A Century of Turmoil: Examining the Modern Effects of MLB’s Antitrust Exemption on Labor Relations in Major and Minor League Baseball

I. Introduction

The year 2022 marked the centennial anniversary of a day that both Major League Baseball (MLB) and the United States Supreme Court have lived to regret. Over the last century, MLB has been permitted to grow and expand unconstrained by federal antitrust laws due to a general exemption bestowed upon it by the Supreme Court in 1922.^[1] Under a formalist-era view of the Commerce Clause, the Supreme Court announced that professional baseball was not engaged in interstate commerce, and was therefore not subject to federal antitrust laws.^[2] Although this original reasoning was abandoned half a century later, the Court stated its prior jurisprudence was an “aberration confined to baseball” and decided to affirm the exemption on grounds of stare decisis.^[3] When combined with the Court’s hesitance to extend a similar exemption to any other professional sports leagues, America’s pastime was effectively placed on a pedestal above all others.^[4]

This disparate treatment of professional sports leagues regarding application of federal antitrust laws is best exemplified by examining the history of labor disputes in the sports arena. These labor disputes have been at the core of several of the most prominent legal challenges within the professional sports industry. For much of its history, baseball was generally protected from these challenges by its general antitrust exemption.^[5] Conversely, leagues like the National Basketball Association (NBA) and National Football League (NFL) were subject to a number of challenges to their labor practices under federal antitrust laws in the twentieth century.^[6] While those leagues were forced to fight their legal battles in court under the threat of antitrust penalties, MLB was shielded from such threats and subject to labor challenges only under its limited grievance procedures.^[7]

In 1998, Congress attempted to resolve this discrepancy by passing the Curt Flood Act as an amendment to the Clayton Act.^[8] Although purporting to apply federal antitrust laws to issues of labor within the sport of professional baseball, three limitations to the Act call this seemingly absolute declaration into question.^[9] First, although initially stating that the federal antitrust laws apply to professional baseball, the Act specifically limits this application to employment matters affecting major-league players.^[10] Second, the Act states that it will not affect application of the nonstatutory labor exemption under the Fair Labor Standards Act (FLSA).^[11] Finally, the Act undertakes a series of near-redundant provisions to make clear that it does not apply to the practices of Minor League Baseball (MiLB) or its players.^[12] Presently, it is this final limitation that is causing MLB some of its most significant legal and societal perception issues.^[13]

This Comment considers the future of MLB’s antitrust exemption and whether it currently provides any benefits in the area of labor disputes. This analysis begins by chronicling the events that led to the development of the exemption, first in the courts and later in Congress. Next, this Comment discusses the impact of the antitrust exemption in MLB by examining the state of labor relations both pre- and post-Curt Flood Act. Finally, this Comment examines the historical treatment of MiLB and what may be in store in the new era of unionization.

II. The Interstate Commerce Conundrum

To begin this discussion, it is necessary to provide a historical account of the trilogy of Supreme Court decisions that granted MLB its general exemption from federal antitrust laws and the statutory response by Congress. This history provides a foundation for the present legal landscape in professional baseball, while highlighting the impact of Congress and the Courts on the growth of MLB in the United States. Further, this history serves to highlight the disparity in treatment of MLB versus other professional sports leagues, which is necessary to understand how Congressional pressure has been able to force MLB to take some of its current procompetitive measures.

A. The Supreme Court’s Trilogy

To find the source of the current legal issues in professional baseball, one must look no further than the Supreme Court’s holding in Federal Baseball Club v. National League. In Federal Baseball Club, the Baltimore Terrapins of the Federal League^[14] brought an antitrust suit against the National League, alleging a conspiracy to monopolize the sport of baseball.^[15] Specifically, the Federal League alleged that the National League “bought up” some of the Federal League teams and induced them to join the National League.^[16] In finding for the National League, Justice Holmes decreed that the sport of professional baseball was not engaged in interstate commerce, and thus did not fall within the constraints of the Sherman Act.^[17]

To support its holding in Federal Baseball Club, the Court first stated that baseball is not engaged in interstate commerce because interstate travel for games is merely incidental to the “essential thing,” which is the game itself.^[18] The games, although put on for money, were not considered “commerce” by the Court in its view of the commonly accepted use of that term.^[19] In essence, Justice Holmes stated, “[t]hat which in its consummation is not commerce does not become commerce among the States because [interstate] transportation” has taken place.^[20] Although the Court’s reasoning was brief and seemingly matter-of-fact, it has been argued that the holding was justified under the Court’s view of the Commerce Clause at that time.^[21] Regardless, it is inarguable that this holding provided a seemingly irrevocable benefit to professional baseball.

In Toolson v. New York Yankees, the Supreme Court faced a second challenge to MLB’s practices and the antitrust exemption.^[22] In a single paragraph, the Court stated that it would not overrule its decision in Federal Baseball Club.^[23] However, unlike the majority in Federal Baseball Club, the Court in Toolson premised its holding on a deference to Congress. First, the Court referenced that Congress had been aware of its prior holding and had thus far neglected to pass any legislation applying the federal antitrust laws to professional baseball.^[24] Second, in noting that professional baseball had been left to develop for thirty years on the understanding that it was not subject to federal antitrust laws, the Court held that “if there are evils in this field which now warrant application to it of the antitrust laws it should be by legislation.”^[25] Although the Court premised its inaction on a deference to Congress to resolve the issue of baseball and antitrust, this so-called inaction instead further cemented the Court’s judicially created exemption.

