MLB Antitrust Win Upheld as Minor Leagues Hold Out for SCOTUS
On Tuesday, a three-judge panel on the U.S. Court of Appeals for the Second Circuit in New York affirmed a federal district judge’s ruling that dismissed an antitrust lawsuit brought by minor league teams.
The outcome was expected given that the U.S. Supreme Court exempted MLB from antitrust claims via the 1922 decision, Federal Baseball Club v. National League. Under the principle of stare decisis, which is Latin for “to stand by things decided,” courts must follow Supreme Court precedent.
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The key question now is whether the Supreme Court, which criticized MLB’s exemption in the 2021 decision NCAA v. Alston, will reconsider the exemption. Although the Curt Flood Act of 1998 substantially narrowed the exemption, it remains for certain other topics of value to MLB, including MiLB and MLB franchise relocation, a relevant point given the potential A’s move from Oakland to Las Vegas.
Last year, SDNY Judge Andrew Carter Jr. dismissed Nostalgic Partners v. Office of the Commissioner, which involves three minor league teams (the Staten Island Yankees, Norwich Sea Unicorns and Tri-City ValleyCats) that lost their MLB affiliations as part of MiLB’s reorganization. Carter stressed that regardless of whether the antitrust claims have any merit, the exemption unambiguously preempts those claims and therefore they must be dismissed.
Second Circuit clerk Catherine O’Hagan Wolfe, on behalf of Judges Barrington Parker, Michael Park and Alison Nathan, expressed a similar sentiment on Tuesday in a short statement. “We must continue to apply Supreme Court precedent unless and until it is overruled by the Supreme Court . . . we need go no further,” O’Hagan Wolfe wrote.
The Department of Justice has taken the unusual step of filing statements of interest in this litigation. Although the DOJ doesn’t take a side, it wants to know whether the exemption remains good law given that the economics of MLB have changed considerably since 1922.
Members of Congress from both parties have periodically voiced similar sentiments. Typically, in each Congress members introduce or threaten to introduce legislation that would strip MLB of the exemption.
Last week, for example, Senators Mike Lee, Marco Rubio, Ted Cruz and Josh Hawley introduced such a bill as a response to “recent controversies surrounding the Dodgers Pride Night and the relocation of the [2021] All-Star Game from Atlanta.”
While these bills often attract initial headlines, they, like NIL bills, tend to fade into obscurity over time.
One bill, however, gained traction and became law. The Curt Flood Act, which President Bill Clinton signed into law in 1998, eliminated the exemption as it applies to MLB players’ employment.
The minor league teams can now petition the Second Circuit for a “rehearing en banc,” where, if granted, other judges on the Second Circuit would consider the case. However, rehearing petitions are rarely granted, especially in a case like this one where all the judges agree.
Once the rehearing step is complete, the minor league teams can then petition the Supreme Court. Four of the justices must vote to accept a case (grant a writ of certiorari). The odds are always long, with only about 1% of cases getting heard.
But the minor league teams know at least one justice, Neil Gorsuch, believes the exemption lacks logic. He chided the justices who, in 1922, reasoned MLB ought to be exempt from antitrust law since so-called “exhibitions of baseball” did not involve interstate commerce.
“Teams regularly crossed state lines [as they do today] to make money and enhance their commercial success,” Gorsuch critiqued in the Alston opinion.
Perhaps Gorsuch would vote to review the exemption if given the chance. Maybe a few of his colleagues would, as well, as several have advocated for the importance of antitrust scrutiny in maintaining legitimate competition.
The Supreme Court could also wait to see how Concepcion et al. v. MLB—an antitrust case involving minor league wages—plays out in another federal circuit (the First). A split between the Second and First Circuits on antitrust issues could make the Supreme Court more likely to weigh in.
