### FILED U.S. COURT OF APPEALS ELEVENTH CIRCUI T MAY 27, 2003 THOMAS K. KAHN

CLERK [PUBL ISH] IN THE UNITED STATES COURT OF APPEALS FOR TH E ELEV ENTH C IRCUIT

________________________ No. 02-10333

________________________ D. C. Docke

t No. 01- 00511-CV-4 -RH MA JOR L EAG UE B ASE BAL L, ALL AN H . SEL IG, TAM PA B AY D EVIL RAY S LT D, FLO RIDA MA RLIN S BA SEB ALL CLU B LL C,

Plaintiffs -App ellees,

versus CHA RLIE CRIS T, Defen dant-A ppellant.

________________________ Appeal from the United States District Court for the Northern District of Florida

_________________________ (May 27, 2003)

Before TJOFLA T and BLAC K, Circuit Judges, and GOLDBE RG*, Judge.

_______________________________________ * Honorable Richard W. Goldberg, Judge, United States Court of International Trade, sitting by designation.1 The exemption has been crystalized by three Supreme Court decisions. See Fed. Baseball Club of Baltimore, Inc. v. Nat’l Leag ue of Prof’l Baseball Clubs , 259 U.S. 200, 42 S. Ct. 465, 66 L. Ed.

898 (1922); Toolson v. New York Yankees, Inc. , 346 U.S. 356, 74 S. Ct. 78, 98 L. Ed. 64 (19 53); Flood v. Kuhn , 407 U.S. 258, 92 S. Ct. 2099, 32 L. Ed. 2d 728 (1972).

2 See part IV, infra

. 3 See Flood , 407 U.S. at 282, 92 S. Ct. at 2112 (stating that “the aberration is an established one”

); Id. at 269, 92 S. Ct. at 2105 (“We granted certiorari in order to look once again at this troublesome and unusual situation.”).

4 The Fourth Amendment, made applicable to the states by the Fourteenth Amendme nt, see Mapp v. Ohio , 367 U.S. 643, 81 S. Ct. 1684, 6 L. Ed. 2d 1081 (1961), guarantees “[t]he right of the people to be

secure in their p

ersons, houses, pa

pers, and effe

cts, against unr

easonable searches and seizures.” For convenience, we omit reference to the F ourteenth Amendment. 2 TJOFLA T, Circuit Judge: For better or worse , professi onal baseball has long enj oyed an exemption from the antitrust laws. 1 The sco pe of this exemp tion – a ju dge-m ade rule premised upon dubious rationales 2 and la beled an “ab errat

ion” by the Supr eme Court 3 – ha s be en t

he s ubj ect

of e xte nsi ve l itiga ti on ov er t

he y ears. I

n this c ase , we are call ed upon to address t wo key issues: ( 1) the effec t of the fede

ral rule upon state antitrust law and (2) whether the exem ption extends beyond antitrust prosecutions into the real m of mere investigations. With regard to t he first issue, we hold that the

federal exe

mption preempts s

tate ant itrust law. As for the second issue, we hold t

hat the Florida Attorney General cannot proceed wit

h the investiga tion in thi s case. This

holding is bas ed upon the Fourth Amendment 4 and state law rather than t

he antitrust exemption. In this vein, our analysi s differs3

significan tly from th at of the d istrict cour t, althoug h we u ltimately aff irm its decision.

I. A. Major Leagu e Baseb all (“ML B”) is an uninco rporated associatio n of thirty major league baseball cl ubs. On November 6, 2001, a super majority of

the clubs voted in favor of

eliminat ing two teams from t

he league. The Fl orida Marlins a nd the Tampa Bay Devil Rays voted in favor of contraction. The former Attorney General ofFlorida, Ro bert Butterw orth, is a fan of b aseball, but not o f MLB ’s contraction policy. According to one newspaper, Butterworth proclaimed that “[i]t’s not go ing to be easy for b aseball to le ave the sta te of Flo rida . . . . W e finally got a te am in Tampa Bay, and we’re going to do all we can to keep it.” See Joe Fo llick, State Start

s Battle Over Cont

raction , The Tampa Tribune, Nov. 14, 2001. Similarly, Butterworth is r eported to have said, “I’ m out here to do whatever I can do to keep [baseball] in Florida if at all possi ble.” See Lesley Clark & Clark Spenc er, Baseball Cutback Plan Challenged , The M iami He rald, No v. 25, 20 01. Makin g good on his p romise, th e Attorn ey Gen eral issued several civ il inv est iga ti ve d ema

nds (“C IDs” ) to

Majo r Le agu e Ba seb all , Co mmis sioner All an H.4

Selig, the Tampa Bay Devil Rays, Lt d., and the Fl orida Marlins Bas eball Club, LLC – all of w hom ar e plaintiffs in this case . The C IDs w ere issued pursua nt to the Atto rney G eneral’s au thority un der Flo rida’santitr ust statute, F la. Stat. §5 The pertinent pa rt of section 542.2 8 states as follows : 542.28 Civil investigative demand.— (1) Whenever the Attorney General . . . has reason to believe that any person may be in possession, custody, or control of any documentary material, or may have any information, which doc umentary material or information is relevant to a civil antitrust investigation authorized by s. 542.27(3), the Attorney Ge neral or such state attorney may, prior to the institution of a civil or cr iminal proceeding thereon, issue in w

riting and cause

to be served upon s

uch person a civi

l investigative demand . . . .