By the time Toolson reached the Supreme Court, the legitimacy of the Court’s holding in Federal Baseball Club had already begun to receive a spotlight. In his dissent in Toolson, Justice Burton took aim at the majority opinion in Federal Baseball Club, which he joined in 1922, and argued that the exemption was provided solely because the activities of professional baseball did not amount to interstate commerce.^[26] In reexamining the extent of MLB’s interstate activities at the time of Toolson, Justice Burton argued that the federal antitrust laws should apply.^[27] Despite this view serving as a dissent in Toolson, the following years proved that Federal Baseball Club was an anomaly within antitrust jurisprudence.^[28]

In 1972, a half-century of confusion over professional baseball and antitrust laws came to a final conclusion. In Flood v. Kuhn, Curt Flood, a star outfielder for the Philadelphia Phillies, brought a lawsuit alleging violations of federal antitrust laws by MLB over its reserve clause system.^[29] Despite presenting an opportunity for the Supreme Court to reexamine the general exemption it granted professional baseball fifty years prior, and in light of its intermediate decisions declining to extend the exemption beyond baseball, the Court refused to disturb the central holding of Federal Baseball Club.^[30] Although the Court finally declared that the sport of professional baseball was engaged in interstate commerce, the Court described Federal Baseball Club and Toolson as “aberration[s] confined to baseball.”^[31] Under the doctrine of stare decisis, the Court held that the repeated affirmation of those cases over a period of fifty years entitled them to be upheld again.^[32] Further, much like the Court in Toolson, the Court in Flood called on Congress to address the issue of antitrust and professional baseball if it disagreed with the Court’s holding.^[33] However, it would be nearly thirty years before such legislation was passed.^[34]

When viewed in succession, it is fair to question the Supreme Court’s motives for affording professional baseball this disparate treatment under federal antitrust laws. One argument could be that the Court was attempting to refrain from “legislating from the bench,” by leaving the ultimate decision to Congress.^[35] However, it can also be argued that the Court did not want to unnecessarily restrain what was the most popular sport in the United States at that time.^[36] Regardless of the true underlying reason, the practical effect was that the Court both granted, and later sustained, a complete exemption from federal antitrust laws for professional baseball.^[37] Ultimately, it was the Court’s decision in Flood that set the stage for eventual Congressional action.^[38]

B. The Curt Flood Act

Although it took nearly thirty years after the Court’s decision in Flood, Congress finally made its position known regarding application of federal antitrust laws to professional baseball through passage of the Curt Flood Act of 1998. Specifically, the Act began by stating broadly:

[T]he conduct, acts, practices, or agreements of persons in the business of organized professional major league baseball directly relating to or affecting employment of major league baseball players to play baseball at the major league level are subject to the antitrust laws to the same extent such conduct, acts, practices, or agreements would be subject to the antitrust laws if engaged in by persons in any other professional sports business affecting interstate commerce.^[39]

Under the title of this provision, one would imagine that the Act applied the federal antitrust laws to the sport of professional baseball in all respects.^[40] However, the Act provided a number of limitations to its application and coverage. First, as relevant to the context of this Comment, the Act applied federal antitrust laws to professional baseball only to the extent such conduct by MLB is “directly relat[ed] to or affecting employment of major league baseball players.”^[41] Therefore, despite broadly claiming that the Act applied antitrust laws to MLB, in practice, the Act applied only to employment matters within the highest level of the sport.^[42]

Second, the Curt Flood Act made numerous overtures to ensure it explicitly excluded Minor League Baseball from its coverage. Under the limitations section, the Act stated that it would not apply to matters “relating to or affecting employment to play baseball at the minor league level . . . or any reserve clause as applied to minor league players.”^[43] Next, the Act stated that it would not apply to “the relationship between organized professional major league baseball and organized professional minor league baseball, or any other matter relating to organized professional baseball’s minor leagues.”^[44] Finally, as a more implicit rejection of coverage for Minor League players, the Act created a cause of action only for Major League players.^[45] At the time of enactment, these provisions were proclaimed as a win for minor-league baseball and security for its future.^[46] However, modern times have certainly brought this view into question.^[47]

Despite the importance of the preceding limitations to the Curt Flood Act, Congress made the strongest statement of its intent in section 3(d)(4).^[48] Under that provision, the Act stated succinctly, “[n]othing in this section shall be construed to affect the application to organized professional baseball of the nonstatutory labor exemption from the antitrust laws.”^[49] Inclusion of this provision is so significant because it negated much of what the Act purported to accomplish—the application of federal antitrust laws to labor relations in MLB.^[50]

III. The Nonstatutory Labor Exemption Safe Harbor

As a consequence of the trilogy of Supreme Court decisions granting MLB its general antitrust exemption and the passage of the Curt Flood Act, the issue of legal rights and remedies of baseball players at all levels has been a continuing debate. Although the discussion in Part II provides a general framework for understanding the legal landscape within professional baseball, those legal principles have done little to settle the baseball labor debate once and for all. Therefore, much like the game of baseball itself, the labor rights and remedies afforded to professional baseball players have evolved over time, subject to a variety of external influences.^[51]

