relationship. The NBA Comm. who reviews contracts, found the term to relate to compensation as did the arbitrator
Irreparable harm can be found in the loss of services of a star athlete to a team. It would be difficult for Celtics to plan intelligently for the next season. The balance of harms favors the Celtics. This is not a case dealing with the enforcement of personal service contracts, but rather a case in which a court can order an individual to rescind a contract and prevent them from performing a service for others. Celtics hands were not unclean b/c Shaw is an intelligent person who read and understood the contract when he signed it.
Class:
Court looked to the labor agreement
He had an existing contract
o Flood v. Kuhn (US Supreme Ct.)
o Facts: Flood played for St. Louis Cardinals for a number of years. At age 31 he was traded to Phillies with a pay raise, however, Flood rejected the trade and declared himself a free agent and filed suit. Flood claimed a violation of anti-trust law and 13th Amend. Flood appealed to Supreme Ct.
o Issue: Is professional baseball’s reserve system within the reach of the federal antitrust laws?
o Rule: Baseball’s reserve system is exempt from the federal antitrust laws.
o Holding: Flood’s claim is not actionable under anti-trust laws
§ Pro. Baseball is a business and it is engaged in interstate commerce.
§ The rulings of Fed. Baseball and Toolson have survived Stare Decisis.
§ Other sports operating interstate are not exempt.
§ Congress has been aware of these arguments but has been passive and does not have any intention to subject reserve system to the reach of antitrust statutes.
§ If any change is going to be made it will be made by Congress and not the Courts.
