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An Inspiring Story Of How Affirming Textualism Rescued An Industry


To mark yesterday’s oral arguments in King v. Burwell, I think it’s worth noting a very famous example of textualism from almost 40 years ago.

In that case, an entire enterprise—widely recognized as part of the very fabric of America—was structured fundamentally around arrangements based on one phrase in a key governing document. There had been decades’ worth of institutional understanding as to the meaning of that phrase, and when its meaning was contested, the industry could marshal extensive evidence that the phrase had “always” been interpreted in such fashion and that no one involved ever had contemplated differently. Yet when that phrase’s meaning was finally contested squarely, the ruling was that the phrase meant what it said rather than the previously accepted interpretation.

When that ruling came down, the industry and its supporters in the media universally predicted utter chaos and the end of everything that had made the industry great and American. The losing side wanted the ruling party “to face a firing squad. As [name to be provided later] put it, the…wails ‘sounded like the last five minutes of the Gotterdammerung…’”

In fact, it took the losing side about two decades to accept the decision and the changes it wrought, during which they kept attempting to overturn the results in one form or another (nearly wrecking their industry in the process). But from 40 years on, just about everyone now recognizes that the ruling was the best thing that could have happened to the industry. The industry has never been more successful and the specific claims of doom made at the time all have been conclusively falsified.

Okay, Enough Secrecy

For those who haven’t guessed, I’m talking, of course, about the arbitration proceeding in 1976 which allowed baseball players to obtain free agency. For background, prior to that time baseball teams had claimed the ability to “reserve” the rights to a player’s services for infinite duration. Yes, really. Specifically, the “Uniform Player Contract” every player signed had a provision stating that if the team had tendered a contract to the player and the two sides had not agreed on terms by a specific time, then “the Club shall have the right…to renew this contract for the period of one year.”

The baseball owners interpreted that clause to mean that the team had a right to renew the contract for a one year period at the end of each year. From that interpretation, an entire system was built called the “reserve system,” under which teams had a perpetual right to reserve a player’s services.

When the language finally went before arbitrator Peter Seitz in 1976, the owners presented evidence of that interpretation going back to 1883 (including an affidavit from the leader of a prior union of baseball players stating that the earlier union had no desire whatsoever to question the reserve system). According to the owners, “the reserve system wasn’t just the reserve language…It was an interwove set of statutes…Pull out one thread and the whole industry would unravel.” By contrast, the players’ union made a simpler argument that the language cited above meant what it said. And the arbitrator agreed.

Hating on Textualism Didn’t Destroy Its Merits

The first thing the owners did was fire the arbitrator. The second thing they did was spend almost 20 years crying that the sport was collapsing and trying to roll back the effects of the ruling, culminating in the 1994-95 strike which canceled the World Series.

Yet despite those predictions of doom, the sports has never been healthier. Competitive balance has been better, not worse, since 1976 (despite predictions to the contrary—yes, I am oversimplifying the various trends since then, but the overall conclusion is true). If the court rules in favor of King after today’s hearing, maybe it will point towards a similar bright future of patient-centered health care despite predictions of doom.

(All quotes from John Helyar’s “Lords of the Realm.”)