The 2021 antitrust lawsuit brought by the Tri-City ValleyCats along with three other former minor-league teams’ parent companies against Major League Baseball (MLB) was upheld for dismissal by the United States Court of Appeals for the Second Circuit in New York on Tuesday.
In 2020, MLB reorganized its minor league teams, cutting the number of affiliates from 160 to 120. Those cut included the Staten Island Yankees, Norwich Sea Unicorns, Salem-Keizer Volcanoes and the ValleyCats, who were owned by the Houston Astros. Staten Island, Norwich and Tri-City had been playing in the single-A New York-Penn League, while Salem-Keizer played in the single-A Northwest league. The New York-Penn League subsequently folded, but Tri-City joined the independent Frontier League.
In January 2021, the four teams’ organizations filed a suit in the state Supreme Court’s commercial division for breach of fiduciary duty and tortious interference. It stated MLB’s takeover plan of the minor leagues “is nothing less than a naked, horizontal agreement to cement MLB’s dominance over all professional baseball.”
At the time of the suit, ValleyCats chairman Doug Gladstone said his team was seeking $15 million, approximately the team’s worth before the affiliation loss. Playing in the Frontier League costs Tri-City hundreds of thousands more money because it has to pay expenses, including salaries, that the Astros used to pay.
In October 2022, U.S. District Judge Andrew Carter dismissed the lawsuit that challenged MLB’s antitrust exemption because, he determined, it was still exempt from antitrust scrutiny. However, he noted that the plaintiffs established antitrust standing and plausibly pleaded an antitrust violation. So the teams appealed it.
In Tuesday’s decision, Circuit Judges Barrington Parker, Michael Park and Alison Nathan cited the U.S. Supreme Court’s 1922 case which granted baseball was not interstate commerce, but exhibitions exempt from antitrust laws, as well as the Supreme Court’s reaffirmations in 1953 and 1972 cases.
The court wrote, “And we must continue to apply Supreme Court precedent unless and until it is overruled by the Supreme Court.”
The teams could appeal to the Supreme Court, however it only agrees to review about 1% of petitions.
Categories: Business, Sports