Antitrust Changeup: How a Single Antitrust Reform Could Be A Home Run for Minor League Baseball Players

Volume 125 Issue 1

Fall 2020

Antitrust Changeup: How a Single Antitrust Reform Could Be A Antitrust Changeup: How a Single Antitrust Reform Could Be A

Home Run for Minor League Baseball Players Home Run for Minor League Baseball Players

Jeremy Ulm

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Recommended Citation Recommended Citation

Jeremy Ulm,

Antitrust Changeup: How a Single Antitrust Reform Could Be A Home Run for Minor League

Baseball Players

, 125 DICK. L. REV. 227 (2020).

Available at: https://ideas.dickinsonlaw.psu.edu/dlr/vol125/iss1/7

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Antitrust Changeup: How a Single

Antitrust Reform Could Be A Home

Run for Minor League Baseball Players

Jeremy Ulm*

BSTRACT

In 1890, Congress passed the Sherman Antitrust Act to pro-

tect competition in the marketplace. Federal antitrust law has

developed to prevent businesses from exerting unfair power on

their employees and customers. Specifically, the Sherman Act

prevents competitors from reaching unreasonable agreements

amongst themselves and from monopolizing markets. However,

not all industries have these protections.

Historically, federal antitrust law has not governed the “Bus-

iness of Baseball.” The Supreme Court had the opportunity to

apply antitrust law to baseball in Federal Baseball Club, Incorpo-

rated v. National League of Professional Baseball Clubs; how-

ever, the Court held that the Business of Baseball was not

interstate commerce and thus not subject to federal antitrust law.

The Supreme Court upheld this stance twice more in Toolson v.

N.Y. Yankees, Incorporated and Flood v. Kuhn. Further, the Su-

preme Court held that, if baseball was to become subject to anti-

trust law, Congress must be the party to enact such a change. In

1998, Congress passed the Curt Flood Act (“Flood Act”). The

Flood Act applied antitrust law to certain aspects of baseball

while explicitly not including other aspects, such as the employ-

ment of minor league baseball players.

This Comment argues that Congress should act again and

pass legislation to apply federal antitrust law to minor league

baseball. This Comment will analyze the low wages of minor

leaguers and the impact that MLB’s antitrust law immunity has

on those conditions. Further, this Comment argues that the rule

of reason is the proper test for courts to apply to cases brought

by minor leaguers. While this Comment does not predict the

outcome of such cases, it argues that the true value of the appli-

* J.D. Candidate, Pennsylvania State University Dickinson Law, 2021. I would

like to thank my dad for giving me a love for baseball and my mom for giving me a

love for writing. Without the two of you, none of this would be possible.

227

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cation of antitrust law is the ability for minor leaguers to bring

suits at all.

ABLE OF

ONTENTS

I. I

NTRODUCTION

........................................ 229

II. B

ACKGROUND

........................................ 230

A. Basic Applicable Principles and Purposes of

Federal Antitrust Law ............................. 230

1. Sherman Act § 1 and the Prohibition of

Agreements Amongst Competitors ............ 231

2. Sherman Act § 2 and the Prohibition of

Monopolization ............................... 233

3. Antitrust Law and Union Bargaining ......... 234

B. Judicial History of the “Business of Baseball”

Exemption to Federal Antitrust Law .............. 236

C. Passage and Treatment of the Curt Flood Act ..... 237

1. Inclusions and Omissions Within the Flood

Act............................................ 238

2. Judicial Treatment of the Business of Baseball

After the Flood Act ........................... 239

a. Minor League Players’ Antitrust Claims . . 239

b. Other Determinations on the Scope and

Impact of the Flood Act .................. 241

III. A

NALYSIS

............................................. 241

A. Minor League Players’ Need for Reform .......... 241

1. Wage Structure Under Minor League

Baseball’s Uniform Player Contracts .......... 242

2. Length and Viability of a Minor League

Baseball Career ............................... 243

3. Major League Baseball’s Steps to Remedy the

Problem ...................................... 245

B. Antitrust Analysis ................................. 246

1. Current Scope of the Business of Baseball

Exemption .................................... 246

2. The Non-Statutory Labor Union Exemption’s

Applicability to Minor League Baseball ....... 248

3. Proper Antitrust Test for Judging Minor

League Baseball’s Conduct.................... 249

a. Per Se Illegal Violations .................. 249

b. Quick Look Rule of Reason .............. 250

c. Rule of Reason ........................... 250

IV. C

ONCLUSION

.......................................... 251

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I. I

NTRODUCTION

“How can you not be romantic about baseball?”

Brad Pitt’s

line from the movie Moneyball summarizes how many people feel

about America’s Pastime.

It is a sport that captures its audience

through a series of timeless moments that are remembered for de-

cades and passed down as folklore for generations. Among the

thousands of memorable moments are Jackie Robinson breaking

the color barrier,

the “shot heard round the world,”

and the home

run chase between Sosa and McGwire.

Those memories are just

the tip of the iceberg when it comes to the moments that have made

baseball the game that it is today.

However, in the front office, the game loses its romanticism.

Over the past three decades, professional baseball has grown finan-

cially at an incredible rate,

and player salaries have skyrocketed.

In 2019, Los Angeles Angels center fielder Mike Trout signed the

largest contract in the history of North American sports, totaling

almost $430 million over 12 years.

While players and fans may

romanticize the high salaries, they remain just a dream for many

who pursue a career in baseball.

Players who make it to “The Show” earn a sizeable income,

whether they are on massive contracts like Trout, or even just earn

the league minimum.

However, minor league players (“minor

leaguers”) play for the hope of future financial success and a love of

the game, not because they immediately see impressive income.

1. M

ONEYBALL

(Columbia Pictures 2011).

2. See, e.g., Micah Chen, America’s Pastime: 20 Reasons Why Baseball Will

Always Hail over Football, B

LEACHER

EPORT

(Apr. 25, 2011), http://bit.ly/

3bTGIGR [https://perma.cc/59PU-7M9U].

3. See, e.g., Biography, J

ACKIE

OBINSON

, http://bit.ly/2v7tKoi [https://

perma.cc/66EP-M6P9] (last visited Feb. 22, 2020).

4. See, e.g., The Story Behind the Shot Heard Round the World, NPR (Oct. 3,

2006), n.pr/2PefjW8 [https://perma.cc/87TA-CPBR].

5. See, e.g., Grant Brisbee, The Misremembering of McGwire-Sosa, SBN

A-

TION

(Sept. 5, 2018), http://bit.ly/2wFkUyv [https://perma.cc/R79D-D654].

6. See Brown, infra note 155 (noting the increase in MLB annual revenue

from $1.2 billion in 1992 to $10.7 billion in 2019).

7. See, e.g., Michael Haupert, MLB’s Annual Salary Leaders Since 1874, S

OCI-

ETY FOR

MERICAN

ASEBALL

ESEARCH

, http://bit.ly/2ulOWGF [https://

perma.cc/445U-K249] (last visited Feb. 22, 2020) (noting the increase in highest

player salary from $6.1 million in 1992 to $38.3 million in 2019).

8. See, e.g., Tyler Kepner & Kevin Draper, Mike Trout Received a Huge Pay-

day. But Others Still Dwarf Him, T

ORK

IMES

(Mar. 19, 2019), https://

nyti.ms/2HMgbgL [https://perma.cc/MU83-6J9X].

9. See, e.g., MLB Minimum Salary Rises $8,500 to $563,500 Next Season, USA

ODAY

(Nov. 13, 2019), http://bit.ly/39X18gm [https://perma.cc/KZ8V-YN6F] (last

visited Feb. 22, 2020).

10. Infra Part III.A.

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Minor leaguers sign Uniform Player Contracts (“UPCs”) regardless

of which of the 30 Major League Baseball (MLB) franchises drafts

them.

UPCs drastically reduce the bargaining power of minor

leaguers and are arguably anticompetitive because they allow inde-

pendently-owned franchises to act in unison rather than creating an

open market for players.

Further, these UPCs may be the type of

agreements that federal antitrust law forbids.

Antitrust law and baseball have a long and interesting relation-

ship.