One such external influence on the rights of professional baseball players was the creation of the nonstatutory labor exemption. To understand the impact of the exemption on professional baseball, and sports in general, it is first necessary to explain its origin and relevance. The nonstatutory labor exemption was the product of decades of jurisprudence regarding the interplay of unions and antitrust law.^[52] Stated simply, “[t]he nonstatutory labor exemption to the federal antitrust laws removes from antitrust scrutiny restraints on trade that are the product of a collective bargaining agreement between labor and management.”^[53]

Within the context of sports, the nonstatutory labor exemption plays a fundamental role in the collective bargaining process between players and the league. Specifically, it exempts agreed-upon terms in a collective bargaining agreement from antitrust scrutiny, no matter how uncompetitive the terms may be.^[54] However, this immunity is not unlimited. For a collectively bargained term to be exempt from antitrust scrutiny, it must be a mandatory subject of bargaining, the result of bona fide arm’s length bargaining, and related to the employment relationship.^[55] It is within this framework that labor relations within baseball and other sports took shape post-Flood.

A. Development of the Exemption in Other Sports

As the general antitrust exemption was limited to professional baseball, other professional sports were left to confront labor disputes through other means. In Mackey v. National Football League, the courts had their first opportunity to consider the applicability of the nonstatutory labor exemption to labor and antitrust challenges.^[56] In Mackey, the Eighth Circuit considered whether the NFL’s “Rozelle Rule”^[57] violated section 1 of the Sherman Act.^[58] In finding that the Rozelle Rule did in fact violate the Sherman Act, the court initially held that the Rule did not meet the three-prong test required for application of the nonstatutory labor exemption.^[59] In evaluating the exemption’s requirements, the court first noted that the Rozelle Rule met two prongs of the test as it was related to the employment relationship and affected a mandatory subject of bargaining.^[60] However, the court held that the nonstatutory labor exemption was inapplicable because it found that the NFL had imposed the Rule on a union that was in a relatively weak bargaining position.^[61] Therefore, the NFL received no antitrust protection and the court struck down the Rule.^[62]

Although Mackey and its immediate aftermath were viewed as a victory for professional athletes in terms of possessing the requisite ability to challenge unfair labor practices under the Sherman Act,^[63] the courts’ treatment of labor disputes in the 1980s suggested otherwise. In 1987, Leon Wood, a first-round draft choice of the Philadelphia 76ers of the NBA, initiated a challenge to the NBA’s salary cap, college draft, and prohibitions against player corporations as violations of the Sherman Act.^[64] In affirming the district court’s dismissal of Wood’s claim, the Second Circuit cited findings that the provisions in question satisfied the three-prong test.^[65] Further, as a policy matter, Judge Winter advanced his opinion that “player/management issues” should be decided under labor policy principles, rather than antitrust law.^[66] In attempting to reconcile this view and the holding of Wood with the Eighth Circuit’s treatment of the collective bargaining agreement in Mackey, it is questionable whether there was truly a sufficient factual difference to justify providing the NBA protection under the nonstatutory labor exemption, but not the NFL.^[67] Regardless of the answer, it is at least notable that the Court reached its decision while also making it known that it did not wish to disturb these “unique solutions” to labor issues in sports.^[68]

Returning to the development of the nonstatutory labor exemption in professional football, NFL players experienced a setback as well after Wood. In 1987, following expiration of the NFL’s collective bargaining agreement, a dispute arose over the NFL’s First Refusal/Compensation system, which served as the substitute for the Rozelle Rule, and the players went on strike.^[69] After the month-long strike ended without agreement on a new collective bargaining agreement, a group of players filed an antitrust action in Powell v. National Football League, against the NFL over the First Refusal/Compensation system.^[70] However, unlike in Mackey, the players were unsuccessful.^[71] In reaching this decision, the Eighth Circuit clarified its position on two issues. First, the court stated that the nonstatutory labor exemption may continue to be invoked after a collective bargaining agreement has expired.^[72] Second, the court held that where collective bargaining negotiations are ongoing, antitrust remedies are unavailable, and remedies must instead be sought under federal labor laws.^[73] However, despite benefitting the NFL in this instance, this holding created a narrow carve-out for the players to bring an antitrust suit when the negotiations were no longer “ongoing.”^[74]

Following Powell, the players decided to pursue this narrow carve-out by decertifying their union and effectively terminating collective bargaining negotiations.^[75] The players then renewed their antitrust challenges.^[76] However, despite a jury verdict in their favor,^[77] the players’ ultimate resolution in this instance was the signing of a new collective bargaining agreement between the NFL and the players.^[78] Although this resolution brought peace with regard to labor disputes, the peace was short-lived.

The year 1996 served to bring closure to the years of uncertainty regarding application of the nonstatutory labor exemption in professional sports. In Brown v. Pro Football, a class of 235 developmental squad players brought an antitrust challenge against the NFL and Resolution G-2.^[79] Here, writing for the majority, Justice Breyer took the opportunity to make the Court’s view explicitly clear—“antitrust and labor law do not mix.”^[80] To that end, Justice Breyer stated, “to give effect to federal labor laws and policies and to allow meaningful collective bargaining to take place, some restraints on competition imposed through the bargaining process must be shielded from antitrust sanctions.”^[81] Thus, echoing the sentiments of the Eighth Circuit in Powell, the Court landed on the side of protecting the NFL and its owners with regard to labor disputes involving collective bargaining.^[82] However, again following the lead of the Eighth Circuit, Justice Breyer also left open the possibility for players to bring antitrust challenges by decertifying their union and ending negotiations.^[83] Therefore, NFL players were once again left with a difficult decision—“either give up [their] ability to engage in collective bargaining or give up [their] antitrust rights.”^[84]

