Stephen Cobb

Welcome to the third season of State AG Pulse. In this season, we’re selecting one story every week from the state AG news. Over the next  minutes, we’ll take a quick dive into that story to analyze the impact of state AGs as regulators and consumer protection guardians and provide tips to help your business work successfully with state AGs.

My name is Stephen Cobb. I’m a former deputy attorney general of the Commonwealth of Virginia and partner here at Cozen O’Connor. With me today is my colleague Keturah Taylor. Keturah, welcome to the podcast.

Keturah Taylor

Thanks, Stephen. Excited to be here with you today.

Stephen Cobb

We’re talking today about a story that is becoming near and dear to my heart because it is the overlap of two things that I’m incredibly passionate about, and one is obviously the role of state attorneys general, but the other is professional sports.

Keturah Taylor

So I won’t purport to be quite as passionate about professional sports as you might be, but of course I’m always interested in keeping a finger on the pulse of what state AGs are up to. And this story definitely caught my eye this week.

Stephen Cobb

All too often we get used to seeing state AGs flex their regulatory muscle in some tried and true industries, financial services, tech, anything dealing with cyber and data breaches. But one of the areas that we are not, at least not traditionally used to seeing state AGs involve themselves is within the sports industry.

But recently we’ve seen some pretty big announcements come out of state AG offices, as it concerns professional sports leagues, professional sports franchises, the NCAA. In May , New York Attorney General Letitia James and California Attorney General Rob Bonta issued an announcement that they were taking a first of its kind investigation of the National Football League, to focus on claims of workplace discrimination and a hostile work environment.

This comes after investigations of individual franchises from the DC AG and the Virginia Attorney General’s Office. And this is in addition to investigations into some NCAA practices and universities from the attorney generals of Michigan, Tennessee and New Mexico. Which is a long lead up to say, this is an area and a cause and industry that has not felt the regulatory ire of state AGs before, but it’s all of a sudden feeling it very, very quickly.

Which leads us into our article, ripped from the headlines, that we’re discussing today, which is an announcement issued from the Connecticut Attorney General William Tong. So Keturah, why don’t you tell our listeners a little bit about his most recent announcement.

Keturah Taylor

So, as you mentioned, AG Tong announced that he led a coalition of  attorneys general in weighing in on a case that is up for review by the Supreme Court. The caption is Tri-City ValleyCats and Oneonta Athletic Corporation vs. the Office of the Commissioner of Baseball.

It stems from a  agreement among  major league baseball teams to cut affiliated minor league teams from  affiliates down to , so essentially leaving  minor league teams out in the cold. Through that contraction, like I said,  teams across  states essentially lost the ability to compete for minor league talent and the types of financial support that they would’ve received from those major league affiliates. So certainly a significant economic impact on those teams, and of course the communities that they exist in.

So the minor league teams took action. They brought an antitrust suit against the MLB, claiming that this is a horizontal agreement that restricts competition in violation of the Sherman Act, our federal antitrust law.

This was first brought before the Southern District of New York and then reviewed by the Second Circuit. Unsurprisingly, both courts found themselves bound by what is a hundred years of precedent establishing an antitrust exemption for professional baseball that effectively immunizes the MLB against any of these types of antitrust claims. So, as the Second Circuit said, they are required stare decisis to continue to apply that Supreme Court precedent unless and until the Supreme Court overrules it. So essentially teeing it up for review.

Stephen Cobb

One of the things I found really interesting here, Keturah, of those  AGs that are weighing in, you have Connecticut, Arizona, Colorado, Indiana, Kansas, Louisiana, Minnesota, Montana, New Jersey, New Mexico, New York, Tennessee, Vermont, and West Virginia, in addition to the Commonwealths of Massachusetts, Pennsylvania, Virginia, and the District of Columbia. More and more, when we see large amici amongst state AGs, they are often broken down on partisan lines. But what we see here is that this is very much a bipartisan group of AGs weighing in on this issue of the antitrust exemption. What do you think that tells us about kind of at least where as a matter of law and public policy, this issue’s heading?

Keturah Taylor

Well, as you mentioned, it’s completely bipartisan. America’s pastime brings us all together, right? And I think it’s a nonpartisan issue when you’re talking about states and communities that want to have a vibrant sports league. They want to have a fan base, they want to bring their community together. So that’s something that is not particularly contentious between Democrats and Republicans. So it doesn’t surprise me that this particular issue brought AGs from both sides of the aisle onto the same brief.

Stephen Cobb

AGs are one of, if not the largest group of Supreme Court practitioners, they are the pros at what it takes to go and challenge and win these constitutional arguments. So it’s interesting when they band together in this form.

Keturah Taylor

Absolutely. So I don’t want to try and read the tea leaves too much. You never know what’s going on inside the Supreme Court, but I think when you have AGs weighing in, that certainly has the potential to further encourage the court to take this case up for review. And I also wouldn’t be surprised if we see this case taken up in the next term because as mentioned in some of the briefing that I’ve reviewed, sitting justices have themselves been critical of this baseball exemption in the past. And so hopefully they heed the AGs’ urging in their brief and do take it up for review next year because it is certainly an interesting case that’s important to a lot of people.

Stephen Cobb

One of those things when you talk to regular Supreme Court practitioners, the number one thing that they’ll tell you makes it most likely that a case is going to get brought before Supreme Court as a circuit split of course. And so this doesn’t necessarily rise to that level, but I think when you have  states saying that this is an issue that needs and deserves the Supreme Court to weigh in, obviously it’s something that we need to keep our eye on.

Keturah Taylor

Exactly. And it’s not just that these AGs want their states to benefit from the economic impact of minor league sports, it’s also, as they stated in their brief, they’re concerned about their ability as state antitrust enforcers to fulfill that role as they see fit. So the reason that they say, and that they do have standing to file a brief as amici is because in their view, this antitrust exemption infringes on their sovereignty as the antitrust enforcers.

So what they argue is that typically state antitrust enforcement should not be preempted unless there’s a clear intent of Congress to permit that. And based on their reading of the relevant statutory history and precedent that exists over, like we said, the last a hundred years, there’s no indication that Congress ever intended that the state antitrust enforcement power be overwritten or preempted by the federal antitrust landscape. So they are arguing here, it’s a tough argument to make that precedent directly on point should be overturned.

Stephen Cobb

Indeed, there is kind of the broader topic of whether or not we think this indicates more action and involvement from state AGs at the Supreme Court level. What are your thoughts?

Keturah Taylor

Oh, I’m sure AGs will continue to be extremely active, not only in urging the court to take up cases as they did in this instance, but also weighing in on the merits. Particularly now in October with the new term getting started, we’re seeing a decent number of amicus briefs coming from different coalitions of AGs. As you mentioned earlier, most of those are divided down partisan lines.

Just this week there’s a coalition of  AGs filing amicus briefs in support of one of the parties in a case centering on a certain tax rule that has important state consequences and just a month prior to that, a separate coalition of  AGs led by West Virginia filed an amicus brief for the other parties. So they’re certainly active and I wouldn’t expect that to die down anytime soon.

Stephen Cobb

I couldn’t agree more, the state AGs will continue to be advancing the ball in appellate cases and making their voices heard in the Supreme Court of the United States. Keturah, thank you so much for joining me on this podcast. I hope our listeners will keep a close eye on this petition for cert as well as all of those other cases for which the state AGs are weighing in and asking the Supreme Court to pick up as some of these are certain to be landmark decisions as we go forward. Look forward to having you on our next episode.

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