For the purposes of this Comment, the relevant areas of an-

titrust law include monopolization, horizontal agreements by

competitors, and agreements by unions, all of which arise from the

same principal of economic competition.

Currently, most of

MLB’s actions are protected from antitrust scrutiny, allowing the 30

member franchises to use tools like the UPCs.

This Comment will

show the need for the application of antitrust law to the employ-

ment of minor leaguers.

This Comment will do so by analyzing

the financial and contractual position of minor leaguers, as well as

the proper tests to be applied under federal antitrust law.

This

Comment will also explain why Congress, rather than the judicial

system, must be the body that brings about these changes.

II. B

ACKGROUND

A. Basic Applicable Principles and Purposes of Federal Antitrust

Law

The underlying purpose of the Sherman Antitrust Act

and

other federal antitrust laws is the protection of economic competi-

tion in trade.

This purpose arises from the premise that competi-

tion leads to the best economic, political, and social outcomes.

11. Infra Part III.A.

12. Infra note 126 and accompanying text.

13. Infra Part III.B.

14. Infra Parts II.B.–C.

15. See Sherman Antitrust Act, 15 U.S.C. §§ 1–7 (2018); Clayton Act, 15

U.S.C. §§ 12–27 (2018).

16. Infra Parts II.B.–C.

17. Infra Part III.A.

18. Infra Parts III.A, III.B.3.

19. Infra Parts II.B., III.B.1.

20. Sherman Antitrust Act, 15 U.S.C. §§ 1–7 (2018).

21. See N. Pac. Ry. Co. v. United States, 356 U.S. 1, 4 (1958) (“The Sherman

Act was designed to be a comprehensive charter of economic liberty aimed at pre-

serving free and unfettered competition as the rule of trade.”).

22. Id. (“[U]nrestrained interaction of competitive forces will yield the best

allocation of our economic resources, the lowest prices, the highest quality and the

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The Act’s presumption in favor of economic competition affects

every area of federal antitrust law.

1. Sherman Act § 1 and the Prohibition of Agreements Amongst

Competitors

The plain text of Section 1 of the Sherman Act condemns any

“contract, combination in the form of trust or otherwise, or conspir-

acy in restraint of trade . . . .”

The Supreme Court has not strictly

followed this prohibition, instead holding that only “unreasonable”

restraints of trade are illegal.

This distinction between reasonable

and unreasonable restraints is the “Rule of Reason.”

As the pur-

pose of the Sherman Act is to preserve competition, the Supreme

Court has held entire categories of agreements that foreclose com-

petition, such as price-fixing agreements, to be per se illegal.

Sports leagues where multiple competitors join as a single en-

tity offer an interesting variation on this issue. The Ninth Circuit

Court of Appeals in Los Angeles Memorial Coliseum Commission

v. National Football League

held that the individual franchises

that compose the National Football League (NFL) are independent

legal entities in competition with each other, for analysis under Sec-

tion 1 of the Sherman Act.

The court based this decision on three

points of analysis.

First, if the court allowed the NFL to act as a

single entity, then it would be completely free from Section 1 scru-

tiny.

This result would contradict how various courts previously

treated the NFL.

Competitors cannot evade antitrust scrutiny by

greatest material progress, while at the same time providing an environment con-

ducive to the preservation of our democratic political and social institutions.”).

23. See id. (“But even were that premise open to question, the policy unequiv-

ocally laid down by the Act is competition.”).

24. See Sherman Antitrust Act, 15 U.S.C. § 1 (2019).

25. See Standard Oil Co. v. United States, 221 U.S. 1, 60 (1911) (“[I]t was

intended that the standard of reason which had been applied at the common law

. . . was intended to be the measure used for the purpose of determining whether in

a given case a particular act had or had not brought about the wrong against which

the statute provided.”).

26. See, e.g., Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 687

(1978) (citing Standard Oil as the source of the Rule of Reason).

27. See United States v. Trenton Potteries Co., 273 U.S. 392, 397 (1927) (“The

aim and result of every price-fixing agreement, if effective, is the elimination of

one form of competition.”).

28. L.A. Mem’l Coliseum Comm’n v. Nat’l Football League, 726 F.2d 1381

(9th Cir. 1984).

29. Id.

30. Id.

31. Id. at 1388.

32. Id. (citing various cases that contradict with the contention that the NFL

should be treated as a single entity); see, e.g., Mackey v. Nat’l Football League, 543

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forming together into a single venture while retaining their legally

separate identities.

Second, the necessity of NFL teams’ coopera-

tion, as a means to carry out their business as a league, does not

prevent antitrust scrutiny, although it may bar a finding of per se

illegality.

Again, failing to apply antitrust principles would result

in contrary treatment of both the NFL and other highly cooperative

industries.

Lastly, the court reasoned that the NFL based its argu-

ment on a flawed premise about the relationship between the

league and its member teams.

While the NFL distributes a large

share of its profits evenly amongst its member teams, independent

owners operate the organizations.

As independent competitors,

NFL teams engage in the very types of economic competition that

the antitrust laws exist to preserve.

The U.S. Supreme Court took the analysis of the relationship

between sports leagues and antitrust law further in American Nee-

dle, Incorporated v. National Football League.

The Court held

that the relevant question is not whether courts should consider the

NFL and similar leagues as single entities but rather whether the

NFL is a group of “separate economic actors pursuing separate eco-

nomic interests.”

This inquiry required the court to examine

whether the teams had actual economic competition between them,

even though they formed a single legal entity in the form of a

league.

This holding does not mean that sports teams are unable

to form leagues to cooperate with each other, as such a decision

would undermine the very existence of leagues like the NFL and

F.2d 606, 623 (8th Cir. 1976) (allowing the NFL to coordinate as necessary for the

league to carry out its business of putting on football games).

33. See id. at 1389 (“‘Nor do we find any support . . . for the proposition that

agreements between legally separate persons and companies to suppress competi-

tion among themselves and others can be justified by labeling the project a ‘joint

venture.’ Perhaps every agreement and combination to restrain trade could be so

labeled.’”) (quoting Timken Roller Bearing Co. v. United States, 341 U.S. 593, 598

(1951)).

34. Id.

35. Id. [part from L.A. Mem’l that supports this, referencing Sealy] (citing

United States v. Sealy, Inc., 388 U.S. 350, 356–57 (1967)).

36. Id. at 1389 (“Finally, the district court considered the argument to be

based upon the false premise that the individual NFL ‘clubs are not separate busi-

ness entities whose products have an independent value.’”).

37. Id. at 1390.

38. Id. (“NFL clubs . . . compete with one another off the field as well as on to

acquire players, coaches, and management personnel. In certain areas of the coun-

try where two teams operate in close proximity, there is also competition for fan

support, local television and local radio revenues, and media space.”).

39. See Am. Needle, Inc. v. Nat’l Football League, 560 U.S. 183 (2010).

40. Id. at 195.

41. Id. at 196.

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MLB.

Rather, the Rule of Reason subjects any member teams’

agreements to antitrust scrutiny if those agreements involve the

dealignment of the economic interests of the teams acting as a unit

and the interests of the teams acting as economic competitors.

2. Sherman Act § 2 and the Prohibition of Monopolization

Section 2 of the Sherman Act prohibits any person or organiza-

tion from monopolizing an economic market.

However, the Sher-

man Act does not outlaw monopolies that arise naturally.

The

Supreme Court established a two-element test for a violation of

Section 2 of the Sherman Act.

This test requires a plaintiff to

show that the potential monopolist both has possession of monop-

oly power in a given economic market and took steps towards will-

ful acquisition or maintenance of that power.

Monopoly power

that arises from a “superior product, business acumen, or historic

accident” is not a violation of Section 2.

When an organization

has monopoly power in a market, the organization does not have to

exercise its economic power over pricing to violate Section 2.

Mo-

nopolistic conduct is precisely the type of activity that the Sherman

Act attempts to prevent, as it eliminates competition by its very

nature.

One concern that often arises under Section 2 is vertical inte-

gration.

Vertical integration is when an organization itself per-

42. See id. at 204.

43. Id. at 203 (“When ‘restraints on competition are essential if the product is

to be available at all,’ per se rules of illegality are inapplicable, and instead the

restraint must be judged according to the flexible Rule of Reason.”).

