Case name: Flood v. Kuhn et al.
Court: Supreme Court of the United States
Citation date: 407 U.S. 258; June 19, 1972.
PROCEDURAL HISTORY
Trial Court: Federal court for the Appeal Court: Court of Appeals for
Southern District of New York the Second Circuit
Plaintiff: Curtis Charles FloodAppellant: Curtis Charles Flood
Defendant: The Commissioner of Baseball, Respondent: The Commissioner of
the presidents of the two major leagues, Baseball, the presidents of the two
and the 24 major league clubsmajor leagues and the 24 major league clubs
Facts of the case:
Curtis Flood, a major league baseball player for the St. Louis Cardinals, was traded to the Philadelphia Phillies of the National League without consultation. Flood filed an antitrust suit in January 1970 against the defendants alleging violation of federal antitrust laws and civil rights statutes, violation of state statutes and the common law, and the imposition of a form of peonage and involuntary servitude contrary to the 13th Amendment.
Remedy Sought:
The plaintiff sought declaratory and injunctive relief and treble damages against not being allowed to be his own free agent and “strike his own bargain with any other major league team.”
Court Opinion:
The question presented is whether Professional baseball’s reserve clause violates the Sherman Antitrust Laws. In the Trial Court, it was pointed out “clearly the preponderance of credible proof does not favor elimination of the reserve clause. With the sole exception of plaintiff himself, it shows that even plaintiff’s witnesses do not contend that it is wholly undesirable, in fact they regard substantial portions meritorious.” Judge Cooper in the Trial Court ruled that it wasn’t necessary to deal with the issue of whether exemption from antitrust laws would result because baseball was a subject of collective bargaining and that the plaintiff’s state-law claims were denied because baseball was not a subject that admits to diversity of treatment. The Judge believed that prior cases, Federal Baseball Club v. National League and Toolson v. New York Yankees, Inc. were too controlling in their rulings. Both cases determined that the business of baseball and the sport of baseball were two different things to be distinguished. After offering a statement of personal conviction that “negotiations could produce an accommodation on the reserve system which would be eminently fair and equitable to all concerned,” the Judge also ruled that the reserve clause could be made more suitable for both player and club. Therefore, the Trial Court ruled in favor of the defendants, not the plaintiff.
In the Second Circuit, the appeal court agreed with the Trial Court’s opinion. It concluded that the Common Clause precluded the issue of state law. Judge Moore, who ruled over the appeal court, added his opinion that “with respect to the suggested overruling of Federal Baseball and Toolson, that ‘there is no likelihood that such an event will occur.”
The Supreme Court asked for the writ of certiorari from the court of appeal to look at the case’s past records. Judge Blackmun upheld the appeal court’s decision and ruled that the defendants who are involved in professional baseball are engaged in a business of interstate commerce because fans come from across state lines to see games and buy tickets. Baseball’s reserve system is an anomaly, being exempted from the federal antitrust laws, as established in many past cases over the past half century unlike any other interstate operating professional sports. The Supreme Court emphasized that “since 1922 baseball, with full and continuing congressional awareness, has been allowed to develop and to expand unhindered by federal legislative action.”
Disposition of the case:
Upheld. Congress has never subjected baseball’s reserve system to antitrust statutes and therefore the plaintiff’s claims are not supported.
ECONOMIC ANALYSIS
This case deals with the property rights of player contracts. If the Supreme Court in Flood v. Kuhn rules in favor of the reserve clause and assigns the property rights of baseball players’ contracts to team owners, it would create a very standardized structure that allows the game to grow and creates an organized, equitable system. Under the reserve system, the players could make a maximum of 80% of the previous year’s salary so players would be given a fair deal in that sense. The reserve clause attempts to prevent one team from attracting all the best players by out paying them. The system may not be as efficient for the players but it is profitable for the professional sport. The reason it was created is that it enhanced the fan basis and allowed the sport to spread throughout the nation, making it a national pastime.
If the Judge ruled against the reserve clause, there would also be reasons to back it up because of inefficiency for the players. Unfortunately, fans will not come to games if players leave the sport because they are unhappy with not being able to control their own contracts. Without the reserve system, players could play on teams they preferred and could agree to terms that reached their highest possible marginal utility. If they have a guaranteed salary and are forced to play in a certain city, players are not motivated to improve their performance. Withholding the history of baseball cases, it is not fair to put players under a contract and treat them like a good or human capital when they are not happy. Owners would now have to compete for the players’ contracts, maximizing the overall profits of baseball and would be most beneficial for everyone.
If Coase were to view this situation, he would say that the party with the bigger stake should cover the costs and keep their profits high. Thus, the team owners, or defendants, should pay to create the reserve system, which ensures their profits and the sport’s stability. Without the reserve system, players may get higher salaries, but the competition could lead to the collapse of baseball such as almost occurred in the late 1800s. With the reserve system, the life of baseball could be extended, and since it is in the best interest of the defendants to keep the reserve system, they should be willing to pay to appease the players.
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