San Jose Challenges Baseball's Antitrust Exemption

WSJ:

Baseball's long-criticized antitrust exemption is the knuckleball of Supreme Court precedent: It appears vulnerable to attack, but challengers keep striking out.
Now city officials in San Jose, Calif., are taking their turn at bat in the most notable legal challenge to baseball's exemption in a generation—one that could ultimately swing back to the Supreme Court's doorstep.
The city, seeking to clear the way for the Oakland Athletics baseball club to move to San Jose, filed an antitrust lawsuit against a resistant Major League Baseball last year. It argues the exemption, which dates to a 1922 Supreme Court ruling, has outlived any logic that once supported it. At the very least, the city says, the exemption shouldn't apply to common commercial issues like the relocation of a business.
San Jose lost an initial round of litigation, but a U.S. appeals court surprised some observers by granting the city's request to fast-track the case, setting the stage for a potential ruling in the middle of the baseball season. If it loses at the appeals level, "San Jose is prepared to take its case to the Supreme Court," says Philip Gregory, a lawyer representing the city. "We are confident the justices will see the folly of treating Major League Baseball differently from all other professional sports."
San Jose alleges the league and team owners have colluded to prevent the A's from relocating because the league has made the San Jose market the exclusive territory of a competing franchise: the San Francisco Giants.
"That is not what our antitrust laws allow for any business in America, and it should not be allowed here," Mr. Gregory says.
Major League Baseball, which hasn't given the A's permission to move, says that the land offered by San Jose isn't enough to build a stadium and notes that the city hasn't offered to help fund construction......
Baseball is the only sport with an exemption from the antitrust laws, the product of a unique run through the legal system that began in a different era of the sport—and the courts. In 1922, the Supreme Court held that federal antitrust law didn't apply to baseball because the game was a local affair, not interstate commerce.
In the following years, it became increasingly clear that baseball was in fact a big interstate business. And at the Supreme Court, the justices in other cases began embracing a broader view of the types of commerce that were subject to federal regulation.
Nevertheless, the court in 1953 and 1972 decided against bringing baseball under the antitrust laws, even as it allowed antitrust lawsuits against other sports. For example, the court in 2010 said the National Football League could be sued by an apparel maker over its licensing arrangements.
The court's later opinions said that even if the 1922 ruling was questionable, overruling it could be harmful, given that baseball had built its business around the rules the high court had announced. Any such changes should come from Congress, the court said in both cases.

I'm not sure how baseball could be considered a local affair in this day and age, but I really don't understand why baseball would justify an antitrust exemption in the first place.  It really blows me away that part of baseball's defense is that San Jose hasn't offered to pony up to build a stadium.  WTF?

Here is more history on the origins of the antitrust exemption:

When the National League joined forces with the American League in 1903, the partnership proved to be fruitful immediately. And one of the main rules of business is: success breeds imitation.
Thus, it should be no surprise that another baseball league soon had intentions of challenging the AL/NL monopoly. The Federal League started out as a minor league, but it had major intentions. In 1914, in fact, many people considered the Federal League to be a Major League. And the Federal League wanted to make it official.
On January 5, 1915, the Federal League sued Major League Baseball under federal antitrust law for interfering with their attempts to hire players that were between contracts (meaning not bound by the Reserve Clause) from the American and National League. The judge hearing the case was Kenesaw Mountain Landis [http://www.library.northwestern.edu/archives/exhibits/alumni/landis2.jpg], who was known for his strict adherence to the letter of the law. Landis, however, just so happened to also be a huge Chicago Cubs fan. He understood that the Federal League had a legitimate case. However, ruling in favor of the FL would harm his Cubs, so he took the case under advisement rather than issue a ruling immediately.
In 1915 the Federal League ran into difficulties. Major League baseball had attempted to operate with three leagues in 1884 and 1890 and had failed both times. 1915 was no different. The players and owners in the Federal League were absorbed into the two more-established leagues, and late in the year the Federal League asked Judge Landis to dismiss the case against the American and National Leagues. Landis happily obliged.
But not everyone was happy with the collapse of the Federal League. The owners of the Baltimore Federal League franchise attempted to purchase a Major League team, and were rebuffed. They tried to buy an International League franchise (the IL was the top minor league organization at the top) and were once again denied. White Sox owner Charles Comiskey insulted the city when he said that “Baltimore is a minor league city and not a hell of a good one at that.” Dodgers owner Charles Ebbets chimed in by saying that Baltimore was one of the worst minor league cities because “you have too many colored population to start with.”
The perspective owners then filed an antitrust lawsuit against Major League baseball, claiming a conspiracy to destroy the Federal League. In April of 1919 a court found in favor of the Baltimore owners, and awarded them $240,000 in damages. The case was appealed in 1920, and the appellate court didn’t rule until 1921. When they did rule, they overturned the lower court’s decision, stating that baseball “was not the kind of commerce” federal law was intended to regulate. On May 22, 1922, the Supreme Court upheld this decision, reinforcing baseball’s antitrust exemption.

So when baseball went looking for a commissioner, who better than the guy who helped them out in the fight with the Federal League?