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SALERNO v. AMERICAN LEAGUE OF PRO. BASEBALL CLUBS, (S.D.N.Y. 1969)
Factual and Procedural Background
This is an action for damages brought by Alexander J. Salerno and William Valentine against the American League of Professional Baseball Clubs and individual defendants, including Bowie K. Kuhn as Commissioner of Baseball. The plaintiffs allege violations of the Sherman Anti-Trust Act and the Clayton Act arising from their alleged unlawful dismissal and boycott as umpires in American League baseball. The complaint, filed on September 23, 1969, was served on Bowie K. Kuhn on October 3, 1969; other defendants have not been served. Defendant Kuhn moved to dismiss the action pursuant to Rule 12(b) of the Federal Rules of Civil Procedure on grounds of lack of subject matter jurisdiction, failure to state a claim, and improper venue.
Legal Issues Presented
- Whether this Court has subject matter jurisdiction based on diversity of citizenship under 28 U.S.C. § 1332.
- Whether this Court has subject matter jurisdiction under federal antitrust laws, specifically the Sherman Act and the Clayton Act.
- Whether the complaint states a claim upon which relief can be granted against defendant Bowie K. Kuhn.
- Whether venue has been properly laid in this Court.
Arguments of the Parties
Defendant's Arguments
- The Court lacks subject matter jurisdiction because there is no complete diversity of citizenship between plaintiffs and defendants.
- The complaint fails to state a claim against defendant Kuhn, as organized professional baseball is exempt from federal antitrust laws.
- The venue is improper in this Court.
Plaintiffs' Arguments
- Jurisdiction is conferred by diversity of citizenship.
- The action arises under the federal antitrust laws.
- They urge reconsideration of the Supreme Court’s exemption of professional baseball from antitrust laws, arguing that baseball now constitutes interstate commerce.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Levering Garrigues Co. v. Morrin, 61 F.2d 115 (2d Cir. 1932), aff'd 289 U.S. 103 (1933) | Complete diversity requires that each plaintiff be diverse from each defendant. | Used to determine that complete diversity was absent because a plaintiff and a defendant were citizens of the same state. |
| John Birch Society v. National Broadcasting Co., 377 F.2d 194 (2d Cir. 1967) | Interpretation of diversity jurisdiction requirements. | Supported the conclusion that complete diversity was lacking. |
| Potter's Photographic Applications Co. v. Ealing Corporation, 292 F. Supp. 92 (S.D.N.Y. 1968) | Diversity jurisdiction principles. | Further supported the absence of complete diversity. |
| United Steelworkers of America v. R.H. Bouligny, Inc., 382 U.S. 145 (1965) | Citizenship of unincorporated associations determined by citizenship of all members. | Applied to find that the American League's citizenship included New York, defeating complete diversity. |
| Rosenthal Rosenthal, Inc. v. Aetna Casualty Surety Co., 259 F. Supp. 624 (S.D.N.Y. 1966) | Same as above regarding unincorporated associations. | Supported the Court’s determination on citizenship. |
| Fine v. Philip Morris, Inc., 239 F. Supp. 361 (S.D.N.Y. 1964) | Same as above regarding unincorporated associations. | Supported the Court’s determination on citizenship. |
| Oppenheim v. Sterling, 368 F.2d 516 (10th Cir. 1966), cert. denied, 386 U.S. 1011 (1967) | Non-service of an unincorporated association does not affect its citizenship for diversity purposes. | The Court held that American League’s citizenship counted despite lack of service. |
| Federal Baseball Club v. National League, 259 U.S. 200 (1922) | Professional baseball exempt from federal antitrust laws. | The Court followed this precedent, finding baseball exempt from antitrust laws. |
| Toolson v. New York Yankees, Inc., 346 U.S. 356 (1953) | Reaffirmed Federal Baseball exemption from antitrust laws. | The Court considered itself bound by this reaffirmation and declined to reconsider the exemption. |
| United States v. Shubert, 343 U.S. 222 (1955) | Stated that any expansion or contraction of baseball’s antitrust exemption must come from Congress. | Supported the Court’s refusal to reconsider the exemption. |
| United States v. International Boxing Club, 348 U.S. 236 (1955) | Same as above regarding Congressional authority over antitrust exemptions. | Supported the Court’s position. |
| Radovich v. National Football League, 352 U.S. 445 (1957) | Same as above regarding Congressional authority over antitrust exemptions. | Supported the Court’s position. |
Court's Reasoning and Analysis
The Court first examined whether it had subject matter jurisdiction under diversity jurisdiction pursuant to 28 U.S.C. § 1332. It concluded that complete diversity was lacking because plaintiff Salerno and defendant Kuhn were both citizens of New York, and the American League, an unincorporated association, included a New York resident member (the New York Yankees). The Court applied established precedent that the citizenship of an unincorporated association is determined by the citizenship of all its members, and non-service on a party does not negate its citizenship for jurisdictional purposes.