Unsurprisingly, Justice Breyer’s opinion in Brown was heavily criticized as damaging to professional athletes who seek to avoid the enforcement of anticompetitive labor terms. According to one scholar, “Justice Breyer’s decision plainly reduce[d] the potential value of the antitrust weapon from a treble damage bomb to a child’s pop gun that will necessarily remain predominantly at the bottom of the toy chest.”^[85] Although this language may seem extreme at first, it is important to emphasize the impracticality of decertifying a union.^[86] As a result, antitrust challenges have only been brought in the rarest of occasions post-Brown.^[87]

B. Impact of the Exemption Pre-Curt Flood Act

Returning to the world of professional baseball, MLB was provided far stronger protection from player suits prior to passage of the Curt Flood Act. Prior to the Act, concerted activity under Section 7 of the National Labor Relations Act (NLRA)^[88] was the only tool that the Major League Baseball Players Association (MLBPA) and its players could use to pressure MLB’s management into accepting the players’ bargaining terms.^[89] Therefore, unlike players in the NBA and NFL who were legally permitted to bring antitrust suits against their respective leagues after jumping through some hoops, the options for MLB players were far more limited.^[90] However, led by an experienced union head, MLB players were able to effect change through their limited grievance procedures.

The first step in this process came in 1968 when, under the leadership of Marvin Miller,^[91] the MLBPA and MLB owners negotiated the first collective bargaining agreement in professional sports.^[92] The agreement is notable, not only because it was the first of its kind in professional sports, but also because it included formal grievance procedures for players to have their voices heard.^[93] With this new power in hand, it did not take long for the MLBPA to take aim at its repeated enemy—the reserve clause.^[94] The stage for this battle took the form of an arbitration hearing regarding John Alexander “Andy” Messersmith’s contract for the 1975 MLB season.^[95] Specifically, the MLBPA challenged the reserve clause provision in the 1973 Collective Bargaining Agreement, which stated that if “the Player and the Club have not agreed upon the terms” of a new contract for the next season, then “the Club shall have the right . . . to renew [the] contract for the period of one year on the same terms.”^[96] On this issue, the MLBPA argued that a player’s contract could be renewed in this manner for only a single year, after which the player would become a free agent.^[97] In contrast, MLB was of the opinion that contracts could be renewed each year if an agreement was not reached.^[98] In sharp contrast to the preceding five decades, the independent arbitrator sided with the players.^[99]

Despite this monumental victory for the players, the MLBPA chose to disregard this victory in favor of reaching a new agreement with the MLB owners.^[100] While the motives for this decision are understandable and commendable,^[101] if the MLBPA leadership hoped that compromising in this instance would quell future anticompetitive conduct by the MLB owners, then such hope was in vain. Over the next two decades, the MLBPA was forced to repeatedly return to the arbitration battleground to protect its players.^[102] For example, the MLB owners were alleged to have conspired to lower players’ salaries on three different occasions during the 1980s.^[103] In each case, the owners were found guilty and forced to pay damages for lost salaries.^[104] Similarly, following the expiration of the Collective Bargaining Agreement (CBA) in 1994, the owners attempted to institute a salary cap to lower costs.^[105] After the players refused and an agreement could not be reached, the players went on strike during the 1994 season.^[106] The parties continued to negotiate throughout the remainder of 1994; however, when an agreement could not be reached before the start of the 1995 season, the owners decided to walk away from the bargaining table and play the season with replacement players.^[107] The ensuing legal battle concluded with a federal district court finding that the MLB owners violated their duty to bargain in good faith by walking away from the negotiating table, and the court ordered the parties to continue negotiating on the Collective Bargaining Agreement.^[108]

Viewed in isolation, each of the preceding events can and should be viewed as victories for the sport of baseball and its players. However, with the majority of these disputes taking place outside of the courtroom, their resolutions did little to calm the legal environment of professional baseball as a whole. For example, the hesitant approach taken by the Supreme Court from Federal Baseball Club^[109] through Flood may have settled the issue of antitrust and labor relations, but its language created confusion in the lower courts who sought to apply its holding to other aspects of professional baseball outside of labor disputes.^[110] Thus, when the players and owners finally decided to come together and ask Congress for clarity,^[111] Congress could no longer avoid taking a stance.

C. Impact of the Exemption Post-Curt Flood Act

When Congress declared through the Curt Flood Act that the employment practices of Major League Baseball would be subject to federal antitrust laws, it seemed that the tides were finally turning in favor of the players.^[112] However, although the Act was heralded as representing a fundamental change to labor relations in professional baseball, the reality is that the Act came far too late to effect any meaningful change.^[113] The reason for this is twofold.

