Wyckoff v. Office of Commissioner of Baseball

211 F. Supp. 3d 615, 2016 WL 5478498, 2016 U.S. Dist. LEXIS 135443
CourtDistrict Court, S.D. New York
DecidedSeptember 29, 2016
Docket15 Civ. 5186 (PGG)
StatusPublished
Cited by4 cases

This text of 211 F. Supp. 3d 615 (Wyckoff v. Office of Commissioner of Baseball) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wyckoff v. Office of Commissioner of Baseball, 211 F. Supp. 3d 615, 2016 WL 5478498, 2016 U.S. Dist. LEXIS 135443 (S.D.N.Y. 2016).

Opinion

MEMORANDUM OPINION & ORDER

PAUL G. GARDEPHE, United States District Judge:

This is a class action suit for antitrust and wage-and-hour violations brought by [617]*617professional baseball scouts against the current and former Commissioner of Major League Baseball, the Office of the Commissioner, and the clubs that comprise Major League Baseball. Defendants have moved to dismiss the antitrust claims on the grounds that they fall within the baseball exemption to antitrust regulation. Defendants have also moved to dismiss the wage-and-hour claims—except those brought by Plaintiff Jordan Wyckoff against the Office of the Commissioner, the two individual defendants, and the Kansas City Royals—on standing grounds.

BACKGROUND

I. FACTS

The Second Amended Complaint alleges that the Office of the Commissioner of Baseball—doing business as “Major League Baseball” or the “MLB”—is an unincorporated association comprised of thirty professional baseball clubs (the “Franchises”). (Second Am. Cmplt. (“SAC”) (Dkt. No. 109) at ¶20) Major League Baseball operates pursuant to the Major League Constitution, an agreement between the franchise teams. (Id. at ¶ 83) Major League Baseball is a large and lucrative organization: in 2014, MLB’s annual revenue was approximately $9 billion, and more than 75 million baseball fans paid to attend games. (Id. at ¶¶ 77-78)

A. The Role of Professional Baseball Scouts

Each baseball club (“Franchise”) employs baseball scouts who observe baseball players across the United States and internationally for the purpose of identifying new talent and assisting the Franchises in making hiring decisions:

[Scouts] attend baseball games (including, for example, high school games, college games, minor league games, and major league games) and watch players to rate their skills in a variety of categories such as fielding, hitting for power and average, and running. Scouts also record players’ pitching and/or hitting mechanics and develop comprehensive evaluations and projections of players’ abilities. Depending on the type of scout, a scout might evaluate either amateur players, professional players, or both. But regardless, the basic job duties of the scout are similar. They assess baseball players and project the players’ abilities to perform at the major league level, and they present that information to the Franchises.

(Id. at ¶ 93)

Players are evaluated on a numeric scale, with 20 being the lowest and 80 the highest. (Id. at ¶ 94) A score of 50 indicates that a player is performing at a major league level for the category being graded. (Id.) To evaluate players, scouts are required to travel domestically and internationally, and at certain times of the year they work long hours. (Id. at ¶¶ 97-98)

Defendants employ “well over one thousand scouts” and “control all or virtually all of the market for the purchase of baseball scouting services.” (Id. at ¶¶ 92, 125-26) The information that scouts provide about players “guide[s] the Franchises’ decisions on how to rank players to be acquired.” (Id. at ¶ 95) Because Defendants “place importance on the acquisition and development of baseball players, ... a scout who is good at evaluating baseball players has great value.” (Id. at ¶ 127)

Scouts do not make final decisions about whether to sign players or how much to pay them, however. (Id. at ¶ 95) Accordingly, Plaintiffs argue that “[although the information (and skills required to present good information) are important and valuable to the Franchises, the information [618]*618provided by scouts is not directly related to the business of baseball or any revenue stream received by the Franchises or MLB.” (Id. at ¶ 96)

B. The Uniform Employee Contract

A scout’s employment relationship with a Franchise is governed by a form contract—the “Uniform Employee Contract”—“prescribed by the Commissioner.” (Id. at ¶ 100) The Uniform Employee Contract is used for a variety of employees— not just scouts—and incorporates the Major League Rules and the Major League Constitution. (Id.) Under the Uniform Employee Contract, MLB and the Commissioner of Baseball have “ ‘broad powers of control and discipline’ ” over the employment relationship. (Id.) The employment contracts issued to scouts typically provide for a one year term. (Id. at ¶ 102)

The standard Uniform Employee Contract contains a “Loyalty” provision, which provides that scouts will

a. “serve [the employing Franchise] diligently and faithfully, and ... observe and comply with all rules and regulations of [the employing Franchise] and the Commissioner.”
b. “maintain the confidentiality of all confidential information, including but not limited to scouting information acquired during the [scout’s] employment [under the Scout Contract], and ... preserve such information for the exclusive benefit of [the employing Franchise].”

(Id. at ¶ 105) When under contract with a Franchise, scouts are prohibited from providing scouting services to other Franchises. (Id.)

Major League Rule (“MLR”) 3(k)— which is incorporated by reference in all scouts’ employment contracts—states:

[t]o preserve discipline and competition, and to prevent the enticement of players, coaches, managers, and umpires, there shall be no negotiations or dealings respecting employment, either present or prospective, between any player, coach or manager and any Major or Minor League Club other than the Club with which the player is under contract, or acceptance of terms, or by which the player is reserved or which has the player on its Negotiation List, or between any umpire and any baseball employer with which the umpire is under contract, or acceptance of terms, unless the Club or baseball employer with which the person is connected shall have, in writing, expressly authorized such negotiations or dealings prior to their commencement.

(Id. at ¶ 116) Although MLR 3(k) does not mention scouts, Defendants apply this rule to scouts. (Id. at ¶ 117) Accordingly, a scout working under a one-year employment contract with a Franchise is generally prohibited from talking with any other Franchise until after that contract expires, unless the scout receives approval from his Franchise employer. (Id. at ¶¶ 118-19) Plaintiffs allege that “[t]he Franchises have a tacit agreement not to permit such discussions unless the scout is being considered for a promotion.” (Id. at ¶ 119) Accordingly, this tacit agreement among the Franchises prevents scouts from making “a horizontal move in a similar capacity.” (Id.) Moreover, because scouting positions are not posted openly, scouts do not generally request permission to pursue opportunities with other Franchises. (Id. at ¶ 121) Similarly, a Franchise seeking to hire a scout must wait until that scout is no longer under contract to initiate contact. (Id. at ¶ 118)

The Franchises will sometimes enter into agreements that are even more restrictive than the Uniform Employment [619]*619Agreement and MLR 3(k). For example, in 2014, when the San Diego Padres hired a former Texas Rangers executive as their general manager, the Padres agreed that their new general manager “would not poach any employees from the Rangers absent certain pre-designated exceptions.” (Id.

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Bluebook (online)
211 F. Supp. 3d 615, 2016 WL 5478498, 2016 U.S. Dist. LEXIS 135443, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wyckoff-v-office-of-commissioner-of-baseball-nysd-2016.