By Jeff Birren
Background
Litigation can be slow. Aaron Senne and others sued MLB, its commissioner and clubs for wages and hours law violations on February 7, 2014, in San Francisco Federal Court. For an early description of the case, see Halas and Cohorn, “Minor League Baseball Players Continue Trend of Professional Sports Wage and Hour Class Actions in Suit against MLB,” Sports Litigation Alert, March 4, 2014, and Cohorn, “Minor League Baseball Responds,” Sports Litigation Alert, June 13, 2014.
The case has gone from Magistrate Judge Joseph Spero to District Court Judge Richard Seeborg, with Chief Magistrate Judge Elizabeth Laporte assigned for discovery purposes. It has reverted back to Magistrate Judge Spero. The case has had: multiple amended complaints with new plaintiffs; been consolidated with Yadel Marti v. MLB on October 10, 2014; a “Consolidated Amended Complaint” filed on October 24, 2014 without Mr. Marti as a named plaintiff; multiple filed answers; multiple motions to dismiss for lack of jurisdiction filed by ten defendants; an Order granting discovery related to the personal jurisdiction issues; completion of that discovery; an Order granting Interim Co-Lead Counsel status on October 10, 2014; oppositions to the above motions; multiple case management conferences; multiple scheduling orders; multiple motions to transfer by all defendants; and a motion by plaintiffs to strike the Answers. That resulted in a motion to amend the answers, which led to a non-opposition to the motion to amend the answers; a conditional withdrawal of the motion to strike the answers; a February 11, 2015 Order by Judge Spero granting leave to file amended answers; over 325 docket entries; and appearances by seven law firms for the plaintiffs. On February 12, 2015 counsel for MLB in the case brought by the City of San Jose filed “A Motion to Relate Case” to determine whether wages and hours claims by minor league players are related to the antitrust case brought by the City of San Jose that is now headed to the Supreme Curt. Judge Spero finally heard the motions to dismiss and transfer on February 13, 2015.
The Motion To Dismiss
Proskauer Rose, representing MLB, argued its motion to dismiss the Braves, Red Sox, White Sox, Indians, Tigers, Yankees, Phillies, Pirates, Rays and Nationals. They asserted (1) there is a lack of personal jurisdiction in California because they do not engage in continuous and systematic general business activities in California; (2) that the claims do not arise out of the moving defendants’ contacts with California; and (3) that it “would not be reasonable” to assert such jurisdiction.
The motion relies on recent Supreme Court rulings. A court may hear claims against a defendant if they have “continuous and systematic contact with the forum state as to render them essentially at home in the forum state” (Goodyear Dunlop Tires Operations, S.A, v. Brown, 131 S. Ct. 2846, 2851 (2011)). For general jurisdiction, the forum state has to be the state where a corporation “is fairly regarded as at home.” Going forward, it would be the “exceptional case” where there can be general jurisdiction other than in the principal place of business or state of incorporation (Daimler AG v. Bauman, 134 S. Ct. 746, 761 (2014)).
Those defendants do not have minor league teams in California, they do not have offices in the state, their tryouts are “generally” elsewhere, they only employ a small number of employees in California, and the players receive the offseason workout packages in another state. Each team travels to California several times a year to play games in the state and receive revenue from such games played. However, they asserted, that does not rise to the level of the contact that is required under Goodyear and Daimler. Before hearing from counsel, Judge Spero stated that he did not “think there is general jurisdiction over the moving defendants and it is not a close call.” He also stated that is was “clear” that under current Supreme Court authority, it is “not sufficient to conduct substantial and systematic business in the state… The entity contacts are of minor moment.” “I don’t think there is general jurisdiction.”
The issue therefore was whether the claims arose out of the defendant’s contact with the state and thus created “special jurisdiction.” Judge Spero remained focused on the possible connection between a specific named plaintiff, a defendant, and California. He said at this stage of the litigation that “opt-ins” did not create special jurisdiction over a defendant; only named plaintiffs did that. Moreover, as the case was not yet a class action, it was a “putative class action” and therefore, he said, unnamed class members did not create special jurisdiction.
He also stated that the plaintiffs needed to go named player by named player, and team by team, and show the specific contacts between the player, the team and California for each team that opposed jurisdiction. This would require additional briefing, and leave to amend to bring in additional plaintiffs, if they could.
