Virginia M. Kendall
The Chicago Cubs scored a victory at home Thursday, three days before the start of the season.
Helping drive home the win was 93 years of legal precedent exempting Major League Baseball from antitrust law.
In a written opinion, U.S. District Judge Virginia M. Kendall declined to temporarily halt the construction of a Wrigley Field video board that will block the view of Cubs games from two nearby rooftop clubs.
Kendall held the rooftops likely will not prevail on their argument that the Cubs are violating a revenue-sharing agreement as well as prohibitions on anti-competitive and monopolistic behavior by erecting the right-field board as part of a $375 million ballpark renovation.
Baseball is the only professional sport that has an antitrust exemption — a legal winning streak dating back to 1922 with the U.S. Supreme Court’s ruling in Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200 (1922).
In that opinion, written by Oliver Wendell Holmes, the court held the Sherman Act does not apply to the “business” of “giving exhibitions of base ball.”
In Toolson v. New York Yankees, 346 U.S. 356 (1953), the Supreme Court held that Congress’ failure to act since Federal Baseball showed that “the business of providing public baseball games for profit between clubs of professional baseball players” did not fall under antitrust law.
The high court again emphasized Congress’ inaction in its ruling in Flood v. Kuhn, 407 U.S. 258 (1972), that “the business of baseball” is outside the scope of the Sherman Act.
Kendall cited those and other cases in concluding the rooftops are pursuing a losing strategy with their contention that the Cubs are trying to drive them out of business with anti-competitive practices.
The rooftops offer views of Cubs games without entering the ballpark. Under a 2004 agreement, the rooftops are required to pay the Cubs 17 percent of their profits, and the Cubs are prohibited from obstructing the view of Wrigley Field unless it’s approved by a government authority. The team received such approval from the City Council.
The Ricketts family, which bought the Cubs in 2009, is overhauling Wrigley Field, including adding video boards and other signs.
The owners of several rooftop clubs sued to block the expansion. Two entities — Skybox on Sheffield and Lakeview Baseball Club — filed a separate action in January seeking to halt construction of the right-field board until the overall litigation is resolved.
Skybox and Lakeview allege the right-field board will block their view of Wrigley Field and drive away customers. The loss of customers, in turn, will put them out of business, they allege.
In addition to breaching the revenue-sharing agreement, the rooftops allege, the Cubs unsuccessfully pressured them to engage in price-fixing in violation of antitrust law.
The Cubs also violated antitrust law by trying to bully them into selling their property to the team, the rooftop owners allege.
When they refused, the rooftop owners allege, the Cubs retaliated with a plan to put a video board directly in front of their businesses.
The Cubs deny the rooftop owners’ allegations. And they reject the notion the rooftops are in danger of going out of business.
In Thursday’s opinion, Kendall denied the rooftop owners’ motion for a preliminary injunction.
The clubs are not likely to prevail on the merits of their contract and antitrust claims, Kendall wrote. And even if they were likely to ultimately succeed, she continued, they have not shown that they are facing imminent foreclosure or that they will go out of business permanently.
Addressing the antitrust claim, Kendall rejected the argument that the baseball exemption applies only to the league and league rules, not to franchises.
Both the Supreme Court and the Chicago-based 7th U.S. Circuit Court of Appeals “have taken a broad reading of the baseball exemption,” Kendall wrote.
Quoting Toolson, she wrote that the Cubs’ conduct — putting on baseball games for patrons — is central to “the business of providing public baseball games for profit.”
Even if the baseball exemption did not apply, the rooftops’ antitrust claim would still fail, Kendall wrote.
The team is not monopolizing any market because the market includes other sporting events and live entertainment, Kendall wrote.
“While the court accepts that there are some die-hard Cubs fans that would never attend a White Sox game, that does not mean that Cubs games constitute their own market,” she wrote.
Kendall is not alone in her view of the rooftops’ antitrust arguments.
Those arguments likely won’t “gain any traction,” said Adam J. Glazer, a partner at Schoenberg, Finkel, Newman & Rosenberg LLC and an adjunct professor at Northwestern University School of Law.
“It seems to me there’s room to argue about other aspects of the judge’s ruling,” said Glazer, a commercial litigator who is not involved in the case. “But on the antitrust aspect, that’s firmly settled until the Supreme Court says otherwise or Congress changes the law.”
The case is Right Field Rooftops LLC, et al. v. Chicago Baseball Holdings LLC, et al., No. 15 C 551.
The rooftops are represented by Thomas M. Lombardo and Abraham Brustein, both of DiMonte & Lizak LLC in Park Ridge. They could not be reached for comment.
The Cubs are represented by Andrew A. Kassof and Daniel E. Laytin, both of Kirkland & Ellis LLP.
“We look forward to moving ahead with the expansion to protect and preserve Wrigley Field for our fans and our team,” the Cubs said in a statement.