Sergio MIRANDA; Jeffrey Dominguez; Jorge Padilla; and Cirilo Cruz, Individually and on Behalf of All Those Similarly Situated v. Allan Huber SELIG, Bud; Kansas City Royals Baseball Corp.; Miami Marlins, L.P.; San Francisco Baseball Associates, LLC; Boston Red Sox Baseball Club L.P.; Angels Baseball L.P.; Chicago White Sox Ltd.; St. Louis Cardinals, LLC; Colorado Rockies Baseball Club, Ltd.; Baseball Club of Seattle, LLP; Cincinnati Reds, LLC; Houston Baseball Partners, LLC; Athletics Investment Group, LLC; Rogers Blue Jays Baseball Partnership; Cleveland Indians Baseball Co., L.P.; Cleveland Indians Baseball Co., Inc.; Padres L.P.; San Diego Padres Baseball Club, L.P.; Minnesota Twins, LLC; Washington Nationals Baseball Club, LLC; Detroit Tigers, Inc.; Los Angeles Dodgers Holding Co.; Sterling Mets L.P.; Atlanta National League Baseball Club, Inc.; AZPB L.P.; Baltimore Orioles, Inc.; Baltimore Orioles, L.P.; Phillies L.P.; Pittsburgh Baseball, Inc.; Pittsburgh Baseball P‘ship; New York Yankees P‘ship; Tampa Bay Rays Baseball Ltd.; Rangers Baseball Express, LLC; Rangers Baseball, LLC; Chicago Baseball Holdings, LLC; Milwaukee Brewers Baseball Club, Inc.; Milwaukee Brewers Baseball Club, L.P.; Office of Commissioner of Baseball, DBA Major League Baseball; Los Angeles Dodgers, LLC
No. 15-16938
United States Court of Appeals, Ninth Circuit
June 26, 2017
1237
Argued and Submitted April 18, 2017, San Francisсo, California
REVERSED.
John W. Keker (argued), David J. Rosen, Thomas E. Gorman, and R. Adam Lauridsen, Keker & Van Nest LLP, San Francisco, California, for Defendants-Appellees.
Before: SIDNEY R. THOMAS, Chief Judge, and FERDINAND F. FERNANDEZ and MARY H. MURGUIA, Circuit Judges.
OPINION
THOMAS, Chief Judge:
In this case we consider whether professional minor league baseball is exempt from federal antitrust law. Applying controlling precedent, we hold that it is, and we affirm the judgment of the district court.
I
Major League Baseball (“MLB“) is an unincorporated association consisting of thirty MLB franchises, also known as clubs or teams. Each franchise employs approximately forty baseball players on its “40-man roster,” with up to twenty-five players on its “active roster,” who play at the major league level. As part of MLB‘s “farm system,” each franchise also employs 150 to 250 players who compete at the minor league level. MLB franchises employ a high number of minor league players hoping that a handful will develop into major league players. Therefore, though minor league players train and play for minor league clubs, they are nonetheless employed by an MLB club.
The Contrаct sets forth minor league players’ first-season monthly salary rate. For each subsequent season, players and clubs are supposed to negotiate a monthly salary. If a player and club are unable to reach an agreement, the monthly salary rate is determined in the same manner as the first-season salary. Unlike major lеague baseball players, minor league players do not belong to a labor union and therefore must engage in negotiations independently.
Although MLB‘s salary guidelines are not publicly available, the plaintiffs, a class of minor league baseball players (“the Players“) allege MLB requires that all first-year minor league players earn $1,100 per month, Class-A minor league players earn $1,250 per month, Class-AA minor league players earn $1,500 per month, and Class-AAA minor league players earn $2,150 per month. The Players allege that most minor league players earn less than $7,500 per year, with some earning as little as $3,000. Minor league players receive no salary for spring training, during which they work fifty to sixty hours per week.
II
On February 5, 2015, the Players filed a complaint against the Office of the Commissioner of Baseball, former Commissioner Allan Huber “Bud” Selig, and MLB‘s thirty franchises (collectively, “the Owners“). Each class representative played minor league baseball at some point between 2010 and 2012. While employed as minor league players, the class representatives worked an average of fifty to sixty hours per week and earned less than $10,000 per year. Seeking declaratory and injunctive relief as well as damages, the Players allege that MLB‘s hiring and employment policies have violated federal antitrust laws by “restrain[ing] horizontal competitiоn between and among” the MLB franchises and “artificially and illegally depressing” minor league salaries.