First, the Curt Flood Act failed to effect any meaningful change because it merely placed professional baseball players in the same position as players in other professional leagues.^[114] Despite those players in other leagues having more protection than baseball players, the landscape was far from perfect.^[115] Following Powell and Brown, it had become universally recognized that professional athletes subject to collective bargaining agreements, who were seeking to bring antitrust claims against their respective leagues, must first decertify their union.^[116] However, while this option is legally available, it is quite drastic and not a practical solution.^[117]

To exemplify the unreasonableness of this solution, it should be noted that the MLB players have not chosen to pursue decertifying their union since it became available through the Curt Flood Act.^[118] It should equally be noted that this is not for a lack of labor disputes. In 2021, the first work stoppage in baseball took place since the 1994 strike that helped fuel passage of the Curt Flood Act.^[119] At its core, the dispute centered largely around the sentiment among players that the MLB owners had disproportionately gotten their way in the two previous collective bargaining agreements.^[120] However, even though the players possessed the ability to decertify and bring antitrust claims, they declined to pursue that option.^[121] Thus, at least in this respect, the Curt Flood Act by itself has yet to provide meaningful change.

Second, the Curt Flood Act has failed to fundamentally alter the nature of labor relations in professional baseball because it came too late to effectively change the MLBPA’s bargaining power.^[122] By the time the players and owners came together to request help from Congress through the Act, the sport of baseball itself was not in a good place. Following the 1994 strike, there was a growing sentiment among baseball fans that the strike was merely “a dispute between multimillion-dollar athletes and a multibillion-dollar league.”^[123] The fallout of this dispute caused a plunge in fan attendance and viewership numbers, which some argue the MLB has never fully recovered from.^[124] Thus, when Congress passed the Curt Flood Act, there appeared to be an understanding between the players, MLB, and even Congress that the sport of baseball could not afford another strike.^[125]

Therefore, the Act resulted in an environment where the players had the legal right to sue the league, or to strike in the event of labor disputes, but neither of those options were practically available.^[126] In other words, instead of crafting laws that improved the MLBPA and players’ bargaining power relative to the league, Congress instead provided a self-destruct button if either party chose not to play ball.^[127] However, in the more than two decades since the enactment of the Curt Flood Act, these same external factors, which hampered the players’ bargaining power in its immediate aftermath, have slowly come around to benefit the players.^[128] Thus, while baseball has still failed to reach the same heights as before the 1994 strike, baseball is at least in a place where it was able to successfully survive a work stoppage and further improve labor conditions for its players.^[129]

To exemplify this argument, reference to the recent 2021 MLB lockout is beneficial.^[130] On December 1, 2021, the MLB’s Collective Bargaining Agreement expired and simultaneously began what would soon become the longest lockout in the history of professional sports.^[131] Although a number of issues led to the lockout, the dispute was primarily related to money and player salaries.^[132] In the four years preceding the lockout, player salaries declined for four consecutive years, largely due to MLB’s competitive balance tax.^[133] To resolve this issue, there was an agreement between the owners and MLBPA to raise the tax threshold but a disagreement over the amount of such increase.^[134]

Discussion of this dispute presents a perfect opportunity to explain how the Curt Flood Act has actually benefitted MLB players in recent years. As with other professional leagues, ownership cannot unilaterally impose terms in a collective bargaining agreement, and thus requires the consent of the players’ bargaining agent.^[135] Therefore, on paper, the players are still left with the options of decertification or compromise.^[136] However, the 2021 lockout provided MLB players an option that had not yet been available in prior disputes—standing firm at the negotiating table.^[137] Stated simply, one reason this option became available to the players was the changing dynamics among baseball fans in their opinions on labor disputes. Polls conducted at that time demonstrated that, unlike the labor disputes in 1994 or 2002, MLB fans were in favor of the players and placed primary blame for the work stoppage on MLB leadership.^[138] Therefore, much like changing attitudes among fans influenced Congress in passing the Curt Flood Act,^[139] fans again shifted the balance of power at the bargaining table during the 2021 lockout. What was the result? The MLB was forced to make true concessions, which allowed for enhancements across the board for the labor environment in professional baseball.^[140]

To evaluate the modern legacy of the Curt Flood Act and its impact on labor relations in professional baseball, it is necessary to accept two truths. First, the Act did benefit MLB players in the sense that it placed them on a level playing field with athletes in other professional leagues.^[141] Second, it is also arguably true that external influences have been a necessary component in making use of the Act for the benefit of the players.^[142] Therefore, Major League players seemed poised to carry this momentum, along with the power of the Curt Flood Act, into future negotiations and continue to improve the sport of baseball as a whole. However, it is not just Major League players that are making strides despite the shortcomings of the Act.^[143]

IV. The Minor League Dilemma

At each major milestone in the century of jurisprudence and legislation regarding professional baseball, one specific group has seemingly always ended up on the losing side—Minor League Baseball (MiLB). Whether one looks judicially to Federal Baseball Club and its progeny, or legislatively to the Curt Flood Act, much of history regarding labor relations has either failed to discuss the Minor Leagues or explicitly placed them on a different playing field.^[144] However, recent years have demonstrated that this trend may be coming to an end.^[145]

A. Historical Treatment of the Minor Leagues

To begin a discussion of the Minor Leagues, it is important to first provide some background information. By rule, each MLB is required to have a certain number of Minor League affiliates.^[146] From a sheer numbers standpoint, the Minor Leagues consist of over 6,000 players, as compared to the 1,200 currently in MLB.^[147] As for labor rules and regulations, MiLB players were traditionally excluded from the MLBPA.^[148] However, even though the Minor Leagues have been kept from the bargaining table, the MLB collective bargaining agreements have often included provisions regulating Minor League players.^[149] Thus, while Major League players have had decades of advocates fighting to—among other things—improve player salaries, Minor League players have long been paid below the federal minimum wage.^[150] If that alone were not bad enough, those advancements for Major League players have, at times, come at the expense of Minor League players.^[151] Unfortunately, the many problems that have historically been faced by MiLB can be succinctly stated as one commenter put it:

Whether one examines the wages, working conditions, grievance procedure, or several other issues, minor league players have been left behind relative to their major league counterparts and even relative to the average working person in the country. The bargaining history in MLB has helped major league players but has left minor league players powerless in their own pursuits.^[152]

If everything discussed above were not enough to cause a double-take, one must only take a step further and inquire into the history of MiLB and professional baseball’s antitrust exemption.

