Baseball Labor Relations: Anti-Trust Exemptions & the Reserve Clause

Or "How it Took 75 Years to Correct a Mistake"

Baseball has had a tumultuous history with its labor relations. The reserve clause - the clause in baseball contracts that continued to roll the terms of the contract over at the will of the club - was the subject of player ire almost from the founding of major league baseball. Over the last several years, the working relationship between the players and owners seems to have become less contentious. This article discusses some of the origins of the animosity to the present day's relative labor peace.

In 1922, the Supreme Court ruled against the then defunct Baltimore Federal League team in it's case against the National League on anti-trust grounds and in so doing created a "troublesome and unusual situation."

As an aside, the court was not persuaded that vaudeville acts had been ruled to be covered under the anti-trust statutes and that they perform a similar function.

The Federal Baseball Club v. National League decision stood for the idea that the business of "base ball" was not the interstate travel to far flung cities, but rather the intrastate exposition of individual effort in the playing of a game. Since the Major Leagues were simply organizations for scheduling the games and organizing rules, there was some merit to the argument. The court decided that in this instance, congress had not meant to cover the game of baseball under the Sherman anti-trust act.

Since baseball's exemption from this act was strictly a judicial affair, the concept was free to be challenged in court and in 1953, Toolson v. New York Yankees, Inc., et. al. came before the court. Toolson was a Yankees minor leaguer who argued that the reserve clause illegally interfered with his ability to reach the major leagues and that MLB's monopolization and collusion restrained his ability to engage in interstate commerce.