Major League Baseball dodged antitrust litigation brought by the Staten Island Yankees and three other defunct minor league clubs over a restructuring that removed one quarter of MLB’s minor league affiliates from the league’s century-old farm system.
Judge Andrew L. Carter Jr. on Wednesday dismissed the lawsuit, which sought an injunction unwinding the overhaul, plus treble damages compensating the teams—and then some—for losses tied to the 2021 restructuring.
Carter, writing for the US District Court for the Southern District of New York, cited the exemption that has shielded MLB from most antitrust claims since 1903. Although Congress has “chipped away” at the exemption, courts—including the US Supreme Court—have upheld it for nearly 120 years, the judge found.
The teams “believe that the Supreme Court is poised to knock out the exemption, like a boxer waiting to launch a left hook after her opponent tosses out a torpid jab,” Carter wrote. “It’s possible. But until the Supreme Court or Congress takes action, the exemption survives.”
The lawsuit, filed in December, also included claims on behalf of the Norwich Sea Unicorns, the Salem-Keizer Volcanoes, and the Tri-City Valley Cats—former single-A affiliates of the Detroit Tigers, the San Francisco Giants, and the Houston Astros, respectively.
It challenged a realignment that cut 40 out of 160 minor league teams. The move’s purpose was to replace the competitive market forces driving the farm system with a cost-cutting plan aimed at increasing profits for major league club owners, the suit said.
In his ruling Wednesday, Carter found that the MLB antitrust exemption was the only thing preventing the case from moving forward. The judge rejected the league’s argument that the teams lacked standing to bring their claims. He also found that they had “adequately pleaded an antitrust violation.”
The reorganization reduces competition by preventing minor league teams from competing for MLB affiliations and preventing major league teams from competing to draw additional minor league affiliates, Carter found.
“Whether a team’s home fans refer to groups of people as y’all, you all, or yinz, whether they prefer thin crust or deep dish pizza, whether they crave abalone or chicken fried steak, whether the team constantly contends or sporadically succeeds, each major league team has exactly four minor league affiliates,” the judge wrote.
Although the Justice Department filed a statement urging the court to read the baseball exemption narrowly, it’s still good law, Carter said. And as long as it is, it “will not brook this lawsuit,” he concluded.
MLB is represented by Sullivan & Cromwell LLP. The minor league teams are represented by Weil, Gotshal & Manges LLP and Berg & Androphy.
The case is Nostalgic Partners LLC v. Office of the Comm’r of Baseball, SDNY, No. 21-cv-10876, 10/26/22.