Minor league teams’ antitrust lawsuit dismissed, but MLB’s exemption could be challenged on appeal –

Minor league teams’ antitrust lawsuit dismissed, but MLB’s exemption could be challenged on appeal –

U.S. District Judge Andrew Carter dismissed a lawsuit he contested last Wednesday Major League Baseball‘s antitrust exemption because, it determined, MLB is still exempt from antitrust scrutiny.

“Plaintiffs believe the Supreme Court is poised to eliminate the exemption, like a boxer waiting to throw a left hook after his opponent lands a stinging jab,” he wrote. “It’s possible. But until the Supreme Court or Congress takes action, the exemption lives on.”

But even in ruling against the four former minor league teams that sued, Carter, who presides over the SDNY, found that the plaintiffs established antitrust standing and plausibly pleaded an antitrust violation, points that could be relevant if MLB’s exemption is later reduced or eliminated and antitrust law applies.

Last year, the Staten Island Yankees, Norwich Sea Unicorns, Salem-Keizer Volcanoes and Tri-City ValleyCats sued MLB, saying the league and MLB teams violated antitrust law by stripping more than 40 minor league clubs of the affiliations. As the former affiliates see it, MLB’s move was “nothing less than a naked, horizontal deal to cement MLB’s dominance over all of professional baseball.”

MLB insists the lawsuit is “patently frivolous.” According to the 1922 Supreme Court ruling Federal Baseball Club vs. National League, MLB is exempt from antitrust scrutiny. Although Congress and President Bill Clinton narrowed the exemption through the Curt Flood Act of 1998, the exemption remains in place for matters related to minor league baseball.

Carter described the former affiliates as logically describing an injury that antitrust law is designed to remedy. MLB’s revocation of minor league affiliations, he wrote, “serves to lessen competition among rivals by preventing plaintiffs from competing with each other for affiliations and by preventing MLB clubs from competing with each other to affiliate with more minor league teams.” He added that “without their affiliations, expelled teams cannot attract top talent and are prohibited from playing against MiLB-affiliated teams.”

The minor leaguers also adequately defined the relevant market. Carter wrote that they “argue that there are no reasonable substitutes for MiLB affiliations, explaining that non-MiLB teams cannot reach the same pool of talent, sponsors or fans, particularly because they are prohibited play against teams affiliated with the MiLB”. He reasoned, “Just as the NCAA and NFL have complete control over the college and professional football market in the United States, MLB has complete control over the baseball market.”

But Carter underscored the lawsuit’s fundamental flaw: None of the legal arguments can prevail if the law doesn’t apply. Although the Department of Justice under Attorney General Merrick Garland filed a brief recommending Carter read MLB’s waiver narrowly, Carter did not see the light of day. Read broadly or narrowly, the exemption applies unambiguously to minors.

End of the game?

Not too fast.

Teams can appeal Carter’s decision to the U.S. Court of Appeals for the Second Circuit, though Carter suggested teams would face strong odds there as well. In Wyckoff v. MLB Commissioner, baseball scouts argued that MLB teams conspired to diminish competition for his services. In 2017, the Second Circuit upheld the dismissal of the suit, finding that the scouts’ claims concerned the business of baseball and therefore fell within the exemption. Wyckoff it is a discouraging precedent for former affiliates.

A loss in the Second Circuit wouldn’t necessarily mean the end of the road, either. The teams could file a petition with the Supreme Court. The Court only agrees to review about 1% of petitions, but some of the judges might be interested. In writing the Court’s 9-0 opinion a NCAA vs. AlstonJudge Neil Gorsuch criticized the MLB waiver logic. Companies that affect commerce in multiple states, he explained, are typically subject to antitrust scrutiny. Meanwhile, Judge Brett Kavanaugh’s often-cited concurring opinion, while not addressing MLB’s exemption, expressed support for applying basic antitrust analysis to economic restraints in sports.

MLB’s antitrust exemption is also the target of the Senate Judiciary Committee’s review, to which MLB Commissioner Rob Manfred recently. he wrote a letter attempting to justify the exemption. It remains to be seen how the midterm elections will affect the committee’s leadership and priorities, though both Democratic and Republican members have led the bipartisan review.

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