Sergio Miranda v. Allan Selig

Court of Appeals for the Ninth Circuit
860 F3d 1237, 2017 WL 2723962, 2017 U.S. App. LEXIS 11293 (2017)

ELI5:

Rule of Law:

Professional minor league baseball is exempt from federal antitrust laws under the longstanding "business of baseball" exemption established by Supreme Court precedent and codified regarding minor leagues in the Curt Flood Act of 1998.

Facts:

Major League Baseball (MLB) franchises employ hundreds of minor league players through a "farm system" to develop talent for the major leagues.
MLB requires all franchises to use a Uniform Player Contract when hiring minor league players, which includes a "reserve clause" granting the team exclusive rights to the player for seven years.
The plaintiffs allege that MLB establishes fixed salary guidelines, with first-year players earning roughly $1,100 per month and AAA players earning roughly $2,150 per month.
Minor league players are required to work 50 to 60 hours per week during the season and receive no salary for spring training.
Most minor league players allegedly earn less than $7,500 per year, with some earning as little as $3,000.
Unlike their major league counterparts, minor league players are not members of a labor union and must negotiate independently.
The plaintiffs claimed that the MLB franchises conspired to depress minor league salaries artificially by refusing to compete for players.

Procedural Posture:

The plaintiffs filed a class action complaint in the United States District Court for the Northern District of California.
The defendants (Owners) filed a motion to dismiss the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).
The District Court granted the defendants' motion to dismiss.
The plaintiffs appealed the dismissal to the United States Court of Appeals for the Ninth Circuit.

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Issue:

Does the historical exemption from federal antitrust laws for the "business of baseball" extend to the employment contracts and salary restrictions of minor league baseball players?

Opinions:

Majority - Chief Judge Thomas

Yes, the employment of minor league players and the restrictions imposed on them fall squarely within the "business of baseball" exemption from antitrust laws. The court reasoned that it was strictly bound by Supreme Court precedents—specifically Federal Baseball (1922), Toolson (1953), and Flood (1972)—which established and reaffirmed that the business of baseball is not subject to the Sherman Act. Furthermore, the court noted that when Congress passed the Curt Flood Act of 1998, it explicitly withdrew the antitrust exemption for major league players but specifically retained the exemption for minor league players. The court concluded that any changes to this anomaly must come from Congress or the Supreme Court, not an intermediate appellate court.

Analysis:

This decision reaffirms the unique and anomalous position of baseball in American law as the only professional sport with a general exemption from federal antitrust statutes. By strictly adhering to stare decisis, the Ninth Circuit confirmed that lower courts cannot overturn the 1922 Federal Baseball precedent, even if the underlying economic reality of baseball as interstate commerce has changed. The ruling highlights the critical impact of the Curt Flood Act, which codified the exemption for minor leagues while removing it for the majors, effectively barring minor league players from challenging wage-fixing or restrictive contracts under antitrust theories.

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