44. Sherman Antitrust Act, 15 U.S.C. § 2 (2018) (“Every person who shall

monopolize, or attempt to monopolize, or combine or conspire with any other per-

son or persons, to monopolize any part of the trade or commerce among the sev-

eral States, or with foreign nations, shall be deemed guilty of a felony.”).

45. See, e.g., United States v. Aluminum Co. of Am., 148 F.2d 416, 432 (2d

Cir. 1945) (stating that holding a monopoly is legal while monopolization is the

prohibited conduct). A monopoly is an organization’s control over an economic

market. Id. Monopolization is using anticompetitive means to establish that con-

trol. Id.

46. See United States v. Grinnell Corp., 384 U.S. 563, 570–71 (1966).

47. Id.

48. Id. at 571.

49. Aluminum Co., 148 F.2d at 427 (“[I]t is no excuse for ‘monopolizing’ a

market that the monopoly has not been used to extract from the consumer more

than a ‘fair’ profit.”).

50. Id. at 429 (“Throughout the history of these statutes it has been constantly

assumed that one of their purposes was to perpetuate and preserve, for its own

sake and in spite of possible cost, an organization of industry in small units which

can effectively compete with each other.”).

51. Sherman Antitrust Act, 15 U.S.C. § 2 (2018).

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forms multiple stages of production rather than having an outside

competitor assist with each stage.

While vertical integration alone

does not create an antitrust violation, there are potential pitfalls.

When a monopolist vertically integrates into a second market, the

monopolist could be creating a second monopoly.

This second

monopoly does not typically result in a final price increase in a

downstream market, provided the monopolist is already charging

monopoly prices.

A secondary monopoly may, however, allow a

monopolist to suppress prices in the downstream market below the

competitive level and to increase the original monopoly’s profit

margins.

The relationship between Major and Minor League

Baseball (“MiLB”) may fit the model of vertically integrated mo-

nopolies in two separate markets, opening the door for potential

antitrust scrutiny.

The current relationship between the Business

of Baseball and antitrust law may bar such an inquiry, however.

3. Antitrust Law and Union Bargaining

The activities and agreements that unions and other labor or-

ganizations reach receive special treatment in antitrust law, both by

statute and the common law.

The Clayton Act specifically carves

out an exemption in antitrust law for the formation and operation

of labor unions.

This exemption arises from the premise that soci-

ety should protect human labor and not treat it as a mere economic

52. P

HILLIP

E. A

REEDA

ET AL

., A

NTITRUST

NALYSIS

: P

ROBLEMS

, T

EXT

AND

ASES

450 (7th ed. 2013) (providing an example of vertical integration in a

hypothetical manufacturing context).

53. Id. at 451 (providing illustration of a harmless and unavoidable instance of

vertical integration).

54. See, e.g., Otter Tail Power Co. v. United States, 410 U.S. 366, 378 (1973)

(finding the creation of a secondary monopoly by refusing to allow the entrance of

competitors in the downstream electric power distribution market).

55. A

REEDA

ET AL

., supra note 52, at 451.

56. Id. (providing an illustration of a change in distribution of profit margins

between the original and secondary monopoly markets for aluminum pipe and in-

got, respectively).

57. See Teams by MLB Affiliation, M

LB, http://bit.ly/mlbteams [https://

perma.cc/95NC-ZSEY] (last visited Jan. 25, 2020) (showing the franchise structure

between MLB and MiLB franchises).

58. See Parts II.B., II.C.

59. Infra notes 68–69 and accompanying text.

60. Clayton Act, 15 U.S.C. § 17 (2019) (“Nothing contained in the antitrust

laws shall be construed to forbid the existence and operation of labor, agricultural,

or horticultural organizations, instituted for the purposes of mutual help . . . or to

forbid or restrain individual members of such organizations from lawfully carrying

out the legitimate objects thereof.”).

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good or commodity.

As one may expect, however, this exemption

is not an absolute protection for all contracts, combinations, or con-

spiracies into which a labor union may enter.

One important area to which the exemption does not extend is

when a union acts in combination with a non-union organization.

While certain agreements to which a union is a party may be per-

missible under federal antitrust law, the addition of a business into

such an agreement may subject the combination to antitrust scru-

tiny.

If a business’s actions would violate the Sherman Act, those

same actions are illegal if a union and business carry out a similar

action while acting in combination.

Similarly, the Eighth Circuit Court of Appeals expanded upon

the question of when union activities trigger antitrust scrutiny in

Mackey v. National Football League.

Labor law may supersede

antitrust law where the only restraint of trade arises from an agree-

ment between the parties of a collective bargaining agreement.

Additionally, this preemption applies to only the subjects of

mandatory collective bargaining.

Lastly, agreements can override

antitrust law only when the agreement between parties arises from

“bona fide arm’s-length bargaining.”

These distinctions are of

great importance when analyzing the relationship between minor

leaguers, MLB, and the Major League Baseball Players Association

(MLBPA).

61. Id. (“The labor of a human being is not a commodity or article of

commerce.”).

62. See, e.g., Int’l Org., United Mine Workers v. Red Jacket Consol. Coal &

Coke Co., 18 F.2d 839, 843 (4th Cir. 1927) (clarifying that, while a labor union’s

ordinary function is not a violation of the Sherman Act, acts that are outside of

legitimate union objectives are still subject to antitrust scrutiny).

63. See Allen Bradley Co. v. Local Union No. 3, Int’l Bhd. of Elec. Workers,

325 U.S. 797, 810 (1945).

64. Id. at 811.

65. Id. (“We know that Congress feared the concentrated power of business

organizations to dominate markets and prices. It intended to outlaw business mo-

nopolies. A business monopoly is no less such because a union participates, and

such participation is a violation of the Act.”).

66. See Mackey v. Nat’l Football League, 543 F.2d 606, 614 (8th Cir. 1976).

67. Id.

68. Id.; W. E. Shipley, Annotation, Subjects of mandatory collective bargain-

ing under Federal Labor Relations Act, 12 A.L.R.2d 265 (explaining areas where

the Federal Labor Relations Act requires employers to use collective bargaining).

69. Mackey v. Nat’l Football League, 543 F.2d 606, 614 (8th Cir. 1976).

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B. Judicial History of the “Business of Baseball” Exemption to

Federal Antitrust Law

In 1922, the Supreme Court established an exemption to fed-

eral antitrust law for the “Business of Baseball” in Federal Baseball

Club, Incorporated v. National League of Professional Baseball

Clubs.

Relying on the narrow interpretation of the Commerce

Clause

in effect at that time, the Court held that the Business of

Baseball was not interstate commerce and thus was not subject to

federal antitrust law.

The Court reached this conclusion by

strictly defining the business as putting on individual baseball

games, which by definition could not occur “among the several

States.”

Teams and players came from different states to compete

in these games, but this fact was not sufficient to meet the definition

of interstate commerce.

This decision established the nearly cen-

tury-long “Business of Baseball” exemption.

Thirty years after Federal Baseball Club, Incorporated v. Na-

tional League of Professional Baseball Clubs, the Supreme Court

upheld the exemption by issuing a one-paragraph per curium opin-

ion in Toolson v. New York Yankees, Inc.

Much like Jose Al-

tuve,

Toolson managed to make up for what it lacked in size with

a lasting impact on the game, for better or worse.

The Court took

this opportunity to assign the role of subjecting the Business of

Baseball to federal antitrust law to Congress.

Congress previously

left baseball alone to develop as a market under the assumption

that antitrust did not apply to the sport, leading the Court to be-

lieve that Congress was indeed the appropriate entity to change the

relationship.

70. Fed. Baseball Club, Inc. v. Nat’l League of Prof’l Baseball Clubs, 259 U.S.

200, 208–209 (1922).

71. U.S. C

ONST

. art. I, § 8, cl. 3.

72. Fed. Baseball Club, 259 U.S. 200.

73. Id.; U.S. C

ONST

. art. I, § 8, cl. 3.