* * * (3) No such demand shall require the production of any documentary material, the submission of any answers to written interrogatories, or the g iving of any oral testimony if such material, answe rs, or testimony would be protected from disclosure under: (a) The standards applicable to subpoenas or subpoenas duces tecum issued by a court of this state in aid of a grand jury investigation; or (b) The standards applicable to a discovery request under the Florida Rules of Civil Proce

dure, to the extent t

hat the applicatio

n of such standar

ds to any such demand is appropriate and consistent with the provisions and purposes of this chapter. * * * (5) Within 30 days after the service of an investigative demand upon any person or at any

time before the r

eturn date speci

fied therein, wh

ichever period i

s longer, the person served may file in the circuit court . . . a pe tition for an order of the court modifying or setting aside the demand . . . . We know that the CI

Ds were based so

lely upon the

Attorney Ge

neral’s authori

ty to investigate antitrust violations for several reasons. First, each CID said on its face tha t it was “issued pursuant to the Florida Antitrust Act of 1980, Section 542.28, Florida Statutes.” No other authority

was identified fo

r their issuance . Second, the state d reason for issui

ng the CIDs, as noted on the face of the CIDs, was “to determine whether there is, has been or may be a violation of . . . the [state or federal antitrust laws] . . . by conduct, activities, or proposed action of the following nature: possible contracts, combinations, or conspiracies in restraint of trade, or monopolization, attempted monopolization, or combinations or conspiracies to monopolize trade or commerce, re

lating to the prop

osed contraction

and/or relocati

on of the Tampa B ay Devil Rays and/or the Florida Marlins.” Third, the Attorney General acknowledged before this court that the CIDs’ only purpose was to investigate a possible antitrust violation arising out of the contraction agreement. When asked at oral argument whether the CI Ds would have issued but for the threatened contraction, the Attorney Genera l answered in the negative. 5 542.28. 5 The CIDs were broad in scope, requiring that each recipient a nswer6 For example, the plaintiffs were asked to identify all meetings, ag reements, and communications relating to contraction of the two Florida teams; describe the process by which Major League Baseball attempts to obtain new stadia; detail the balance she et for the two Florida clubs; discuss alternatives to contraction; and identify how and why club owners voted on the question of contraction.

7 The Attorney

General reque

sted the productio

n of organization

al charts; studies , research, reports, and recommendations relating to contraction; by laws, constitutions, and rules that govern M ajor League Baseb all; notes and documen ts concerni ng the contra ction meet ing; profit and loss statements; revenue sharing agreements; and ownership applications and documents assessi

ng the anticipat

ed viability o

f the Florida clu

bs.

8 See note 5, supra . 6 several interrogatories 6 and produce volum inous documents. 7 The recipient

s of the CIDs had sever al options a

vailable , but only one opt ion could yie ld the des ired resu lt. The m ost obv ious op tion wo uld hav e been to comply with the t

erms of the CIDs. But t his option was unat

tracti ve because the CIDs were burdensome, and the recipient

s believed t

hat the fede

ral exempti on gave the m a “fede ral right” to be free n ot only fr om antitr ust prosecution , but also from this investi

gation . Secon d, the recip ients of th e CID s could h ave filed s uit in state cour

t pursuant t

o Fla. Stat. § 542.28(3)-(5) 8 under the theor y that si nce the business of b aseball is immu ne from an titrust prosecution , the Attorney G eneral’s investigation is

baseless and therefore fl unks the “grand jury” and “Florida Rules of Civil P rocedu re” tests esta blished b y subsec tions (3) (a) and ( 3)(b), re spectively

. This option was si

milarly una

ttract ive because Commiss ioner Selig, MLB, and the two Florida clubs would have found it impossible to convince a Florida t rial court9 In Flood , 407 U.S. at 260 n.1, 92 S. Ct. at 2100 n.1, Supreme Court described the reserve

system as fo

llows: The reserve system, publicly introduce d into baseball contracts in 1887 . . . centers in the uniformity of player c ontracts; the confinement of the player to the club that has him under the contract; the assignability of the play er’s contract; and the ability of the club annually to renew the c ontract unilaterally, subject to a stated salary

minimum.

