The future of Minor League Baseball is headed to the United States Supreme Court

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By now, you probably know about the long-pending putative class action lawsuit filed against Major League Baseball, in which former San Francisco Giants farmhand and trial lawyer Garrett Broshius is representing a group of minor leaguers alleging that their meager pay - about $1,100 per month, plus unpaid Spring Training - violates state and federal minimum wage laws. That case is Senne et al. v. Office of the Commissioner of Baseball et al., and I wrote a couple of years ago that Garrett Broshuis, the plaintiffs’ lead attorney, had the right idea in the very clever way he pleaded his complaint.

Paying minor leaguers a minimum wage, and compensating them for Spring Training, would cost MLB teams a grand total of $5.5 million annually, but it was a result that MLB found unacceptable - so they spent millions of dollars pushing the “Save America’s Pastime Act,” a bill specifically designed to preempt Broshius’s lawsuit. So Broshuis pivoted, instead seeking relief under Arizona’s state minimum wage law.

Even though there is a federal minimum wage – it is set at $7.25 per hour – states also have their own minimum wage laws, many of which require higher hourly rates than the federal statutory minimum. The way the law is written, the federal minimum wage acts as a floor, meaning that a state is legally allowed to require a wage that is greater than the federal wage, but can’t have a minimum wage that falls below it.

In Arizona, the current minimum wage is $11 per hour, and will rise to $12 an hour in 2020. As a result, even to the extent minor leaguers’ access to federal minimum wage laws are limited by the new federal statute, they may well be entitled to the higher state minimum wage.

Although MLB attempted to pass similar legislation in Arizona, those efforts weren’t entirely successful, and Broshius made an extremely clever argument - that several separate classes should be certified. One would be certified as to Arizona, for Cactus League minor leaguers. A second would be certified in Florida for Grapefruit League minor leaguers, and as to teams like the Oakland Athletics and San Francisco Giants, California law applied to a California class, even when those minor league players were in Spring Training in Arizona or at minor league affiliates in other states. Then Broshius sought class certification.

A class action is pretty much what it sounds like - a lawsuit brought by a small group of people (called “class representatives”) on behalf of a larger one (the “proposed class”). You’ve probably been a part of a class action before and never realized it; when they settle, all of the class members receive special notices, usually by postal mail, telling people that they’re entitled to money. The most famous class action settlement in recent history was probably the Equifax settlement, but there was also this settlement with Subaru, and this settlement about Takada airbags. I’ve handled about 40 class actions in my career of varying sizes.

To understand how and this works, we should take a minute to explain why class actions are such an effective legal tool. Let’s say that Company A overcharged a million people $10 each for a particular product. If I sue Company A for my $30, Company A has many options to defend the lawsuit, including by making me spend more than $30 on the lawsuit. In other words, it’s a losing proposition for me to sue for my money back. But if I can sue on behalf of all of the people overcharged by Company A, Company A faces a very different challenge. As the brilliant Justice Richard Posner once wrote, “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.”

Class certification is a special legal process by which a court determines whether or not a case can proceed as a class action. In most class cases, class certification hearings are much more important than trials, because very, very few companies ever want to defend class action trials. For example, the risk Company A now faces if it loses at trial after a class is certified isn’t paying $30, but instead paying $30 million. Even if they have a 90 percent chance of winning, that’s still a 10 percent chance of paying millions of dollars.

Because of this, the overwhelming majority of class actions settle if they’re certified. That’s why it was extremely significant late last year when the Ninth Circuit Court of Appeals ruled in Senne that multiple classes could be certified.

Recall that these two classes cover time spent participating in spring training, extended spring training, and the instructional leagues— periods during which virtually all players are completely unpaid for their participation. Moreover, these classes do not bring overtime claims, but rather allege minimum wage violations. Therefore—as the district court correctly held—liability can be established simply by showing that the class members performed any compensable work. That is easily resolved on a classwide basis by answering two questions: (1) are the players employees of defendants, and (2) do the minor league team activities during these periods constitute compensable work under the laws of either Arizona or Florida? We hold that these two “common, aggregation-enabling issues in the case are more prevalent [and] important than the non-common, aggregation defeating, individual issues,” therefore making certification appropriate.

In other words, what Broshius alleged is called a “liability-only” class, a very clever device first popularized in a case involving washing machines sold by Sears alleged to be prone to growing mold. In that case, the Seventh Circuit Court of Appeals explained that a class action may be certified on a classwide theory of liability, and determine each class member’s damages later.

A class action is the efficient procedure for litigation of a case such as this . . . .A determination of liability could be followed by individual hearings to determine the damages sustained by each class member. The parties probably would agree on a schedule of damages based on the cost of fixing or replacing class members’ mold-contaminated washing machines. In that event the hearings would be brief; indeed the case would probably be quickly settled.

Based on that precedent, the Ninth Circuit in Senne certified several liability classes noting, I think correctly, that the common course of conduct by MLB was the overarching question.

Defendants do not seriously contest that their policy is to deny players compensation during spring training, extended spring training, and the instructional leagues—nor could they credibly do so . . . . And as we have long held, such uniform corporate policies “carry great weight for certification purposes.” . . . Damages may well vary, and may require individualized calculations. But “the rule is clear: the need for individual damages calculations does not, alone, defeat class certification.”

This ruling is rather close to a worst-case scenario for Major League Baseball, not just because a trial would mean the risk of owing thousands of players thousands of dollars each, but also because a loss would result in the entire minor league payment scheme being found to violate minimum wage standards as a matter of law. In other words, the Ninth Circuit said, in essence, that Broshius can put on trial MLB’s policy of treating minor leaguers as apprentices.

It’s for this reason that MLB immediately asked the Ninth Circuit to reconsider its ruling, in something called en banc review. Typically, a panel of three appellate judges considers appeals, and in en banc review, all of the appellate judges in that Circuit consider the appeal. That request was widely expected to be granted given the scope of the issues raised, but in a stunning move, the Ninth Circuit denied MLB’s request earlier this year.

The league has petitioned the Supreme Court of the United States for a writ of certiorari - in other words, to hear the case, and to stay proceedings until it decides. The current justices on SCOTUS has been extremely skeptical of class actions in the past. That said, SCOTUS typically only grants about eighty or so of the thousands of petitions for certiorari it receives annually, and accepting class certification review is even more rare, so the league’s odds of even having the court hear the case are not good.

Moreover, petitioning the court for review of this ruling whilst it is very publicly attempting to eliminate 42 minor league teams could be a dangerous game. After all, SCOTUS is the one government body capable of eliminating the league’s antitrust exemption with a stroke of the proverbial pen, and MLB bringing this case before the High Court now is a rather high-risk venture, especially with notable baseball fans already among its members.

On the other hand, if SCOTUS does deny certiorari, MLB will quickly begin to run out of options. They could face a very public class-wide trial, with the risk of hundreds of millions of dollars in damages awarded to the class. They could settle the case, which would almost certainly require the end of the apprenticeship model of minor league baseball wages. Or they could simply end the minor leagues entirely, a step which Manfred has already hinted. But given the direction this litigation is proceeding, it’s more and more likely that the real reason MLB is seeking to contract the minor leagues is because they know that, fairly soon, the model of paying minor leaguers poverty wages is going to come to an end.

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