Returning to this common point of discussion—MLB’s antitrust exemption—it should be noted that the holdings of Federal Baseball Club, Toolson, and Flood were not directed solely at Major League Baseball by name. Instead, these decisions spoke of “professional baseball” as a whole.^[153] As a result, both MLB and MiLB shared in a collective misery under the antitrust exemption until passage of the Curt Flood Act.^[154] Although the Act was not perfect by any means,^[155] it did accomplish its stated purpose of removing MLB’s antitrust exemption as applied to the employment of Major League players.^[156] However, MiLB was not permitted to share in this relief. Instead, the Act specifically stated that it did not apply to “any conduct, acts, practices, or agreements of persons engaging in, conducting or participating in the business of organized professional baseball relating to or affecting employment to play baseball at the minor league level.”^[157] To justify this decision, the Act’s proponents echoed sentiments that Minor League Baseball in its then-current state could not survive.^[158]

What should not come as a surprise at this point is that these arguments in favor of maintaining the antitrust exemption came from MiLB leadership.^[159] However, their original arguments during debate over the Curt Flood Act were not so limited. MiLB proponents initially opposed the entire Act, believing that “no compelling public policy could be advanced for jeopardizing professional grassroots baseball to provide Major League players with another litigation weapon of dubious value in future labor disputes.”^[160] Although this argument failed to persuade against the Act as a whole, MiLB was able to secure its own personal protection.^[161] Thus, as a result, a rift was created that continues to this day. The antitrust laws apply to the employment practices of Major League Baseball but not Minor League Baseball.^[162] Further, the labor issues suffered by Minor League players are not limited to just those suffered by Major League players.^[163]

B. The Save America’s Pastime Act and the Seasonal Exemption

As referenced, MiLB is unique in the sense that, despite its close affiliation with MLB, its structure is quite dissimilar.^[164] One important difference is the structure of the player employment relationship. Under MLB rules, an affiliated MiLB team is required to issue every player the same Uniform Player Contract (UPC).^[165] The UPC states that players receive a salary during the playing season only and will receive no compensation for the rest of the year.^[166] However, the duties and obligations under the UPC remain in force throughout the year, and thus, players are required to participate in offseason conditioning programs, spring training, and other out-of-season programs without compensation.^[167] Therefore, the end result of this arrangement under the UPC is that, historically, many Minor League players worked roughly half of the year uncompensated, while the salary they did receive kept them below the poverty line.^[168]

To defend this arrangement, both MiLB and MLB have traditionally looked to section 213(a)(3) of the FLSA.^[169] This provision, in part, exempts from federal minimum wage and overtime provisions:

[A]ny employee employed by an establishment which is an amusement or recreational establishment . . . if (A) it does not operate for more than seven months in any calendar year, or (B) . . . its average receipts for any six months of such year were not more than 33 [and a third] per centum of its average receipts for the other six months of such year.^[170]

This “seasonal exemption” was originally enacted to preserve those establishments whose operations were seasonal and “weather-dependent,” such as amusement parks and beaches.^[171] Applying this intent to the sport of baseball, one can initially invoke a similar mental impression between a day at the ballpark and a day at the beach. However, the initial courts who considered applicability of the exemption did not come to a conclusive answer so easily.

Application of the seasonal exemption to MiLB reached the courts on two notable occasions in the 1990s, creating two divergent decisions which emphasize the tenuous application of this exemption. First, in Jeffery v. Sarasota White Sox, the Eleventh Circuit found that the exemption did apply to the Sarasota White Sox because: (1) its seasonal operation lasted less than seven months and (2) the team’s financial statements indicated that it generated its revenue almost exclusively during the season.^[172] The court supported these findings by explaining its view that the relevant inquiry to determine the length of seasonal operation must look to the length of time the employer is actually operational.^[173] Further, in determining the timing of revenue generated, the court noted that “[v]irtually all of Defendant’s receipts are derived from spring training games played . . . in March and minor league games played at the complex from April through August.”^[174]

Conversely, in Bridewell v. Cincinnati Reds, the Sixth Circuit found instead that the seasonal exemption did not apply to MiLB.^[175] In doing so, the court questioned the Eleventh Circuit’s decision in Jeffery as it noted that court’s failure to discuss the method of accounting used to support its finding that the team met prong (B) of the exemption.^[176] Conducting its own inquiry, the Sixth Circuit found that the Reds received “significant” offseason revenue from sources like season-ticket purchases and advertising rights.^[177] Finally, to further distinguish itself from Jeffery, the Sixth Circuit noted its view that the proper inquiry for seasonal duration under prong (A) looks beyond merely the duration of the baseball season.^[178] Applying this view, the court noted that the Reds “operated year-round with no fewer than 120 employees in the ‘off-season.’”^[179]

