An End-of-the-Year MLB Legal Update

It’s been a busy year in the courtroom for Major League Baseball. From its minor league pay practices and fan safety rules, to its scout hiring and television broadcasting practices, MLB spent 2015 defending itself from a variety of different lawsuits across the country. While I’ve covered many of these cases throughout the year, I’ll provide a final, year-end status update on three of MLB’s on-going lawsuits: The Payne suit challenging MLB’s fan safety protocol; the MASN broadcast royalty dispute between the Baltimore Orioles and Washington Nationals; and the Wyckoff suit contesting MLB’s scout-hiring and pay practices.

Payne v. Office of the Commissioner of Baseball

The issue of MLB fan safety was front and center in 2015 following a series of incidents in which fans sustained serious injuries after being struck by foul balls or broken bats. In light of these events, MLB announced earlier this month that it was issuing a new set of non-binding safety recommendations to its teams, encouraging the league’s franchises to take steps to install additional netting between the dugouts, while also making it clearer to fans at the time they buy their tickets whether particular seats are shielded from flying objects.

Despite these recommendations, MLB continues to face a lawsuit that seeks to force the league to take even greater steps to protect its fans. As I noted in July, in Payne v. Office of the Commissioner of Baseball, a California federal court has been asked to order MLB to mandate that all 30 of its teams install foul-pole-to-foul-pole netting in their stadiums. As I also noted at the time the case was filed, though, the suit faced several substantial legal hurdles — not the least of which was the fact the lead plaintiff in the suit appeared to lack the requisite legal standing-to-sue, since she had never been injured while attending an MLB game.

Likely recognizing this defect in the case, the plaintiff’s attorneys filed an amended complaint in October, adding two new plaintiffs to the suit, both of who previously had been hit by foul balls. The new complaint also went to greater (and more visceral) lengths to illustrate the damage that foul balls can inflict on fans, showing a number of relatively graphic photos of fans who had suffered injuries at games.

Despite these additional allegations, MLB nevertheless filed a motion to dismiss the Payne case in November, urging the court to toss the suit on several grounds. First, the league picked up on the standing issue I discussed in July, arguing that none of the three named plaintiffs in the case had a sufficient legal basis to sue. Specifically, in addition to noting the first plaintiff — Gail Payne — had never been injured at a game, MLB contended the second plaintiff — Robert Gorman, author of the book “Death at the Ballpark” — had only been injured at a minor league game, and thus didn’t have legal grounds to file suit against the 30 major league clubs.

Meanwhile, although MLB acknowledged the third plaintiff, Stephanie Smith, was alleged to have been injured at a Los Angeles Dodgers game, the league stressed she had not indicated that she had plans to attend another game in the future, and therefore arguably did not present the continuing risk of future injury necessary to legally support a court order of the sort requested in the case.

In addition to the standing issue, MLB’s motion to dismiss also asserted that the suit was barred by the so-called “baseball rule.” As I explained in June, under the baseball rule, courts have historically held that teams are not liable for injuries a fan might sustain from an object leaving the field of play because fans have legally assumed the risk of being injured when attending a baseball game. MLB asserted in its motion that the Payne lawsuit must be dismissed pursuant to these prior judicial precedents.

Finally, for good measure, MLB argued the California federal court in which the Payne suit was filed lacked jurisdiction over many of the league’s 30 teams. The league previously asserted this same defense successfully in the Senne minor league wage lawsuit, which resulted in the court dismissing eight teams from that case earlier this year.

In response, the Payne plaintiffs have disputed MLB’s characterization of the facts and the law, contending the court should allow the case to proceed to trial. A hearing on the matter has been set for Feb. 26, with the court likely to decide whether to dismiss the case in the weeks that follow.

Even if the plaintiffs survive this initial attempt by MLB to have the case tossed out of court, though, it still appears as if the Payne suit ultimately faces long odds of success.

The MASN Case

Last month, a New York state court issued its long awaited decision in the MASN broadcast-rights-fee dispute between the Baltimore Orioles and Washington Nationals. As I noted at the time, the court’s opinion represented something of a split decision for the parties. On the one hand, the court granted the Orioles and its Mid-Atlantic Sports Network (MASN) much of their requested relief, tossing out an arbitration award from MLB’s Revenue Sharing Definitions Committee (RSDC) that would have forced MASN to pay the Nationals roughly $60 million per year in broadcast-rights fees.

In particular, the court emphasized the involvement of the Nationals’ legal counsel, the Proskauer Rose law firm, in the case. Because the Proskauer firm had extensive ties to MLB — having represented the league and its teams in a variety of matters — the court believed the firm’s representation of the Nationals in the MASN dispute presented an appearance of potential impropriety, warranting a reversal of the RSDC’s arbitration award.

Despite tossing the RSDC’s arbitration award, the court refused to order MLB to send the dispute to more neutral arbitrators, as Baltimore and MASN had requested. Instead, the court suggested that so long as the Nationals retained new legal counsel for the dispute, MLB would be within its rights to send the matter back to the RSDC to hold a new hearing and issue a new award in the case.

