Last week, District Court Judge Andrew Carter, Jr. granted Major League Baseball’s (MLB) Motion to Dismiss four former Minor League Baseball teams’ lawsuit. While it is a big victory for MLB, an appeal is likely on the horizon.
Before 2020, the Professional Baseball Agreement (PBA) between MLB and the National Association of Professional Baseball Leagues governed the relationship between MLB teams and minor league affiliates. As a part of the PBA, MLB teams could have as many minor league affiliates as they wanted. In turn, MLB teams paid the payroll costs for players, managers, and other employees, and the affiliates paid 8 percent of ticket sales to the MLB teams.
In 2020, MLB announced the Professional Development League (PDL), proposing to cap minor league affiliates at four per organization and shift the model to minor league teams affiliating through licensing agreements rather than contracting through the National Association of Professional Baseball Leagues.
By 2021, the Professional Development League came to fruition, and 40 teams were eliminated, including The Staten Island Yankees, The Norwich Sea Unicorns, Salem-Keizer Volcanoes, and Tri-City ValleyCats.
Due to the elimination, the four affiliates filed suit in the United States District Court for the Southern District of New York, alleging that MLB violated the Sherman Act by orchestrating a horizontal agreement among its teams and excluding the plaintiff affiliates from the new league.
A Victory for MLB’s Antitrust Exemption
The affiliates overcame the first hurdle—establishing standing for an antitrust claim. However, Judge Carter easily disposed of the suit, leaning heavily on prior holdings (“the business of providing public baseball games for profit between clubs of professional baseball players was not within the scope of the federal antitrust laws.” Toolson v. New York Yankees, Inc., 346 U.S. 356, 357, 74 S. Ct. 78, 98 L. Ed. 64 (1953)). Specifically, Judge Carter found that “minor league affiliations are central to the business of baseball.” Therefore, it falls within the exemption, and “until the Supreme Court or Congress takes action, the exemption survives[, and] shields MLB from [the affiliates’] lawsuit[,]” Judge Carter reasoned, granting the Motion to Dismiss.
The affiliates can appeal the ruling, which counsel for the affiliates has assured will happen and will focus on “overthrowing the baseball exemption.” Ultimately, the affiliates hope that the issue will reach the Supreme Court. Considering the United States Senate Judiciary Committee has begun reviewing the antitrust exemption, there may be enough support for the Supreme Court to review the issue, and either through the Court or Congress, it may be overturned.
Until then, the exemption gives MLB a big victory.