The Owners filed a motion to dismiss under
III
We have jurisdiction under
A
The business-of-baseball exemption is best understood within its historical context. In 1890, Congress passed the Sherman Act “to protect trade and commerce against unlаwful restraints and monopolies.” Sherman Act, ch. 647, 26 Stat. 209 (1890). Under the Sherman Act, “[e]very contract . . . in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”
The Supreme Court first exempted the business of baseball from these federal antitrust laws almost a century ago in Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200, 42 S.Ct. 465, 66 L.Ed. 898 (1922). In Federal Baseball, the Supreme Court held that the business of baseball does not constitute “trade or commerce among the several States,”
The Court revisited the baseball exemption thirty years later in Toolson v. New York Yankees, Inc., 346 U.S. 356, 74 S.Ct. 78, 98 L.Ed. 64 (1953) (per curiam). In a one-paragraph per curiam opinion, and over Justice Burton‘s dissent, the Court declined to overrule Federal Baseball, reasoning that the business of baseball had “been left for thirty years to develop, on the understanding that it was not subject to existing antitrust legislation.” Toolson, 346 U.S. at 357. Therefore, “if there are evils in this field which now warrant application to it of the antitrust laws it should be by legislation.” Id.
In the years after deciding Toolson, the Supreme Court considered antitrust claims brought against defendants engaged in the business of traveling theater companies, United States v. Shubert, 348 U.S. 222, 75 S.Ct. 277, 99 L.Ed. 279 (1955), professional boxing, United States v. Int‘l Boxing Club of N.Y., 348 U.S. 236, 75 S.Ct. 259, 99 L.Ed. 290 (1955), professional football, Radovich v. Nat‘l Football League, 352 U.S. 445, 77 S.Ct. 390, 1 L.Ed.2d 456 (1957), and professional basketball, Haywood v. Nat‘l Basketball Ass‘n, 401 U.S. 1204, 91 S.Ct. 672, 28 L.Ed.2d 206 (1971). In each case, the Supreme Court held that the exemption articulated in Federal Baseball did not extend to sports or entertainment beyond baseball. See Shubert, 348 U.S. at 228; Boxing Club, 348 U.S. at 243; Radovich, 352 U.S. at 452; Haywood, 401 U.S. at 1205. Adopting the reasoning from Toolson, the Court also stated in Shubert, Boxing Club, and Radovich that it was the role of Congress—not the courts—to create additional exceptions to federal antitrust laws. See Shubert, 348 U.S. at 230 (“If the Toolson holding is to be expanded—or contract-
The Supreme Court once again upheld the baseball exemption in Flood v. Kuhn, 407 U.S. 258, 92 S.Ct. 2099, 32 L.Ed.2d 728 (1972), and, unlike in Toolson, it provided a lengthy explanation for its holding. The Court discussed in detail the cases described above. Flood, 407 U.S. at 274-80. It also noted that numerous bills had been introduced in Congress regarding the applicability оr nonapplicability of antitrust laws to baseball, yet none passed both houses of Congress. See id. at 281. Furthermore, it noted that bills that passed one house of Congress expanded rather than restricted the exemption. Id. at 281-82. In light of the case law and legislative history, the Court acknowledged that (1) “[p]rofessional baseball is . . . engaged in interstate commerce“; (2) “baseball is . . . an exception and an anomaly” with regard to its exemption from federal antitrust laws; (3) though it may be considered “unrealistic, inconsistent, or illogical,” this exemption is well-established and does not extend to boxing, football, basketball, and, presumably, other sports; (4) the Supreme Court has previоusly emphasized that Congress allowed professional baseball to develop and expand unhindered by federal antitrust laws, even in the advent of radio and television; and (5) the Court has also “expressed concern about the confusion and retroactivity problems that inevitably would result with a judicial overturning of Federal Baseball” and its progeny, and, therefore, any change should be made by Congress and not the courts. Flood, 407 U.S. at 282-83. Thus, the Flood Court declined to overrule Federal Baseball and Toolson, holding, once again, that professional baseball is exempt from federal antitrust laws. Id. at 284-85.