Not surprisingly, both sides have notified the court they intend to appeal the decision. Specifically, MASN and the Orioles are appealing the court’s decision to allow MLB to send the matter back to the RSDC. Meanwhile, MLB is appealing the court’s determination that Proskauer Rose’s involvement in the matter warranted a reversal of the RSDC arbitration award.

As a result, we would still appears to be months — if not years — away from a resolution of the matter. Unless the appellate court sides with MLB by reinstating the RSDC’s award, then the issue will have to go through another round of arbitration — before either the RSDC or a panel of neutral arbitrators — following the appeal’s resolution. Given the contentious history between the parties in the case, it seems likely that whichever side loses a new arbitration would then file yet another lawsuit challenging the outcome in court.

So it’s reasonable to anticipate the MASN dispute will continue to drag on for the foreseeable future.

Wyckoff v. Office of the Commissioner of Baseball

The Wyckoff case is the latest in a series of lawsuits challenging MLB’s pay practices. While earlier cases had predominantly focused on the treatment of minor league baseball players, the Wyckoff case identified another group of MLB employees who are allegedly paid a sub-minimum wage: scouts. Specifically, the Wyckoff suit alleges that MLB scouts can be paid as little as $5 per hour once all of their job duties are properly accounted for.

In addition to alleging these pay practices violate federal minimum wage law, the Wyckoff suit contended MLB’s scout hiring practices violate federal antitrust law. In particular, Wyckoff asserted that MLB teams have entered into illicit agreements not to hire away one another’s scouts, resulting in a lack of competition between teams that has further depressed scouts’ salaries.

There have been several developments in the Wyckoff suit since our last look at the case in July. First, the plaintiffs filed an amended complaint in the suit in October, adding a new plaintiff to the case. In addition to the original plaintiff — Jordan Wyckoff, a former part-time scout for the Kansas City Royals — a second former MLB scout — Darwin Cox, previously a full-time scout for the Colorado Rockies — has added his name to the lawsuit.

In addition to adding a plaintiff to the case, the new complaint further substantiated MLB’s alleged antitrust violations. In particular, on pages 21 to 23 of the new filing, the plaintiffs contend MLB has implemented a so-called “offset policy,” in which the league regulates salaries paid to employees who have signed a contract with a new franchise after being dismissed from their former team. The Wyckoff plaintiffs allege this system harms scouts by lowering the pay that scouts receive, and further deters teams from signing away scouts from other clubs.

Following the filing of the new complaint in the Wyckoff case, MLB submitted a motion asking the court to officially dismiss most of the lawsuit. MLB’s motion began by predictably arguing that Wyckoff’s antitrust claims should be thrown out in light of baseball’s historic antitrust exemption. In addition, the league contended that 29 of the 30 MLB teams should be released from the suit’s claims under the Fair Labor Standards Act because only a single scout — the case’s original plaintiff, Jordan Wyckoff — had asserted that he’d been paid a sub-minimum wage.

In a rare moment of agreement, the Wyckoff plaintiffs conceded that their minimum wage claims should be dismissed against all but the Royals, since Kansas City was the only team currently alleged to have paid its scouts less than the minimum wage.

The plaintiffs disputed MLB’s contention that the case fell within the scope of baseball’s antitrust exemption, however. Instead, the plaintiffs emphasized prior rulings by New York courts adopting a relatively narrow view of the exemption, contending that because scouts are not directly involved in the staging of professional baseball games, their antitrust claims were not covered by the sport’s exemption. Indeed, as I noted earlier this year, courts have historically been divided regarding the extent to which MLB’s activities are protected by the exemption.

MLB’s motion to dismiss the Wyckoff case is still pending before the court, so it will likely be several months before we discover which view of baseball’s antitrust exemption the court will adopt. At a minimum, though, the case will continue forward on Wyckoff’s claim minimum wage claim against the Royals, regardless of the court’s ruling on the antitrust issue.

We hoped you liked reading An End-of-the-Year MLB Legal Update by Nathaniel Grow!

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Nathaniel Grow is an Associate Professor of Business Law and Ethics at Indiana University's Kelley School of Business. He is the author of Baseball on Trial: The Origin of Baseball's Antitrust Exemption, as well as a number of sports-related law review articles. You can follow him on Twitter @NathanielGrow. The views expressed are solely those of the author and do not express the views or opinions of Indiana University.

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hartmtown
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hartmtown

This is an awesome review. Thanks, as always, Nathaniel, for keeping us abreast of the legal side of the game.

Psychic... Powerless...
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Psychic... Powerless...

Completely agree.

JCCfromDC
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JCCfromDC

Thirded.

I’m not sure that MLB would have appealed the MASN decision if Angelos hadn’t – the writing was on the wall. That said, if they win their cross-appeal, I think that’s game over.

And then the teams can start talking about the next five year period (2017-2021). Oh, boy …