MLB Largely Prevails in Scout-Pay Lawsuit

One can be forgiven for having forgotten about the Wyckoff v. Office of the Commissioner of Baseball lawsuit. The class action case — filed back in July 2015 by Jordan Wyckoff, a former scout for the Kansas City Royals — accused Major League Baseball and its teams of violating both federal antitrust and employment law by colluding to deprive amateur and professional scouts both of the minimum wage and overtime compensation. Specifically, the case contended that MLB teams have unlawfully agreed not to compete with one another for the services of their scouts, with the result that wages for these employees have, in some cases, been depressed to as little as $5 per hour once all of their various job duties have been accounted for.

Late last year, MLB filed a motion asking the court to dismiss Wyckoff’s antitrust claims under its historic antitrust exemption. At the same time, MLB also argued that the suit’s minimum-wage claims should be dismissed against all but the Royals, since Wyckoff — the only plaintiff named in the suit who was asserting a violation of the minimum-wage and overtime rules — had never been employed by any of the other 29 MLB clubs.

Since then, the parties have waited… and waited… and then waited some more for the court to issue a ruling. That wait mercifully came to an end this past Thursday when Judge Paul Gardephe finally released his long-anticipated decision, more than nine months after MLB’s motion had first been filed.

In his opinion, Judge Gardephe granted MLB all of the relief it had requested, dismissing the overwhelming majority of Wyckoff’s case. As a result, while Wyckoff can continue to pursue his claim for back-pay from the Royals, any hopes he may have had that his suit would spur more systemic changes to the market for MLB scouts appear to have fallen short.

By way of a refresher, Wyckoff’s case alleged that MLB teams had illegally depressed the market for scouts in several ways, all in violation the Sherman Antitrust Act. For instance, Wyckoff contended that unless a scout’s current team has given him permission to interview with another club, then MLB teams are prohibited from negotiating with the scout since he is currently under contract with another franchise. Similarly, the lawsuit also asserted that MLB teams will often agree that any high-level, front-office executive moving from one team to another may not bring other employees (including scouts) with him from his former team to his new employer, another mechanism that allegedly depressed the competition for scouts.

Although these Sherman Act claims faced an obvious hurdle in the form of baseball’s antitrust exemption, Wyckoff’s attorneys presumably had hoped that the court would construe that immunity narrowly, allowing the plaintiffs to proceed with their antitrust case against the league. This hope was not entirely farfetched. Although it is true that a majority of courts nationwide have traditionally held that the sport’s exemption broadly protects the entire “business of baseball,” federal trial courts in New York — where the Wyckoff case was filed — have historically taken a more circumscribed view the doctrine, finding, for instance, that it did not apply to antitrust lawsuits challenging MLB’s employment of umpires or — more recently — its television broadcasting practices.

Despite the fact that New York precedent seemingly favored the plaintiffs, Judge Gardephe nevertheless elected to follow the majority interpretation of the antitrust exemption, ruling that the doctrine broadly shields MLB from scrutiny under the Sherman Act. In particular, Judge Gardephe believed that the prior New York decisions took an unreasonably narrow view of the baseball exemption, finding the broader interpretation adopted by the majority of courts was more consistent with the underlying Supreme Court decisions that created the sport’s antitrust immunity. And because the employment of baseball scouts is central to the business of baseball, he thus concluded that the Wyckoff plaintiffs’ antitrust claims must be dismissed in light of MLB’s antitrust exemption.

In addition, Judge Gardephe further agreed with the league that 29 of the 30 MLB teams ought to be dismissed from Wyckoff’s minimum-wage and overtime claims, as well. This ruling was not unexpected since Wyckoff’s attorneys had themselves admitted last December that they only intended to proceed with a minimum-wage claim against the Royals — Wyckoff’s former employer — and not any of the other 29 teams. Indeed, because no one named as a plaintiff in the suit had alleged that they’d been illegally underpaid by any other franchise, the plaintiffs lacked the legal standing to proceed with their minimum-wage claims against the other 29 clubs.

Thus, although Thursday’s decision was not a complete victory for MLB, it was still a big win for the league. Rather than face leaguewide antitrust liability for its scout-hiring and -retention practices — and potential triple damages should the plaintiffs have ultimately prevailed under the Sherman Act — the case’s scope has now been significantly reduced, with the only issue remaining that of whether the Royals illegally deprived Wyckoff (or any of the team’s other scouts) of the minimum-wage and overtime compensation.

Moving forward, then, one can anticipate that the plaintiffs will attempt to appeal Judge Gardephe’s ruling regarding the applicability of baseball’s antitrust exemption to the case. However, because Thursday’s ruling did not resolve Wyckoff’s case in its entirety, the plaintiffs will not have an immediate, automatic right to appeal. Instead, they will have to ask Judge Gardephe to approve the case for a so-called interlocutory appeal, allowing them to seek appellate review of his decision while the remainder of the case proceeds against the Royals at the trial-court level.

Interlocutory appeals are, as a general rule, rarely granted. That having been said, if Judge Gardephe believes that the scope of baseball’s antitrust exemption is an issue upon which there is “substantial ground for difference of opinion” — which isn’t entirely implausible given the conflicting precedents in New York — then he could decide to let the plaintiffs immediately appeal the decision. If not, then Wyckoff will likely have to wait until his minimum-wage claim against the Royals has been resolved to appeal Thursday’s ruling, a process that could take several years.

Even if the plaintiffs are allowed to immediately appeal last week’s decision, however, they would still need to convince the Second Circuit Court of Appeals that Judge Gardephe had erroneously ruled regarding the scope of baseball’s antitrust exemption. Considering that Gardephe’s ruling was consistent with the majority interpretation of the doctrine, this may be a difficult argument to make. Indeed, other federal appellate courts that have previously considered the scope of baseball’s antitrust exemption have consistently adopted the broader, “business of baseball” interpretation of the doctrine that Judge Gardephe applied in Wyckoff.

As a result, Wyckoff’s best hope of prevailing on his antitrust claims was probably to receive a favorable ruling on the antitrust-exemption issue at the trial-court level. Because other New York federal trial courts had previously adopted narrow interpretations of the doctrine, it was not inconceivable that Judge Gardephe would follow suit, allowing Wyckoff to proceed on his Sherman Act claims against the league. In that case, the plaintiffs could have pressed for a favorable settlement from the league before MLB had a chance to seek a second opinion on appeal.

But now that Judge Gardephe has departed from these prior, more favorable precedents, Wyckoff’s chances of prevailing on appeal are probably relatively slim. Thus, Thursday’s ruling has likely doomed the plaintiffs’ hopes of securing anything more than whatever back pay Wyckoff may be owed by the Royals.

Nathaniel Grow is an Associate Professor of Business Law and Ethics and the Yormark Family Director of the Sports Industry Workshop 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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mike sixelmember
5 years ago

That exemption really needs to go away. Not that I expect Congress to ever do that….