The All-Star Game Lawsuit against MLB Is a Stunt

J ob Creators Network, a 501(c)(4) business advocacy group based in Texas, recently won headlines in FoxBusiness and NBC News for filing a lawsuit against Major League Baseball, the MLB Players Association, and various of their individual leaders over the decision to withdraw the All-Star Game from Atlanta in protest over Georgia’s new voting law. Given the economic harm to innocent business owners who had relied on the 2019 announcement of Atlanta getting the game, and given that MLB’s decision to bully the State of Georgia for a democratically enacted law was largely based on lies about the content of that law, it would be heartening to see some consequences imposed on MLB and the union for their irresponsible acts. But this lawsuit is not going to do that.

The major media reports on this lawsuit were conspicuously light on the details of who is suing whom, for what, and on what legal theory. That is probably not an accident, given that outlets were presumably reporting off of JCN’s press release. The complaint filed by JCN in federal court in Manhattan seeks over $100 million in damages, a billion dollars in punitive damages, and an injunction moving the All-Star Game back to Atlanta. It invokes two 19th-century federal civil-rights statutes, 42 U.S.C. Sections 1983 and 1985(3) — the former a frequently invoked tool against state actors, and the latter from the Ku Klux Klan Act of 1871. It also asserts common-law claims for tortious interference with contracts and business relationships, promissory estoppel, and civil conspiracy. Because the lawsuit is filed in federal court in New York, the common-law claims might be decided under New York state law, but MLB might try to invoke the law of Georgia (where the harm took place) or Texas (where the plaintiff is located) if their law is more favorable to the defendants on some points.

The first obvious legal problem with this lawsuit is the plaintiff. No Georgia business has joined the lawsuit. JCN is principally a national free-market advocacy group, originally founded by the CEO of Home Depot. That’s a worthy cause, but it is not the same as being a direct representative of Atlanta businesses. JCN appears to be claiming that it has standing to seek damages on behalf of nonmember businesses, but without framing the lawsuit as a class action. JCN claims that it has, itself, suffered damages:

Since April 2, 2021, JCN has had to divert resources to address the grave harm to its Atlanta-area members and incurred expenses, which include leasing signs in New York’s Times Square and advertising in The New York Times. It has also been required to divert personnel from its fundraising efforts resulting in lower receipts. Together, these costs amount to over $1.6 million.

A court deciding whether to throw the case out on the pleadings might find that to be enough to show that JCN has a right to sue, since a plaintiff’s allegations are presumed to be true at that stage. But if you actually read the ad and the billboard, they are arguments against MLB’s decision — not the kinds of things the group “had” to do and can recover as legal damages.

The federal-law claims are a stretch as well. Section 1983 lawsuits require a showing that the defendant’s conduct amounted to state action. That has occasionally ensnared the intersection between powerful private businesses and the state, but usually only when either the business is carrying out state dictates (thus, indirectly acting for the state) or the state is enforcing private choices (thus, effectively adopting them). As an example of the latter, in the 1972 case of Lavoie v. Bigwood, the First Circuit found that a trailer park’s racially discriminatory policies became state action when the sheriff was called to enforce them. But the Supreme Court, as far back as its decision in Jackson v. Metropolitan Edison Co. (1974), concluded that a power company with a state-backed monopoly was not the state, at least not for purposes of its decisions to terminate electric service from a customer without due process of law. While there might be an aggressive argument to be made that MLB’s exemption from the antitrust laws could make it a state actor in an extreme case regarding its power to move franchises (and I am doubtful of that argument), the antitrust exception has little to do with the All-Star Game, a single event held by other leagues that lack the antitrust exemption.

Bizarrely, JCN’s complaint asserts that “the MLB Defendants also violated the Dormant Commerce Clause. Although the Commerce Clause empowers Congress to regulate interstate and foreign commerce it also applies where defendants seek to impose a restriction on permissible state regulation.” I have no idea what that means. A state can violate the dormant commerce clause by discriminating in favor of in-state against out-of-state business, by trying to regulate interstate instrumentalities, or in some cases by trying to export its own state’s laws to interfere with other states’ internal laws. But a private business cannot violate the commerce clause by moving an event from one state to another. To the contrary, its freedom to do so is protected from state regulation by the dormant commerce clause.

The Ku Klux Klan Act, as its name suggests, aims at conspiracies by private groups and does not require state action. But the key to a Ku Klux Klan Act case is a conspiracy to deprive individual constitutional rights. The complaint never says what those rights are. It appears to suggest either that it is an equal-protection violation to move a business from a majority-black city (Atlanta) to a mostly white city (Denver), or that it is a conspiracy to deprive Georgia of its right to pass laws. Neither of these is what the Ku Klux Klan Act protects against.

That leaves the state-law claims, which are less obviously flawed, but JCN is still not the right plaintiff to bring them. A claim for promissory estoppel, for example, requires proof that the plaintiff took some action — say, investing money — on the basis of a promise the defendant made to the plaintiff. There may well be Atlanta businesses with valid promissory estoppel claims against MLB for changing course two years after announcing the game in Atlanta, but JCN is not one of them. Similarly, a claim for tortious interference with contract is typically brought by the party that lost its contract.

We can applaud JCN for its public effort to focus criticism on the bad faith of MLB and its union and the impact of their actions on innocent Georgia businesses and workers. But this lawsuit looks more like a mechanism to raise donations and grab headlines than like a proper use of the legal system.