Next, the Court addressed jurisdiction under federal antitrust laws. Plaintiffs relied on the Clayton Act and sought reconsideration of the Supreme Court’s longstanding exemption of professional baseball from antitrust laws. The Court acknowledged the plaintiffs’ argument that baseball is now substantially interstate commerce but held itself bound by the Supreme Court precedents in Federal Baseball, Toolson, and subsequent cases, which exempt baseball from antitrust laws unless Congress acts otherwise. Consequently, the complaint failed to state a claim under antitrust statutes.
Because the Court found no subject matter jurisdiction either by diversity or federal question, and the complaint failed to state a claim, the Court granted the motion to dismiss pursuant to Rule 12(b).
Holding and Implications
The Court GRANTED the defendant’s motion to dismiss the action.
The direct effect is dismissal of the plaintiffs’ complaint for lack of subject matter jurisdiction and failure to state a claim under federal antitrust laws. The Court reaffirmed the continued validity of the Supreme Court’s baseball antitrust exemption and declined to extend federal antitrust jurisdiction to professional baseball absent Congressional action. No new precedent was established; the ruling adhered strictly to existing Supreme Court authority.
CROAKE, District Judge.
This is an action for damages against the above-named defendants for alleged violations of the Sherman Anti-Trust Act ( 15 U.S.C. §§ 1 and 2), and the Clayton Act ( 15 U.S.C. Sections 15 and 26), arising out of the "unlawful dismissal and boycott" of plaintiffs from employment as American League Baseball umpires by defendants who, the complaint alleges, are "conducting * * * organized professional baseball as an illegal agreement, combination and conspiracy in restraint of trade and as a monopoly in violation of (the above-named acts)." Action was commenced in this Court by the filing of a complaint on September 23, 1969, which was served upon Bowie K. Kuhn, as individual defendant and Commissioner of Baseball on October 3, 1969. The other named defendants who have not been served in this action are, the American League of Professional Baseball Clubs (American League), an unincorporated association, Joseph E. Cronin, individually and as President of the American League, and Paul Porter.
Defendant, Bowie K. Kuhn, brings on this motion, pursuant to Rule 12(b) of the Federal Rules of Civil Procedure, seeking an order to dismiss the action against himself on the following grounds:
1. The court lacks jurisdiction of the subject matter in this action.
2. The complaint fails to state a claim against defendant upon which relief may be granted.
3. The venue in this action has not been properly laid.
With regard to jurisdiction, plaintiffs allege, first, that "jurisdiction is conferred upon this Court by reason of diversity of citizenship," and, second, that "this action arises under the anti-trust laws of the United States."
In order for the Court to have subject matter jurisdiction under 28 U.S.C. § 1332, it is necessary that there be complete diversity of citizenship, which has been interpreted to mean that the citizenship of each plaintiff must be diverse from that of each defendant. Levering Garrigues Co. v. Morrin, 61 F.2d 115 (2d Cir. 1932), aff'd 289 U.S. 103, 53 S.Ct. 549, 77 L.Ed. 1062 (1933); John Birch Society v. National Broadcasting Co., 377 F.2d 194 (2d Cir. 1967); Potter's Photographic Applications Co. v. Ealing Corporation, 292 F. Supp. 92 (S.D.N.Y. 1968).
