Tossed: Court Dismisses Minor League Wage Increase

Over the last couple years, the battle for higher wages for minor league baseball players has been fought on several legal fronts. The highest profile challenge has come in the form of litigation claiming that the minor league pay scale — under which minor league players often earn as little as $3,000 to $7,500 per year — violates the nation’s minimum wage laws.

At the same time, however, a separate lawsuit filed last December attacked the problem from a different legal angle. In Miranda v. Office of the Commissioner of Baseball, four former minor league players asserted that Major League Baseball’s minor league pay practices violate the Sherman Antitrust Act. In particular, the players argued that MLB and its thirty teams have illegally conspired to fix minor league players’ salaries at below-market rates not only by agreeing to a uniform, league-wide salary scale for minor league players, but also by artificially reducing the size of the signing bonuses that entry-level players receive under MLB’s domestic and international signing bonus pool rules.

As I noted at the time the Miranda case was filed last year, the plaintiffs in the suit faced at least one major impediment in their attempt to challenge the minor league pay practices under the Sherman Act: baseball’s antitrust exemption. Indeed, soon after the case was filed, MLB filed a motion asking the court to dismiss the lawsuit in light of its antitrust immunity.

Given that precedent, it should come as little surprise that Judge Haywood Gilliam dismissed the Miranda suit on Monday, concluding that MLB was shielded from the plaintiffs’ claims by virtue of its antitrust exemption.

The plaintiffs’ attorneys in the Miranda suit had hoped to convince the court not to apply the antitrust exemption in the case by arguing that none of the U.S. Supreme Court’s prior decisions on the topic had ever considered the legality of the minor league pay scale. As one might expect, this argument failed to persuade Judge Gilliam.

Instead, the judge determined that he was bound to follow the decision issued earlier this year by the Ninth Circuit Court of Appeals in the city of San Jose’s lawsuit against MLB. In the San Jose case, the appellate court had ruled that baseball’s antitrust exemption broadly extends to the entire “business of baseball.” Judge Gilliam believed that MLB’s minor league pay practices — like the relocation restrictions at issue in the San Jose lawsuit — were thus clearly encompassed by the sport’s antitrust exemption.

Despite dismissing the plaintiffs’ case, Judge Gilliam was not entirely unsympathetic to the plight of minor league baseball players. In particular, he acknowledged that:

Plaintiffs have a persuasive policy argument that the Defendants should not be afforded carte blanche to restrict the pay and mobility of minor league players without answering to the federal antitrust laws that apply to the employment of major league baseball players and, for that matter, all other professional sports leagues. But that policy argument must be made to Congress or the Supreme Court.

While the Miranda plaintiffs thus struck out at the trial court level, they can still appeal Judge Gilliam’s decision to the appellate court. Unfortunately for the plaintiffs, they also face slim odds of prevailing on appeal, as their case will go to the same Ninth Circuit court that just rejected San Jose’s lawsuit against MLB earlier this year. So it appears unlikely that the former minor league players will fare any better at the court of appeals level than did San Jose.

As a result, the Miranda plaintiffs’ best — and in all likelihood only — hope is that the U.S. Supreme Court will be willing to overturn baseball’s antitrust exemption and subject MLB to the Sherman Act. Along those lines, the Supreme Court will soon decide whether to grant San Jose’s appeal in its lawsuit against MLB, with a decision expected in early October.

If the Supreme Court were to grant San Jose’s appeal and subsequently overturn baseball’s antitrust exemption, then the plaintiffs in the Miranda suit would be allowed to proceed with their claims against MLB under the Sherman Act. However, as I discussed back in June, the Court is unlikely to agree to hear San Jose’s case due to some problematic procedural issues in the suit.

Even if the Supreme Court declines to hear San Jose’s appeal, however, the Miranda plaintiffs could always elect to pursue a Supreme Court appeal of their own. And while any lawsuit faces long odds of successfully reaching the Supreme Court — with the Court only accepting around 1-2% of appeals in any given year — the Miranda case may very well prove to be more attractive to the Court than the San Jose suit since it does not present the same procedural issues that threaten to trip up San Jose’s appeal.

Assuming that the Miranda plaintiffs do appeal Monday’s decision, the Ninth Circuit would likely issue a ruling in the case sometime in late 2016 or early 2017. That would put the Miranda suit on track for a Supreme Court appeal sometime in 2017, with a decision — should the Court agree to hear the case — then likely coming in 2018.

On the other hand, even if the Supreme Court does not agree to overturn baseball’s exemption in the San Jose or Miranda suits, that does not mean that the battle for higher minor league wages is doomed. Indeed, Monday’s decision has no bearing on the two cases seeking to challenge MLB’s minor league pay practices under the nation’s minimum wage laws. And while the minimum wage cases face potential challenges of their own, they nevertheless have always had a much stronger chance of success than the Miranda suit in light of baseball’s antitrust immunity.

So despite Monday’s decision, the fight over MLB’s minor league pay scale is likely to continue on well into the foreseeable future.