After George is told by Minkler and Mooney, front office guys of The New York Mets, that the team is looking to hire a new head of scouting, they follow up by saying that league rules prevent them from actually making an offer to George while he is still under contract with The New York Yankees. Does such a league rule violate Federal anti-trust laws under the Sherman Anti Trust Act?
(EDITOR’S NOTE: Anti-trust law is admittedly complicated, and the courts have interpreted and reinterpreted these laws multiple times over the last 100+ years. What follows is a basic framework for understanding George’s predicament. We hope you will follow the links we’ve included in this post and, if interested, do further research into anti-trust law.)
The Sherman Anti Trust Act of 1890 has 2 major sections. Section 1 makes illegal any contract that restrains trade. Section 2 forbids the use of monopolistic power. The essential point of the Act was to ensure that things like price fixing, bid rigging, and refusals to deal would be illegal – to make sure that there is competition within the market so that no single entity gains too much control in the free market. This idea, to promote fair competition, is the basic goal of the act.
In Major League Baseball, these anti-trust laws became particularly problematic when Curt Flood challenged baseball’s “reserve system.” Free agency is nowadays one of the essential components of Baseball’s off-season, but until the 1970’s there was no such thing as a “free agent” in the MLB as we know it today. Instead, Baseball had a “reserve system” in place, which gave teams the exclusive right to sign a player for one year after that player’s contract expired. No other team was allowed to negotiate or sign that player. A player could request to be made a free agent, or wait the year and forfeit the pay. But teams would typically just trade such a “hold out” player to another team, which would then be able to use that very same reserve clause against the newly traded player. And the cycle would continue.
The problem for Major League Baseball was that this, quite clearly, appears to be a restraint of trade and violation of the Sherman Anti Trust Act. This is because it restricts players ability to make contracts with the team of their choice, which essentially eliminates competition between teams for player services. This is what happened to Curt Flood. He was an outfielder for the St. Louis Cardinals when he, along with a number of his teammates, was traded to the Philadelphia Phillies following the 1969 season. Flood was not happy and brought suit against Baseball, arguing that the “reserve clause” was an illegal restraint of trade that essentially acted like a group boycott and a concerted refusal to deal.
Believe it or not, The Supreme Court in Flood v. Kuhn kind of agreed with Flood. However, there was one major problem. In 1922, The Supreme Court had ruled in Federal Baseball Club v. National League that Baseball was not really interstate commerce and that the league is therefore exempt from the Federal Government’s anti-trust laws (The Federal Government only has jurisdiction over interstate commerce). This Baseball exemption had been upheld 30 years later in Toolson v. New York as well. Therefore, The Court in Flood was unwilling to overturn this decades long exemption, and ruled that if Congress really wanted these laws to apply to Baseball, it would have to take up the matter itself. For now, The Court was staying out of it. Flood lost the case, and The Baseball exemption was further solidified in Federal jurisprudence.
Baseball ultimately did allow free agency later in the 1970’s following an arbitration decision, The Stietz decision, which basically eliminated the “reserve system.” Free agency was brought fully into the sport in a subsequent Central Bargaining Agreement in 1976 between the players union and ownership, which created Baseball’s first free agent system. CBA’s in later years have produced even more freedom for players, resulting in the modern free agent system we have today. Then in 1998, Congress passed The Curt Flood Act, which extended anti trust protections to baseball players regardless of any CBA agreement.
So, after all that, does this mean that George should be allowed to join the Mets as their new head of scouting? Is the League rule violative of Federal anti-trust laws? The answer is, surprisingly, a resounding no. For starters the 1998 Curt Flood Act only became law on October 27, 1998, about a year and a half after the Mets made their non-offer to George. At the time of when the episode “The Millennium” first aired, Baseball was still technically exempt from Federal anti-trust laws. Furthermore, and this is where it all gets incredibly more interesting and complicated, The Curt Flood Act only applies to baseball players, and not to other staff employed by MLB teams that are “employed in the business of organized professional baseball.” The historical baseball exemption is still in effect for everyone else except for the players.
This issue was highlighted in a 2016 Federal lawsuit brought by 2 MLB scouts that alleged anti trust violations against Baseball. The case is surprisingly on point to George’s situation. Under MLB rules, teams are not allowed to negotiate with scouts (or other employees) that are currently under contract with another team. Once again, seems like a classic Sherman Anti Trust issue, as Baseball is prohibiting a competitive labor market. The SDNY court ruled against the scouts, and the 2nd Circuit Court of Appeals ruled the same on appeal, with the reasoning that Baseball is still exempt from anti-trust laws with regards to those “employed in the business of organized professional baseball,” except for the players. The Supreme Court put the matter to rest by declining the scouts’ final appeal. Therefore, even under current law, it seems highly likely that a court would find that the league rule prohibiting the Mets from offering George the head scout position while he is under contract with the Yankees is legal, because Baseball still maintains it’s historic exemption from Federal anti-trust laws. The best George can do at this point is just strap on a body suit and hope he gets fired.