74. Fed. Baseball Club, 259 U.S. at 208–09 (“But the fact that in order to give

the exhibitions the Leagues must induce free persons to cross state lines and must

arrange and pay for their doing so is not enough to change the character of the

business.”).

75. Toolson v. N.Y. Yankees, Inc., 346 U.S. 356 (1953).

76. Id.

77. Jose Altuve Player Profile, ESPN, http://bit.ly/JoseAltuveStats (last visited

Nov. 12, 2019) (listing Jose Altuve’s height as 5’6”).

78. Toolson, 346 U.S. at 357.

79. Id. (“Congress has had the ruling under consideration but has not seen fit

to bring such business under these laws by legislation having prospective effect.”).

80. Id. (“We think that if there are evils in this field which now warrant appli-

cation to it of the antitrust laws it should be by legislation.”).

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The third strike for those seeking the application of antitrust

law to the Business of Baseball came 20 years later when the Court

decided Flood v. Kuhn.

In Flood, the Court clarified that, under a

more modern and less restrictive view, baseball was clearly a busi-

ness that took part in interstate commerce.

The Court clarified

that other sports leagues were also interstate commerce and were

subject to antitrust law.

The Court did not, however, see fit to

depart from the holdings of Fed. Baseball Club and Toolson.

Doubling down on past reasoning, the Court held once again that

Congress was the appropriate authority to alter the interplay of

baseball and antitrust.

Prior to Flood, Congress tried and failed multiple times to cre-

ate legislation regarding the exemption, and the Supreme Court

viewed this “positive inaction” as the legislature’s intent, or lack

thereof, to apply antitrust law to baseball.

Additionally, the

Court expressed concern about retroactivity issues that could arise

if the Court overturned Federal Baseball Club.

Due to the for-

ward-looking nature of legislation, Congressional action would not

create the same concerns.

The Court loaded the bases for Con-

gress to step up to the plate and settle the issue.

C. Passage and Treatment of the Curt Flood Act

Twenty-five years later, Congress passed the Flood Act, imple-

menting the legislation the Supreme Court proposed in Toolson

and Flood.

The Flood Act amended the Clayton Act, creating a

new subsection titled “Application of the antitrust laws to profes-

sional major league baseball.”

The Flood Act appeared on its

face to allow courts to hear cases on a broad variety of antitrust

issues surrounding the modern Business of Baseball that the Busi-

81. Flood v. Kuhn, 407 U.S. 258 (1972).

82. Id. at 282.

83. Id. at 282–83.

84. Id. (“With its reserve system enjoying exemption from the federal anti-

trust laws, baseball is, in a very distinct sense, an exception and an anomaly. Fed-

eral Baseball and Toolson have become an aberration confined to baseball.”).

85. Id. at 285 (“And what the Court said in Federal Baseball in 1922 and what

it said in Toolson in 1953, we say again here in 1972: the remedy, if any is indicated,

is for congressional, and not judicial, action.”).

86. Id. at 283.

87. Id.

88. Id. (“The Court . . . has voiced a preference that if any change is to be

made, it come by legislative action that, by its nature, is only prospective in

operation.”).

89. Curt Flood Act, 15 U.S.C. § 26b (2018).

90. Id.

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ness of Baseball exemption previously prevented them from assess-

ing.

In reality, the specific language of the Flood Act showed just

how limited the revocation of the exemption was and how rarely

courts were willing to subject the Business of Baseball to antitrust

scrutiny.

1. Inclusions and Omissions Within the Flood Act

The Flood Act subjects “the conduct, acts, practices, or agree-

ments of persons in the business of organized professional major

league baseball directly relating to or affecting employment of ma-

jor league baseball players to play baseball at the major league

level” to scrutiny under federal antitrust law where such conduct

would not have been previously up for review.

This extension of

antitrust law is valid only “to the same extent . . . [as] persons in any

other professional sports business affecting interstate commerce.”

Courts give more leniency to cooperative agreements that are nec-

essary to carry out the business of a sports league.

Additionally,

while normally the government or any injured party can bring an

antitrust action,

the Flood Act gives only MLB players standing to

sue for an antitrust violation.

The Flood Act has far from eliminated the Business of Base-

ball exemption from federal antitrust law.

Only the specific

agreements involving MLB players are subject to antitrust scrutiny,

while all other facets of the business remain exempt.

The Flood

Act provides a non-exhaustive list of exempt agreements.

100

This

list includes agreements with umpires and agreements relating to

franchise expansion, franchise relocation, and most important for

the purpose of this Comment, minor league baseball.

101

Not only

does conduct “affecting employment to play baseball at the minor

league level” remain free from antitrust scrutiny, but the reserve

91. See, e.g., Charles O. Finley & Co. v. Kuhn, 569 F.2d 527, 541 (7th Cir.

1978) (denying plaintiff’s claim that MLB violated antitrust law by vetoing certain

trades between member teams due to the Business of Baseball exemption).

92. Infra Part II.C.2.

93. Curt Flood Act, 15 U.S.C. § 26b (2018).

94. Id.

95. See supra notes 29–33, 35, 37–44 and accompanying text.

96. See 15 U.S.C. § 15 (2018) (“[A]ny person who shall be injured in his busi-

ness or property by reason of anything forbidden in the antitrust laws may sue

therefor in any district court of the United States . . . .”); id. §§ 15(a), 15(c).

97. Curt Flood Act, 15 U.S.C. § 26b(c) (2018).

98. Id.

99. Id. § 26b(a).

100. Id. § 26b(b).

101. Id.

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clause

102

for minor leaguers and the relationship between Major

and Minor League Baseball are also still exempt.

103

Further, the

Flood Act explicitly states that Congress does not extend standing

to sue under the Flood Act to minor leaguers.

104

While the plain text of the Flood Act removed only a narrow

portion of the Business of Baseball exemption, in the two decades

since Congress passed the Flood Act, plaintiffs have initiated a vari-

ety of suits seeking antitrust scrutiny in areas of the Business of

Baseball other than the “conduct, acts, practices, or agreements . . .

directly relating to or affecting employment of major league base-

ball players.”

105

2. Judicial Treatment of the Business of Baseball After the Flood

Act

Since the passage of the Flood Act, plaintiffs have brought

multiple cases seeking the courts’ application of antitrust law to va-

rious aspects of the Business of Baseball and questioning the Flood

Act’s scope and impact.

106

a. Minor League Players’ Antitrust Claims

In 2015, a group of former minor league baseball players

brought a class action suit on behalf of thousands of minor leaguers,

alleging violations of both Section 1 and Section 2 of the Sherman

Act by MLB and its 30 member franchises.

107

The complaint al-

leged that the MLB franchises “willfully acquired and maintained

monopoly power” over the “market for minor league men’s profes-

102. Reserve Clause, B

ASEBALL

EFERENCE

, http://bit.ly/2GnQsdQ [https://

perma.cc/C54T-958S] (last visited Jan. 25, 2020) (explaining the function and his-

tory of the reserve clause). The reserve clause is a concept in baseball where a

player would be bound to a given team for longer than the length of the individual

contracts he signed. Id. Free agency replaced the reserve clause in MLB after an

arbiter held that the length of the reserve clause was not explicitly stated within

MLB’s player contracts. Id. Minor leaguers currently lack union representation

and the power to compel arbitration with MiLB or MLB. See Delcos, infra note

157.

103. Reserve Clause, supra note 102.

104. Curt Flood Act, 15 U.S.C. § 26b(c) (2018).

105. Id.

106. See, e.g., Miranda v. Selig, 860 F.3d 1237, 1238 (9th Cir. 2017) (question-

ing the applicability of federal antitrust law to minor league baseball); City of San

Jos ´e v. Office of Comm’r of Baseball, No. C-13-02787 RMW, 2013 WL 5609346, at

*2 (N.D. Cal. Oct. 11, 2013), aff’d by City of San Jos ´e v. Office of the Comm’r of

Baseball, 776 F.3d 686 (9th Cir. 2015) (questioning the applicability of federal anti-

trust law to MLB franchise relocation); Wyckoff v. Office of the Comm’r of Base-

ball, 705 F. App’x 26, 28 (2d Cir. 2017) (questioning the applicability of federal

antitrust law to MLB scouts).

