MLB’s Antitrust Exemption: A Derelict in the Stream of the Law

MLB's Antitrust Exemption: A Derelict in the Stream of the Law.

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On June 26, 2017, the Ninth Circuit Court of Appeals affirmed a decision dismissing a suit by Minor League Baseball players complaining of wage suppression and violation of federal antitrust laws by Major League Baseball. The players alleged that MLB’s hiring and employment policies violate antitrust laws through restraint of horizontal competition between franchises and artificial and illegal depression of minor-league salaries. The court based its decision on the foundation that Minor League Baseball, like MLB, is entitled to exemption from antitrust laws and may not be found liable.

The Baseball Antitrust Exemption, the Curt Flood Act, and the Suit

In 1922, the U.S. Supreme Court determined that MLB is entitled to exemption from federal antitrust laws because its exhibitions did not constitute interstate commerce. This decision has been described as “a derelict in the stream of the law” based on “a narrow, parochial view of commerce.” The expansion of the Commerce Clause and the increased out-of-state revenue for MLB teams have caused the foundation for baseball’s antitrust exemption to become increasingly tenuous. The Curt Flood Act of 1998 rolled back MLB’s antitrust exemption with regard to labor issues and major-league players’ contracts; however, the Act retained the exemption for other issues, such as minor-league players’ contracts and franchise ownership issues. Minor leaguers, who did not unionize and gain representation during negotiations incident to the Act’s passage, are left with little recourse to combat the alleged collusion.

Minor-league players are reportedly paid well below minimum wage and often make less than $7,500 a year.

Similar suits have complained of antitrust-law abuse, and this decision is a continuation of MLB’s antitrust exemption as it applies to minor-league players. The players are currently considering appealing the issue to the Supreme Court or asking the Ninth Circuit to reconsider its holding. If this case is ultimately unsuccessful, it appears likely that minor-league players will continue to combat unfair wages through alternative legal theories.