By Jordan Kobritz
Now there are two lawsuits challenging Major League Baseball’s treatment of Minor League players.
The first lawsuit was filed in February when three former Minor League Baseball (MiLB) players sued Major League Baseball (MLB) and its member clubs in Federal District Court in San Francisco. In their suit, referred to as the Senne case, the Plaintiffs allege that when they played in the Minor Leagues they were paid less than the minimum wage in violation of the Federal Labor Standards Act (FLSA) as well as state wage and hour laws.
MLB denied the allegations on a number of grounds, among them that MiLB players are seasonal workers; they are apprenticing for a job in MLB; some of the hours devoted to training are for the players’ own benefit; and the players are similar to interns. If any of those scenarios apply, then MLB may be exempt from the provisions of the FLSA. That determination hinges more on the facts of the case than the law, which virtually guarantees that short of a settlement, the Senne suit will linger in the courts for some time.
Earlier this month, a second lawsuit attacking the MiLB system was filed against MLB. However, rather than rely on wage and hour laws for relief, the four plaintiffs in Miranda claim that MLB is in violation of the Sherman Antitrust Act.
Before addressing the specifics of the Miranda case, two points are worth noting. First, MiLB is not a party to either lawsuit. MiLB clubs neither establish Minor League salaries nor do they pay their players directly. Nevertheless, Minor League clubs have a lot riding on the outcome of these cases. In an effort to defray a portion of the cost of operating their Minor League systems, MLB requires each of its affiliates to pay a portion of their revenue into a pool, which is then distributed equally among the 30 MLB teams. If MLB loses either of the lawsuits, it would undoubtedly seek to shift some of the additional cost of doing business onto its MiLB affiliates.
Second, MiLB is concerned with the outcome of the Senne case and intends to be proactive in assisting MLB. During the recently concluded Baseball Winter Meetings in San Diego, MiLB Vice President Stan Brand announced that he will lobby Congress next year to add MiLB players to the list of occupations that are exempt from the minimum wage and overtime requirements of the FLSA. If Brand’s lobbying efforts are successful, the Plaintiffs’ federal claims in Senne will be gutted, leaving them with the logistically more difficult and more costly to pursue state claims.
Miranda accuses MLB of conspiring to suppress MiLB salaries in a variety of ways. First, the Plaintiffs challenge the annual amateur draft, arguing that it limits players’ negotiating ability. Because the draft prevents players from shopping their services to the highest bidder, signing bonuses are suppressed. It should be noted that players who are not drafted are free agents and can negotiate with any of the 30 thirty MLB teams. However, the draft consists of 40 rounds totaling more than 1,200 players, including supplemental picks. Anyone who is not drafted is not considered a prospect and has little-to-no negotiating leverage despite their free agent status.
A second grievance is that, beginning in 2012 MLB capped the amount teams are allowed to spend on signing bonuses. Teams are allocated a “bonus pool” which is based in part on the order in which they finished the previous season – the lower the finish, the higher the bonus pool and vice versa — and in part on the number of picks each club has. MLB can penalize clubs that exceed the bonus cap through fines and/or by the loss of future draft picks which further serves to limit signing bonuses.
Another complaint by the players is that once they sign a contract with the team that drafts them, their salaries are basically “fixed” as long as they are in the Minor Leagues. MLB has established guidelines for minimum MiLB salaries, which are generally presented to players on a take-it-or-leave-it basis. In practice, the minimum salaries invariably become the maximum salaries. Players are only paid during the regular baseball season which in Rookie Leagues, the lowest rung on the MiLB ladder, lasts only two and one-half months, rather than five months for full-season leagues. Players earn as little as $2,500 per season at the Rookie level up to $10,000 per year at Triple-A, the highest level of MiLB.
The last major factual complaint in Miranda is that under the terms of the Uniform Player Contract that all MiLB players are required to sign, MLB teams can control players for seven Minor League seasons. Once they become free agents, players are able to sell their services to the highest bidder. Some MLB teams sign Triple-A players for $50,000-100,000 per season as protection for the Major League roster. However, most MiLB players either retire or are released before they ever reach free agency.
Even if the courts accept all of the allegations in Miranda as fact, the Plaintiffs have an almost insurmountable burden to overcome. Miranda is a full-fledged attack on MLB’s most sacred cow – its almost century-long exemption from the antitrust laws, which were created by the decision in the 1922 Federal Case. The U.S. Supreme Court reaffirmed that exemption on two occasions, in 1953 in the Toolson case and again in 1972 in the Flood case.
Rather than ignore the law, the Plaintiffs acknowledge it in their complaint but implore the courts to overturn the exemption, saying “The exemption no longer has, if it ever had, any current basis in economic reality, especially for the market in professional minor league baseball players’ compensation where minor leaguers have no union, no collective bargaining, no free agency or other means of fairly negotiating for their services.”
It should be noted that although MiLB players have never been unionized, the Major League Baseball Players Association (MLBPA), which represents Major League players along with members of an MLB team’s forty-man roster that are playing in the Minor Leagues, has agreed to a number of the working conditions that are challenged in the Miranda case, including the free agent draft and the signing bonus pools.
For the Miranda plaintiffs to prevail, they must first overcome the courts’ long-held belief in the concept of stare decisis. It is highly unlikely that any lower court judge, especially if he or she has designs on a higher court appointment, will vote to overturn a decision of the U.S. Supreme Court (SCOTUS). That means Miranda must reach the Supreme Court for the Plaintiffs to have any chance of success. The odds of that happening are long, as the Supreme Court grants certiorari in less than 1 percent of requests. Even if it does grant cert, it is doubtful that a conservative court will overturn its long-held stance that even if it erred in the Federal Case, the best forum to right that wrong is Congress.
If SCOTUS does look to Congress for answers, it is unlikely to help the plaintiffs in Miranda. Perhaps that’s why in their complaint they conveniently ignored the Curt Flood Act passed by Congress in 1998. While that legislation chipped away at baseball’s antitrust exemption by allowing MLB players to bring antitrust charges against MLB, it specifically excluded Minor League players from doing likewise.
The Flood Act states that it “does not create, permit or imply a cause of action by which to challenge under the antitrust laws…any conduct, acts, practices, or agreement…affecting employment to play baseball at the minor league level.” As a Minor League team owner at the time, I participated in the intense lobbying campaign that resulted in the inclusion of the cited language. Its purpose was to ensure the preservation of the Minor Leagues, as they existed without fear of an antitrust lawsuit.
Ultimately, the Miranda case appears to be a non-starter. While it may be costly to defend against — although any organization with $9 billion in annual revenues and the resources to pay soon-to-be Commissioner Emeritus Bud Selig $6 million a year in retirement can certainly absorb the legal costs — the Miranda suit is destined to fail. Given the history and language of the Curt Flood Act, it also appears as if any attempt to have Congress overturn baseball’s antitrust exemption as it relates to the Minor Leagues will likewise prove fruitless.
For now, it seems the only way MiLB players can “beat the system” is to make it to the Major Leagues where the minimum salary in 2015 will be $507,500. Failing that, perhaps they can take solace in the fact that less than one-half of one percent of all high school baseball players ever get drafted and play professional baseball. That consolation, along with their memories, may not be an adequate substitute for additional compensation, but it is all that most players will ever have.
Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is a Professor in the Sport Management Department at SUNY Cortland and also maintains the blog: http://sportsbeyondthelines.com Jordan can be reached at jordan.kobritz@cortland.edu.
