Major League Baseball (MLB) has reached a settlement in federal and state court lawsuits filed by minor league teams that lost their affiliations with big league clubs. The settlement puts an end to the potential challenge that could have been brought against MLB’s antitrust exemption in the U.S. Supreme Court.
The lawyer representing the suing teams, James W. Quinn, announced on Thursday that all three cases have been resolved through a confidential settlement. MLB, however, declined to comment on the matter.
In September 2020, MLB reduced the minimum guaranteed minor league affiliation agreements from 160 to 120 and took over the operations of the minors from the National Association of Professional Baseball Leagues. This move faced opposition from the parent companies of several teams, including the Staten Island Yankees, Tri-City ValleyCats, Salem-Keizer Volcanoes, and Norwich Sea Unicorns.
In December 2021, these parent companies filed a lawsuit in the U.S. District Court in Manhattan, alleging that MLB’s actions violated the Sherman Antitrust Act. They claimed that an agreement between competitors had artificially decreased and restricted the output in the market for Minor League Baseball (MiLB) teams associated with MLB clubs.
The settlement of these lawsuits brings an end to a contentious legal battle and ensures a resolution for both MLB and the affected minor league teams. The details of the settlement, however, remain undisclosed to the public.
Tri-City and Norwich Lawsuit
In January 2021, Tri-City and Norwich were sued in state court. The trial, originally scheduled for November 13, was set to address whether MLB had provided improper inducements to minor league teams and whether the teams had breached their agreements with the former minor league governing body.
Dismissal of Federal Lawsuit
The federal lawsuit, filed in U.S. District Court in Manhattan, was dismissed due to the antitrust exemption. This decision was later upheld by the 2nd U.S. Circuit Court of Appeals.
Appeal to the U.S. Supreme Court
Lawyers representing the minor league teams then made a request to the U.S. Supreme Court, seeking a review of the decision in hopes of overturning baseball’s antitrust exemption. This exemption was initially established by a 1922 Supreme Court ruling. However, at the time of writing, the Supreme Court had not yet decided whether to take on the case.
Baseball’s Antitrust Exemption
Baseball was granted an antitrust exemption by the Supreme Court during the Federal League case. In this case, Justice Oliver Wendell Holmes stated that baseball was not considered interstate commerce but rather exhibitions exempt from antitrust laws. The court reaffirmed this exemption in subsequent cases such as the 1953 ruling involving New York Yankees farmhand George Toolson and the 1972 Curt Flood decision. It was expressed that any changes to the exemption should be enacted by Congress.
Application of Antitrust Laws to MLB
In 1998, a law was passed that applied antitrust laws to MLB’s treatment of major league players at the major league level.