NEW YORK — A federal appeals court in Manhattan on Tuesday ruled that Major League Baseball remains exempt from a lawsuit filed by the Tri-City ValleyCats and three other minor-league teams that sued the league after it dropped them as MLB affiliates in 2020.
An exemption dating to 1922 shields MLB from antitrust lawsuits, such as the ValleyCats' legal claims alleging the league violated Section 1 of the 1890 Sherman Act when it eliminated the ValleyCats as an affiliate of the Houston Astros, according to the ruling by a tribunal of justices on the U.S. Court of Appeals for the Second Circuit.
The attorney for the minor-league teams, however, said the decision paves the way for him to bring the matter to the U.S. Supreme Court.
“For us, this is exactly what we wanted,” Manhattan-based attorney James Quinn told the Times Union. “Only the Supreme Court can overrule their own precedent; the lower courts can’t. ... We think if we get to the Supreme Court, we have a very good chance at getting the exemption overruled — and then we move forward.”
In June 2021, the U.S. Supreme Court unanimously ruled against the National Collegiate Athletic Association and in favor of current and former student-athletes in Division I football and basketball programs. The plaintiffs alleged that the NCAA, by limiting compensation for the athletes’ services, violated the Sherman Act’s prohibition of contracts, combinations or conspiracies that restrain free trade, Quinn noted.
Quinn said MLB’s antitrust litigation exception is an anomaly that does not apply to the National Football League, National Basketball Association or National Hockey League.
“That’s why we have brought this case — to get rid of it,” Quinn said. He has 90 days to apply to the Supreme Court to ask it to hear the case. If successful, the plaintiffs could receive compensation in damages from $35 million to $40 million, he said
The ValleyCats filed the suit in December 2021 in U.S. District Court in Manhattan alongside the Staten Island Yankees, Connecticut's Norwich Sea Unicorns and Oregon's Salem-Keizer Volcanoes. The teams had been affiliated in Class A short-season minor league baseball with, respectively, the New York Yankees, Detroit Tigers and San Francisco Giants.
In court papers, the ValleyCats and other teams alleged that MLB and its commissioner, Rob Manfred, orchestrated the reorganization plan to “effectively destroy” 40 of the 160 minor league teams by depriving fans, players and communities of games that had been available in a competitive market. The suit noted that ValleyCats teams had produced 81 future MLB players, including stars such as Astros second baseman Jose Altuve, a former American League MVP, as well as outfielder George Springer, the 2017 World Series MVP for the Astros. (Springer is now with the Toronto Blue Jays.)
In turn, attorneys for MLB called the suit frivolous. For more than 100 years, they said, the major league teams and their minor-league affiliates — in a structure known collectively as the “farm system” — were governed under the Professional Baseball Agreement between MLB and the National Association of Professional Baseball Leagues, an organization of major- and minor-league teams.
That agreement expired Sept. 30, 2020.
In the reorganization that followed, MLB ceased dealing with the National Association of Professional Baseball Leagues. Instead, it entered into direct contracts with minor-league affiliates and, in doing so, froze out the 40 minor-league teams. MLB attorneys argued that the reorganization led to salary increases for players of between 38 and 72 percent, modernized facilities, improved amenities and working conditions, plus reduced in-season travel.
MLB attorneys also noted that under more than a century of U.S. Supreme Court precedent, the “business of baseball” was exempt from the Sherman Act.
Last October, U.S. District Judge Andrew L. Carter ruled that the ValleyCats and other plaintiffs had established an antitrust standing and adequately pleaded an antitrust violation. But the judge added, “MLB’s antitrust exemption, which has existed since 1903, is a different skein of yarn.”
Carter stated that while a 1998 Supreme Court decision modified the exemption, it was still the precedent held by courts — including the Second Circuit.
“Plaintiffs 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; it shields MLB from Plaintiffs' lawsuit."
In their decision Tuesday, Senior U.S. Circuit Judge Barrington Parker and U.S. Circuit Judges Alison Nathan and Michael Park agreed, upholding Carter’s decision.
“Appellants concede that these precedents … presently immunize MLB against their claims. And we must continue to apply Supreme Court precedent unless and until it is overruled by the Supreme Court,” the decision stated. “We need go no further.”
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ValleyCats lose appeal to MLB, plan to win before U.S. Supreme Court - Times Union
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