MLB Scores Big Win in Minor-League Wage Lawsuit

Last October, the plaintiffs in the lawsuit challenging Major League Baseball’s minor-league pay practices scored an important, albeit preliminary, victory when the court tentatively certified the case as a collective-action lawsuit. As I noted at the time, this meant that rather than have to file individual lawsuits for every player allegedly denied the minimum wage or overtime, current and former minor-league players could instead opt-in to the existing litigation and have their claims against MLB tried together in the existing case (a much more efficient and less costly proposition).

As I also noted at the time, however, this initial victory was potentially short-lived. Under the applicable legal rules, even though the court had preliminarily certified the minor leaguers’ case as a collective action, the court withheld a final judgment on the matter until after the parties had gathered more evidence regarding the extent to which the players’ legal claims were “similarly situated” to one another’s (i.e., whether the work experiences and legal claims of the plaintiffs already named in the lawsuit were roughly equivalent to those of the rest of the players who might join the case).

That additional evidence has now been collected and, on Thursday evening, the judge in the minor-league wage lawsuit ruled that the plaintiffs had failed to show that their cases were similarly situated. Thus, the judge “decertified” the case as a collective action.

This means that the roughly 2,200 current and former minor-league players who had joined the case since October have now been tossed back out of the lawsuit. These players must now instead file their own individual lawsuits against MLB should they wish to seek compensation for their alleged underpayment.

Perhaps more importantly, Thursday’s ruling also dramatically lowers the odds that the existing lawsuit will force MLB to make significant, league-wide changes to its minor-league pay practices. Thus, the decision represents a major victory for the league in the minor-league wage litigation.

Technically, Thursday’s ruling covered two legally distinct, but closely related, issues. While MLB had asked the court to overturn its preliminary certification of the case as a “collective action,” the plaintiffs simultaneously requested that the court approve the case for “class-action” status. The primary difference between a collective-action and class-action lawsuit is that, in the former, potential plaintiffs must affirmatively opt-in to the case in order to be covered by its outcome; in the latter, anyone potentially covered by the lawsuit must affirmatively opt-out of the case in order to avoid being bound by its result. Thus, by securing class-action status, the plaintiffs would have expanded MLB’s potential scope of liability considerably, giving the minor leaguers even more potential leverage over the league.

In a decision released on Thursday evening, however, Magistrate Judge Joseph Spero sided with MLB on both counts. Specifically, he determined that the additional evidence collected by the parties since October revealed that there were potentially significant differences between the claims of individual minor-league players, and as a result, he believed that it would be impractical to allow the plaintiffs to move forward with their case on a collective basis.

In particular, Judge Spero ruled that minor-league players’ legal claims differed in at least three important respects: (1) the types of work-related activities in which the players engaged; (2) the amount of time they spent engaged in those activities; and (3) the amount they were compensated for these activities.

With respect to the first issue, Judge Spero concluded that significant differences existed between MLB organizations as to the types of activities their minor leaguers were expected to perform, and thus the extent to which these efforts constituted compensable “work.” For instance, Judge Spero highlighted offseason training programs — an area in which the plaintiffs had sought compensation for minor leaguers — noting that different teams employed markedly different approaches as to both the mandatory and supervised nature of their players’ winter conditioning work.

Depending on the amount of supervision and control each MLB team asserts over its players in the offseason, these training programs may or may not constitute “work” under the law, and thus may or may not be subject to minimum-wage and overtime requirements. As a result, the judge ruled that it would be difficult, if not impossible, to collectively determine whether MLB teams had violated the rights of all minor-league players in this respect in a single trial.

Similarly, Judge Spero noted that there were significant differences in the amount of time that minor leaguers spent engaged in work-related activities during the playing season, as well. Indeed, the evidence collected since October showed that players reported to the stadium at different times and spent differing amounts of time preparing for games. Consequently, the judge once again believed that it would be difficult to categorically determine the number of hours that all minor-league players had worked — and thus determine if they’d each individually been underpaid — in a single lawsuit.

