UB sports law expert sees possible SCOTUS challenge to baseball antitrust status

BUFFALO, N.Y. – Major League Baseball’s 100-year-old exemption from antitrust laws that protect against unfair competition faces another review after four minor league teams this week filed a federal lawsuit challenging that exemption status.

The case could remove the exemption Major League Baseball (MLB) had been granted by the U.S. Supreme Court for many years, according to Helen “Nellie” Drew, director of the Center for the Advancement of Sport in the University at Buffalo School of Law.

“It has finally happened,” says Drew, who is frequently quoted in regional and national media on sports law. “After months of conjecture, debate and then a lengthy period of silence, several minor league baseball clubs that were eliminated as part of MLB’s restructuring have filed suit against MLB under the antitrust laws.”

At this point, the case brought by some of the eliminated minor league teams is in a federal court in Manhattan. It challenges MLB’s controversial 2019 decision to contract the minor league system from 160 teams to 120. The teams — former affiliates of the New York Yankees, Hostin Astros, San Francisco Giants and Detroit Tigers – said this was a “horizontal agreement” between MLB and its 30 franchises that violates the Sherman Act.

According to the complaint, big league baseball teams are meant to compete with one another for affiliations with the minor league outfits that feed them players. By conspiring to reduce that competition pool, the minor league teams alleged, MLB and its teams effectively engaged in a group boycott in order to cut costs.

The complaint acknowledges that its Sherman Act claims are barred by the Supreme Court's century-old ruling in Federal Baseball Club v. National League, which found that professional baseball did not count as interstate commerce as it was understood at the time.

But the minor league teams want to use this lawsuit as a vehicle to overturn the so-called baseball exemption, which experts agree has aged poorly. The teams said the high court's June ruling in NCAA v. Alston, which found that the NCAA is not exempt from antitrust scrutiny, has cleared the way for the justices to eliminate baseball's antitrust carveout.

"The time is at hand to cast the baseball exemption into the dustbin of antitrust history," the minor league clubs wrote.

The teams will quickly try to kick the case up to the Supreme Court, according to their attorneys.

If that happens, the present makeup of the U.S. Supreme Court could mean the existing exemption MLB has enjoyed from antitrust laws could change, according to Drew.

“Given the current makeup of the Supreme Court, it will be interesting to see if MLB’s 100-year-old antitrust exemption will survive,” says Drew.

Drew said one of her favorite topics as a professor of sports law is MLB’s historic antitrust decision in Federal Baseball Club v. National League.

“It was written by Justice Oliver Wendell Holmes, arguably one of the greatest ever to serve on the Supreme Court,” says Drew. “The trick, however, is that it really isn’t an antitrust decision. Holmes never got to substantive antitrust analysis because he determined that baseball, in 1921, was not interstate commerce, and so the Sherman Act did not apply.”

Drew said this latest lawsuit marks a major revisiting of the antitrust issue and how it relates to MLB.

“There have been two retread opinions (Toolson v. New York Yankees and Flood v. Kuhn),” says Drew. “The Supreme Court declined to revisit the issue even while acknowledging its less than sterling legal underpinnings.”

Drew said it is worth noting MLB itself supported the Curt Flood Act, which removed the exemption in so far as it applied to MLB labor matters.

“But, meanwhile, the exemption remains,” Drew says, “providing protection most notably for the minor league farm system which has given fans like me the opportunity to enjoy baseball in its purest form.”

Legal rumblings for the latest antitrust challenge started in February, according to Drew.

“Today, that case was filed,” says Drew. “Nostalgic Partners LLC, d/b/a the Staten Island Yankees et al v. the Office of the Commissioner of Baseball will be heard in the Southern District of New York, assuming it survives what one assumes will be an immediate motion to dismiss by MLB counsel.”

Drew is available to comment on the case, its progress and its possible implications in professional sports.

The century-old antitrust exemption for MLB has been, by the Supreme Court’s own admission, an “anomaly,” Drew says. “It will be interesting to see what the results of this challenge will be,” she says.