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Minor League Baseball Players Take a Swing at MLB in Antitrust Suit

Several minor league baseball players have filed an antitrust class action against Major League Baseball, alleging that MLB and its teams operate as a cartel to impose restrictive contracts on minor league players. The suit, Miranda v. Selig, alleges that the league’s anticompetitive conduct has artificially lowered wages for the approximately 6,000 minor league baseball players employed by the league, resulting in some minor leaguers earning as little as $3,000 per year.

This antitrust suit follows on the heels of other lawsuits filed earlier this year by minor and major league baseball players who challenge MLB’s wage and hour practices under the Fair Labor Standards Act and various state wage laws. The plaintiffs in Miranda make allegations similar to those in the prior lawsuits, but seek remedies—including treble damages and injunctive relief—under the Sherman Act and Clayton Act for the MLB’s allegedly anticompetitive conduct.

The Miranda complaint focuses heavily on the “uniform player contract” that MLB requires for virtually all minor league players. The uniform player contract contains a “reserve clause,” which grants to the player’s team the exclusive contractual rights to that player for a seven-year period. During this seven-year period, the team may assign the minor leaguer’s rights to another team, or unilaterally terminate the player’s contract, but the player may not enter into a contract with another team on his own.

The plaintiffs allege that, because MLB rules prohibit a minor leaguer from playing for any team unless he agrees to the uniform player contract, and because MLB has monopoly power over professional baseball, the effect of the reserve clause is to keep minor leaguers’ salaries artificially low by precluding players from shopping their services to different teams. Furthermore, the complaint alleges, minor league players have little ability to challenge the reserve clause or uniform player contract, since many fear that they will be shut out of the major leagues if they complain about MLB’s anticompetitive practices.

Anticipating a defense that MLB may raise in response to the suit, the complaint also attacks the “business of baseball” exemption from the antitrust laws. Beginning in the early twentieth century, the Supreme Court—in a trilogy of cases, Federal Baseball Club v. National LeagueToolson v. New York Yankees, and Flood v. Kuhn—carved out an exemption from federal antitrust liability for professional baseball. The Court initially based this exemption with the rationale that the league was not engaging in interstate commerce. Although in the following decades it rejected this original rationale, the Court nonetheless has allowed the exemption to persist on stare decisis grounds.

Plaintiffs urge that the exemption should be discarded altogether, arguing that it “no longer has, if it ever had, any current basis in economic reality.” Moreover, they assert, the exemption is particularly ill-suited to minor league baseball, where the players have no union, no collective bargaining agreement, and are unable to engage in free agency to negotiate more favorable contracts.

Plaintiffs have requested that the court certify a class of thousands of minor league players who were employed under the uniform player contract during the four years preceding the lawsuit. They seek damages resulting from their loss of higher wages they would have received in a competitive market, along with injunctive relief prohibiting MLB from enforcing the reserve clause.