107. See Miranda v. Selig, 860 F.3d 1237, 1238 (9th Cir. 2017).

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sional baseball players,” in violation of Section 2 of the Sherman

Act.

108

Further, plaintiffs alleged that the defendants “entered into

a continuing agreement, combination or conspiracy in restraint of

trade with the purpose, intent, and effect of restraining horizontal

competition among the Defendants and the MLB,” in violation of

Section 1 of the Sherman Act.

109

The district court dismissed the

case.

110

On appeal, the Ninth Circuit Court of Appeals held that

the Business of Baseball exemption and the language of the Flood

Act prohibited the minor leaguers from bringing federal antitrust

law claims.

111

While the court refused to judge the case on its merits, the mi-

nor leaguers’ complaint still stated claims that would otherwise con-

stitute antitrust violations.

112

Their argument focused on the UPCs

that a minor league player must sign to play for an MLB

franchise.

113

The players alleged that the MLB franchises used

these UPCs as a tool for “artificially and illegally depressing minor

league wages . . . below what they would receive in a competitive

market.”

114

At the time of Miranda, the UPCs stated that first-year

players would receive $1,100 per month, only during the course of

the season, resulting in annual earnings of less than $10,000.

115

The

players contended that minor leaguers would be able to earn higher

wages if MLB and its member franchises did not conspire to sup-

press minor leaguers’ wages and if the open market was able to

assess the value of their services.

116

While the scope of the Flood

Act shows that Congress did not intend for minor leaguers to have

standing to bring a case under federal antitrust law,

117

perhaps that

is the problem.

108. Complaint at 27–28, Miranda v. Selig, No. 14-cv-05349-HSG, 2015 WL

5357854 (N.D. Cal. Sept. 14, 2015) [hereinafter Miranda Complaint].

109. Id. at 28–29.

110. Miranda v. Selig, No. 14-cv-05349-HSG, 2015 WL 5357854 (N.D. Cal.

Sept. 14, 2015), aff’d, 860 F.3d 1237 (9th Cir. 2017).

111. Miranda v. Selig, 860 F.3d 1237, 1240 (9th Cir. 2017).

112. Miranda Complaint, supra note 108, at 26–29.

113. Id. at 15–20.

114. Id. at 17.

115. See Miranda, 860 F.3d at 1239.

116. Miranda Complaint, supra note 108, at 24–25.

117. See Miranda, 860 F.3d at 1243–44 (discussing Congress’s intent to ex-

clude minor league baseball from antitrust law as an extension of the historical

Business of Baseball exemption); see also infra Part III.B.1.

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b. Other Determinations on the Scope and Impact of the Flood

Act

Courts have assessed the Business of Baseball exemption for

areas outside minor league baseball as well. The Flood Act states

that it does not extend the application of federal antitrust law to

“the relationship between persons in the business of organized pro-

fessional baseball and umpires or other individuals who are em-

ployed in the business of organized professional baseball by such

persons.”

118

The Second Circuit Court of Appeals analyzed this

subsection of the Flood Act when a group of professional baseball

scouts brought a class action suit against the Commissioner of

MLB.

119

As a condition of employment by a MLB franchise, the

scouts had to sign Uniform Employee Contracts (“UECs”) pro-

vided by MLB.

120

Much like the UPCs that minor leaguers sign,

the scouts’ UECs dictated their payment and other terms of their

employment.

121

The scouts argued that these UECs were an unrea-

sonable restraint on their employment and prevented the scouts

from obtaining a fair value for their services.

122

Further, the plain-

tiffs argued that the court should not include scouts and their UECs

within the Business of Baseball after the Flood Act because the re-

striction “serves no essential function in staging professional base-

ball games nor does such anticompetitive conduct enhance the

vitality or viability of baseball.”

123

In light of Supreme Court prece-

dent, the Second Circuit rejected the plaintiffs’ view of the Business

of Baseball exemption and the limited exception to the exemption

that the Flood Act created.

124

The court construed the Flood Act

to apply to professional scouts, deciding that the scouts are “per-

sons in the Business of Baseball.”

125

III. A

NALYSIS

A. Minor League Players’ Need for Reform

The application of federal antitrust law to Minor League Base-

ball players is more than a hypothetical issue. Minor leaguers deal

118. Curt Flood Act, 15 U.S.C. § 26b(b)(5) (2018).

119. Wyckoff v. Office of the Comm’r of Baseball, 705 F. App’x 26, 28 (2d

Cir. 2017).

120. Second Amended Complaint at 20, 23, 27–28, Wyckoff v. Office of the

Comm’r of Baseball, No. 15-CV-05186-PGG, 211 F. Supp. 3d 615 (S.D.N.Y. Cal.

Sept. 29, 2016).

121. Id.

122. Id. at 26–29.

123. Id. at 25.

124. Wyckoff, 705 F. App’x at 29.

125. Id.

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with many issues due to the wage structure contained in the

league’s Uniform Player Contracts. Recently, MLB has responded

with attempts to remedy these issues, but protection under the anti-

trust laws would prevent MLB from changing its mind in the future.

1. Wage Structure Under Minor League Baseball’s Uniform

Player Contracts

MLB’s annually-published Major League Rules (“MLR”) in-

clude a copy of the UPC that all minor leaguers must sign in order

to play for an MiLB team.

126

The MLR also states that the salary a

minor leaguer receives “shall be the amount established by the Ma-

jor Leagues for each Minor League classification or League.”

127

The minimum salary for minor leaguers is $1,100 per month for all

first-year players.

128

The minor league UPCs state that minor

leaguers and the team they play for “shall attempt annually to ne-

gotiate an applicable monthly salary rate for the next subsequent

championship playing season.”

129

If the parties are unable to reach

an agreement about the pay rate, the club gets to set the salary,

provided the new pay rate is not less than 80 percent of what the

player made the previous season.

130

Additionally, minor leaguers earn payment for their work only

during the regular season and the playoffs—not for their work dur-

ing the off season or spring training.

131

Based on these salary num-

bers, thousands of minor leaguers end up making less than $10,000

per year,

132

falling below the federal poverty level.

133

To make ends

meet, minor leaguers settle for low-quality living arrangements,

work minimum wage jobs during the off season, and cut costs wher-

ever they can.

134

126. M

AJOR

EAGUE

ASEBALL

, M

AJOR

EAGUE

ULES

205–231 (2019).

127. Id. at 29.

128. Frequently Asked Questions: The Business of MiLB, M

LB, https://

atmilb.com/2EGKeos [https://perma.cc/25PA-BK84] (last visited Dec. 20, 2019).

129. M

AJOR

EAGUE

ASEBALL

, supra note 126, at 209.

130. Id. at 210.

131. Id.

132. Miranda v. Selig, 860 F.3d 1237, 1239 (9th Cir. 2017).

133. Federal Poverty Level (FPL), U.S. C

ENTERS FOR

EDICARE

& M

EDI-

CAID

ERVICES

, http://bit.ly/390wX8g [https://perma.cc/X8PA-DW38] (last visited

Dec. 20, 2019).

134. Emily Waldon, ‘I Can’t Afford to Play this Game’: Minor-Leaguers open

up about the Realities of Their Pay, and Its Impact on Their Lives, T

THLETIC

(Mar. 15, 2019), http://bit.ly/2rbuRBg [https://perma.cc/A3H7-AB2E] (detailing

the financial struggles of several anonymous minor leaguers and the effect that

their low salary has on their lives).

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Some minor leaguers are able to survive their stint in the minor

leagues by living off their signing bonuses.

135

Top draft picks re-

ceive signing bonuses over $1 million.

136

Approximately 40 percent

of players receive signing bonuses of less than $10,000.

137

Without

a signing bonus acting as a nest egg, minor leaguers drafted in later

rounds are even more dependent on off-season jobs to make ends

meet.

2. Length and Viability of a Minor League Baseball Career

A career in professional baseball does not guarantee financial

success.

138

The annual MLB draft lasts 40 rounds, with each team

receiving the rights to one player in each round, with a few excep-

tions.

139

MLB rosters allow for only 25 active players.