Ms. Elise Bloom argued for MLB and nine of the moving teams. She began discussing general jurisdiction, the battle already won. Judge Spero asked about the contacts between the moving teams, the plaintiffs and California. Ms. Bloom stated that the claims did not arise of their contacts with California because they did not care where players worked out in the offseason, and California was the players’ choice. Those clubs sent scouts to California every year and all signed minor league players from the state, but that was not the basis of the claims, and therefore they should be dismissed. She successfully demonstrated the lack of that connection between California for eight defendants.
Ms. Celeste Bruce argued for the Orioles. She repeated her briefs’ factual arguments concerning the Orioles’ lack of California contact. During rebuttal she argued against giving the plaintiffs leave to amend, stating “at some point” this has to end and “they have had more than a year.” Judge Spero agreed that it had to end at some point.
Garrett Broshius argued for the plaintiffs. He was in a difficult position as the court had rejected their arguments concerning substantial contacts. He immediately irritated Judge Spero, who told him that he was “mixing apples and oranges.” Judge Spero also pressed him as to how he could “take into consideration claims of people that aren’t here?” Mr. Broshius did not answer the question, but said there should be a flexible analysis tailored to the facts. Judge Spero asked him why they had not amended the complaint to bring in plaintiffs that related to those teams. Mr. Broshius replied that they would have needed leave of court to do that. Judge Spero then asked him to go through team by team and “show me named plaintiff” that had claims against each of the moving defendants “arising out of” the contact with California. Judge Spero listened, and then told him that “I think you need to have a plaintiff named in the suit with claims arising out the conduct of each” defendant. He wanted “key jurisdictional facts” that this player resided and worked in the state for a specific team.
During rebuttal, Judge Spero asked Ms. Bloom why the case was unlike the home office cases. She replied that in the home office cases the employer knew where the employee was located, whereas in this case the clubs did not require the players to work out in California in the offseason, nor did they know where they were, or whether they worked out at all. Judge Spero disagreed.
The Motion To Transfer
Judge Spero also heard argument on the motion to transfer the case to the Middle District of Florida. He stated in his opening remarks that he was “not inclined to transfer.” In their motion, the defendants asserted that they are all subject to jurisdiction in Florida. Judge Spero stated that this issue was not well briefed and the burden was on the defendants. He suggested that the difference between a two-hour flight and five-hour flight was not enough to move the case, especially since it was “national wide” and the “parties were scattered” across the country.
Ms. Bloom argued that there was general jurisdiction over all of the defendants in Florida, but Judge Spero stopped her. He told her that the plaintiffs were likely to stipulate to her argument, because the same could be said about California. Bruce Simon, arguing for the plaintiffs, stated the defendants “are arguing the opposite on venue” than they had on the motion to dismiss.
Ms. Bloom argued that the case concerned the treatment of minor league baseball players by major league franchises. Minor League Baseball’s head office is located in the Middle District of Florida. 15 major league teams conduct spring training in Florida, compared to none in California. There are 23 minor league teams in Florida versus 12 in California, and far more minor league employees reside in Florida than California.
Mr. Simon countered by stating that the case was in fact about MLB’s control over the entire process, that there are more MLB teams in California than Florida, that plaintiffs resided here and performed the unpaid work in California and thus there was no forum shopping. On rebuttal, he stated “it is not a bean counting case on venue.” He also stated “jurisdictional issues change during a case.”
The parties disagreed over whether the plaintiffs’ choice of forum was given any weight, whether the convenience of the California resident plaintiffs or the convenience of the defense witnesses was more significant. In their briefs they disagreed over which docket was more congested, where more of the agreements were signed, and where much of the work was performed.
Conclusion
After 80 minutes, Judge Spero stated: “here is what I am going to do.” He gave the plaintiffs until March 16, 2015 to file a proposed amended complaint only adding new plaintiffs. On that day he wants the new plaintiffs’ factual declarations and a ten-page brief “showing club by club” how the “claims of named plaintiffs arise out of” the conduct of the moving defendants and their contacts with California. The defendants have until April 6, 2015 to file a 15-page opposition. He further stated that he wants a single joint brief from the defendants going forward, so the Orioles will no longer file separate briefs listing Proskauer merely as their “local counsel.” The motions will be deemed submitted without further hearing.
Therefore, oral argument did not change anything as it was perfectly consistent with Judge Spero’s opening remarks. He also scheduled a Case Management Conference on May 15, 2015.
Birren worked for the LA/Oakland Raiders for 34 seasons and was general counsel for much of that time. During that time he worked closely with owner Al Davis and Amy Trask, the NFL’s first female Club Chief Executive. He has an MA in History from USC and a JD from Southwestern, where he taught sports law for three years. He can be reached at jebirren@comcast.net.