Both Jeffery and Bridewell stood as the only challenges to the seasonal exemption in MiLB for almost two decades.^[180] However, the seeds for a universal resolution were planted in 2015 with the filing of Senne v. Kansas City Royals.^[181] In Senne, forty-five Minor League players filed a class action lawsuit against all MLB teams collectively, alleging violations under the FLSA and state wage-and-hour laws of California, Arizona, and Florida.^[182] Specifically, the players alleged: (1) teams did not pay their players during spring training, extended spring training, or instructional leagues; (2) as players are “employees” and those periods constitute compensable work, the teams unlawfully failed to pay the players minimum wage; and (3) the players are routinely required to work overtime during the season, which they are uncompensated for.^[183]

Although the MLB appeared to view the Senne complaint as innocuous at first, pressure from external sources led the MLB to undertake an all-hands-on-deck strategy.^[184] In the courtroom, MLB took great efforts to prevent the case from moving forward by attacking the suit on class certification grounds.^[185] At the same time, MLB chose to also combat the case legislatively, as it lobbied Congress to resolve the issue through an amendment to the FLSA.^[186] The result of these efforts was a partial victory for MLB on each front.

On the legislative front, MLB’s efforts proved successful as Representatives Brett Guthrie and Cheri Bustos introduced the Save America’s Pastime Act (SAPA) to the United States House of Representatives in June 2016.^[187] However, the immediate negative reaction from the public to the Act halted any progress towards its enactment.^[188] For the next year and a half, no public mention was made of SAPA until March 2018.^[189] At that time, Congress was faced with a deadline to pass its spending bill to continue funding of the government.^[190] As this was taking place, a surprising report came from the Washington Post five days before the deadline was set to expire, stating that Congress was once against considering SAPA.^[191] Soon after, the modified version of SAPA was included in a draft version of the bill, which subsequently passed.^[192]

In its final form, SAPA was enacted as an amendment to section 213(a) of the FLSA.^[193] The Act states that the FLSA’s minimum wage and overtime provisions do not apply to:

[A]ny employee employed to play baseball who is compensated pursuant to a contract that provides for a weekly salary for services performed during the league’s championship season (but not spring training or the off season) at a rate that is not less than a weekly salary equal to the minimum wage under section 206(a) of this title for a workweek of 40 hours, irrespective of the number of hours the employee devotes to baseball related activities.^[194]

The language of this provision reflects a compromise MLB made with itself to ensure passage of the Act. The MLB conceded the issue of paying minimum wage to Minor League players, although not before proclaiming to the world that this was “not a dollar-and-cents issue.”^[195] However, this concession was not a difficult one to make, as paying minimum wage under this provision meant only an extra $60 for players at the lowest levels of the Minor Leagues.^[196] Instead, MLB focused its efforts on retaining the prohibition of overtime pay, on which it succeeded.^[197] Therefore, stated simply, SAPA proclaims that Minor League players are not entitled to receive overtime compensation, so long as they are paid minimum wage during the “championship season.”^[198]

Returning to the courtroom, SAPA was only able to solve part of MLB’s larger problem. Although SAPA provided MLB what it sought, a federal exemption from the FLSA for Minor League players, its protection was not absolute. First, although the initial draft of SAPA in 2016 stated it would apply retroactively, the final draft of the Act abandoned that provision.^[199] Second, as SAPA serves as an amendment to the Federal Labor Standards Act, it provided no relief for MLB from state minimum wage and overtime laws.^[200] In the case of Senne, it was this second limit which proved most impactful. Therefore, after the Ninth Circuit eventually certified each of the proposed classes in Senne,^[201] the MLB decided to finally settle with the players.^[202] Further, as an added measure, the MLB removed its rule preventing teams from paying players outside of the season.^[203]

To bring the preceding discussion in line with the overall conversation regarding the modern impact of MLB’s antitrust exemption, the impact of the lack of antitrust scrutiny on these developments must be noted. First, absent protection from antitrust laws, there is a good chance that the Senne case never reaches the courts in the first place. At its core, Senne represented an effort by Minor League players to receive compensation for their employment efforts.^[204] Specifically, among other things, they sought to be paid at least minimum wage.^[205] However, prior to Senne and even SAPA, the UPC stood in the way, setting a rigid pay scale that limited what minor leaguers could be paid.^[206] Finding the impact of MLB’s antitrust exemption in this scenario is not difficult to do. “[S]uch an industry-wide, collectively determined pay scale would normally run afoul of the Sherman Antitrust Act.”^[207] Therefore, despite current efforts on the state-level to combat the UPC’s pay scale,^[208] MLB’s exemption continues to shield it from lawsuits brought on antitrust grounds.

Stated in even broader terms, as MiLB is currently situated, MLB has an almost unlimited power to unilaterally impose rules and regulations on Minor League players.^[209] Unlike the Major Leagues, where union representation by the MLBPA gradually improved labor conditions for its players, Minor League players have historically been far less fortunate.^[210] However, recent developments suggest this trend may be coming to an end.^[211]

C. Unionization in Minor League Baseball?

Only mere months following the centennial anniversary of Federal Baseball Club, the sport of professional baseball reached yet another milestone moment. On August 28, 2022, MLBPA leadership took the monumental step of mailing union authorization cards to all Minor League players.^[212] Although the timing of this action by the MLBPA may seem unusual, the unionization of Minor League players had been a consideration for the MLBPA dating back to introduction of SAPA in 2016.^[213] Subsequently, the MLBPA’s resolve to get this done was only strengthened following cancellation of MiLB’s 2020 season and housing concerns raised in 2021.^[214] Finally, following the MLBPA’s issuance of union authorization cards, the MLB voluntarily recognized the MLBPA as the bargaining representative of Minor League players.^[215]

