SAN FRANCISCO (CN) – A panel of Ninth Circuit judges on Tuesday appeared unwilling to reject Supreme Court precedent deeming Major League Baseball exempt from antitrust laws, despite arguments that the exemption is based on a lie.
Fighting the dismissal of a suit alleging a conspiracy to fix Minor League players’ pay, attorney Samuel Kornhauser argued the judicial branch’s invented antitrust exemption for baseball is based on the false premise that the league is not engaged in interstate commerce.
“It’s not 1922 when baseball was struggling,” Kornhauser told three Ninth Circuit judges on Tuesday. “We are not bound by that decision if circumstances have changed.”
Kornhauser was referring to the 1922 Supreme Court ruling, Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, which declared professional baseball exempt from the Sherman Antitrust Act.
Subsequent Supreme Court rulings blindly followed that precedent despite its obvious flaws, Kornhauser argued, adding the Sherman Antitrust Act contains no specific carve-out for baseball, as it did for labor unions, farm coops and insurance.
“How are we not constrained by that?” U.S. Circuit Judge Mary Murguia asked, referring to high court rulings upholding the exemption. “The Supreme Court decision saying otherwise is not to be recognized?”
Kornhauser replied by quoting 18th-century British Justice William Blackstone, a historian of common law, who wrote judges should not uphold precedential rulings that are “most evidently contrary to reason” when the prior decisions are “manifestly absurd or unjust.”
Kornhauser represents a class of Minor League players looking to overturn a 2015 ruling dismissing their antitrust class action against MLB team owners and Commissioner Bud Selig.
Lead plaintiff Sergio Miranda sued MLB in December 2014, claiming the teams conspire to suppress Minor League players’ pay and restrict their ability to work for other teams in violation of antitrust laws.
Representing MLB and its clubs, attorney John Keker of Keker & Van Nest said U.S. District Judge Haywood Gilliam got it right when he dismissed the class action in September 2015.
“There is no reasonable dispute that the antitrust exemption applies to the business of baseball,” Keker said.
In his 2015 ruling, Gilliam acknowledged the Minor Leaguers’ persuasive argument that MLB teams “should not be afforded carte blanche to restrict the pay and mobility of Minor League players,” but he found only Congress and the Supreme Court possess the power to alter baseball’s “singular and historic exemption from antitrust laws.”
Gilliam also concluded that he was bound by the Ninth Circuit’s January 2015 ruling in City of San Jose v. Comm’r of Baseball, which held the antitrust exemption applies broadly to the “business of providing public baseball games for profit between clubs of professional baseball players.”
Kornhauser contended that case involved a separate issue – the attempted relocation of the Oakland A’s – and did not address uniform player contracts that suppress Minor League players’ wages and limit their mobility.
The class attorney cited massive profits for MLB team owners as evidence of the league’s unfair practices. It earned nearly $10 billion in revenue in 2016, and each of its 30 teams was valued on average at $744 million in 2013, according to Forbes.
“You don’t need to protect billionaires when you’ve got tens of thousands of Minor League baseball players living on $3,000 a year,” Kornhauser said.
The average Major League player earns more than $4 million per year, according to a 2015 study by the Associated Press. Meanwhile, most Minor Leaguers earn $3,000 to $7,500 annually and receive no overtime pay, despite routinely working 50 to 75 hours a week during the five-month championship season, according to Miranda’s class action complaint.
Responding to Kornhauser’s contention that no Supreme Court ruling has explicitly dealt with the issue of Minor League players, Chief Ninth Circuit Judge Sidney Thomas asked, “Why aren’t those activities part of the game of baseball?”
Kornhauser cited a 2014 ruling from the Southern District of New York, Laumann v. National Hockey League, which held that because broadcasting games on TV is an interstate industry by nature, it falls outside of baseball’s antitrust exemption. In his brief, Kornhauser called that ruling an example of how some courts “continue to nibble away at the supposed all-encompassing business of baseball exemption.”
“The Federal Baseball decision was the wrong law,” Kornhauser concluded. “There’s not a single word saying ‘baseball’ in the Sherman Antitrust Act.”
The three circuit judges – Thomas, Murguia and Ferdinand Fernandez – took the arguments under submission, giving no signal of their willingness to deviate from Supreme Court precedent on baseball’s antitrust exemption.