Minor Leagues Present Major Challenge to MLB's Antitrust Exemption

Two minor league baseball teams have gone to the Supreme Court with a simple request: Put an end to the rules that have protected Major League Baseball from antitrust liability for over a century. It's hardly the first time MLB's antitrust immunity has been challenged in court, and it remains to be seen whether the Supreme Court will take their side.

At issue is a consequence of MLB's 2020 restructuring. The sea change saw MLB cut the number of minor league affiliates from 160 to 120 and restricted major league teams from affiliating with more than four minor league clubs. The minor league teams behind the case (the Tri-City ValleyCats and the Norwich Sea Unicorns) argue that cutting the 40 affected teams essentially put them out of business overnight. That sort of thing tends to rub people the wrong way, especially when it's done by what amounts to a state-sanctioned monopoly.

One League to Rule Them All

The current conflict is just the latest fracas in the century since 1922's Federal Baseball Club v. National League, in which the Supreme Court unanimously ruled that baseball wasn't subject to antitrust rules. Justice Oliver Wendell Holmes was quoted as saying that, rather than interstate commerce, "The business is giving exhibitions of baseball, which are purely state affairs … But the fact that, in order to give the exhibitions, the Leagues must induce free persons to cross state lines and must arrange and pay for their doing so is not enough to change the character of the business."

It's anyone's guess what Justice Holmes would think about the current state of MLB and the industry that's developed around the sport. That said, other iterations of the Supreme Court have apparently shared his and the Taft Court's feelings on the matter, and there's little indication that the current Court will differ from its predecessors.

Previous Challenges

There have been many challenges to MLB's antitrust exemption, though only two have made it to the Supreme Court.

The first came in 1953 in a case called Toolson v. New York Yankees.

George Toolson was a pitcher for the Newark Bears, a now-defunct farm team for the New York Yankees. Toolson believed himself a strong enough pitcher to merit consideration in the major leagues, but the reserve clause in his contract effectively kept him bound to the Yankees for a full year after his contract with them and the Bears expired. So when the Bears dissolved prior to the 1950 season and Toolson was sent back down to a Class-A team in the Yankees' minor league system, Toolson was understandably upset.

Toolson took his grievances – and the Yankees – to court. The district court in Los Angeles and the Ninth Circuit shot the case down on the basis of precedent set by the Supreme Court in 1922. The Supreme Court agreed to hear the case, but they, too shot Toolson down. MLB's antitrust exemption was upheld, and George Earl Toolson never made it to the major leagues.

The next major decision came in 1972 with the case Flood v. Kuhn, in which the Supreme Court voted 5 – 3 that the antitrust exemption and the reserve clause in MLB contracts should be upheld.

Flood v. Kuhn was brought by a player named Charles Curtis Flood. Flood was a talented Black player with a reputation as an all-star center fielder and a salary to match, albeit only after spending years being traded, tossed around, marginalized, underpaid, and discriminated against by the teams he played for and the fans who watched him do it.

In 1969 Flood was traded to the Phillies, a team that as known for mistreating its players and the rampant racism at all levels of the organization and fandom. He objected, but his contract and the reserve clause within would force him to go where he was told.

So he sued.

Flood filed a complaint in the federal district court for the Southern District of New York, naming commissioner Bowie Kuhn, the presidents of the NL and AL, and all 24 MLB team presidents as defendants. His suit was struck down, and the reserve clause upheld.

Flood appealed the decision to the Second Circuit, which also upheld the reserve clause and all precedent set under Federal Basis and subsequent decisions.

The Supreme Court agreed to hear the case. It was eventually decided in MLB's favor by another margin of 5 – 3, though the justices made it clear that they thought the MLB's antitrust exemption was Congress' problem, not theirs.

While the MLB hasn't used reserve clauses since 1974, the antitrust exemption is still very much in effect.

A New Challenge

A bipartisan group of 18 attorneys general, the professional baseball players union, and many others have come out in support of the Tri-City ValleyCats and the Norwich Sea Unicorns and their challenge to the MLB's antitrust exemption. Times have clearly changed since 1922, and there's been no shortage of criticism for the policy and the reserve clause in MLB contracts. It remains to be seen whether the current Court will be any more sympathetic to the players, or if it will choose to uphold one of the few state-sanctioned monopolies in the US.

Related Resources:

• Judge: Minor League Baseball Players Are Employees, Not Apprentices (FindLaw's Legally Weird)
• $185 Million Settlement Reached in Minor League Baseball Dispute (FindLaw's Legally Weird)
• What is Antitrust Law and Trade Regulation? (FindLaw's Learn About the Law)