10 The Florida Supre

me Court’s holding

has scant support i

n the case law; the

vast majority of lower courts have held that the exemption created by the U.S. Supreme Court extends more broadly to the “business of baseball.” Some of these cases were c ited by the district court. See Major Leag ue Baseball v. B

utterworth , 181 F.Supp. 2d. 1316, 1322 n.4 (N.D. Fla. 2001). Lest there be any doubt about the matter, the district court f orcefully destroyed the notion that the antitrust exemption should be narrowly cabined to the reserve sy stem. Id. at 1322-1332. Given the persuasiveness of the district court’s reasoning, in conjunction with the fact that the Atto

rney Gene

ral no longer a

rgues that the a

ntitrust exemption sho

uld be so narrowly construed, we see no need to expound upon the matter. 7 to adop t the first pr emise ofthe argu ment – n amely, tha t the “busin ess of ba seball” is immune from anti

trust prose cution. This

is because t

he Supreme Court of Florida held i

n an earlie

r decision t

hat the ant

itrust e xemption esta

blished by federal law extends only to the re serve system 9 rather tha n broadly exempti

ng the “business of baseball. ” See Butterworth v. Nat ’l League of Prof’ l Baseball Clubs , 644 So.2d 1021 (Fla. 1994). 10 This left opt ion three: an action i

n federal cour

t, the present la wsuit. B. The plaintiffs’ complaint is based upon tw o theories. Under the first theory, the plaintiffs contend that (a) there is a “federal right” that exempts “the business of baseball” as a proper subject of an antitrust enforcement sui t and (b) this federal11 See Griswold v. Connecticut , 381 U.S. 479, 484, 85 S. Ct. 1678, 1681, 14 L. Ed. 2d 510

(1965).

12 The plaintiffs cla im that state reg

ulation of baseba

ll via antitrust litig

ation would inevitably e

ntail extensive extra

territorial eff

ects and impose a h

eavy burde

n on interstate commerce. Therefore, the plaintiffs contend that courts have erected a ra re per se rule under the Commerce Clause th

at, rather than b

alancing the bu

rden on interstat

e commerce with l

egitimate state interests, automatically precludes the application of state antitrust laws to the business of baseball. 8 right extends to administr ative investigat

ions. We call this the “

penumbra” theory because, like Justice Douglas’s theory of the Bill of Rights, 11 the claim p osits that a core fed eral right ( i.e., exemp tion from antitrust prosecution ) has a shadow which extends the right to encompasses m uch more (i.e., an exemption from antitrust investi gation ). Having established this broad federal right, the plaintiffs argue that this right precludes t

he Attorney General ’s invest igation. This is so even if the state inves tigation is p remised solely up on state an titrust law , because state antitrust law , to the exte nt that it is ap plied to th e busine ss of bas eball, is preempted by federal law and violates t he Commerce Clause. 12 The plainti ffs also i

nvoke another model. Like the penumbra t heory, the second model c ontinue s to argu e that fede ral law ex empts th e busine ss of bas eball from antitrust regulation, and that the Supremacy C lause and the Comm erce Clause preclud e the app lication ofstate antitru st law to th e extent th at state law is inconsist ent with feder

al policy . Unlike the pe numbra theory, however, the second theory does not contend that an exemption from prosecuti on necessarily incl udes13 See note 5, supra . 14 The Fourth Amendment, which protects against unreasonable searches and seizures, has been held to limit the scope of administrative subpoenas. See Okla. Press Publ’g Co. v. Walling , 327 U.S. 186, 208-11, 66 S. Ct. 494, 505-07, 90 L. Ed. 614 (1946). See also Fed. Trade Comm’n v. Am. Tobacco Co. , 264 U.S. 298, 306, 44 S. Ct. 336, 337, 68 L. Ed. 696 (1924) (“ It is contrary t o the first princip

les of justice to al

low a search thr

ough all the resp

ondents’ record

s, relevant or irrelevant, in the hope that something will turn up.”).

15 Section 1983 provides that “[e]very person who, under color of [state law] subjects . . . any citizen of the United States . . . to the deprivation of any rig hts . . . secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress. . . .”

16 See 28 U.S.C. § 1331.

17 See 28 U.S.C. § 1367. 9 an e xemp ti on f

rom i nve sti gat ion . Ra the r, law external

to federal

antitrus t doctrine preclud es the A ttorney G eneral’s in vestigatio n. Since the Atto rney G eneral co uld not possibly

bring a suit

on the grounds that

contraction constitut

es anticompet

itive behavior in vi olation of f ederal or st

ate anti trust la ws, any invest

igation must

be premise d on the notion th at the Atto rney G eneral is fr ee to inve stigate per fectly legal act ivity. The plainti ffs alle ge that thi s premise is incorrect

in light of

Florida law 13 and the F ourth A mendm ent, 14 which prohibit baseless “fi shing expeditions.” Invoking both theories, the plai ntiffs seek declarat

ory and injunctive reli ef under 42 U.S.C. § 1983, 15 in additio n to an o rder settin g aside th e CID s pursu ant to Fla. Stat. § 542.28(3). The district court could have properly exerci sed federal question jur

isdiction 16 over the section 1 983 claim s, and it co uld hav e exercise d its supplemental

jurisdic tion 17 ove r the cl aim s ar isi ng under Flo rid a la w.10

The distric

t court grant

ed much of the requested reli ef, holding t hat the antitrus t exemption cove

rs the busine ss of baseball and that s tate ant itrust laws do not apply to t

he proposed contra

ction. The di strict

court furthe

r held that

“the Attorney General

had no authorit

y to issue a

ntitrust CIDs to investigate the proposed contraction of Major League Baseball.” Major Leagu e Baseb all , 181 F. Supp. 2d at 1335. The le gal basis f or the lat ter conclus ion is uncle ar, because no authority was cited by t

