Minor Leaguers Lose MLB Antitrust Case, Will Re-Pitch to Justices

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By Hassan A. Kanu

A group of minor league baseball players who allege that Major League Baseball conspires to keep their salaries lower than they should be lost their case in a federal appeals court. They are planning to ask the U.S. Supreme Court to take up the case and reconsider the MLB’s antitrust exemption, attorney Samuel Kornhauser told Bloomberg BNA ( Miranda v. Selig , 2017 BL 218858, 9th Cir., No. 15-16938, 6/26/17 ).

Antitrust laws are designed to encourage fair competition and prevent unfair business practices like monopolies or price fixing. The antitrust exemption is a big part of Major League Baseball’s business model. The exemption underlies the “farm system,” wherein MLB teams hire a high number of prospects in the hopes of developing them into major league players. The MLB can set minor leaguer’s first-season contracts, after which the players have to negotiate a monthly salary independently—unlike other major sports leagues that have players’ unions.

The players allege that most minor league players make less than $7,500 a year, with some earning under $3,000.

Goal Is ‘Competitive Wage’

“There’s no economic, moral, or any other reason for shafting minor league baseball players,” Kornhauser, the players’ attorney, said June 26. “Baseball is a multibillion-dollar business these days, and there’s no reason to protect 30 billionaires from paying a competitive wage.”

A spokesperson for the league told Bloomberg BNA June 26 that the MLB has no comment on the ruling.

The U.S. Court of Appeals for the Ninth Circuit relied on a previous case, Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, in its June 26 decision. Federal Baseball established a “nearly century-old business-of-baseball exemption” that allows the league to operate free of federal antitrust regulations. The U.S. Supreme Court based the decision on a finding that the league isn’t engaged in “interstate commerce.” There are no other sports or entertainment businesses with a similar exemption, although traveling theaters, the National Football League, the National Basketball Association, and professional boxing organizations have all tried to have it extended to their businesses.

The Federal Baseball ruling “didn’t make much sense back then and it certainly doesn’t make sense nearly 100 years later,” Kornhauser said. It has since been upheld in a number of decisions that “were not without controversy,” Judge Sidney Thomas of the Ninth Circuit said, pointing to a number of dissents by former Supreme Court judges.

Application of Exemption Is Slam Dunk

Nonetheless, a legal principle known as “stare decisis” requires that federal courts follow both their own prior reasoning and that of the high court, unless certain “narrow circumstances” would justify a departure from previous rulings. In light of those precedents, “minor league baseball falls squarely within” the baseball exemption from federal antitrust laws. Moreover, “Congress has made clear its intent to maintain the baseball exemption for anything related to the employment of minor league players,” the judges said.

Some judges of the high court itself have “recognized that baseball is a big business that is involved in interstate commerce, so there really wasn’t any basis for the original decision,” Kornhauser said. “The rationale now is, ‘OK, well the MLB relied on that and got used to operating that way and having the exemption, so it ought to be left to Congress to change the law.’”

The Supreme Court hasn’t revisited the issue for more than 40 years, but it’s not unheard of for the justices to overturn precedent that may be 70 or 90 years old, he said.

Attorneys from Keker, Van Nest & Peters LLP represented the teams and MLB.

To contact the reporter on this story: Hassan A. Kanu in Washington at hkanu@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Chris Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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