DOJ weighs in on MLB antitrust case, says exemption should be narrowly interpreted

The Department of Justice waded into the controversy over Major League Baseball’s century-old antitrust exemption Wednesday, telling a federal court the exemption should be narrowly interpreted to just the business of staging games.

The New York federal court is presiding over the early stages of an antitrust lawsuit against MLB that was brought by four minor league teams that were squeezed out of MiLB when baseball contracted 40 teams in 2020. Their case states that under the antitrust exemption, the lawsuit should be dismissed. Their plan is then to keep appealing it all the way to the Supreme Court, which in its decision against the NCAA last year termed the baseball exemption “aberrational.”

But the DOJ filing raises another prospect: that the exemption stands, but the court rules what MLB did with the minor league clubs falls outside it and is subject to the antitrust laws. The 18-page filing, which lists assistant attorney general Jonathan Kanter at the end among other officials, pointedly does not take a position on what the district court should do.

Instead, the DOJ lays out an argument for the exemption having only a very narrow sway.

“In that light lower courts should not extend the ‘baseball exemption’ beyond the scope recognized by the Supreme Court… which limited the exemption to conduct that is central to the actual exhibition of professional baseball games,” the DOJ wrote. “Thus, while the exemption may cover ‘antitrust challenges to (Major League Baseball’s) league structure and its reserve system,’ it would not cover conduct beyond the scope of the offering of exhibitions of professional baseball.”

DOJ does not write whether the restructuring of minor league baseball fell outside of the exemption.

Advocates for minor leaguers, though, were interpreting the DOJ’s insertion into the case as the death knell for the exemption.

“It is momentous that the Justice Department today declared that baseball’s antitrust exemption ‘does not rest on any substantive policy interests that justify players. . . losing out on the benefits of competition, ‘”said Harry Marino, executive director of MiLB Advocates. “This means the United States government sees no substantive reason why Major League Baseball teams should be permitted to collude and pay Minor League players poverty wages, as they have for decades.”

The exemption has long been an anomaly. Even in upholding the exemption in a 1972 case brought by player Curt Flood to undo the reserve system that had forever tied players to teams, the Supreme Court ruled, “(p) professional baseball is a business and it is engaged in interstate commerce.”

Earlier this year Sen. Bernie Sanders (I-VT) announced a bill to overturn the exemption, citing the minor league restructuring. It joins a similar version that is pending from last year introduced by Sen. Mike Lee (R-Utah) and Rep. Jeff Duncan (R-SC).

The exemption no longer covers MLB players. MLB allowed free agency shortly after the Flood case, and Congress in 1998 codified into law that the exemption does not apply to labor issues. The law, named after Flood, though, specifically spelled out that minor leagues still fell under the exemption.

The DOJ was not specific in terms of what businesses should fall under the exemption and which would not, writing only that the 1922 ruling cited as exempt the business of giving baseball exhibitions.

“The Supreme Court has repudiated the original Commerce Clause justification for the ‘baseball exemption,’ leaving it as an aberration with respect to other sports and other antitrust exemptions,” the DOJ wrote. “Second, for those reasons, among others, the lower courts should not expand the ‘baseball exemption’ beyond the scope established by the Supreme Court.”

The LA Times was the first to report the development.

The federal case in New York is brought by the former affiliates of the New York Yankees, Houston Astros, Detroit Tigers and San Francisco Giants.

(Photo: Peter Aiken / USA Today)

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