Court Opinion

ID: 9793351
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:46:23.915991+00
Date Added: 2024-06-11T08:04:34.795177
License: Public Domain

Opinion
BROUSSARD, J.
The San Diego Chargers Football Company, a California limited partnership, appeals a judgment awarding damages for violation of the California antitrust law. (Bus. & Prof. Code, § 16700 et seq., hereinafter the Cartwright Act.)1 In accordance with other decisions considering the applicability of state antitrust laws to national professional sports leagues, we conclude that the Cartwright Act is not applicable to the interstate activities of professional football.
From 1968 to 1976, Dennis Partee, a California resident, played professional football as a punter and placekicker for the Chargers, a member of the National Football League (NFL). In 1974, the World Football League came into existence, and one of its teams offered Partee $50,000 to play for *381it for a season. He subsequently entered into a contract with the Chargers for three years with a salary of $38,500 in 1974, $44,000 in 1975, and $49,500 in 1976. The agreement was subject to the terms and conditions of the standard NFL players contract. The trial court fixed damages for violation of the Cartwright Act based on the difference between the $50,000 offer and the 1974 salary, awarded for the three years of the contract and trebled for a total award of $103,500.
In 1975, the last full year Partee played for the Chargers, the NFL had 26 teams located in 16 states and the District of Columbia. The league structure is characterized by a basic division into two conferences each having divisions composed of certain teams within the conference, and by play according to an ordered schedule between teams within the various divisions and the two conferences. The Chargers play nearly half their games outside of California, and most of their games are against teams located in other states. NFL games are regularly broadcast coast to coast over network television, and professional football has gained nationwide appeal.
To promote athletic competition by providing a means of keeping the teams on a par with each other and to foster the business success of the member teams, the NFL has certain operating rules, many of which are embodied in the NFL constitution and bylaws. Partee’s antitrust action concerns five of these operating rules as they existed in 1974: the draft, option clause, Rozelle rule, tampering rule and one-man rule.2 These rules are applied nationwide to all of the teams in the league. The court found all but the option clause to violate California antitrust laws.
Since 1968, all NFL players have been represented by the NFL Players Association (NFLPA). In 1970, the NFLPA and NFL management entered *382a second collective bargaining agreement covering the 1970 and 1973 seasons. No new agreement was reached until March 1977, but this agreement was made retroactive to the expiration date of the prior agreement. This new agreement, which was effective into 1982, contains each of the rules or practices challenged by Partee.3
The Chargers contend that professional football is a unique activity of interstate commerce which requires nationally uniform governance, that only federal antitrust laws apply, that interstate commerce would be unreasonably burdened if state antitrust laws were applied to professional football’s interstate activities, and that application of the Cartwright Act was a violation of the commerce and supremacy clauses of the Constitution.
The Chargers do not claim federal antitrust laws, the Sherman and Clayton Acts, “occupy” the field of antitrust regulation, or that the federal and state antitrust laws so conflict as to require preemption of the state scheme. The federal and California antitrust laws, having identical objectives, are harmonious with each other. (See Chicago Title Ins. Co. v. Great Western Financial Corp. (1968) 69 Cal.2d 305, 315 [70 Cal.Rptr. 849, 444 P.2d 481].)
The commerce clause is a limitation upon the power of the states without implementing legislation by Congress. (A.&P. Tea Co., Inc. v. Cottrell (1976) 424 U.S. 366, 370-371 [47 L.Ed.2d 55, 60, 96 S.Ct. 923].) “Not every exercise of state power with some impact on interstate commerce is invalid. A state statute must be upheld if it ‘regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental . . . unless the burden imposed on such-commerce is clearly excessive in relation to the putative local benefits.’” (Edgar v. Mite Corp. (1982) 457 U.S. 624, 640 [73 L.Ed.2d 269, 282, 102 S.Ct. 2629, 2640]; Minnesota v. Clover Leaf Creamery Co. (1981) 449 U.S. 456, 471 [66 L.Ed.2d 659, 673, 101 S.Ct. 715]; Pike v. Bruce Church, Inc. (1970) 397 U.S. 137, 142 [25 L.Ed.2d 174, 178, 90 S.Ct. 844].) The burden on interstate commerce will ordinarily be found unreasonable where the state regulation substantially impedes the free flow of commerce from state to state or governs “those phases of the national commerce which, because of the need of national uniformity, demand their *383regulation, if any, be prescribed by a single authority.” (Southern Pacific Co. v. Arizona (1945) 325 U.S. 761, 767 [89 L.Ed. 1915, 1923, 65 S.Ct. 1515].) The commerce clause permits only incidental regulation of interstate commerce by the states; direct regulation is prohibited. (Edgar v. Mite Corp., supra, 457 U.S. 624, 641-643 [73 L.Ed.2d 269, 282-283, 102 S.Ct. 2629, 2640-2641].)
It is settled that the NFL is engaged in interstate commerce and that federal antitrust laws are applicable. (Radovich v. Nat. Football League (1957) 352 U.S. 445, 452 [1 L.Ed.2d 456, 462, 77 S.Ct. 390].)
A number of cases have considered the applicability of state antitrust laws to national professional sports leagues. The leading case is Flood v. Kuhn (S.D.N.Y. 1970) 316 F.Supp. 271, affirmed (2d Cir. 1971) 443 F.2d 264, affirmed 407 U.S. 258 [32 L.Ed.2d 728, 92 S.Ct. 2099]. Considering baseball’s reserve system, the trial court found state antitrust laws inapplicable on alternative grounds: preemption and unreasonable burden on interstate commerce.4
Treating the applicability of state antitrust laws to professional baseball as a question of first impression, the Second Circuit affirmed. (Flood v. Kuhn, supra, 443 F.2d 264, 267-268.) The court stated: “[W]here the nature of an enterprise is such that differing state regulation, although not conflicting, requires the enterprise to comply with the strictest standard of several states in order to continue an interstate business extending over many states, the extra-territorial effect which the application of a particular state law would exact constitutes, absent a strong state interest, an impermissible burden on interstate commerce.” (Id., at p. 267.)