140

These

numbers mean that, at any given time, there are 750 MLB players,

while 1,200 new players enter the draft each year.

141

It takes play-

ers drafted in the first two rounds of the MLB draft an average of

four to six years to make it to the major leagues.

142

Players taken in

later rounds wait even longer in the minor leagues and are much

135. Generally, MLB draft picks bargain for and receive signing bonuses in

addition to the salaries in the UPCs that they sign. Jim Callis, Here are the 2019

Draft Pools and Bonus Values, M

AJOR

EAGUE

ASEBALL

(June 3, 2019), https://

atmlb.com/2HX1kQy. MLB teams each have a limited pool from which they can

draw signing bonus money. Id. MLB determines the value of each team’s bonus

pool based on the position of each team’s draft picks in the first ten rounds of the

draft. Id. MLB limits the signing bonuses for players drafted in rounds 11–40 to

$125,000 per player, unless a team decides to spend from its pool. Id. The average

bonus pool in 2019 was $8.8 million per team. Id. Bonus pools increase annually

in line with annual increases in MLB’s revenue. Id. See Weaver, infra note 136 for

more information on the ranges and averages of MLB draft pick signing bonuses.

136. Levi Weaver, On Minor-League Pay, MLB’s Stance Doesn’t Line up with

the Facts, T

THLETIC

(Apr. 4, 2018), http://bit.ly/2NZA0ot [https://perma.cc/

H6YX-7M5J] (last visited Jan. 25, 2020).

137. Id.

138. But see Josh Norris, Lobbying Effort By MLB, MiLB Could Pay Off

(Mar. 21, 2018), B

ASEBALL

MERICA

, http://bit.ly/37tloFx [https://perma.cc/R69J-

CDM8] (containing an interview with MiLB President Pat O’Connor about the

state of pay for minor leaguers and their opportunities).

139. 2019 Draft Tracker, M

AJOR

EAGUE

ASEBALL

, https://atmlb.com/

3aMdyZM (last visited Jan. 25, 2020) (detailing the order and number of draft

picks in the 2019 MLB draft); Jonathan Mayo, Examining Impact of Houston’s

Lost Draft Picks, M

AJOR

EAGUE

ASEBALL

(Jan. 13, 2020) https://atmlb.com/

37sLwAi (discussing the Houston Astros losing multiple future draft picks as a

punishment for stealing signs during the 2017 regular season and playoffs).

140. M

AJOR

EAGUE

ASEBALL

, supra note 126, at 6.

141. Id.

142. Cork Gaines, Most Baseball Draft Picks Will Still Be In The Minors Four

Years From Now, B

USINESS

NSIDER

(June 7. 2013) http://bit.ly/3aIohUV [https://

perma.cc/27XG-3J87].

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less likely to make it to the majors.

143

The average MLB career

lasts 6.85 years.

144

The terms of the UPCs and MLB’s free agency

system allow a single franchise to control a player for up to 12

years.

145

Given the average length of time players spend in the mi-

nor and major leagues, the average player will never have an oppor-

tunity to sell his skills on the open market.

146

Despite low wages in the minor leagues with little chance of

progressing to the majors, not everyone in professional baseball

agrees that the players are put in an unfair financial situation. In an

interview about the topic of minor league player wages, MiLB Pres-

ident Pat O’Connor defended the league’s payment structure.

147

O’Connor justified the low wages on the basis of upward mobility

as follows:

This is not a career choice, and people want to debate about the

fact that McDonald’s worker[s] make more than minor league

baseball players, and that’s a fact. But I don’t think that some-

where there’s a major league in French fry prep that makes

$550,000 [as its] minimum wage or starting wage.

148

O’Connor also offered a grim look on how increasing wages

for minor leaguers would affect MiLB.

149

O’Connor said, if minor

league salaries hypothetically were to double or triple, it would lead

143. MLB Amateur Entry Draft, T

ASEBALL

UBE

, http://bit.ly/2RQp65l

[https://perma.cc/A5SP-TALK] (last visited Jan. 25, 2020) (illustrating the lack of

players drafted in late rounds). As an example, only 3 of the 150 players drafted in

the final 5 rounds of the 2015 draft have made it to the MLB for any amount of

time. Id. Compare this to the 50 percent of players from the first 2 rounds who, on

average, would have made it to the MLB in this time. Id.

144. Sam Roberts, Just How Long Does the Average Baseball Career Last?,

ORK

IMES

(July 15, 2007) https://nyti.ms/37uRHE6 [https://perma.cc/

YKJ3-D3BN] (last visited Jan. 25, 2020) (listing the average career length of play-

ers drafted from 1969–1993). Players drafted after 1993 were not included in the

data because not all of their careers have yet ended. Id.

145. Weaver, supra note 136. A minor leaguer can become a free agent after

playing for seven seasons in the minor league system of an MLB franchise. Id. If

an MLB franchise adds a minor leaguer to the team’s major league roster, the

franchise would control the player’s right at the major league level for another six

years. Id. Between the years of minor league control and the years of major

league control, a minor leaguer could spend 12 total years before becoming a free

agent and having the opportunity to earn market value for his services. Id.

146. Id.

147. Whitney McIntosh, The President of Minor League Baseball has Some

Thoughts About Paying Players a Fair Wage, SB N

ATION

(Dec. 19, 2017) http://

bit.ly/2TXdb8o [https://perma.cc/GP24-4U7M].

148. Id.

149. Weaver, supra note 136.

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to MLB reducing the number of MiLB franchises accordingly.

150

That statement is far from solely fear mongering, as MLB is already

proposing a reduction in the size of MiLB.

151

Increasing the aver-

age minor leaguer’s salary to $40,000 annually would cost each

MLB franchise $6.815 million.

152

For comparison, the average

MLB payroll in 2019 was $138.6 million.

153

Therefore, an increase

of $6.815 million would raise the average MLB payroll by less than

5 percent.

154

Additionally, MLB set a league record for revenue in

2019, grossing over $10.7 billion.

155

Despite these statistics, MLB is

only beginning to make changes.

3. Major League Baseball’s Steps to Remedy the Problem

MLB and some of its member franchises are taking steps to

address the issues surrounding minor league pay.

156

Before the

2019 season, one MLB franchise, the Toronto Blue Jays, announced

plans to increase minor league salaries within its system by 50 per-

cent.

157

The Major League Baseball Player’s Association

(“MLBPA”) praised the raise, but MLB merely addressed future

negotiations with MiLB.

158

MLB stated that salaries would be a

focal point in discussions about the new Professional Baseball

Agreement (“PBA”) between MLB and MiLB.

159

The current

PBA expires at the end of the 2020 regular season.

160

150. Id. (“If the cost of that talent is doubled or tripled, . . . MLB is not going

to pay that much money for the talent. . . They’re going to say, ‘If 160 teams is

going to cost [this much], we’re just going to cut down on the number of teams.’”).

151. J.J. Cooper, MLB Proposal Would Eliminate 42 Minor League Teams,

ASEBALL

MERICA

(Oct. 18, 2019), http://bit.ly/30Sl7cJ [https://perma.cc/JWD6-

N4YE] (detailing a proposed plan by MLB ahead of negotiations in 2020 between

MLB and MiLB on an updated Professional Baseball Agreement between the two

organizations).

152. Weaver, supra note 136.

153. MLB Team Payroll Tracker, S

POTRAC

, http://bit.ly/37nj9U5 [https://

perma.cc/PJG5-RDTJ] (last visited Jan. 25, 2020) (showing the total payroll for

each MLB franchise during the 2019 season, as well as the league average).

154. Weaver, supra note 136.

155. Maury Brown, MLB Sees Record $10.7 Billion In Revenues For 2019,

ORBES

(Dec. 21, 2019), http://bit.ly/36rQsUK (last visited Jan. 25, 2020).

156. Supra notes 136–145 and accompanying text.

157. John Delcos, Toronto Blue Jays Boost Pay of Their Minor Leaguers; Ma-

jor League Baseball Not Thrilled (Mar. 18, 2019), F

ORBES

, http://bit.ly/2TS1YGm.

