By Christopher Deubert, Senior Writer
In the April 7, 2023 issue of the Sports Litigation Alert, I detailed the extensive briefing before the United States Court of Appeals for the Second Circuit in Nostalgic Partners, LLC v. The Office of the Commissioner of Baseball. In that case, four minor league baseball clubs formerly affiliated with Major League Baseball (MLB), seek to overturn MLB’s century-old antitrust exemption. The Second Circuit heard oral argument in that case on June 13, 2023, in a two-week stretch of mixed legal results for MLB.
The Nostalgic Partners Case
The plaintiffs made bold arguments in their briefing, perhaps ultimately too bold. The clubs acknowledged that the Second Circuit was required under Supreme Court precedent (Federal Baseball, Toolson, and Flood) to affirm the District Court’s dismissal of the case in light of baseball’s antitrust exemption. Indeed, the plaintiffs essentially encouraged the Court to dismiss the case. However, it was also their expressed desire that the Second Circuit would “dispatch this case to the Supreme Court with a message attached: Enough already.”
The Second Circuit was not persuaded. While the District Court was willing to opine that the clubs presented meritorious antitrust claims if not for baseball’s exemption, the Second Circuit saw no need to weigh in. Only a week after hearing oral argument, on June 20, 2023, the court dispatched of the appeal in a one-and-a-half-page decision, declaring that it “must continue to apply Supreme Court precedent unless and until it is overruled by the Supreme Court.” Nostalgic Partners, LLC v. Office of Commissioner of Baseball, 2023 WL 4072836 (2d Cir. June 20, 2023). Consequently, the court “need go no further” and declined the party’s “invitations” “to opine on other, non-dispositive issues.”
The clubs are undoubtedly disappointed. They believed that with a strong statement of discontent by the Second Circuit as to MLB’s antitrust exemption, they would be in a strong position to convince the Supreme Court to take the case and reverse a century of what they believe is bad law. At the same time, the Second Circuit did the clubs a favor by deciding the appeal so quickly. The clubs will now almost certainly appeal to the Supreme Court, as has been their stated goal all along. If the Court takes the case, it seems probable that it is doing so for the purposes of overturning baseball’s exemption.
The Concepcion Case
While the Nostalgic Partners case has been playing out, there has also been another challenge to baseball’s antitrust exemption. In the United States District Court for the District of Puerto Rico, three former minor league baseball players sued MLB and its clubs alleging that their restrictive pay practices toward minor leaguers violated the Sherman Antitrust Act and the Fair Labor Standards Act (“FLSA”). The plaintiffs’ case had several issues, ultimately resulting in MLB’s victory in the Court’s June 21, 2023 adoption of a May 31, 2023 Report and Recommendation by the Magistrate Judge.
First, the three named plaintiffs played from 2010-16, 2015-19, and 2016-18 respectively, resulting in the loss of the FLSA claims on statute of limitations grounds.
Second, the Court dismissed the 27 MLB clubs for whose farm systems the players did not play for lack of personal jurisdiction.
Finally, the Court reviewed the parties’ antitrust claims. The Court acknowledged the Supreme Court’s trilogy of cases on the issue and also that the plaintiffs’ attorneys had brought a “strikingly similar claim in the Northern District of California” seven years earlier. The court dismissed that case based on baseball’s antitrust exemption, a decision upheld by the Ninth Circuit. See Miranda v. Selig, 860 F.3d 1237 (9th Cir. 2017).
Nevertheless, like the plaintiffs in Nostalgic Partners, the players argued that now is the time for a rethink of baseball’s antitrust exemption in light of the Supreme Court’s decisions in NCAA v. Alston and Dobbs v. Jackson Women’s Health Org. The Court was unpersuaded, holding that nothing in those decisions “authorizes lower courts, such as this one, to overrule Supreme Court precedent.”
The Court’s decision in Concepcion also did nothing to help the plaintiffs in Nostalgic Partners. A positive decision for the players would have added support for the minor league clubs’ forthcoming request to the Supreme Court to review baseball’s antitrust exemption.
The players have appealed the Court’s ruling.
Republican Senate Bill
While decisions were pending in Nostalgic Partners and Concepcion, on June 16, 2023, Republican Senators Marco Rubio (Florida), Mike Lee (Utah), Ted Cruz (Texas), and Josh Hawley (Missouri) announced that they will introduce legislation to repeal MLB’s antitrust exemption. The Senators’ statement said the legislation will “promote fair competition, provide opportunities for other leagues to thrive, and ultimately benefit players, teams, and fans alike.” Politics also played a role, as the Senators introduced the bill “in light of recent controversies surrounding the Dodgers Pride Night and the relocation of the All-Star Game from Atlanta.” Nevertheless, Democratic Senators, including nominally independent Bernie Sanders (Vermont), have also previously introduced legislation to undo the exemption. Consequently, there would seem to be a real opportunity for passage of such legislation, if it rose to a sufficiently high priority for Congress, which seems less likely. Either way, the existence of proposed legislation may affect the Supreme Court’s eagerness to review the Nostalgic Partners decision.
The Age Discrimination Case
On June 21, 2023, James Benedict and 16 other former scouts of MLB clubs filed a class action lawsuit against the league and its clubs alleging systematic violation of the federal Age Discrimination in Employment Act (“ADEA”) and state corollaries. The claims include interesting allegations, including that analytics and the COVID-19 pandemic have been used as a pretext for dismissing or not hiring older scouts and the alleged admission by a San Francisco Giants executive that the club was likely to “go younger” in its search for scouts.
That said, there is antitrust element to the case. The plaintiffs allege that MLB has a rule prohibiting clubs from negotiating with the employees of other clubs about potential employment, including scouts. Additionally, the plaintiffs claim that the clubs maintain a blacklist of older scouts whom the clubs will not employ.
These claims potentially state violations of antitrust law. Indeed, the plaintiffs effectively say so but acknowledge that the allegedly problematic “conduct might be protected from antitrust by MLB’s exemption from federal antitrust law.” Nevertheless, rather than mount yet another challenge the baseball’s antitrust exemption, the scouts framed the allegations as a collusive effort to violate age discrimination laws.
Baseball’s antitrust exemption has survived countless legal challenges over the years. The ones above are the most recent and perhaps threatening for some time. Nevertheless, any change in the law still seems as challenging as Miami Marlin Luis Arraez’s quest to bat .400 this season.