Analyzing the organization of professional baseball and the effect of state antitrust regulation balanced against its need, the court of appeals reasoned: “Professional baseball clubs, although existing as separate legal entities, are organized into so-called leagues for competitive play and are dependent on the league playing schedule to further the ends of their sports competition. Therefore, it is the league structure at which any state antitrust regulation must be aimed if organized professional baseball is not to be severely fragmented. On the one hand, it is apparent that each league extends over *384many states, and that, if state regulation were permissible, the internal structure of the leagues would require compliance with the strictest state antitrust standard. The consequent extra-territorial effect of necessary compliance would be considerably more far-reaching than that in Southern Pacific Co. v. Arizona, supra. On the other hand, we do not find that a state’s interest in antitrust regulation, when compared with its interest in health and safety regulation, is of particular urgency. Hence, as the burden on interstate commerce outweighs the states’ interests in regulating baseball’s reserve system, the Commerce Clause precludes the application here of state antitrust law.” (443 F.2d at pp. 267-268; fn. omitted.)
Affirming the circuit court, the United States Supreme Court stated: “The petitioner’s argument as to the application of state antitrust laws deserves a word. Judge Cooper rejected the state law claims because state antitrust regulation would conflict with federal policy and because national ‘uniformity [is required] in any regulation of baseball and its reserve system.’ 316 F.Supp., at 280. The Court of Appeals, in affirming, stated, ‘[A]s the burden on interstate commerce outweighs the states’ interests in regulating baseball’s reserve system, the Commerce Clause precludes the application here of state antitrust law.’ 443 F.2d, at 268. As applied to organized baseball, and in the light of this Court’s observations and holdings in Federal Baseball, in Toolson, in Shubert, in International Boxing, and in Radovich, and despite baseball’s allegedly inconsistent position taken in the past with respect to the application of state law, these statements adequately dispose of the state law claims.” (407 U.S. at pp. 284-285 [32 L.Ed.2d at p. 745], fn. omitted; see State of Wisconsin v. Milwaukee Braves, Inc. (1966) 31 Wis.2d 699 [144 N.W.2d 1, 17-18]; cert. den. 385 U.S. 990 [17 L.Ed.2d 451, 87 S.Ct. 598]; rehg. den. 385 U.S. 1044 [17 L.Ed.2d 689, 87 S.Ct. 770].)
Following Flood v. Kuhn, state antitrust regulation has been held inapplicable to professional basketball (Robertson v. National Basketball Association (S.D.N.Y. 1975) 389 F.Supp. 867, 881; HMC Management v. New Orleans Basketball Club (La.App. 1979) 375 So.2d 700, 706-707) and professional football (Matuszak v. Houston Oilers, Inc. (Tex.Civ.App. 1974) 515 S.W.2d 725, 728-729). No case has been found applying state antitrust laws to the interstate activities of professional sports.
Professional football is a nationwide business structured essentially the same as baseball. Professional football’s teams are dependent upon the league playing schedule for competitive play, just as in baseball. The necessity of a nationwide league structure for the benefit of both teams and players for effective competition is evident as is the need for a nationally uniform set of rules governing the league structure. Fragmentation of the *385league structure on the basis of state lines would adversely affect the success of the competitive business enterprise, and differing state antitrust decisions if applied to the enterprise would likely compel all member teams to comply with the laws of the strictest state. (Flood v. Kuhn, supra, 443 F.2d at pp. 267-268.)
We are satisfied that national uniformity required in regulation of baseball and its reserve system is likewise required in the player-team-league relationships challenged by Partee and that the burden on interstate commerce outweighs the state interests in applying state antitrust laws to those relationships.
Partee seeks to distinguish Flood v. Kuhn, on the ground that professional baseball enjoys a unique exemption from federal antitrust law (Flood v. Kuhn, supra, 407 U.S. 258, 269-284 [32 L.Ed.2d 728, 736-745]; Toolson v. New York Yankees (1953) 346 U.S. 356 [98 L.Ed. 64, 74 S.Ct. 78]; Federal Baseball Club v. National League (1922) 259 U.S. 200 [66 L.Ed. 898, 42 S.Ct. 465, 26 A.L.R. 357]), and that the United States Supreme Court in upholding baseball’s exemption from state law relied on the cases establishing baseball’s federal exemption and stated that its holding applied to baseball. However, the high court specifically relied upon the court of appeals’ statement: “ ‘[A]s the burden on interstate commerce outweighs the states’ interests in regulating baseball’s system, the Commerce Clause precludes the application of state antitrust law.’ ” The high court also relied upon the district court judge’s statement that “national ‘uniformity [is required] in a regulation of baseball and its reserve system.’ ” (407 U.S. at p. 284 [32 L.Ed.2d at p. 745].) There is no justification to conclude that the United States Supreme Court did not fully consider the brief statements from the lower court opinions it chose to quote, approve, and rely upon. The statements are clear and unequivocal, and we are not free to disregard them. Because in all relevant respects the burden on interstate commerce and the state interest resulting from the player-team-league relationship in professional football attacked by Partee is substantially the equivalent of that resulting from the reserve clause in professional baseball, the statements are applicable to professional football.
Our conclusion that application of the Cartwright Act in the instant case would be in conflict with the commerce clause makes it unnecessary to consider the claim that application of the Cartwright Act would also be in conflict with federal labor law policy.5
*386The judgment is reversed insofar as it awards damages on the basis of violation of the Cartwright Act. Each party shall bear its own costs on appeal.
Bird, C. J., Mosk, J., Richardson, J., Kaus, J., and Byrne, J.,*concurred.