B
In 1998, Congress passed the Curt Flood Act, taking long-awaited action on the business-of-baseball exemption. Curt Flood Act of 1998, Pub. L. No. 105-297, 112 Stat. 2824 (codified at
C
In City of San Jose v. Office of the Commissioner of Baseball, 776 F.3d 686 (9th Cir. 2015), cert. denied, U.S., 136 S.Ct. 36, 36, 193 L.Ed.2d 25 (2015), we held that restrictions on franchise relocation fall squarely within the “business of baseball” and are therefore exempt from fedеral antitrust laws under Flood. We reasoned that this was particularly evident because the Curt Flood Act “withdrew baseball‘s antitrust exemption with respect to the reserve clause and other labor issues [for major league players], but explicitly maintained it for franchise relocation.” Id. at 690.
Considering the case law and the Curt Flood Act, it is undeniably true that minor league baseball—particularly the employment of minor league baseball players and the requirement that they sign a uniform contract containing a reserve clause—falls squarely within baseball‘s exemption from federal antitrust laws. Even more than the franchise relocation rules at issue in San Jose, the employment contracts of minor league players “relate to the ‘business of providing public baseball games for profit between clubs of professional baseball players.‘” San Jose, 776 F.3d at 690 (quoting Toolson, 346 U.S. at 357). Indeed, MLB‘s reserve clause, albeit as applied to major league players, is precisely what was challenged in Flood, where the Supreme Court determined, oncе again, to uphold the baseball exemption. Flood, 407 U.S. at 259, 284.
The Players argue that the baseball exemption does not apply to minor league baseball because Federal Baseball, Toolson, and Flood did not decide the issue of “whether major league baseball and its constituent clubs could conspire to fix the salaries paid to minor league players.” However, MLB‘s farming structure belies the claim that major and minor league baseball are separate and distinct in a meaningful way for the purposes of the Sherman Act. Minor league baseball players are employed and paid by MLB, and MLB employs minor league players with the hope that some of them will develop into major leаgue players. Therefore, the employment of minor league players is precisely the type of activity that falls within the antitrust exemption for the business of baseball.
Citing Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877, 127 S.Ct. 2705, 168 L.Ed.2d 623 (2007), the Players insist that we can “refuse[] to apply stare decisis” and decline to follow Federal Baseball, Toolson, and Flood. Specifically, the Players argue that we, like the Supreme Court in Leegin, should not “blindly apply[] outmoded, erroneous reasoning to an antitrust case,” especially in light of economic changes that have occurred since Federal Baseball.
The Players misapprehend the doctrine of stare decisis, particularly as it applies to intermediate federal appellate courts. Courts of Appeal must adhere to the controlling decisions of the Supreme Court. See Hutto v. Davis, 454 U.S. 370, 375, 102 S.Ct. 703, 70 L.Ed.2d 556 (1982)
Further, under the law-of-the-circuit rule, “[w]e are bound by decisions of prior panels’ [sic] unless an en banc decision, Supreme Court decision, or subsequent legislation undermines those decisions.” Baker v. Delta Air Lines, Inc., 6 F.3d 632, 637 (9th Cir. 1993) (internal quotation marks and citation omitted).2
The Supreme Court may, of course, overrule its own prior precedent. See Payne v. Tennessee, 501 U.S. 808, 827-28, 111 S.Ct. 2597, 115 L.Ed.2d 720 (1991) (“Nevertheless, when govеrning decisions are are unworkable or are badly reasoned, ‘this Court has never felt constrained to follow precedent.‘“) (quoting Smith v. Allwright, 321 U.S. 649, 665, 64 S.Ct. 757, 88 L.Ed. 987 (1944)). Nonetheless, even at the Supreme Court, “[s]tare decisis is the preferred course because it promotes the evenhanded, predictable, and consistent development of legal рrinciples, fosters reliance on judicial decisions, and contributes to the actual and perceived integrity of the judicial process.” Id. at 827.
Both the Supreme Court and our Court have repeatedly upheld the business-of-baseball exemption, and as recently as 2015. See Flood, 407 U.S. at 284; Toolson, 346 U.S. at 357; Shubert, 348 U.S. at 228; Boxing Club, 348 U.S. at 243; Radovich, 352 U.S. at 452; Haywood, 401 U.S. at 1205; San Jose, 776 F.3d at 692. We are bound by these decisions. Indeed, even if the Supreme Court had not spoken on this issue, the Players are unable to point to any of the narrow circumstances that would justify departure from our own circuit precedent.
Moreover, Congress has made clear its intent to maintain the baseball exemption for anything related to the employment of minor league players, the rеserve clause as applied to minor league players, and the relationship between major and minor league baseball.
IV
In light of Supreme Court precedent, the decisions of our Court, and the Curt Flood Act, minor league baseball falls squarely within the nearly century-old
AFFIRMED.