One Minor League Player Suit Strikes Out; Another One in On-Deck Circle

Jeff Samardzija of the 2015 White Sox finished last in the league in total earned runs and gave up the most hits and home runs. Following that performance, he still signed a new five-year, $90 million deal with the San Francisco Giants.

At least the “Shark” won 11 games last season. The Yankees will pay C.C. Sabathia $25 million this year after he won all of six games for them last year. And the Yankees may look good next to the Tigers, who will compensate Justin Verlander with $28 million this season after he notched five wins in 2015.

While these contracts would stand out under any circumstances, they are particularly alarming when the plight of the 6,000 or so minor leaguers is considered, many of whom earn less than the federal minimum wage of $7.25 per hour. For the third consecutive spring training, this column turns to litigation involving minor leaguer baseball compensation.

Baseball has enjoyed immunity from the reach of antitrust laws ever since Justice Oliver Wendell Holmes famously concluded in 1922 that while indisputably a big business, the sport did not engage in interstate commerce because it was based on a “pre-established circuit” of “exhibitions of baseball to be given in the various cities.” Federal Baseball Club v. National League, 259 U.S. 200, 204 (1922).

Fifty years later, the Supreme Court undermined Holmes’ rationale by expressly recognizing that “[p]rofessional baseball is engaged in interstate commerce,” but left its antitrust immunity in place based upon stare decisis. Flood v. Kuhn, 407 U.S. 258, 282 (1972).

While that decision ultimately led to free agency in the majors, it did nothing to help minor league players, and still left baseball, alone among professional sports, unjustifiably exempt from antitrust laws.

The impact of the exemption is readily seen today. While Major League Baseball, an industry with revenues of nearly $10 billion last season, pays its players a minimum of $507,500 per year and an average of $4.25 million, minor leaguers are not represented by a union, and many not only eke by below the federal poverty line of $11,770, but also earn less in real dollars than their 1970s counterparts.

Most minor leaguers earn monthly wages between $1,100 and $2,150 during their three- to five-month seasons and receive no overtime pay regardless of the hours devoted to their teams. Even worse, they receive no compensation for spring training, for playing in instructional or off-season leagues or for following required off-season conditioning programs. Working part-time winter jobs is not uncommon.

Each team in minor league baseball has a single affiliate Major League Baseball team, most of which were named as defendants in two federal suits challenging minor league compensation filed in San Francisco. Since last spring training, baseball has gone one for two in defending these putative class actions.

The more aggressive case, Miranda v. Office of the Commissioner of Baseball, 3:14cv05349 (N.D. Calif.), a frontal assault on baseball’s notorious reserve clause, was dismissed with prejudice in September. The reserve system gave way to free agency in the majors years ago, but minor leaguers remain bound to the team drafting them for at least seven years.

Lead plaintiff and ex-minor leaguer Sergio Miranda asserted that the reserve clause deprived players of “the freedom of movement available to players in virtually all other professional sports.” The argument resonated with U.S. District Judge Haywood S. Gilliam, Jr. who wrote that baseball “should not be afforded carte blanche to restrict the pay and mobility of minor league players.”

Yet, carte blanche is just what baseball continues to enjoy. Like other judges to wrestle with baseball antitrust concerns before him, Gilliam ruled that Miranda’s argument against the exemption is ripe for consideration but found only the Supreme Court or Congress can take it up.

Neither option offers much promise. In the renowned Curt Flood case, the Supreme Court made clear that any changes to baseball’s immunity must come from Congress, and few look to the present dysfunctional Congress to meaningfully review the game’s exemption. As a result, monopolistic control over minor league baseball is alive and well.

After pitching a shutout in the Miranda case, however, Major League Baseball was roughed up in the early innings of the case now known as Senne v. Kansas City Royals Baseball Corp., 3:14cv00608 (N.D. Calif.). Class certification was sought by 43 ex-minor leaguers seeking not to overturn the antitrust exemption but to assert the narrower claim that their compensation violated state and federal minimum wage and overtime laws.

MLB argued class certification was inappropriate because minor leaguers are given different assignments both during the season and in the off-season for different compensation set by each team, and that federal wage-and-hour laws do not apply to “seasonal” work like baseball.

The U.S. District Court heard how all minor league players are bound by the same standard contract “which requires players to worker [sic] for a fixed salary regardless of the number of hours worked, resulting in compensation that falls below the minimum wage because of the long hours they are required to work.”

The court then found that both the minimum wage and overtime claims were “substantial” and granted conditional class-action status last October.

More than 500 past and present minor leaguers then joined the suit, including a few active major leaguers, such as reliever George Kontos of the Giants, who previously pitched for both Niles West High School in Skokie and Northwestern University. This class action represents the best hope minor leaguers have for relief.

In response, baseball is increasing its lobbying efforts, urging Congress to effectively annul the class-action suit by classifying minor leaguers as “seasonal” workers beyond the reach of the Fair Labor Standards Act and hourly wage laws. MLB will have to work fast; the Senne case now has a February 2017 trial date.

Of course, should Congress decide to hold public hearings on MLB’s proposals, the lobbying efforts could backfire. The spectacle of erstwhile yet impoverished minor leaguers testifying about their hours, dim prospects of advancement and bleak working conditions just might stir public interest in their cause, more than comparisons to the bloated salaries of pitchers on the downside of their careers like Samardzija, Sabathia or Verlander ever could.

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