he distri ct court. However, we have two clues t hat lead us to suspect that the c ourt adopted the penumbra theory. First, t he court’s final order completely

ignored the pl aintiff

s’ clai ms based on Fla. Sta

t. § 542.28(3) a

nd made no mention of the Fourt h Amendment. Second, the f inal order de clared tha

t “the federal and state ant

itrust laws do not apply to t he proposed contra

ction of Major League Baseball from 30 to 28 and do not authorize investigation of that proposed contraction by the Attorney General.” That

is, the di strict

court appears

to have bel iev ed t

hat the rig ht t o be exe mpt

fro m an a

nti tru st i nve sti gat ion inh ere ntl y fl ows from th e exemp tion itself. As we discuss below, we believe that the district court made an analytica l mistake and t

hat the court

should have consi dered the pla intiffs ’ claims based upon the Fourth Amendment and Fla. Stat. § 542.28(3). But the court’s inst incts were correct: the law prohibi ts basele ss “fishi

ng expeditions ,” and so an exempt ion from11

prosecution ne cessaril

y would have require d the distr ict court to prohibit

the Attorn ey Gen eral’s inve stigation. W e therefo re affirm the cour t’s judgm ent in favor of the plaintiffs.

C. We ordinarily review a district court’s decision to grant or deny an injunctio n for clea r abuse o f discretio n. See United States v. Gilbert , 244 F.3d 888, 908 (11th Cir. 2001). Underlying quest ions of law, however,

are reviewed de

novo . See United States v. P ruitt , 174 F.3d 1215, 12 19 (11th C ir. 1999) (“A district court

by definition abuses it

s discretion when it makes an error of law.”) (citation o mitted); Manning ex rel. Manning v. School Bd. of Hills borough County, Fla. , 244 F.3d 927, 940 (11th Cir. 2001). The decisions of the distri ct court that the Attorney General challenges in this app eal were all reached as a matter oflaw. A ccordin gly, de novo review is appro priate.

II. A. The “business of baseball” is exempt fro m the federal antitrust laws. See Fed. Baseball

Club of Baltimore , Inc. v. Nat ’l League of Prof’ l Baseball Clubs , 25912

U.S. 2 00, 42 S . Ct. 465 , 66 L. E d. 898 ( 1922) ; Toolson v. New York Y ankees, Inc. , 346 U .S. 356 , 74 S. C t. 78, 98 L . Ed. 64 (1953 ); Flood v. Kuhn , 407 U.S. 258, 92 S. Ct. 20 99, 32 L . Ed. 2d 728 (1 972); Prof’l Basebal l Schools and Clubs,

Inc. v. Kuhn , 693 F .2d 108 5 (11th Cir. 198 2). The district court persuasi vely established this fact , and the Attor

ney General no longe

r contends tha

t the feder

al exemption extends only to the player re serve system. Instead,the Attorney General argues that the e xemption has li

mits. Speci ficall

y, the Attor

ney General cont

ends that t

he exemption might not

be triggere d if the fac

ts establ ished by the i

mpending investiga tion sho w that th e plaintiffs engage d in non -exemp t condu ct. The A ttorney G eneral’s p osition is n o doub t correct, b ut wha t condu ct could possibly be non -exemp t? It is true that the an titrust exem ption ha s not bee n held to immunize the dealings between professional baseball clubs and third parties. This case, however,does not involve third part

ies. Rathe

r, the is sue of contrac

tion concerns a matt

er that i s central

to baseball ’s league s

tructure – s

pecifica lly, t he numb er of club s that may participate in league play. W e agree th at the decis ion to contract i s obviously par t of the “bus iness of base ball”; t he number of clubs,and their organizati on into leagues for the purpose of playing schedul ed games, are basic ele ments of the produc

tion of major league baseball games. Moreover,the number of clubs necessarily affect s the number of clubs sharing in national13

revenues. As the district court stated, “ It is difficul t to conceive of a decisi on more integral to the busin ess of m ajor leagu e baseba ll than the n umber of clubs that will be allowed to compete.” Major Leagu e Baseb all v. Butte rworth , 181 F. Supp.2d 1316, 1332 (N .D. Fla. 2001). Wh en the applicability of baseball’s exemption is so apparen t, no factu al develo pment is necessar y. See Prof’l B aseball S chools , 693 F.2d at 1085-86 (aff

irming, as a

matter of l aw, a motion to di smiss where the dismissa l was ba sed upo n an app lication ofthe exem ption to a ntitrust ch allenges to a minor league franchise locat ion system and game scheduling rules). But what if club owners agreed not to e liminate the two clubs slated for eliminat ion in the eve

nt that a l

ocality chooses to subsidize a tea m, such as by paying for it

s stadium? Surely

such a scheme, t

he Attorney General

argues, is

not covered by the exemption. We disagree. Nobody disputes the notion that money is at the core of the cont

raction i ssue. While t

he most die-har

d baseball f

ans might fancy the sport as a mere pa stime, mo st people unders tand that p rofessio nal spor ts is big bu siness an d that pro fits matter m ost. So it w ould no t be surp rising if unprofitabl e baseball

