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Gardella v. Chandler

February 9, 1949

GARDELLA
v.
CHANDLER



Before L. Hand, Chief Judge, and Chase and Frank, Circuit Judges.

Author: Chase

CHASE, Circuit Judge.

The appellant brought this suit to recover treble damages under Secs. 1, 2 and 3 of the Sherman Act, 26 Stat. 209, 15 U.S.C.A. §§ 1, 2 and 3, and under, as stated in the complaint, Secs. 2 and 3 of the Clayton Act, 15 U.S.C.A. §§ 13 and 14. Apparently he relies upon Sec. 4 of the Clayton Act, 38 Stat. 731, 15 U.S.C.A.§ 15, and we shall so treat his complaint.

He is a professional baseball player who, while under contract to play exclusively with the ball club popularly called the New York Giants which is owned and operated by one of the appellees, the National Exhibition Company, a New York corporation, violated the terms of the hereafter mentioned reserve clause of that contract by playing professional baseball in Mexico. He was consequently barred for a period of years from playing with baseball clubs in what is known as "organized baseball" in accordance with the provisions of his contract with the National Exhibition Company and thus deprived pro tanto of his means of livelihood. This suit followed and the first issue presented by this appeal is whether the district court had jurisdiction of the cause of action under the Sherman and Clayton Acts. The complaint was dismissed solely on the ground that the court had not such jurisdiction and no other is claimed now. D.C., 79 F.Supp. 260.

The appellant undertook to allege three causes of action against the appellees who are Albert B. Chandler, individually and as the Commissioner of Baseball; Ford C. Frick, individually and as President of the National League of Professional Baseball Clubs, an unincorporated association; William Harridge, individually and as president of the American League of Professional Baseball Clubs, an unincorporated association; George M. Trautman, individually and as president of The National Association of Professional Baseball Leagues, an unincorporated association; and National Exhibition Company, before mentioned.

He alleged generally in support of each cause of action that "organized baseball" comprised two so-called major leagues known respectively as the National and the American and the so-called minor leagues made up of clubs composing leagues of eight grades based upon the respective abilities of the players in the several clubs in each of such leagues. There are eight clubs in each of the major leagues and each club plays during a season games at its home grounds and games at the home grounds of each of the others until each club has played approximately one hundred and fifty games. The winning club in each major league plays a series of games with the winning club in the other at the close of the season for what is called the world championship, and during the season selected players from the clubs in each league perform as a team in playing a similarly selected team in what is called an "all stars" game. The clubs in the National League are located in the following places where each owns or leases a baseball park where games are played. Boston, Mass.: New York, N.Y.; Brooklyn, N.Y.; Philadelphia, Pa.; Pittsburgh, Pa.; Cincinnati, Ohio; Chicago, Ill., and St. Louis, Mo. The clubs of the American League own or lease parks where games are played in the following places. Boston, Mass.; New York, N.Y.; Philadelphia, Pa.; Washington, D.C.; Cleveland, Ohio; Detroit, Mich.; Chicago, Ill.; and St. Louis, Mo. The individual clubs are owned by corporations organized under the laws of the respective states in which their parks are located. The minor leagues are composed of clubs in a similar way and these clubs play games in various cities in this country and Canada.

These leagues and the clubs comprising them have entered into agreements, designed to control the manner in which "organized baseball" shall be conducted, which require players to be bound to their respective clubs by what is known as the standard contract. The so-called major league agreement, among other things, gives to appellee Chandler supervisory and disciplinary power over the major leagues, their clubs and their players. The so-called major-minor league agreement gives him similar powers over the minor leagues, their clubs and their players. The standard player contract includes what is known as a reserve clause which requires a player who is under contract to play with any club to refrain, at the expiration of the period of his employment, from contracting to play for, or playing for, any other club other than the one to which he has been under contract or its assignee. Thus, and in other particulars which need not be presently described, the agreements in "organized baseball" have created a closely knit organization which was intended to, and does, dominate and control to a large extent the playing of professional baseball in this country, Canada, Cuba, Puerto Rico and Mexico.

In playing their games the teams of the various clubs perform in the ball parks already referred to and each game is ended in the park where it is begun. But in order to get to the park where the game is played some or all of the players, managers, coaches, and employees have to travel across state or foreign boundaries; and the equipment necessary for the traveling club, consisting of uniforms, bats, gloves, mitts, masks, chest protectors, shin guards, baseballs and the like is similarly transported.

