About 99 years and seven months ago, Supreme Court Justice Oliver Wendell Holmes and his colleagues issued a ruling that would shape professional baseball in the United States for the next century.
In a now infamous case most often referred to as “Federal Baseball,” the court ruled that professional baseball was exempt from the Sherman Antitrust Act passed three decades earlier, which meant teams could collude to suppress wages and dictate the fortunes of member clubs in ways that would be illegal in other big business spheres.
No other professional sports league was ever granted the same exemption, and the Supreme Court has more than once referred to that Holmes decision as one it would not make again.
Now, a century later, lawyers representing four of the 40 minor league franchises that lost their affiliations with major league teams last year are hoping they have the right case to bait the Supreme Court into ending that exemption once and for all.
Lawyers representing the Staten Island Yankees and three other teams filed a lawsuit to the U.S. District Court in the Southern District of New York in late December. In the suit, they argue that Major League Baseball’s decision to end big league affiliations with those minor league clubs represents anticompetitive behavior in violation of the Sherman Antitrust Act — collusion on the part of MLB and its member organizations to eliminate the free market’s role in determining which franchises survive and which do not.
More importantly, they argue that the unique antitrust exemption that has allowed MLB to violate that act in various ways for years is “anachronistic” and should be cast “into the dustbin of antitrust history,” citing the court’s own skepticism about the baseball exemption as written into its landmark decision about amateurism in NCAA v. Alston last year.
“[The Supreme Court] was almost inviting somebody to come and challenge the baseball exemption,” one of the attorneys filing the suit, Jim Quinn of Berg & Androphy, said on the sports law podcast “Conduct Detrimental.” “We’ve decided we’re going to accept that invitation.”
From players to scouts to Wrigley Field-adjacent rooftop owners, many have tried to challenge the exemption in lawsuits. Few have enticed the Supreme Court to take their case at all. None have managed to convince the highest court to overturn the exemption. As recently as 2018, two different cases tried to challenge the exemption on differing grounds. The Supreme Court declined to hear either one.
Quinn, who has represented players’ associations in the four major U.S. men’s professional sports, including in a major NFL antitrust case in the 1990s, did not respond to a request for comment. He and the chief negotiator for the MLB Players Association, Bruce Meyer, have worked together for decades, including on behalf of players’ unions in the NBA and NHL. That the lawsuit is landing now, as Meyer and the MLBPA are in the midst of a lockout with MLB, is noteworthy timing.
But the legal reason Quinn and his high-powered colleagues are filing the suit now when so many others have failed before them is clear: When the Supreme Court issued that ruling against the NCAA last year, it went out of its way to explain why the baseball exemption was not something that would be extended to other groups — such as the NCAA, for instance — to head off any potential arguments in that direction.
“To be sure, this Court once dallied with something that looks a bit like an antitrust exemption for professional baseball [in Federal Baseball],” Justice Neil M. Gorsuch wrote in that decision. “… But this Court has refused to extend Federal Baseball’s reasoning to other sports leagues — and has even acknowledged criticisms of the decision as ‘unrealistic’ and ‘inconsistent’ and “aberration[al].”
In light of that language and similar skepticism expressed by Justice Brett M. Kavanaugh in his concurrence, the new suit on behalf of those minor league franchises argues, “Plaintiffs thus have objectively good reasons to believe that the Supreme Court would no longer apply the ‘unrealistic’ and ‘inconsistent’ and ‘aberration[al]’ baseball antitrust exemption if presented with a proper case for reconsidering it.
“This,” the suit continues. “Is that case.”
But is it?
Logistically speaking, the case is built to speed quickly through the lower courts and onto the Supreme Court’s radar, in part because it names Major League Baseball itself as the lone defendant, thereby avoiding any geographical entanglements that might have arisen from naming individual teams. And because the Supreme Court awarded the exemption in the first place, it is almost certain that no lower court would overturn it first, adhering instead to precedent set by the nation’s highest bench.
If everything goes to plan for Quinn and his colleagues, the district court would rule against them. They would appeal, sending the case to the U.S. Court of Appeals for the 2nd Circuit, which probably would also follow precedent and rule against them. At that point, the case could be appealed to the Supreme Court, which would then have to decide whether to hear what would represent an obvious and explicit challenge to the Federal Baseball ruling.
“Everything in the complaint is compelling. Everything they said is a clear antitrust violation. Baseball, the way it’s been operating in the minor leagues, is a clear violation of antitrust law except that it has this exemption,” said Sam Ehrlich, a professor of sports law at Boise State University who filed an amicus brief to the Supreme Court ahead of its decision in NCAA v. Alston. “The fact that it’s Major League Baseball turns it to a compelling set of facts from an antitrust perspective to, ‘Well, that’s a nice try, but it’s probably not going to go anywhere.’ ”
Because the Major League Baseball Players Association collectively bargains with MLB and therefore gains a statutory labor exemption to antitrust law, the loss of the MLB antitrust exemption would not necessarily change much in terms of labor relations at the big league level — though it could affect business issues such as the relocation of franchises.
But the abolition of the exemption could create seismic shifts in minor league baseball, where MLB teams have long colluded to suppress wages to far below minimum wage, as well as dictate how franchises operate within the system.
Before the start of the 2021 season, Major League Baseball took control of minor league operations. It excised 40 of 160 affiliated teams in a broad restructuring that raised standards for facilities and nutrition while ending long-standing relationships between cities and their beloved minor league clubs.
Within a year, relentless public pressure from groups representing players’ interests had convinced MLB to raise minor league pay and institute a requirement that organizations pay for minor leaguers’ housing starting next season. If MLB somehow lost its antitrust exemption, it would probably no longer take steps such as eliminating affiliated teams or dictating the organization of the minor leagues quite so quickly.
And it might just open the door for minor league players to unionize, because MLB would have more incentive to collectively bargain with its minor league employees when it would be subject to antitrust suits for wage suppression and other collectively decided standards than it does now. In collective bargaining, at least, MLB would have some say over the labor standards by which minor leaguers would be governed.
“On the merits, the complaint makes a lot of good sense, and baseball is shooting itself in the foot for eliminating minor league teams in the hinterlands where people learn to love and be attracted to baseball,” said William Gould, a former head of the National Labor Relations Board who has mediated labor disputes between MLB and its players in the past. “… It’s a long shot proposition, just as the prior attempts to overturn it have made good sense but never carried the day.”
For any of that change to materialize, the Supreme Court would have to break with years of turning down cases that challenged the antitrust exemption and agree to hear this one. If it did, the nine justices would then, in theory, evaluate the merits of the suit itself as they decided whether to overturn the long-standing exemption and upend baseball’s status quo.
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