clubs were permit

ted to remai

n in otherwise una

ttract ive markets in t

he event of a public bail- out. But thi s does not mean tha t a decision regarding the

number of teams tha

t may parti cipate i

n league play

is somehow unrelated t

o the “busine ss of baseball.” Federal antitrus t law exempts t

he18 The Attorney General contends that the investigation was “by no means limited to the mere act of contraction itself”; rather, the CIDs “requested infor mation relating to

the proposed contraction.” We are unimpressed by this word game. No matter how the Attorney General characterizes

the investigatio

n, the CIDs we

re focused on co

ntraction – a matte

r that is well within the business-of-baseball exemption. 14 contraction issue from judicial scr utiny, and no i

nquiry into MLB’s moti ves or desires coul

d possibly cha

nge the fact

that contr

action implicates t

he heart of t

he “busines s of base ball.” 18

B. The Attorney General

of Florida next

contends that

even if the bus iness of baseball i s immunized from fede ral anti trust prose cution, st

ate enforce

ment agencies can still invoke state antitrust la w. The argument is that the federal exemption is not

really a n “exemption” as such, but mere ly a real m where the federal antitrust la

ws do not operate. The federal exemption, the Attorney General says, is merely a “gap in, rather than an exemption to,federal antitrust law.” What is meant by t

his craft y wording is not ent

irely clear, but we get

the drift : the business of baseball should be viewed as an area i n which Congress has refrained from fe deral antitr ust regu lation, and therefor e states sho uld hav e free reig n to apply their antitrust laws so long as states are mindful of the Com merce Clause balancing t

est enuncia

ted in Pike v. Bruce Church, Inc. , 397 U.S. 137, 142 , 90 S.15

Ct. 844 , 847, 25 L. Ed. 2 d 174 ( 1970) (“Whe re the statu te regulate s even-h andedly to effectu ate a legitim ate local pu blic interes t, and its eff ects on in terstate commerce are only incidental,it will be upheld unless t he burden imposed on such commerce is cl early exce ssive in re lation t o the putati

ve local bene fits.”) (citat ions omitted). The Attorney General argues that t he Pike balancing test can be appli ed only after an inves tigation is c omplete d and a m ore dev eloped r ecord em erges.

The pla intiffs resp ond by arguing that Flood , in conjunct ion with the Supre macy C lause, ma kes the b usiness o f baseba ll immun e from in consisten t state laws. Moreover, the plaintiffs contend that the S upreme Court’s Co mmerce Clause jurisprudenc e, when applied t o professional

baseball,

must be read to e stablis h a unique per se rule that

prohibits t

he applicat

ion of stat

e antitr ust laws when the federal exemption is triggered. Since balancing is unnecessary , a developed record is also unnecessary. Any discussion of whet her Congress meant t

o immunize the busi

ness of baseba ll fr om all antitrus

t law (as opposed t

o federal antitrust la

w) is, of course, fanciful b ecause C ongres s never c onveye d its prefe rence on e way o r the othe r. The ex emption is entirely ju dge-m ade, altho ugh so me decis ions hav e attempte d to16

cloak this disturbin g fact in th e langua ge of C ongres sional inte nt. Our analysis must turn to t

he criti cal language

utilized by the Supreme Court i n Flood : The p eti ti one r’s arg umen t as to t he a ppl ica ti on of sta te a nti tru st laws deser ves a wor

d. [The dist rict court ] rej ecte d the s tate

law cl aims because state anti

trust regulati on would conflict with federal policy and because nat

ional “uni formity (i s required) i n any regulat

ion of baseball a

nd its rese

rve system. ” The Court of Appeals,in affirmi ng, stated, “[A]s the burden on interstate commerce o utweighs the states’ interests in re gulating baseball’ s reserve system, the Commerce Cla usepre clu

des the app li cat ion here of sta te a nti tru st law. ” As applied to org anized baseb all, and in the light of this Court’s observations

and holding in Federa l Baseba ll , in Toolson , in Shubert , in International Boxing , and in Radovich , and despite ba seball’s allegedl y inconsist

ent position taken in the past with res

pect to the applicat ion of stat

e law, these

statements adequatel

y dispose of t

he state law claims. Flood , 407 U.S. at 284-85, 92 S. Ct. at 2113 (citati ons omitted). Hardly a mode l of clarity, th e passag e forces th e reader to ask two question s. First, was t

his passage a

holding? We answer in the a ffirmati ve, even though t

he declaration that

“these state

ments adequately dispose of the st ate law claims” is far from the forcef

ul language cha

racteri stic of most

holdings. The cont

ext of the opinion makes clear that the Court was rendering a deci sion with respect to an important i ssue in the c ase. Indeed, the very next

sentence af

ter the quot

ed passage states: “The conclusion we have reached makes it unnecessary for us to consider the respondents’ additi onal argument . . . .” Id. at 285, 92 S. Ct. at 2113.19 At least one other court has similarly concluded that federal antitrust policy , as established in the Flood