Before reaching what this means for the future of MiLB, some background information on the MLB’s willingness to accept a unionized MiLB is necessary. Following Senne and its settlement, there was an implicit understanding that fundamental changes were coming to the MiLB.^[216] Although SAPA will protect MLB from any future federal wage and overtime challenges, Senne opened the door for a difficult, but possible path forward for Minor League players to bring challenges under state minimum wage and overtime laws.^[217] To avoid running afoul of these state laws, it is likely that a new problem would be created. As states possess their own minimum wage laws, universal compliance with the laws by MLB teams could easily create a situation where two similarly situated players are paid different amounts, based solely on the location of the team.^[218] Therefore, MLB appears to have exercised one of its available options to combat this potential issue—allow the players to unionize and resolve the wage issues through collective bargaining.^[219] Opponents of this unionization effort may look at this situation as an isolated issue, whose resolution could be achieved through other means. However, one must only look back to 2021 to see another problem that forced MLB’s hand.^[220]

Moving to the question of what is next, the MLB announced its desire to have a new collective bargaining agreement in place with the Minor League players before spring training in 2023.^[221] Although that deadline was narrowly missed, the parties did agree to the inaugural MiLB collective bargaining agreement in March 2023.^[222] This new Agreement represented yet another historic moment for Minor League players, providing a number of substantive changes and benefits including, among other things, offseason pay, guaranteed housing for players earning less than a certain amount, and health benefits.^[223] Considering the convoluted history of labor negotiations within professional baseball, it is likely a good sign moving forward that the Minor League players were able to make such tremendous strides in their first trip to the bargaining table.

The final dynamic to note moving forward into the young history of unionization for the Minor Leagues implicates a common foe—MLB’s antitrust exemption. Although MLB has chosen to voluntarily recognize the MLBPA as a union representative for MiLB,^[224] that decision does nothing to affect the League’s antitrust exemption as applied to MiLB. So long as the Curt Flood Act remains in effect in its current state, or barring future legislation, there has been no act of Congress or the courts to remove the exemption as applied to MiLB.^[225] Therefore, only time will tell whether Minor League players will be subject to the same tumultuous journey experienced by Major League players pre-Curt Flood Act,^[226] or if the external forces that helped Major League players make strides in recent years^[227] can similarly provide support for advancements in the Minor Leagues. The answer to this will likely depend on how well the players and MLBPA can maintain the public’s interest in labor issues relating to players they cannot regularly see or hear about on television.

V. Conclusion

Although recently celebrating its centennial anniversary, the future of MLB’s antitrust exemption is more uncertain than ever before.^[228] In the recent decision, NCAA v. Alston, Justice Gorsuch referred to MLB’s exemption as “unrealistic and inconsistent and aberration[al].”^[229] While his opinion echoed voices of the past by inviting legislators to address the problems with MLB’s exemption, Justice Gorsuch seemingly took his position a step further by suggesting the Court could decide to abolish its own judicially created exemption if Congress declines to do so.^[230] Following this invitation, members of Congress appear to have heard this warning as legislation has been introduced to remove MLB’s exemption. Most recently, Senator Bernie Sanders introduced the Save American Baseball Act, which would both remove the exemption in its entirety and repeal the Curt Flood Act.^[231]

In considering the impact of the proposed legislation, it is important to emphasize that it seeks to both remove the antitrust exemption and repeal the Curt Flood Act.^[232] The significance of this tandem approach is found throughout the history of MLB and the majority of this Comment. If Congress sought to repeal only the Curt Flood Act, MLB players would be, on paper, subject to the same labor turmoil suffered through most of the twentieth century.^[233] Therefore, while it is possible that the aforementioned external forces could alter the balance of power to some extent, meaningful legislation would likely require dissolution of the exemption as well. In other words, the most surefire method to place MLB and MiLB players on the same footing as other sports leagues is to both repeal the Curt Flood Act and dissolve MLB’s antitrust exemption.^[234] However, Congress has yet to vote on this issue.^[235]

Throughout this discussion, one question has remained most prevalent—what are the modern justifications for retaining MLB’s general exemption from antitrust laws? In a June 2022 letter in response to congressional inquiry, MLB Commissioner Rob Manfred seemed to both argue that the exemption is necessary for professional baseball, while simultaneously noting that many facets of the labor relationship would not be affected should the exemption be removed.^[236] However, one potential justification did go unmentioned by Commissioner Manfred. As it has been demonstrated, baseball has been the subject of pressure from external forces in the past as a means to reform its conduct. Therefore, it seems appropriate to suggest that one justification for the exemption is that the threat of its removal allows lawmakers to rid the MLB of unfavorable or anticompetitive conditions.

Perhaps the timing was merely coincidental, but it should be noted that the successful unionization efforts by Minor League players came just a few short months after Commissioner Manfred was subjected to congressional inquiry.^[237] However, only time will tell whether the current measures are a legitimate threat to MLB’s antitrust exemption or perhaps merely another instance of congressional compulsion. In any event, the future of MLB’s antitrust exemption is anything but certain, and it is likely that there are more chapters to come in this century-long journey.

L. Edward Martin, IV