Yesterday, I wrote about the legal problems with Major League Baseball’s demand that players both assume the risk of dying of a deadly viral plague and take a pay cut for the privilege. Since then, in a further development, it seems that the league and union are at loggerheads over what, exactly, their March 26 agreement on COVID-19 meant.
Recent reporting indicated that MLB does not believe the recent agreement resolves the matter of player salaries in the event of TV-only games. Today, union chief Tony Clark announced that he holds precisely the opposite position, as Ronald Blum of the Associated Press reports.
The league claims the question of salary in a no-attendance season simply hasn’t been decided, pointing to a clause providing that the sides agree to “discuss in good faith the economic feasibility of playing games in the absence of spectators or at appropriate substitute neutral sites.” By this reading, the entire original agreement related only to the resumption of a typical season.
The player side says the agreement provides for a pro rata reduction of salary to match the number of games played, regardless of whether fans are in the stands. Clark tells Blum: “Players recently reached an agreement with Major League Baseball that outlines economic terms for resumption of play, which included significant salary adjustments and a number of other compromises. That negotiation is over.”
Disputes over the meaning of contracts aren’t anything new, so, in a vacuum, it’s not surprising that the parties are having that kind of disagreement. At the same time, it is surprising that the parties are having this degree of disagreement over what can only be considered a material term of the contract, given the sophistication of the parties involved.
So whose fault is it? The Mets, of course. It’s always the Mets’ fault.
Major League Baseball players are upset over the prospect teams may seek additional pay cuts if games are played in empty ballparks due to the coronavirus outbreak.
Their anger was stoked last week when New York Gov. Andrew Cuomo said he was told by Mets chief operating officer Jeff Wilpon that the union would have to agree to lower salaries if games are played without fans.
Anyway, now that we know we can blame the Mets, let’s look at why this matters.
Contracts typically contain two kinds of language: material terms and immaterial terms. Material terms are the important things that the parties are agreeing to: things like the price of a good, the place of delivery, or the method and time of payment. Immaterial terms are things which don’t impact the ability of a party to substantially perform their end of the bargain. For example, if I contract with Kenny Kelly to buy three widgets from him at ninety-nine cents per widget, and the contract specifies that the widgets must be delivered in a blue pickup truck, the price per widget is material whereas the color of the truck probably isn’t. A court will rule Kenny in breach if he delivers fidget spinners instead of widgets, but probably not if he delivers the widgets in a green sedan.
Why is this important? Because a dispute centering around a material term calls into question whether a contract was ever formed in the first place. A Colorado court explained this nicely:
The general rule is that when parties to a contract ascribe different meanings to a material term of a contract, the parties have not manifested mutual assent, no meeting of the minds has occurred, and there is no valid contract. However, an exception to the general rule is observed when the meaning that either party gives to the document’s language was the only reasonable meaning under the circumstances. In such cases, both parties are bound to the reasonable meaning of the contract’s terms.
We can use the Sunshine test - the law is basically the same on this point just about everywhere - to see what happens here. So if the union and the league really have a dispute over whether or not players agreed to a pay cut - wages are obviously a material term of a labor contract - there’s a genuine legal question as to whether they ever formed an agreement at all. If one side has the only reasonable interpretation of the contract, that side prevails. Otherwise, there is no agreement at all.
Let’s see what the agreement says. You can see that here. MLB is hanging its proverbial hat on this language:
MLB and the union will discuss the economic feasibility of playing games at neutral sites or without fans. The commissioner has the right to suspend or cancel games after the start of the season if government restrictions or travel conditions change.
And if this were all there was, the league might have a point; after all, this is just an agreement to discuss things later, which is a strange agreement. But it’s not all there is.
Each player signed to a major league contract at the start of the season shall have his salary determined by multiplying his full-season salary by the number of games scheduled (not adjusting for weather-related postponements or cancellations) divided by 162, minus any advanced salary. In the event of an additional interruption or delay, the salary shall be determined by multiplying his full-season salary by the games played by the player’s club divided by 162. Thresholds and amounts for bonuses, escalators and vesting options would be reduced by using the same formula. A player previously at spring training who is unable to report because of travel restrictions or visa issues would be placed on the restricted list and receive up to 30 days of salary.
That seems pretty straightforward, actually. The players are to be paid a proportional part of their salaries on a per-game basis. The word “shall” usually - though not always - means that the wording that follows is mandatory, though those exceptions make it the most litigated word in the English language.
Still, the most reasonable interpretation of this language - to me, at least, having written and edited a few thousand contracts in my career - is that each player will be paid a per-game rate of 1/162 of their annualized pay, and that based on that pay rate, the league and union will determine if games are still economically feasible. The problem with this interpretation is that it doesn’t resolve the issue. Technically, MLBPA is right that it sets a salary rate for players, but MLB could very reasonably say that the agreement leaves the door open for further negotiation. Why? Because all MLB has to do is say that this pay rate isn’t reasonable with television-only games, and therefore games can only go forward with lower pay. Agreements can always be modified.
Based on this, it seems that there was no meeting of the minds. This contract is probably not valid unless one side caves. And honestly, this is one reason why complicated agreements like this one shouldn’t leave terms to future negotiations. If the union wanted to ensure that the salaries were a closed issue, they could and should have insisted on language so stating, because “shall” isn’t enough. “Must” would have been better. Express language stating that salaries will not be changed based on attendance would have been best. None of that language is present.
Frankly, this is a dispute which should have been resolved at the bargaining table last month. But once again, the league has set the union up to take the fall for its own bad faith actions. The league almost certainly knew what the union’s position on salaries was, but left the door open a crack to undermine that position when the time came. An issue this important should not have been left this indefinite.
At the same time, though, whilst the union’s bargaining efforts have been poor, the league’s actions have been the epitome of bad faith. The league is pulling what amounts to a bait-and-switch on the union whilst also demanding they assume the risk of dying from a contagious disease. It may be legal, but it certainly isn’t ethical. Of course, we’ve seen before what happens when you don’t hold the league to good faith bargaining. This is simply the logical end result.
At this point, the union has nothing to lose. If the league is going to insist on its interpretation of the agreement, then the union should take the eminently reasonable and legally correct position that because there was no meeting of the minds, no final agreement was ever legally executed. Given that, the union should simply cut off negotiations. Why should players be negotiating from this position, expected to shoulder the risk of COVID-19 and take pay cuts? It’s the owners who have far more to lose from a baseball-less 2020 in terms of revenue. Let the burden be on the owners to come to the table with a more reasonable position. Otherwise, MLB players can simply shelter in place along with everyone else.
Sheryl Ring is a litigation attorney and Legal Director at Open Communities, a non-profit legal aid agency in the Chicago suburbs. You can reach her on twitter at @Ring_Sheryl. The opinions expressed here are solely the author’s. This post is intended for informational purposes only and is not intended as legal advice.