decision, preclu

des the applicati

on of state antitru

st law to the business of baseball. See In re Brand Name Prescription Drugs Antitrust L itigation , 123 F.3d 599, 611 (7th Cir. 1997) (“Antitrust law, for example, with an isolation exception, Flood v. Kuhn . . . is a field in which Cong

ress has not

sought to replace state with federal law.”) (first emphasis added; citations omitted). 17 Second, what were the Court ’s grounds for pre cluding the a pplication of state antitrust law? A careful reading of the passag e yields two differen t theories. The district court,as characterized by t he Supreme Court, held that federal policy exempts the business of baseball from antitrust scrutiny, and that state antitrust regulation inherentl

y conflicts with thi s policy. That is,the district court advanced a preem ption the ory. Th e district co urt’s hold ing is in co nsiderab le tension with the usua l standard for pree mption – a feder alism-ba sed doc trine that re quires co urts to “assum[e] that t

he historic police powers of the Stat es [are] not to be superseded by . . . [federal l

aws] unless that [is] the clear and manifest purpose of Congress.” Rice v. Santa Fe El evator Corp. , 331 U.S. 218, 230, 67 S. Ct . 1146, 1152, 91 L. Ed. 1447 (1947). After al

l, the exe mption is ent

irely j udge-made, so one would be hard-pressed to find a clear st atement from Congress in favor of preemption. Even so, the Supreme Court

endorsed the di strict

court’s st

atement, a

nd we are bound by the Court’s hol

ding. 19 The Second Circuit Court of Appeals, by cont

rast, re lied upon the Commerce Clause. There is an interesting quest ion as to whether Commerce20 Notably, a Florida statute provides that Florida antitrust law does not apply to conduct exempted from federal antitrust law. See Fla. Stat. § 542.20 . It is perhaps misleading to say that Florida law is “preempted” by federal law whe n both laws should be read coterminously. However, federal courts may not enjoin state actors to comply with state law, see Pennhurst State School & Hosp. v. Halderman , 465 U.S. 89, 106, 104 S. Ct. 900, 911, 79 L. Ed. 2d 67 (1984), and so the district court wisely declined to base its decision on Fla. Stat. § 542.20. 18 Clause doctri

ne, when applied t

o the business

of baseball , precludes

the applic ation of s tat e an ti tru st law per se , or wh ether the tr aditional Pike balancing t est must be invoked on a case-

by-case basi s. The plaint iffs argue t

hat some courts

have erected a per se rule, even t hough the Second Circui t decisi on endorsed by the Flood Court employed the Pike balancing test. Fortunat ely, we need not answer this question because our Supremacy Clause analysi s disposes of the question at hand: federal law establishes a universal exemp tion in the name of uniformity. 20

C. So far, we have established two key points. First , contraction is a

n issue that is at the heart of the

“business of

baseball” ; therefor

e, contrac

tion cannot be

the subject of a

n antitrus

t enforcement

action predicated upon feder al law. Second,the plaintiffs are

also immune from state antitr ust laws by virtue of the Supremacy Clause. Confronted with these two legal conclusi ons, the Attorney General respon ds by arg uing tha t even if fe deral law preclud es an antitr ust prosecution , this21 The cases of Eastern R.R. Presidents Conf. v. Noerr Motor Freight, Inc. , 365 U.S. 127,

81 S. Ct. 523, 5 L. Ed. 2d 464 (1961), and United Mine Workers v. Pennington , 381 U.S. 657, 85 S. Ct. 1585, 14 L. E

d. 2d 626 (1965), e

stablish an exemption

from antitrust liab

ility for ce

rtain petitioning activ

ities. 19 does not mean that a mere investi gation cannot be conduct ed. We agree, but

our agreement with the Attorney General on this point does not e nd the matter.

1. First, it is far from ax iomatic th at exemp tions fro m pros ecution n ecessarily entail a concomitant r

ight to be fr

ee from invest

igation. The Second Circuit, for example, held that a company could not invoke the Noerr-Pennington antitrust exemption 21 as a basis f or withholding mat

erials s ought through a CID issue d by the U.S . Depar tment of

Justice. See Associated Conta iner Transp. (

Aus.) Ltd. v. United States , 705 F.2d 53, 59 (2 d Cir. 1983). The cou rt emphasized that there is a distinct ion between a prose cution, fr om which a business coul d be protecte d by the judge-m ade antitru st exemp tion, and a mere in vestigatio n into co rporate c onduc t: [T]he ap pellees are not resistin g form al antitrust c harges a nd cann ot, therefore, simply rely on a doctrine which p rotects from prosecuti on busines ses seekin g to influ ence the e nforcem ent of law s. To pr evail on this appeal, appell ees must demonstrate not that t heir conduct may be immune from prosecut ion, but rat

her that t heir communicat

ions with the Federal

Maritime Commission a re beyond the sc ope of legitimate inquiry.22 See note 3, supra . 20

