Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Major League Baseball allegedly conspired to suppress compensation for scouts, (Jul 6, 2015)

By Linda O’Brien, J.D., LL.M.

The Commissioner of Major League Baseball and 30 major league baseball clubs have colluded to suppress the compensation and limit employee mobility for major league baseball scouts, according to a complaint filed in the federal district in New York City (Wyckoff v. Office of the Commissioner of Baseball, July 2, 2015).

The Office of the Commissioner of Baseball, doing business as Major League Baseball (MLB), is an unincorporated association comprised of 30 major league baseball franchises. MLB monitors and controls many fundamental aspects of the franchises’ employees, including hiring, contracts, periods of wage payment and nonpayment, record keeping, and other working conditions. The franchise owners elect the Commissioner of Baseball, who has executive responsibility for labor relations. Jordon Wyckoff is a former MLB scout who worked for the Kansas City Royals organization.

The complaint alleges that MLB is the preeminent baseball league in the world, with revenues for MLB and its 30 teams reaching $9 billion in 2014. Although MLB franchises are competitors, they have joined together to form uniform rules and policies, such as the Major League Rules (MLRs), many of which govern the employment of various types of workers. The franchises collectively employ several hundred scouts, whose basic job is to evaluate baseball players. Most scouts incur significant travel while performing their job and work exhaustive hours during peak work periods. Because they must evaluate players while attending games, or watching videos of games, and write reports, scouts typically work over fifty hours per week.

MLB clubs require all employees to sign uniform contracts, which incorporate the MLRs and dictate when and how salaries are paid. MLB scouts do not belong to a union and thus lack the ability to bargain collectively for better wages and working conditions. Scouting contracts typically last for one year and, while a scout is under contract with a team, MLRs prohibit the scout from discussing employment opportunities with other teams until the contract expires. This mandate has suppressed competition and limited employee mobility, the complaint states.

The MLB franchises are essentially the only employers of baseball scouts in the world. Within this labor market, the franchises place importance on the acquisition and development of baseball players. A scout who is good at evaluating players has great value, the plaintiff stated. In a properly-functioning competitive labor market, each franchise would openly compete for these employees and freely communicate with prospective employees about employment opportunities. However, MLRs inhibit these practices and significantly impact employee compensation by limiting information regarding other teams’ pay packages and reducing a prospective employee’s leverage when negotiating with other teams, according to the complaint.

The complaint also claims that the defendants has intentionally engaged in wage-and-hour abuses by failing to pay scouts overtime wages for hours worked in excess of 40 hours per workweek and failed to record and compensate scouts for all time worked on benefit of the MLB teams. The defendants were aware or should have been aware that the Fair Labor Standards Act requires them to pay scouts and other employees for all hours worked and to pay overtime for hours worked in excess of 40 hours per workweek.

The plaintiff asserts claims for restraint of trade in violation of Section 1 of the Sherman Act and New York’s Donnelly Act and for violation of the Fair Labor Standards Act. The action seeks declaratory and injunctive relief, treble damages, pre- and post-judgment interest, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 1:15-cv-05186.

Attorneys: Judith S. Scolnick, Thomas K. Boardman, and Christopher M. Burke (Scott + Scott, LLP), Stephen M Tillery, Garrett R. Broshuis, and George A. Zelcs (Korein Tillery, LLC) for Jordan Wyckoff.

Companies: Major League Baseball

News: Antitrust NewYorkNews