Settlement Concludes Latest Challenge to MLB’s Antitrust Exemption

The long-running legal dispute between two minor league teams and Major League Baseball is officially over, as is another threat to MLB’s century-old federal antitrust exemption. 

The Tri-City ValleyCats and the Norwich Sea Unicorns — who were among 40 minor league clubs who lost their status as MLB affiliates in 2020 — agreed to a settlement in the case, according to a Tuesday court filing in a New York county court.

Terms of the settlement were not disclosed. 

After the joint stipulation that requested the proceedings to be “discontinued with prejudice,” 

Justice Barry R. Ostrager canceled all future hearings. The case, originally filed in March 2021, was slated to go to trial on Nov. 13. 

An MLB spokesperson declined comment when reached by Front Office Sports on Wednesday. 

Forty of 160 minor league clubs lost their MLB affiliations in 2020, and the ValleyCats and Sea Unicorns sought to challenge MLB’s antitrust exemption. 

“MLB’s intimidation tactics, which it used to pit MiLB teams against each other for the ‘privilege’ of not having their businesses destroyed, has gone on for years but was most vividly demonstrated by a May 2020 email in which Commissioner Rob Manfred emailed the ValleyCats’ owner condolences on the passing of his father, and then in the very same email, issued a veiled threat that any public statement made about MLB’s contraction efforts would be ‘Unwise,’” lawyers for the two teams wrote in the original complaint. 

The settlement comes after New York Attorney General Letitia James and 17 other attorneys general petitioned the U.S. Supreme Court to hear the two teams’ petition to the nation’s highest court. 

“Federal law cannot preempt historic state police power prerogatives absent an unmistakably clear Congressional command,” the attorneys general wrote in their amicus brief. “Antitrust enforcement is undisputedly a function of states’ historic police powers. But Congress never spoke at all—much less clearly and unmistakably—to federal preemption of state antitrust enforcement against the business of baseball.”

Beyond the Troy-based ValleyCats, the Auburn Doubledays, Batavia Muckdogs, and Staten Island Yankees were also among New York teams that lost their MLB affiliations. 

The Connecticut-based Sea Unicorns were an affiliate of the Detroit Tigers, and the ValleyCats were a Houston Astros affiliate. Both teams were defendants in the case along with MLB. 

The resolution of the case means that the Supreme Court challenge goes away as well. 

Over the years, there have been challenges to MLB’s broad antitrust exemption both in the court system and by legislators. Earlier this year, Rep. Barbara Lee (D-California) questioned the league’s antitrust exemption amid the Oakland A’s plan to relocate to Las Vegas. 

“MLB’s continued active encouragement of the A’s abandonment of Oakland and the East Bay runs counter to the rationale supporting MLB’s century-old exemption from federal antitrust law,” Lee wrote in a letter to Manfred.