Id. In a simila r vein, the Fourth Circuit h eld that Noerr-Pennington petiti oning immun ity “is by def inition an exemp tion from antitrust liab ility, and no t a bar to discovery of evidence.” North Carolina Ele c. Membership Corp. v. Carolina Power & Light Co. , 666 F.2d 50, 53 (4th Cir. 1981). Secon d, antitrus t exemp tions mu st be strictly c onstrue d. See Square D Co. v. Niagara Frontier Tariff Bureau, Inc. , 476 U.S. 409, 421, 106 S. Ct . 1922, 1929, 90 L. Ed. 2d 413 (1986). This rule has its roots in the principle that the antitrust laws form the bedrock of our capitalist s ystem premised upon competition, and that anticompeti

tive conduct

harms consumer welfar e. For this r

eason, judge-made exemptions, no less than stat utory exemptions, must be closely cabined. We are hesitant to read the “

business of bas eball” exe mption broadly – e speciall y since the Supre me Co urt has ca lled the ex emption an “aberr ation.” 22 Therefore, we reject the penu mbra th eory pro ffered b y the plain tiffs and a dopted by the dis trict court.

2. In advancing the penum bra theory, the plaintiffs point out that the businessof-baseball

exemption is not

riddled mult

iple except

ions, dist inguishing i

t from Noerr-Pennington

petiti oning immunity. It makes no sense , the plai ntiffs cont

end,21

to allow an inve stigation into conduct t hat we know is perfect

ly legal before the investigation commences. We agree with this se ntiment, although we find it more approp riate to loca te the righ t to be free from b aseless inv estigation s (comm only referred t o as “fishi

ng expeditions ”) in other s ources of law rat her than the antitrust ex emption itself. The Fourth Amendm ent has been held to limit the scope of investigatory power exercised by

federal and state agenc ies. In See v. C ity of Sea ttle , 387 U.S. 541, 544, 87 S. Ct. 1737, 1740, 18 L. Ed. 2d 943 (1967), for example, the Court described the constitutional limits on administrative subpoenas: It is now settled that, when an administrative agency subpoenas corporate books or

records, t

he Fourth Amendment require s that the subpoena be suffi ciently limited i n scope, rel evant in purpose , and specific in directive s o that com pliance w ill not be u nreason ably burdensome. See also United States

v. Morton Salt Co. , 338 U.S. 632, 652-53, 70 S. Ct. 357, 368-69, 94 L. Ed. 401 (1950); Fed. Trade Comm’n v. Am. Tobacco Co. , 264 U.S. 298, 305-06, 44 S. Ct. 336, 337, 68 L. Ed. 696 (1924). To be sure, Congress a nd state legislatures may permissibly grant broad investigative aut hority to regulatory agencies

. See Okla. Press Publ’ g Co. v. Walling , 327 U .S. 186 , 204-0 5, 66 S . Ct. 494, 503, 90 L. Ed. 614 (1946). But investigations premi sed solely upon legal23 The Attorney General’s brief reveals his broad ( and incorrect) view of the investigatory discretion vested in his Office: “Enjoining the Attorney General’s civil investig ation at the outset is foreclosed by the possibility that investigation of the events surr ounding the proposed contraction would have revealed antitrust activity involving non-baseball entities that could not properly hi

de behind baseba

ll’s Federal Base

ballimmunity. Such persons would not be permitted to evad

e the antitrust law

s, and yet wi

thout any inve

stigation, their e

xistence will never be known.” See Brief of Atty. Gen. at 19. In other w ords, the Attorney General has no 22 activity are

the very type of “fishi

ng expedition” that were the target of Justice Holmes’s assaul

t in American Tobacco. Like federal constitut

ional law, Florida law prohibits t he Attorney General from co nductin g baseles s investig ations. See Fla. Stat. § 542.28 (3); cf. Check ‘N Go of Florida, Inc. v. Florida , 790 So. 2d 454, 457-58 (Fla . Dist. Ct. App. 2001) (“The level

of proof require d of the invest igative a gency must suggest

something more than a fis

hing expedition, and something less than probable cause.”) . Section 542.28 establishes two standards that CIDs must meet. First, CIDs must be set aside if they fail to meet the “st andards applicable to subpoenas or subpoenas duces tecum issued by a court of [Florida] i n aid of a grand jury investigat ion.” Fla. Stat. § 542.28(3)(a). Second, CIDs must be set aside if t hey fail t o meet the “standard s applicab le to a disco very req uest und er the Flo rida Ru les of Civ il Procedure, to t

he extent t

hat the application of

such standards

to any such demand is appropriate and consist ent with the provisions and purposes of this chapt er.” Fla. Stat. § 542.28(3)(b). It is clear that

under either standard, the Att orney Gener al must h ave mo re than a m ere intuitio n that illega l activity is afo ot. 23 Thisidea what illegal conduct might have occurred, or who might have eng aged in this conduct. Even so, the Attorney General believes he has the power to commenc e a full-blown investigation. Although the Attorney General need not have a bsolute proof of a violation prior to commencing an investigation (otherwise, what would be the point of conducting an investigation in the first place?), Florida law and the Constitution clearly require that the Attorney General have

something

. 24 Federal Base

ball , which was ty

pical of the Supre

me Court’s crampe

d Commerce Clause jurisprudence during the pre-New Deal era, held that “[t]he business [of] giving exhibitions of baseball” is a “purely state affai[r].” Federal Base ball , 259 U.S. at 208, 42 S. Ct. at 466. The result of this conc

lusion was that the Sh

erman Act did not a

pply to Major

League B aseball.

