MLB Antitrust Exemption Binds Minor Leaguers, Judge Rules

Law360 09/14/2015

A California federal judge on Monday dismissed a putative class action accusing Major League Baseball of violating federal antitrust law by suppressing the compensation of minor league players, saying the game’s historic antitrust exemption still applies.

U.S. District Judge Haywood S. Gilliam Jr. found that the antitrust exemption, first established by a 1922 Supreme Court case, does apply to the employment of minor league players. He said his finding relies on the recent Ninth Circuit decision in City of San Jose et al. v. Office of the Commissioner of Baseball, which affirmed the exemption in a case involving the relocation of a franchise.

“There can be no reasonable dispute that the alleged restrictions on the pay and mobility of minor league baseball players fall into to the articulation of the antitrust exemption recognized in City of San Jose, which applies broadly to the ‘business of providing public baseball games for profit between clubs of professional baseball players,’ ” Monday’s order said.

Judge Gilliam said the San Jose case was backed up by the Curt Flood Act, which withdrew the MLB’s exemption in regards to certain practices concerning the employment of major league players, because the act intentionally left the exemption in place for minor leaguers.

The suit, filed by Sergio Miranda last year, accuses MLB teams of colluding to eliminate competition and challenges a contractual provision known as the reserve clause, which locks minor league players into contracts for seven years and restricts their ability to negotiate with other teams.

The MLB moved to dismiss the suit in May, saying the courts have consistently affirmed baseball’s antitrust exemption. Judge Gilliam seemed to side with the league at a hearing in August, a position affirmed with Monday’s order.

In dismissing the suit with prejudice, Judge Gilliam noted that the plaintiffs made a good policy argument, but that such an argument is futile in the district courts.

“In short, Plaintiffs have a persuasive policy argument that the Defendants should not be afforded carte blanche to restrict the pay and mobility of minor league players without answering to the federal antitrust laws that apply to the employment of major league baseball players and, for that matter, all other professional sports leagues. But that policy argument must be made to Congress or the Supreme Court,” the order said.

An attorney for the putative class could not be reached for comment Monday.

MLB issued a statement saying it was pleased with the decision.

The plaintiffs are represented by the Law Offices of Samuel Kornhauser and the Law Offices of Brian David.

The MLB is represented by John W. Keker, R. Adam Lauridsen, Thomas E. Gorman and David J. Rosen of Keker & Van Nest LLP.

The case is Miranda et al. v. Office of the Commissioner of Baseball et al., case number3:14-cv-05349, in the U.S. District Court for the Northern District of California.

John W. Keker

John W. Keker

(415) 391-5400
email link

Adam Lauridsen

Adam Lauridsen

(415) 773-6686
email link

Thomas E.  Gorman

Thomas E. Gorman

(415) 676-2292
email link

David J. Rosen

David J. Rosen

(415) 676-2236
email link

Developed by Tenrec