The club owners charge admission fees for all games played and divide them with the other contesting clubs as agreed. They, or most of them, also sell for valuable consideration the right to broadcast play-by-play descriptions of the games over the radio and thus across state lines, and some of them sell the right to broadcast the games by television. Some of those to whom these broadcast rights are sold get, and use, the opportunity so provided to advertise goods, articles and commodities which are sold and distributed nationally and internationally.

Since my brothers agree that the judgment should be reversed I will now state what are but my own reasons for believing that it should be affirmed; (1) because a controlling decision of the Supreme Court requires it and (2) because, even if that decision is distinguishable, the allegations in the complaint fail to state a cause of action over which the district court had jurisdiction.

The issues here presented are, as the district judge recognized, decidedly not of first impression. This record is with with possible exception of the allegations as to the sale of broadcasting rights for radio and television, not different in any essential from that before the Supreme Court in Federal Base Ball Club v. National League, 259 U.S. 200, 42 S. Ct. 465, 66 L. Ed. 898, 26 A.L.R. 357 in which it was held that major league ball clubs were not engaged in interstate trade or commerce within the scope of the antitrust laws. Even the possible exception just mentioned exists only if the sale of these radio and television broadcast rights differs in some material way from the sale of the exclusive right to send "play-by-play" descriptions of the games interstate over telegraph wires, for that feature was present in the previous case before the Supreme Court. In each instance by what is called the sale of rights the appellees made it possible for others to transmit information interstate. The playing of baseball games then created the subject matter concerning which information was sent by symbols carried by telegraph wires and translated into words just as such play now creates the subject matter concerning which information is sent through the air by impulses which are transformed either into words or pictures. So far as I can perceive, the difference in the method of transmission is without significance.

These appellees do not themselves broadcast anything nor do they do anything more by way of production of what is broadcast than was shown to have been done in the former case to "produce" what was described. Since the sellers of the rights to broadcast through the air do only what the sellers of the rights to send descriptions over telegraph wires did in the former case I can find no sound basis on the facts for distinguishing that case from this. It seems to me to have decided the precise question here presented and that it controls our decision.

It has never been expressly overuled, and I do not think it has been overruled by necessary implication by United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S. Ct. 1162, 88 L. Ed. 1440, which reflected a trend in decision not apparent in Hooper v. People of State of California, 155 U.S. 648, 15 S. Ct. 207, 39 L. Ed. 297, on which the court relied somewhat in deciding Federal Base Ball Club v. National League, supra.That decisions like Wickard v. Filburn, 317 U.S. 111, 63 S. Ct. 82, 87 L. Ed. 122, and Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219, 68 S. Ct. 996 show a wide reach of Congressional power under the Commerce Clause when Congress chooses to exert it cannot be gainsaid. And United States v. South-Eastern Underwriters Ass'n, supra, reiterates that Congress intended to put within the coverage of the Anti-Trust Acts everything which was interstate or foreign trade or commerce. But in none of these decisions mentioned nor in any others of the Supreme Court of which I am aware, save only Federal Base Ball Club v. National League, supra, has there been a definite holding that "organized baseball" is, or is not, trade or commerce within the meaning of those words in the Sherman and Clayton Acts. Moreover, the rule there stated has since been applied by analogy in another field. Hart v. B. F. Keith Vaudeville Exchange, 2 Cir., 12 F.2d 341, certiorari denied, 273 U.S. 704, 47 S. Ct. 98, 71 L. Ed. 849; Neugen v. Associated Chautauqua Co., 10 Cir., 70 F.2d 605. Furthermore, the case was recently cited and disinguished in North American Co. v. S.E.C., 327 U.S. 686, 694, 66 S. Ct. 785, 90 L. Ed. 945. See Sears v. Hassett, 1 Cir., 111 F.2d 961, 965; cf. Perkins v. Endicott Johnson Corp., 2 Cir., 128 F.2d 208, 218.

Under these circumstances it seems to me that our duty as a subordinate court is to follow the Federal Base Ball Club case. I find no necessary implication among the cases to which I have previously alluded or in any others that it has been overruled. All of them relate to activities quite unlike organized baseball and, though general language can be found in the opinions to indicate changes in methods of approach to decision, there is no actual decision so incompatible with that in Federal Base Ball Club v. National League, supra, as to displace the latter by mere weight of its authority. The interpretation of the anti-trust laws has hitherto been accomplished in a case by case manner which has given due effect to the particular facts and circumstances shown. I cannot find any authoritative definition of the words "trade or commerce" or "affecting trade or commerce" as used in the cases which is so comprehensive that this method can be ...


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