25 In Toolson , the Court retreated from its cramped view of interstate commerce and instead rested its decision on what it perceived as congressional intent. See Toolson , 346 U.S. at 23 position is further advanced by t he language of Fla. Stat. § 542.27(3), which requires that the Attorney General “suspect” that a vi olation has taken place before an investi gation may commence, and Flat Stat . § 542.28(1), whic h requires t

hat the Attorn ey Gen eral have “reason to believe” th at a perso n “may b e in poss ession . . . of any documentary

material ” that is

“relevant

to a civil

antitrus t investi gation” prior to the

issuance of a

ny CIDs. In short,it is clear that a n investiga

tion predicated solely upon legal activity does not pass

muster under any standard.

III. The de ath of the busines s-of-ba seball exe mption would likely be m et with considerabl e fanfare,save for the c lub owners who benefit f rom the rule. The exemption was founded upon a dubious premise, 24 and it has been up held in subsequent cases because of an equally dubious premis e. 25 Moreover, the welfare357, 92 S. Ct. at 78-79. This was another s haky holding

, because the Cou

rt usually de

clines to infer an intention of Congress merely because of cong ressional inaction. In Helvering v. Hallock , 309 U.S. 106, 119-21, 60 S. Ct. 444, 451-52, 84 L. Ed. 604 (1940), for example, the Court said: Nor does want of specific Congressional repudiations . . . serve as an implied instruction by Congress to us not to reconsider, in the light of new experience, . . . those decisions . . . . It would require very persuasive circumstances enveloping Congressional silence to debar this Court from re-examining its own doctrines . . . . Various considerations of parliamentary tactics and strateg y might be suggested as reasons for th

e inaction of . . . Co

ngress, but they

would only be

sufficient to indicate that we walk on quicksand when we try to find in the absence of corrective legislation a controlling legal principle. One might also question the propriety of basing a rule of law on a pe rceived intention alone, without any te

xtual hook whatsoeve

r. To be sure, the

antitrust laws, whi

ch have been re

ad as a delegation to the courts to craft the law of competition in the common law tradition, might present a unique case where the Court’s judge-made exemption is more palatable; however, one must wonder why the Court was so intent on casting the baseball exemption as a rule ordained by Congress in the first place. Responding to cri

ticisms that the Cour

t’s jurisprudenc

e has been schizop

hrenic in granting an e

xemption to baseball b

ut not to other prof

essional sports, th

e Court’s analy

sis in Flood boiled down to this puzzling language: “If we were to act otherwise, we would be withdrawing from the conclusion as to congressional intent made in Toolsonand from the concerns as to re

trospectivity

therein expresse

d. Under these ci

rcumstances, the

re is merit in consistency even though some might claim that beneath that consistency is a layer of inconsistency.” Flood , 407 U.S. at 284, 92 S. Ct. at 2113. So the reasoning behind the present rule seems to be a rigid notion of stare decisis, coupled with a hesitancy to rende r a decision that wou ld o pera te p ros pect ive ly on ly. 24 losses st emming from the potent ially a nticompeti

tive agree

ments among profess ional spo rts clubs h ave been well do cumen ted. See, e.g. , Stephen F. Ross, Antitru st Optio ns to Re dress A nticomp etitive Res traints and Mon opolistic Practices by Professional Sports Leagues , 52 Cas e W. R es. L. Re v. 133 ( 2001)

. Finally, antit

rust law has significant

ly changed since Federa l Baseba ll was decided; per se rules have oft

en been jett

isoned in favor

of the “rul e of reason” – a25

balancing exe

rcise tha t would uphold conduct t hat, while a

ppearing anticompeti

tive at f irst blus h, proves to be e ssential for maintai

ning a success ful league-bas ed ent

erpri se. I

n this vein,we do not f

ault the pos iti on take

n by some courts, and t

he arguments proff

ered by the Att

orney General,that the e xemption should be extre

mely narrow. Even so,we believe tha t a good fait

h reading of Supreme Court precedent leaves us no choice but to rea ch the foll owing conclusions: First, cont

raction i s a matter t

hat fall s within the “

business of baseball” and therefore cannot be t he subject of a prosecution based upon federal antitrus t law. Second, when t

he business-of

-baseball exemption is t

riggered, baseball c lubs are e qually im mune from pr osecutio n unde r state antitru st law. Finally,because the a

ct of contra

ction (or an a

greement to cont

ract) cannot possibly vi olate st

ate or feder

al antit rust laws, a

n investiga

tion based solely upon contraction is basele ss and theref ore violat

es the Fourth Amendment and Fl orida law – both of which li

mit the scope

of the Attorney

General’s aut

hority to i ssue investiga tive subp oenas. It is up to the Supre me Co urt or C ongres s to over rule Flood outrigh t, or perh aps dev ise a mor e cabined exemp tion. As an interm ediate appellate c ourt, w e have n o choice but to ho ld that the d istrict cour t was co rrect in granting judgment in favor o f the plaintiffs.26

AFFIR MED.