Shortly after the formation of Major League Baseball (MLB) in 1903, a reserve clause became standard in players’ contracts. This clause was largely intended to limit players’ free agency and the financial competitive pressure it could cause: if players could freely seek the highest paying positions, then a sort of feedback loop might be created wherein the best-funded teams would dominate the sport while weaker teams would never have an opportunity to create and maintain a competitive roster. The reserve clause, then, simply prevented players from signing on with a new team for a full year aftertheir last contract expired. This ensured that the primary avenue for a player to change teams was by being traded or sold. Players could request exemption from the reserve clause, but it was rarely granted. In short, it was explicitly designed to prevent the free agency of players that is standard practice in the sporting world today.
The reserve clause faced its first legal challenge with Federal Baseball Club v. National League in 1915, when a new baseball league tried to lure players from the MLB by offering higher-paying contracts and a greater degree of free agency. When the offer failed to attract players, then the new league sued MLB under the auspices of the Sherman Antitrust Act, a landmark trust-busting law requiring the federal government to police markets for monopolies and cartels in order to ensure competitiveness. In 1922, the Supreme Court ruled that antitrust legislation did not apply, determining that baseball was not subject to the interstate commerce clause (baseball being simply a game, and thus dealing in “personal effort, not related to production”).
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In 1969, Curt Flood, one of the Cardinal’s captains and a rising baseball star, was traded to the Phillies, which was a much weaker team. The trade purportedly happened without informing him or requesting his input. For these and other reasons (including his perception of the Phillies’ fans as racist), Flood requested free agency. When his request was rebuffed, he sued for damages. The court ruled in favor of MLB, and a Second Circuit court upheld the decision on appeal. Flood appealed again, and was somewhat unexpectedly granted certiorari—review by the Supreme Court—in 1972. Flood’s argument centered on the negative impact the reserve system had on players; MLB countered with the importance of the system to the functioning of the league and baseball as a whole, and strongly invoked the importance of baseball in American culture—an invocation that would ultimately be echoed in possibly excessive detail in the Supreme Court opinion. Federal Baseball Club v. National League was, of course, cited as stare decisis.
The Supreme Court upheld that precedence in its 5-3 decision on Flood v. Kuhn, making a controversial ruling in favor of MLB and the reserve clause.
Summary of Legal Principles
The primary legal principles at work in Flood v. Kuhn were competition law and stare decisis.
As mentioned above, the Sherman Antitrust Act of 1890 required the federal government to investigate anti-competitive practices in the marketplace. The reserve clause would almost certainly have qualified as anti-competitive insofar as it constituted restraint of trade—an unnecessary contractual obligation constraining the ability of individuals to freely conduct business.
It is critical to note that Congress claimed its authority to regulate interstate commerce as its constitutional basis for passing the Sherman Antitrust Act. Thus, it is largely inapplicable if the plaintiff is unable to show that the activity in question has a negative impact on commerce between states. It is this limitation that allowed the court to uphold Federal Baseball Club v. National League. In that decision, Justice Oliver Wendell Holmes wrote that:
The business is giving exhibitions of baseball, which are purely state affairs. […] But the fact that in order to give the exhibitions the Leagues must induce free persons to cross state lines and must arrange and pay for their doing so is not enough to change the character of the business […] the transport is a mere incident, not the essential thing. That to which it is the incident, the exhibition, would not be called trade of commerce […] personal effort, not related to production, is not the subject of commerce.
Since this is the precedent on which Flood v. Kuhn rests, this would be an opportune moment to turn to stare decisis, or the principle of precedence. In his opinion on the Supreme Court of California’s decision on Auto Equity Sales, Inc. v. Superior Court, Justice Peters explained that:
Under the doctrine of stare decisis, all tribunals exercising inferior jurisdiction are required to follow decisions of courts exercising superior jurisdiction. Otherwise, the doctrine of stare decisis makes no sense. The decisions of this court are binding upon and must be followed by all the state courts of California.
This formulation is often referred to as binding precedent. Its purpose is simply to maintain consistency in the law, its interpretations and applications.
The decision by the Supreme Court to uphold in Flood v. Kuhn the precedent set by Federal Baseball Club v. National League has been called “the most frequently criticized example of excessively strict stare decisis”.
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Analysis: Impact, Liabilities, Obligations
The upholding of the reserve clause placed a powerful restraint on players and their mobility. Even after a contract expired—when the team had no further obligation to a player—the player would be unable to enter into a new contract for another full year. In a business environment based on athleticism, a year could constitute a significant portion of a player’s career; indeed, after sitting out a season to pursue his court case, Curt Flood returned a weaker player, dropped out before the season was through, and never played baseball professionally again.
Furthermore, the upholding of the reserve clause created a glaring inconsistency in the law. The antitrust exception that Flood v. Kuhn granted baseball was denied to other sports in a way that makes the court appear to have behaved in a less-than-impartial fashion. Indeed, the opinion—penned by Justice Blackmun—consisted primarily of a saccharine description of the importance of baseball and its surrounding culture, including discussion of some of Blackmun’s favorite players. The opinion—for which Blackmun would be long ridiculed—included a juvenile, rhapsodic ode to the glories of the national passtime, sprinkled with comments about legendary ball players and references to the doggerel poem “Casey at the Bat”.
Although the reserve clause would eventually be struck down, it would not be by way of the courts—at least not directly. Flood’s suit was successful in one respect: publicizing the problem and galvanizing the public. Ultimately, baseball fell under the jurisdiction of the National Labor Relations Board, which in its 1975 Seitz decision effectively established free agency as standard practice in baseball, as it is with other sports industries.