158. Id.

159. Jeff Passan, Sources: MLB Eyes Higher Salaries in Minors, ESPN (Mar.

18, 2019), https://es.pn/30RfyLF (“The working conditions of minor league players,

including their compensation, facilities and benefits, is an important area of discus-

sion in those negotiations.”).

160. Delcos, supra note 157.

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More recently, MLB announced a plan to reduce the number

of minor league teams affiliated with the MLB.

161

The plan would

focus on eliminating minor league teams with inadequate facili-

ties.

162

The plan would also lead to a restructuring of the multi-

tiered system of MiLB.

163

Currently a minor leaguer’s minimum

salary is determined in part by the tier the player occupies.

164

Ad-

ditionally, the plan would reduce the number of rounds in the MLB

Amateur Draft to 20–25 rounds.

165

While this plan is still in its in-

fancy and there will be extensive negotiations between MLB and

MiLB, these proposed changes may impact the PBA and the cur-

rent state of minor league baseball.

B. Antitrust Analysis

Several steps are important when analyzing the legality of

MLB’s treatment of minor leaguers under federal antitrust law.

The first important step is to analyze the current scope of the Busi-

ness of Baseball exemption and the changes that Congress would

need to make to allow minor leaguers to bring suit against MLB.

166

The next step is to examine the collective bargaining process that

led to the current state of minor leaguers and the potential that

collectively bargained contracts preempt application of federal anti-

trust law in this case.

167

The third and final step is to select and

apply the proper standard of review under federal antitrust law.

168

The conclusion from this analysis is that the current treatment of

minor leaguers is a violation of federal antitrust law without the

Business of Baseball exemption.

1. Current Scope of the Business of Baseball Exemption

The Flood Act has eliminated only portions of the Business of

Baseball exemption.

169

While the Flood Act brought the employ-

ment of major league baseball players under the control of federal

antitrust law, it also explicitly left other areas of the Business of

161. Cooper, supra note 151.

162. Id.

163. Id.; M

AJOR

EAGUE

ASEBALL

, supra note 126, at 229–230; Frequently

Asked Questions, supra note 128 (explaining the tiered structure of minor league

baseball. Tiers range from rookie league to AAA, with the experience, skill, and

compensation of players increasing at each level).

164. M

AJOR

EAGUE

ASEBALL

, supra note 126, at 229–230; Frequently

Asked Questions, supra note 128.

165. Cooper, supra note 151.

166. Infra Part III.B.1.

167. Infra Part III.B.2.

168. Infra Part III.B.3.

169. Supra Part II.C.

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Baseball exemption intact.

170

The Flood Act did not subject the

employment of minor leaguers to federal antitrust law.

171

Instead,

the remaining Business of Baseball exemption prevents minor

leaguers from bringing suit against MLB for potential violations of

federal antitrust law.

172

Courts have heard cases about several areas of the Business of

Baseball since Congress passed the Flood Act,

173

and the employ-

ment of minor leaguers was the subject of one of those cases.

174

Generally, courts have followed the stance of the Supreme Court in

regard to the Business of Baseball exemption.

175

In fact, courts

have held that Congress specifically expressed its intent not to sub-

ject the employment of minor leaguers to antitrust law by excluding

them from the Flood Act.

176

The exclusion makes courts even

more hesitant to apply antitrust law to the employment of minor

leaguers.

177

If the Business of Baseball exemption is going to

change further, Congress likely will have to be the source of that

change.

178

Considering the financial hardships minor leaguers face,

179

mi-

nor leaguers are justified in taking steps to improve their situations.

Antitrust law exists to protect competition.

180

MLB’s vertical inte-

gration with MiLB and its use of UPCs to dictate the wages of mi-

nor leaguers is arguably anticompetitive by nature.

181

Minor

leaguers believe that they would earn higher salaries in a truly com-

petitive market for their services.

182

Congress should amend the

Flood Act or pass new legislation to subject the employment of mi-

nor leaguers to federal antitrust law.

If Congress were to pass that legislation, players like the plain-

tiffs in Miranda v. Selig would be able to have a court hear the

merits of their case.

183

The proposed legislation would not guaran-

tee that a court would find MLB to be in violation of federal anti-

170. Supra Part II.C.1.

171. Curt Flood Act, 15 U.S.C. § 26b(b) (2018).

172. Id.

173. Supra Part II.C.2.

174. See Miranda v. Selig, 860 F.3d 1237, 1238 (9th Cir. 2017).

175. Flood v. Kuhn, 407 U.S. 258. 284 (1972) (holding that Congress, not the

Supreme Court or the judicial branch generally, is the proper entity to alter the

Business of Baseball exemption).

176. See, e.g., Miranda, 860 F.3d at 1239–40.

177. Id.

178. Id.

179. Supra Part III.A.

180. Supra Part II.A.

181. See, e.g., Miranda v. Selig, 860 F.3d 1237.

182. Miranda Complaint, supra note 108, at 26–29.

183. Miranda v. Selig, 860 F.3d 1237, 1240.

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trust law. Any court would still have to analyze these facts using

the steps that would apply to any other antitrust case.

184

Nonethe-

less, the proposed legislation at least would give minor leaguers the

opportunity to be heard and give courts the chance to decide if

MLB’s actions are truly anticompetitive. The following parts of this

Comment will analyze the applicability of federal antitrust law to

the current employment of minor leaguers in the event that Con-

gress were to pass legislation allowing courts to do such analysis.

2. The Non-Statutory Labor Union Exemption’s Applicability to

Minor League Baseball

The Clayton Act allows labor unions to enter into contracts

that might otherwise be in violation of federal antitrust law.

185

For

these contracts to be valid, the agreement must serve a legitimate

goal of the union.

186

The Eighth Circuit Court of Appeals created a

three-part test in Mackey v. National Football League (“Mackey

test”) to determine if a collective bargaining agreement preempts

federal antitrust law.

187

This test is useful because the MLR and

the UPCs contained therein were drafted through collective bar-

gaining between the MLBPA and MLB.

188

Therefore, the Mackey

test can help determine if the MLR can preempt federal antitrust

law.

The MLR immediately fails the first element of the Mackey

test. The Mackey test requires that “the restraint on trade [in the

agreement] primarily affects only the parties to the collective bar-

gaining relationship.”

189

While the majority of the MLR deals with

the relationship between MLB and MLBPA members, it also heav-

ily affects minor leaguers.

190

Minor leaguers are not members of

the MLBPA.

191

Further, while the MLBPA factors the impact on

minor leaguers into their decision making process, the MLBPA

does not represent minor leaguers in any legal capacity.

192

Since

184. Infra Parts III.B.2. and III.B.3.

185. Clayton Act, 15 U.S.C. § 17 (2018).

186. See, e.g., Int’l Org., United Mine Workers v. Red Jacket Consol. Coal &

Coke Co., 18 F.2d 839, 843–44 (4th Cir. 1927).

187. Mackey v. Nat’l Football League, 543 F.2d 606, 614 (8th Cir. 1976) (cre-

ating a three-element test for the non-statutory exemption that allows labor law to

preempt antitrust law).

188. M

AJOR

EAGUE

ASEBALL

, supra note 126, at 1.

189. Mackey, 543 F.2d at 614.

190. See, eg., M

AJOR

EAGUE

ASEBALL

, supra note 126, at 205–231.

191. Delcos, supra note 157.

192. Id. (quoting MLBPA director, Tony Clark, as saying, “Although we don’t

represent legally the minor league group, we will continue to do the things that we

can do to support them moving forward despite that”).

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the MLR fails the Mackey Test, a court would find that the MLR

and the UPCs therein do not preempt federal antitrust law.

3. Proper Antitrust Test for Judging Minor League Baseball’s

Conduct

Antitrust law has multiple applicable court tests; the courts

choose which test to use based on the nature of the violation and

the facts at hand.

193

The standard of review in each antitrust case

can impact the outcome before the trial begins.

194

Attorneys filing

antitrust claims on behalf of minor leaguers must analyze what the

appropriate standard of review would be if federal antitrust law

were applicable to Minor League Baseball players.

a. Per Se Illegal Violations

Under the Sherman Act, certain economic restraints are held

to be per se illegal.

195

Per se violations of the Sherman Act fall into

specific categories.

