The Minor-League Wage Battle Might Be on the Verge of Ending by Sheryl Ring March 20, 2018 On Sunday, the Washington Post reported that the omnibus spending bill currently being considered by Congress may include statutory language insulating Major League Baseball from liability for not paying minor leaguers minimum wage. This may be the first time on FanGraphs that we are going to be discussing an omnibus spending bill. But it’s relevant in this case. Readers are likely familiar with the lawsuits filed by Minor League Baseball players alleging that their pay — generally around $1,100 per month for first-year players, with no pay for spring training — is a violation of a law called the Fair Labor Standards Act because it failed to pay minor leaguers even minimum wage. Thus far, the suits have had mixed results: one suit that attacked Major League Baseball’s antitrust exemption was dismissed last summer, but another suit, which has been pending for over three years now, remains extant. Paying minor leaguers minimum wage would cost MLB franchises an extra $5.5 million per year. Minor leaguers are not members of the MLBPA. Nathaniel Grow already covered the problems these suits face in a pair of excellent articles I recommend highly. My own take, as someone who has personally litigated about two dozen class actions in one form or another, is that one suit, in particular, has a shot. (The reasons why are complex enough to deserve their own article, but if you’re curious, that case is Senne et al. v. Office of the Commissioner of Baseball et al., and I think that Garrett Broshuis, the plaintiffs’ lead attorney, had the right idea in the very clever way he pleaded his complaint.) That said, even if none of the lawsuits had any legal merit whatsoever — which is not, I believe, the case — defending such suits is expensive, and there is always risk inherent to any contested litigation. For example, Senne is currently on appeal for the Ninth Circuit Court of Appeals to determine if the case provides what is called a “certifiable class” — in other words, whether the court will allow the named plaintiff to sue on behalf of himself and also all of those other people in the same or a substantially similar position as that named plaintiff. In layman’s terms, Aaron Senne and his co-plaintiffs want to sue on behalf of a group of other minor leaguers, and the Ninth Circuit will decide if they can or not. That’s a big deal, because class actions are often called by some attorneys “in terrorem litigation.” That’s because the certification of a class means that the risk is magnified by an order of magnitude for the defendant. To explain why, let’s take a peek behind the curtain of how some civil attorneys value cases.* (If the next two paragraphs are confusing, that’s fine; just skip to the one after that.) Let’s assume, for the sake of argument, that a single minor leaguer’s case is worth about $1,000 (it’s not, but this is a nice round number, and it’ll work for this exercise), plus any attorney fees and court costs. Major League Baseball’s “risk” at this point — its “worst case scenario payout” — is limited to its own attorney fees expended through trial and appeal, the other side’s full attorney fees expended through trial and appeal (some of the plaintiffs’ claims are “fee-shifting”), and that $1,000. Even if both sides hired the most expensive attorney in the United States, there’s still a cap to how high this risk can go. Let’s say that each side puts in 100 hours of time. At an attorney billing rate of $1,000 an hour, that would produce a $201,000 bill plus costs. That’s the worst case scenario, remember. Multiply that by the plaintiff’s expected probability of winning — say, 50%, for our purposes — and this case is worth about $100,500. *This is a gross oversimplification. Now, let’s repeat this exercise with a class action. If there are 5,000 people in the class, and they each get $1,000, now the total exposure is $5,000,000. Sometimes there’s an econometrician or other expert involved to estimate damages. Add the attorney fee risk — much higher now, maybe as much as tenfold, because class actions are harder and more labor-intensive — and you’re looking at a total worst case scenario for the defendant of about $7,000,000 plus costs. So this same case, as a class action, is worth $3.5 million, and that’s before we get to notice and administration costs, fee multipliers, and all sorts of really technical stuff which brings the total much higher. And there’s also the potential for classwide injunctive relief — a requirement that the defendant do something by court order. That’s a lot of information. What’s important to note, though, is that class action lawsuits are more expensive and riskier for the defendant, and therefore more likely to end in settlements. It’s pretty rare to have a class case go to trial for that reason. So if you’re a corporate defendant, often the best way to avoid a class action (aside from following the law) is often to make it impossible to be sued at all for whatever it is you’re doing. Enter the “Save America’s Pastime Act,” a bill designed solely for the purpose of insulating Major League Baseball from liability for failure to pay minor leaguers minimum wage. The text of the bill adds “any employee who has entered into a contract to play baseball at the minor league level” to the list of exceptions in the Fair Labor Standards Act. MLB hired prominent lobbying firm The Duberstein Group to support the bill and urge members of Congress to do the same. But the Save America’s Pastime Act didn’t garner much traction in Congress as a standalone bill… … until this latest omnibus spending bill, as part of which Congress has to authorize spending a lot of money on a lot of different things. If forced to authorize each item separately, it would take a Long Time. So instead, congress rolls a bunch of appropriations (spending authorizations) together into a single bill (called an “omnibus”) so it can be voted on just once. And sometimes (every time) other stuff finds its way into an omnibus bill, because it’s a lot harder to vote against an omnibus bill when there’s a lot of stuff in there that a congressperson likes. On this particular occasion, Congress is strongly considering adding provisions related to heated topics like immigration, abortion, and the export-import bank. Congress is also considering the addition of the Save America’s Pastime Act to the omnibus bill, as well. The President of Minor League Baseball, Pat O’Connor, told the Washington Post on Sunday that lawsuits like Senne posed an “existential threat” to Minor League Baseball and proposed requirements that were unworkable: “We’re not saying that [minor league pay] shouldn’t go up. . . .We’re just saying that the formula of minimum wage and overtime is so incalculable. I would hate to think that a prospect is told, ‘You got to go home because you’re out of hours, you can’t have any extra batting practice.’ It’s those kinds of things. It’s not like factory work. It’s not like work where you can punch a time clock and management can project how many hours they’re going to have to pay for.” While O’Connor states (correctly) that the bill doesn’t prohibit minor-league pay from increasing, he neglects to mention that it does not require pay increases, either. O’Connor doesn’t propose how or when minor-league pay is going to go up, and right now minor leaguers are making $3,000 to $7,000 per year, well below the poverty line. O’Connor appears to be erecting a straw man here, as well: if Congress wanted to exempt baseball players from overtime regulations, they could do so without exempting them from minimum-wage requirements. The Atlantic reported in 2016 that, after team dues and other deductions, some players in the minor leagues bring home $300 per month and a $25 per diem. Nor are minor leaguers paid in the offseason. To put it a different way, USA Today reported in 2014 that minor leaguers made half as much money as fast-food workers. This, of course, is occurring at a time when Major League Baseball is surpassing $10 billion in revenue. If nothing else, it’s surprising that no team is willing to exploit a potentially clear inefficiency by attracting minor leaguers with better pay. It remains to be seen if the Save America’s Pastime Act, or language with the same goal, ends up in the omnibus bill. It’s also no sure thing that the Act, as proposed, would put a complete end to all class action lawsuits on this issue; those based on state law minimum wage violations could – could – well survive, albeit in a greatly reduced state, and courts in some states and municipalities have been sometimes loathe to follow federal law when their own laws provide more protection. That said, state law is fragmentary in this area – we have 51 different sets of rules, and some might or might not be preempted. So even if the statute doesn’t drive a stake through the heart of these suits, it will almost certainly severely curtail them.