Minor League Teams Take A Swing At Baseball's Antitrust Exemption

• Published date: 19 January 2022
• Subject Matter: Anti-trust/Competition Law, Insurance, Antitrust, EU Competition , Insurance Laws and Products
• Law Firm: Lewis Brisbois Bisgaard & Smith LLP
• Author: Mr John Cardinal Parks and Todd R. Seelman

Denver, Colo. (January 18, 2022) - A group of minor league baseball teams have filed suit in the U.S. District Court for the Southern District of New York in Manhattan against Major League Baseball (MLB) in a pitch to end a nearly century-old antitrust exemption first granted by the U.S. Supreme Court in 1922.

The Lawsuit

The suit is based on MLB's decision in 2019 to contract its minor league system from 160 teams to 120 teams. Charging that no other business in the U.S. would even consider such a "brazen horizontal agreement among competing businesses," the minor league plaintiffs allege that MLB and its clubs had no such qualms because of a judicially created "get out of jail free card," or antitrust exemption, first dealt to them by the Supreme Court in Fed. Baseball Club, Inc. v. Nat'l League of Prof'l Baseball Clubs, 259 U.S. 200 (1922) and subsequently reaffirmed in Toolson v. N.Y. Yankees, Inc., 346 U.S. 356, 356, 74 S. Ct. 78, 78 (1953) and Flood v. Kuhn, 407 U.S. 258, 259, 92 S. Ct. 2099, 2100 (1972).

Even though the Supreme Court had declined to revisit the baseball exemption as recently as 2018 by denying certiorari petitions in Wyckoff v. Office of the Comm'r of Baseball, 138 S. Ct. 2621 (2018) and Right Field Rooftops, LLC v. Chi. Cubs Baseball Club, LLC, 138 S. Ct. 2621 (2018), the minor league clubs argued that the Supreme Court signaled its willingness to reconsider the exemption in NCAA v. Alston, 141 S. Ct. 2141 (2021), in which a unanimous Court refused to exempt the NCAA from antitrust scrutiny despite its decades-old decision in Nat'l Collegiate Athletic Ass'n v. Bd. of Regents, 468 U.S. 85 (1984), which the NCAA had argued provided special protection from antitrust scrutiny for the NCAA's "amateurism" rules. In Alston, the Court not only refused to be bound by its previous NCAA decision in 1984, but also hinted at a willingness to revisit the baseball exemption.

Justice Gorsuch, writing for a unanimous Court in Alston, acknowledged that the Court "once dallied with something that looks a bit like an antitrust exemption for professional baseball" in its 1922 decision in Federal Baseball. Justice Gorsuch went on to note that not only has the Court refused to extend Federal Baseball's reasoning to other sports, it has also acknowledged criticisms of the decision as "unrealistic," "inconsistent," and "aberration[al]."

Apparently emboldened by these words, the minor league clubs argue in their complaint against MLB that they had...