Shearman & Sterling LLP | Antitrust Blog | Ninth Circuit Holds That Stare Decisis Bars Reconsideration Of ‘Business Of Baseball’ Antitrust Exemption As To Minor League Players<br >  
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  • Ninth Circuit Holds That Stare Decisis Bars Reconsideration Of ‘Business Of Baseball’ Antitrust Exemption As To Minor League Players

    On June 26, 2017, a three-judge panel of the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a putative class action brought by professional minor league baseball players (“Players”) against the former commissioner of major league baseball and all thirty major league franchises (collectively “Major League Baseball” or “MLB”).  Miranda v. Selig, No. 15-16938 (9th Cir. 2017).  Players alleged that MLB’s hiring and employment policies violated federal antitrust laws and argued that minor league players did not fall within the well-established antitrust exemption for the business of baseball.  Invoking the judicial principle of stare decisis, the panel held unanimously that the baseball exemption applied to Players’ claims and affirmed the lower court’s dismissal.

    Writing for the court, Judge Sidney R. Thomas explained that, “[b]ecause we are bound by Supreme Court and Ninth Circuit precedent upholding the business of baseball’s exemption from federal antitrust laws, and because Congress explicitly exempted minor league baseball in the Curt Flood Act of 1998, the Players have not stated a claim to relief that is plausible on its face.”  As the Court noted, however, understanding the modern baseball exemption requires some historical context.

    The exemption traces back to a Supreme Court decision finding baseball not to constitute “trade or commerce among the several states”—as required for the application of the Shearman Act—because the need for baseball players to cross state lines to compete was “mere[ly] incident[al]” to the business itself.  Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200, 208–09 (1922).  The Supreme Court later upheld this exemption on several occasions, explaining that even though the sport grew to constitute interstate commerce, Congress had allowed baseball to develop and expand unhindered by federal antitrust laws, and therefore any change in the baseball exemption had to come from the legislature.  Congress took action in 1998 by passing the Curt Flood Act, which subjected most aspects of major league baseball players’ employment to the antitrust laws but explicitly maintained the baseball exemption with respect to minor league players. 

    Notwithstanding this legislative recognition, the players argued that earlier cases did not decide the issue of whether major league franchises could conspire to fix salaries paid to minor league players.  The Court disagreed, rejecting the idea that major and minor league players are “separate and distinct in a meaningful way for the purposes of the Shearman Act.”  Since minor league players are employed by MLB under a “farming structure” used to develop future major league players, the Court found that “the employment of minor league players is precisely the type of activity that falls within the antitrust exemption for the business of baseball.”  The Court also dismissed out of hand plaintiffs’ suggestion that it “refuse[] to apply stare decisis” due to economic changes that have occurred since the decision in Federal Baseball

    This decision indicates that, while the “business of baseball” exemption to the federal antitrust laws may seem anachronistic, it is destined to persist absent an additional act of Congress or reconsideration by the Supreme Court.