A federal judge wrote that Major League Baseball violated antitrust laws with its 2020 reorganization of minor league affiliates but dismissed the lawsuit because of baseball’s long-standing antitrust exemption.
The case, brought by four minor-league clubs that lost their major league affiliation in the re-organization, was designed to test the exemption with a hoped-for run to the Supreme Court. The plaintiffs expected Wednesday’s dismissal, and even called for it in their briefing papers based on the more than century-old exemption that shields MLB’s commercial pursuits from antitrust scrutiny.
“This is exactly the outcome we hoped for,” Jim Quinn, the minor league clubs’ lawyer, wrote in an email. “Focus on appeal will simply be on overthrowing the baseball exemption.”
MLB called for dismissal on several counts, not just the antitrust exemption. The league argued the clubs did not have standing and there was no antitrust violation when MLB culled the number of minor-league teams tied to big-league clubs by 25 percent (40 teams) to 120. On that, Judge Andrew Carter disagreed.
“I find that the plaintiffs have established antitrust standing and have adequately pleaded an antitrust violation,” he wrote. “MLB’s antitrust exemption, which has existed since 1903, is a different skein of yarn.”
The Supreme Court several times since its original decision has ruled to uphold the antitrust exemption. But in its 2021 ruling allowing NCAA athletes to profit off their commercial images, the court noted the shaky ground baseball’s exemption stood on.
“To be sure, this court once dallied with something that looks a bit like an antitrust exemption for professional baseball,” the Court wrote in its unanimous 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).'” Federal Baseball is the name of the 1922 Supreme Court decision.
That part of the college sports decision triggered the current lawsuit. Quinn previously said the case would lose at the district court and appellate levels, but getting before the Supreme Court is the major objective.
In his 17-page decision, the judge methodically went through MLB’s non-exemption arguments and ruled otherwise.
On baseball’s contention that the reduction of MiLB teams was not anti-competitive, Carter wrote, “Defendant’s anticompetitive actions resulted in Plaintiffs losing their affiliations. Without their affiliations, ousted teams cannot attract top talent and are barred from playing against affiliated MiLB teams. … Plaintiffs successfully allege that a competitive market without the agreement would have produced a greater number of affiliations, as shown by the greater output under the (old arrangement).”
On MLB’s argument that the clubs do not have antitrust standing, he wrote, “Defendants further claim that the Second Circuit’s holding … precludes a finding that Plaintiffs have antitrust standing. That cricket won’t sing.”
On MLB’s argument that because the four clubs were previously part of an alleged cartel and cannot bring a case after being ejected from the group, Carter wrote, “Although professional baseball’s prior regime instituted a cap on affiliations, the current lack of variety concerning the number of minor league affiliates for each club buttresses Plaintiff’s claim that MLB has reduced competition in the market.”
The four clubs are the Salem-Keizer Volcanoes, the Norwich Sea Unicorns, the Staten Island Yankees and the Tri-City ValleyCats.
The Department of Justice also intervened in the lawsuit, urging the judge to treat the exemption narrowly. Carter wrote that even doing so, MLB’s minor league reorganization was protected by the exemption.
“As Plaintiffs concede … baseball’s exemption forecloses their case since minor league affiliations are central to the business of baseball,” Carter wrote. “Baseball’s antitrust exemption will not brook this lawsuit; the case is dismissed.”
(Photo: Mark J. Rebilas / USA Today Sports)
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