The judgment also awarded damages for breach of contract. On appeal, the Chargers did not challenge the part of the judgment awarding contract damages, and we dismissed the appeal insofar as it relates to that award.

The draft is a selection system whereby the respective NFL teams are awarded the initial rights to negotiate exclusively with football players graduating from college.
The option clause is a provision of the NFL Standard Player Contract which grants the team the right to renew a player’s contract for one additional year if the team and player cannot agree to a new contract. After the option year expires, the player becomes a “free agent” and may negotiate and contract with teams of another league or with other NFL teams subject to the Rozelle rule.
The Rozelle rule is named after the NFL commissioner, Pete Rozelle. This rule provides if a free agent contracts with another NFL team, the new team must compensate the player’s former team with draft choice(s) or other player contracts. If the new and former teams cannot agree as to the compensation, the commissioner arbitrates the matter and determines the compensation.
The tampering rule prohibits an NFL team from negotiating with a player currently under contract with another NFL team. Also, if one team has the exclusive right to negotiate with a player, no other team may tamper with that player.
The one-man rule refers to the commissioner’s authority to compel a player to adhere to terms of an operative collective bargaining agreement between the players and the NFL teams.

This second collective bargaining agreement was negotiated during the pendency of antitrust suits brought by players against the NFL. The most significant case, Alexander v. National Football League (D.Minn. 1977) 1977-2 Trade Cases (CCH) 1 61,730, was a class action. The agreement and Alexander incorporate a settlement which includes the practices and rules Partee challenges. The settlement also contains a covenant not to sue (in antitrust) by the class members. However, Partee, who filed this suit before the specified cutoff date, chose not to be a class member. This agreement terminated in mid-1982.

As considered by the trial court in Flood v. Kuhn, baseball’s reserve system had many of the attributes of the NFL rules and practices of which Partee complains. Baseball’s reserve system involved an agreement by all of the teams to be involved in a draft creating exclusive bargaining rights in the club as to the draftee; a uniform player’s contract empowering the signing club unilaterally to renew a player’s contract from year to year; denial of any right in a player, once signed, to negotiate with any other team; a prescribed number of players per team; and the unilateral right of a team to assign the contract to another team. (See Flood v. Kuhn, supra, 316 F.Supp. 271, 273-275.)

The dissent asserts that today’s holding strikes a significant blow to the vitality of the Cartwright Act and that by this opinion “we would necessarily have to exempt all businesses engaged in multistate activities.” (Dis. opn. at pp. 389, 408.) This opinion has a limited scope. The Cartwright Act remains vital. We do not mean to suggest that multistate activities *386of other businesses may not be subject to state regulation upon due consideration of the commerce clause. Our holding is limited to the issue directly before us, the inapplicability of the Cartwright Act to professional football.

Assigned by the Chairperson of the Judicial Council.