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From Antitrust Law Daily, August 31, 2017

Strike 2 for baseball scouts in antitrust suit against MLB

By Jeffrey May, J.D.

Baseball’s antitrust exemption barred claims brought by professional baseball scouts against the former Commissioner of Major League Baseball (MLB), the Office of the Commissioner of Baseball, and the clubs that comprise the MLB for conspiring to decrease competition in the labor market for professional baseball scouts, the U.S. Court of Appeals in New York City decided today. A judgment of the federal district court in New York City dismissing a purported class action suit alleging antitrust claims under the Sherman Act and New York’s Donnelly Act, as well as violations of the Fair Labor Standards Act (FLSA), was upheld. With two strikes against them, the scouts’ only recourse would be U.S. Supreme Court intervention (Wyckoff v. Office of the Commissioner of Baseball, August 31, 2017, per curiam).

In September 2016, the federal district court in New York City dismissed the antitrust claims against all of the defendants and the FLSA claims against all of the defendants except the Kansas City Royals—the former employer of named plaintiff Jordan Wyckoff. With respect to the antitrust claims, the district court held that the challenged conduct was within the scope of the exemption and that it was bound by precedent to dismiss the claims. The FLSA claims were largely dismissed because Wyckoff did not allege that he was personally injured by any other franchise and the FLSA claims could not be maintained against the other franchises on behalf of unidentified class members. The other named plaintiff did not bring wage and hour claims under the FLSA against his former employer—the Colorado Rockies or any other franchise. Wyckoff later stipulated to dismissal of the FLSA claims against the Royals for purposes of the appeal. Judgment was entered in favor of the defendants, and the plaintiffs appealed.

Focusing primarily on the antitrust claims on appeal, the scouts argued that the district court erred by ignoring factual allegations indicating that their claims fell outside professional baseball’s antitrust exemption from antitrust regulation. The appellate court disagreed.

Bound by precedent. The appellate court refused to adopt a narrower reading of baseball’s antitrust exemption than what was established in U.S. Supreme Court and Second Circuit precedent. The judicially created exemption was recognized by the Supreme Court in 1922 in Fed. Baseball Club of Balt. v. Nat’l League of Prof’l Baseball Clubs, 259 U.S. 200, and reaffirmed 50 years later in Flood v. Kuhn, 407 U.S. 258.

In 1970, the Second Circuit held that the exemption applied to antitrust claims brought by professional baseball umpires against the American League in Salerno v. Am. League of Prof’l Baseball Clubs, 429 F.2d 1003. Although Congress had created an exception to baseball’s antitrust exemption for major league baseball players in 1988 with the Curt Flood Act, that exception did not apply to others "employed in the business of organized professional baseball," the appellate court explained.

Business of baseball. Based on precedent, the claims were barred if the conduct involved the business of baseball. The Second Circuit noted that the plaintiffs’ own allegations foreclosed their argument that baseball scouts were not involved in the business of baseball.

The case is No. 16-3795-cv.

Attorneys: Garrett R. Broshuis (Korein Tillery, LLC), Judith S. Scolnick (Scott + Scott, Attorneys at Law, LLP) and Michael Dell’Angelo (Berger & Montague, PC) for Jordan Wyckoff. Elliot R. Peters (Keker, Van Nest & Peters LLP) and Elise M. Bloom (Proskauer Rose LLP) for Office of the Commissioner of Baseball.

Companies: Office of the Commissioner of Baseball

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