Finally, Judge Spero concluded that substantial differences existed between players with respect to their compensation. Not only did the evidence show that players received signing bonuses of vastly different sizes, but also that other pay differences existed between players depending on the monthly salary they’d been able to individually negotiate with their MLB team each season, as well as whether they were entitled to receive college scholarship benefits from their team. As a result, the judge once again believed that these differences made it impractical to try to assess whether thousands of minor leaguers had each been unlawfully underpaid by MLB in a single trial.

In light of these differences, Judge Spero not only denied the plaintiffs’ request to certify the case as a class-action lawsuit, but he also overturned his prior, preliminary approval for the suit to move forward as a collective action. Once again, this means that the 2,200 players who have signed on to the suit since October will no longer be able to proceed with their claims in the existing case. Instead, they will have to each pursue their own individual lawsuits should they wish to seek compensation from MLB.

Thus, Thursday’s decision was a significant victory for MLB. Even if MLB ultimately loses the existing case, this means that the league will now, at worst, only be forced to pay damages to the 40 or so players currently named as plaintiffs in the case. MLB’s potential financial exposure in the suit was thus reduced considerably on Thursday.

At the same time, Thursday’s ruling also makes it significantly less likely that the existing lawsuit will bring about the type of systemic, league-wide change to MLB’s minor-league pay practices that the plaintiffs were hoping to secure. Had MLB been found to have illegally underpaid thousands of minor-league players in the case, the league almost certainly would have been forced to modify its pay practices. Conversely, a verdict that the league merely underpaid the few dozen players now remaining in the case is much less likely to have the same effect. As a result, MLB potentially dodged a major bullet last night.

That having been said, MLB is not entirely out of the woods yet. The plaintiffs could — and likely will — immediately appeal Judge Spero’s ruling by asking an appellate court to overrule Thursday’s decision and certify the case as a class action. That process would likely take a year or more, however, and even then probably faces relatively long odds of success given the potential differences between players identified by Judge Spero on Thursday.

Alternatively, the plaintiffs could elect to move forward by filing hundreds or thousands of individual lawsuits against MLB on behalf of all of the players tossed out of the existing case on Thursday. Not only would this strategy significantly increase MLB’s legal costs, but if these cases began to experience some success then they could collectively place enough pressure on MLB to force the league to reform its minor-league pay practices.

At the same time, however, this sort of effort would certainly be a much more costly and time-intensive process for the plaintiffs, as well. It remains to be seen whether the plaintiffs’ existing legal counsel — or other attorneys — will be willing to expend the time and effort necessary to pursue such a strategy, especially since the ultimate odds of success in any individual case may vary to a large extent based on the factors identified in Judge Spero’s ruling from Thursday.

All in all, then, the significance of Thursday’s ruling for MLB cannot be understated. The league won a huge victory in the minor-league wage litigation, one that significantly reduces the chances that MLB will be forced to change its minor-league pay practices in any appreciable way.

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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Melvin Hendrix
7 years ago

How could any fair-minded person not understand that minor league wages is systemic, despite the fact that players are paid individually. Unbelievable.

7 years ago
Reply to  Melvin Hendrix

Law and justice are not synonymous.

7 years ago
Reply to  Melvin Hendrix

Like it or not, the courts threw this whole anti-trust issue into Congress’ lap many decades ago – and because congresscritters are corrupt as hell, they have chosen to side with the potential donor/lobbyist class in their neatly gerrymandered districts. It’s repugnant – but it will apparently continue. This is not some issue where the courts are going to override what elected legislatures have chosen to allow.

7 years ago
Reply to  jfree

Baseball’s antitrust exemption is entirely separate from this lawsuit. The players are suing under the FLSA, not the Sherman Act or Clayton Act.

7 years ago
Reply to  Roger21

Of course. They can’t sue under anti-trust because MLB has an explicit exemption. But that exemption is the only reason MLB can indenture the players when they are in the minors. That exemption is why MLB has a monopsony on hiring baseball players – and is thus why players don’t get paid.

Dave T
7 years ago
Reply to  Melvin Hendrix

This post explained the legal rationale. Breaking it down to a quick summary, a couple of the core questions here are “how many hours do minor league baseball players work” and “how much are they paid”. And the judge decided that each of these vary enough by individual player that it’s not possible to make blanket determinations in a single trial.