196

Only specifically harmful actions are classi-

fied as per se violations.

197

If a court finds that a business commit-

ted a per se violation, the court will not consider the business’s

market power or intent before finding the business guilty of violat-

ing the Sherman Act.

198

The treatment of minor leaguers through the MLR likely does

not fall into any of the per se illegal categories. Therefore, if minor

leaguers brought a suit against MLB, the court would have to use a

different standard of review.

193. See A

REEDA ET AL

., supra note 52, at 144 (explaining that certain combi-

nations should be condemned out of hand while others may have a positive eco-

nomic impact).

194. Id. (explaining that the test used in a given case can shift the burden of

proof between parties).

195. See, e.g., United States v. Trenton Potteries Co., 273 U.S. 392, 397 (1927).

196. See, e.g., id. (condemning price-fixing as per se illegal); Eastern States

Retail Lumber Dealers’ Ass’n. v. United States, 234 U.S. 600, 612–13 (1914) (con-

demning concerted refusals to deal as per se illegal); Fashion Originators’ Guild,

Inc. v. FTC, 312 U.S. 457, 467–68 (1941) (condemning certain group boycotts as

per se illegal).

197. Nynex Corp. v. Discon, 525 U.S. 128, 133 (1998) (“Yet certain kinds of

agreements will so often prove so harmful to competition and so rarely prove justi-

fied that the antitrust laws do not require proof that an agreement of that kind is,

in fact, anticompetitive in the particular circumstances. An agreement of such a

kind is unlawful per se.”).

198. Id. at 136.

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b. Quick Look Rule of Reason

In some antitrust cases, courts use an abbreviated or “quick

look” rule of reason test.

199

The quick look rule of reason is an

appropriate standard of review where an agreement is not so bla-

tantly anticompetitive as to justify a finding of per se illegality.

200

The quick look rule of reason does not require in-depth market

analysis but rather a less formal assessment of the anticompetitive

nature of an agreement.

201

The quick look rule of reason is not the proper test for the

employment of minor league baseball players. While there is not a

hard line rule delineating when to use the quick look rule of reason,

the employment of minor leaguers is not a good fit for the rule.

202

The reduced emphasis on market analysis is not fitting when ana-

lyzing a practice that has been occurring since the start of the rela-

tionship between MLB and MiLB.

203

Therefore, if minor leaguers

brought a suit against MLB, the court would have to turn to the

final prominent test for violations of federal antitrust law: the rule

of reason.

c. Rule of Reason

Courts have used the rule of reason to test for violations of

federal antitrust law since the early days of the Sherman Act.

204

Unlike the quick look version, the full rule of reason involves in-

depth market analysis to determine the anticompetitive impact of

an agreement or practice.

205

When a court analyzes an antitrust

claim under the rule of reason, trials are notoriously in-depth and

drawn out.

206

While most antitrust suits end in a settlement,

207

the

199. See Cal. Dental Ass’n v. FTC, 526 U.S. 756, 770–73 (1999).

200. Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 692 (1978)

(“While this is not price fixing as such, no elaborate industry analysis is required to

demonstrate the anticompetitive character of such an agreement.”).

201. Id.

202. Cal. Dental Ass’n v. FTC, 526 U.S. 756, 781 (1999).

203. Id. (explaining that market clarity and experience is an important factor

in assessing if a quick look is sufficient to find a violation of federal antitrust law).

204. See, e.g., Standard Oil Co. v. United States, 221 U.S. 1, 60 (1911).

205. State Oil Co. v. Khan, 522 U.S. 3, 10 (1997) (“[T]he finder of fact must

decide whether the questioned practice imposes an unreasonable restraint on com-

petition, taking into account a variety of factors, including specific information

about the relevant business, its condition before and after the restraint was im-

posed, and the restraint’s history, nature, and effect.”).

206. Richard A. Posner, A Statistical Study of Antitrust Enforcement, 13 J.L. &

CON

. 365, 374–81 (1970) (describing the length and in-depth nature of federal

antitrust suits and analyzing length for suits brought by the government and by

private parties).

207. Id. at 381.

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amount of market data and level of analysis used is too unwieldy

and unavailable for the purposes of this Comment. Therefore, it is

impossible to make an accurate analysis—let alone a good faith hy-

pothesis—about whether a court would find a violation of federal

antitrust law in the current employment of minor leaguers.

208

The more important outcome of this Comment is the path to

allow the courts to do the analysis. Congress should pass legislation

or amend the Flood Act so courts can hear claims like Miranda v.

Selig and assess the merits of the plaintiffs’ antitrust violation

claims.

209

The rule of reason is the proper test for claims like those

in Miranda v. Selig.

210

While courts may decide that MLB’s actions

do not constitute a violation of federal antitrust law, minor leaguers

deserve the opportunity to have their cases heard.

IV. C

ONCLUSION

Professional baseball has long enjoyed an exemption from fed-

eral antitrust law.

211

Congress addressed the issue of the exemption

by passing the Flood Act and subjecting the employment of MLB

players to antitrust law.

212

However, antitrust law still does not ap-

ply to the employment of minor leaguers.

213

The antitrust exemp-

tion and use of UPCs artificially suppresses minor leaguers’ wages

below their market value.

214

Minor leaguers are forced to choose

among playing the game they love for below-poverty-level salaries,

taking on second or even third jobs while playing as professionals,

or quitting the game to continue to support themselves and their

families.

215

208. See Gregg Steinman, Note, Social Injustice in Minor League Baseball:

How Major League Baseball Makes Use of an Antitrust Exemption to Exploit Its

Employees, 5 U. M

IAMI

ACE

& S

. J

UST

. L. R

. 139 (2015), for further discus-

sion on how courts would rule on a suit analyzing the potential antitrust violations

that have been considered by this Comment.

209. But see Stanley M. Brand & Andrew J. Giorgione, The Effect of Base-

ball’s Antitrust Exemption and Contraction on its Minor League Baseball System: A

Case Study of the Harrisburg Senators, 10 V

ILL

. S

PORTS

& E

. L.J. 49, 51–52

(2003) (“Even if Minor League Baseball were to prevail on an antitrust claim, the

litigation costs of defending such a charge would threaten the league’s survival. In

the end, minor league player development would be stripped of its stability created

by the player draft, reserve clause, and the PBA.”).

210. Supra Parts III.B.1. and III.B.2.

211. Supra Part II.B.

212. Supra Part II.C.1.

213. Supra Part II.C.1.

214. See Miranda Complaint, supra note 108 at 2, 22.

215. Supra Part III.A.

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The courts have repeatedly held that altering the Business of

Baseball antitrust exemption is a job for Congress.

216

For that rea-

son, in order to prevent further economic harm to minor leaguers,

Congress should pass legislation similar to the Flood Act that sub-

jects the employment of minor leaguers to federal antitrust law and

allows minor leaguers to bring claims of antitrust violations against

MLB.

217

Furthermore, with this proposition, minor leaguers’ claims

would not be barred under the Labor Union exemption to federal

antitrust law.

218

Minor leaguers are not members of the union that

bargained for the terms of the UPCs at issue.

219

Therefore, these

claims fail the Mackey Test, due to the lack of a collective bargain-

ing relationship between minor leaguers and MLB.

220

Since MLB

cannot satisfy the Mackey Test, courts should not apply the Labor

Union exemption.

221

Courts should analyze minor leaguers’ claims under the Rule

of Reason.

222

The analysis would involve a thorough analysis of the

baseball market and a look at the anticompetitive harms and

procompetitive benefits of UPCs.

223

While it is uncertain whether

courts would find that MLB and its UPCs violate antitrust law, mi-

nor leaguers at least would have their voices heard and could assure

that MLB does not act in an unfair manner.

224

The proposed alter-

ation to the Business of Baseball antitrust exemption would be

nothing short of a home run.

216. Supra Part II.C.2.

217. Supra Part III.B.

218. Supra Part III.B.2.

219. Supra Part III.B.2.

220. Supra Part III.B.2.

221. Supra Part III.B.2.

222. Supra Part III.B.3.c.

223. Supra Part III.B.3.c.

224. Supra Part III.B.3.c.