The complaint in this case alleges that plaintiff Salerno and defendant Kuhn are each citizens of New York State. Plaintiff further alleges that defendant American League is an unincorporated association whose members, other than the New York Yankees, are "citizens of * * * various states other than New York." It is therefore conceded that one member of the unincorporated association of the American League, the New York Yankees, is a resident of New York. Although there is some question as to whether defendant Kuhn is an actual resident of New York, plaintiff Salerno and defendant American League, through its member, the New York Yankees, are in fact both residents of New York State.
It is well established that the citizenship of an unincorporated association is determined by the residence of all its individual members and that complete diversity cannot exist unless each member of an unincorporated association is a citizen of a state other than that of each plaintiff. See United Steelworkers of America v. R.H. Bouligny, Inc., 382 U.S. 145, 86 S.Ct. 272, 15 L.Ed.2d 217 (1965); Rosenthal Rosenthal, Inc. v. Aetna Casualty Surety Co., 259 F. Supp. 624 (S.D.N.Y. 1966); Fine v. Philip Morris, Inc., 239 F. Supp. 361 (S.D.N.Y. 1964).
Moreover, the fact that the above-named defendant, American League, has not been served does not affect the consideration of its citizenship as a party in determining the existence of diversity in this action. Oppenheim v. Sterling, 368 F.2d 516 (10th Cir. 1966), cert. denied, 386 U.S. 1011, 87 S.Ct. 1357, 18 L.Ed.2d 441 (1967).
Consequently, there can be no complete diversity in the present case and this Court lacks jurisdiction of the subject matter pursuant to 28 U.S.C. § 1332.
Plaintiffs base their second grounds for jurisdiction on Sec. 4 of the Clayton Act ( 15 U.S.C. § 15), which provides as follows:
"Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy * * *."
In attempting to establish jurisdiction under the above section of the Clayton Act, plaintiffs seek what they consider to be a necessary re-evaluation of the decision of the United States Supreme Court in Federal Baseball Club v. National League, 259 U.S. 200, 42 S.Ct. 465, 66 L.Ed. 898 (1922), in which the Court exempted professional baseball from the federal antitrust laws. Plaintiffs point out that the Supreme Court decision of Federal Baseball, supra, was decided at a time when baseball was clearly not an interstate business and that today baseball has grown to such a degree that it "is conducted substantially in interstate commerce."
While plaintiffs' argument is somewhat appealing, this Court considers itself bound by the United States Supreme Court decisions of Federal Baseball, supra, and Toolson v. New York Yankees, Inc., 346 U.S. 356, at 357, 74 S.Ct. 78, at 79, 98 L.Ed. 64 (1953), where the Court states:
"Without re-examination of the underlying issues, the judgments below are affirmed on the authority of * * * (Federal Baseball) so far as that decision determines that Congress had no intention of including the business of baseball within the scope of the federal antitrust laws."
Moreover, in three cases subsequent to Toolson, supra, the United States Supreme Court has clearly stated that any action involving the expansion or contraction of the exemption of baseball from the federal antitrust laws must come from Congress. United States v. Shubert, 343 U.S. 222, 230, 75 S.Ct. 277, 99 L.Ed. 279 (1955); United States v. International Boxing Club, 348 U.S. 236, 243, 75 S.Ct. 259, 99 L.Ed. 290 (1955); Radovich v. National Football League, 352 U.S. 445, 451, 77 S.Ct. 390, 1 L.Ed.2d 456 (1957).
Since baseball is exempt from the federal antitrust laws by decision of the United States Supreme Court, this complaint fails to state a claim against defendant upon which relief can be granted.
Having found that no diversity of citizenship exists under 28 U.S.C. § 1332 and having found that organized baseball does not fall within the scope of the federal antitrust laws, this Court lacks jurisdiction of the subject matter, which is an absolute prerequisite for continuance of an action in the district court under Rule 12(h)(3), Fed.R.Civ.P.
Accordingly, the motion of defendant seeking an order to dismiss this action pursuant to Rule 12(b) is granted. The action is dismissed.
So ordered.
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