NEW YORK — Major League Baseball avoided a possible U.S. Supreme Court challenge to its antitrust exemption when it settled a federal lawsuit and two in New York State court filed by minor league teams who lost their big league affiliations.
James W. Quinn, a lawyer for the teams who sued, said Thursday that a settlement had been reached in all three cases. Quinn said the terms of the settlement were confidential.
MLB declined comment.
MLB cut the minimum guaranteed minor league affiliation agreements from 160 to 120 in September 2020 and took over running the minors from the National Association of Professional Baseball Leagues, which had been in charge since 1901.
The parent companies of the Staten Island Yankees, Tri-City ValleyCats, Salem-Keizer Volcanoes and Norwich Sea Unicorns sued MLB in December 2021 in U.S. District Court in Manhattan, alleging a violation of the Sherman Antitrust Act caused by “a horizontal agreement between competitors that has artificially reduced and capped output in the market for MiLB teams affiliated with MLB clubs.”
Tri-City and Norwich sued in state court in January 2021 and a trial had been scheduled to start on Nov. 13 on issues such as whether MLB made improper inducements to minor league teams and whether minor league teams breached their agreements with the former minor league governing body.
The federal suit was dismissed in U.S. District Court in Manhattan because of the antitrust exemption and that decision was affirmed by the 2nd U.S. Circuit Court of Appeals. Lawyers for the minor league teams then asked the U.S. Supreme Court to review the decision in an attempt to overturn baseball’s antitrust exemption, created by a 1922 Supreme Court ruling. The Supreme Court had not yet considered whether to accept the case.
The Supreme Court granted baseball an antitrust exemption in the Federal League case when Justice Oliver Wendell Holmes wrote that baseball was not interstate commerce but exhibitions exempt from antitrust laws. The Supreme Court reaffirmed the decision in a 1953 case involving New York Yankees farmhand George Toolson and in the 1972 Curt Flood decision, saying any changes should come from Congress.
A 1998 law applied antitrust laws to MLB affecting the employment of major league players at the major league level.