Yankees Could Be Collateral Damage In MLB Sign-Stealing Lawsuit

The drama over whether a letter from the MLB commissioner to the Yankees GM will be published looms as a side story in the DFS players' suit.
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Five DraftKings daily fantasy sports players from across the U.S. took a couple of mighty swings at Major League Baseball earlier this year and whiffed badly on both.

But even with an 0-2 count and seemingly unlikely to avoid completing its strikeout in the courts — well, enough of the metaphor.

The key is that a side issue in the lawsuit regarding the Houston Astros and Boston Red Sox sign-stealing scandals of 2017-19 might well be the only part that gets remembered.

The New York Yankees last week set forth a schedule for the U.S. Second District Court of Appeals to consider its bid to overturn a lower court judge’s ruling ordering the publication of an unredacted version of a September 2017 letter from MLB Commissioner Rob Manfred to Yankees General Manager Brian Cashman.

In a public statement, Manfred said that an investigation showed that any sign-stealing by the Yankees was a “minor” transgression.

But when U.S. District Court Judge Jed Rakoff last month ruled that the letter should be made public (with only very limited redactions), the Yankees claimed that would cause “embarrassment.”

More recently, the Yankees’ appeal insisted that Rakoff had “wrongly” decided about the letter — stressing that the DraftKings players’ lawsuit did not include them as one of the parties.

Judge explains high bar for Yankees

Rakoff agreed to hold off on any action being taken until the Second Circuit issues its own ruling. Last week, a briefing process was arranged that will likely put the issue on hold past the end of the 2020 World Series (if there is one).

However, Rakoff also pointed out that “The Court … retains unfettered discretion whether or not to afford confidential treatment to any Confidential or Highly Confidential Document — or information contained in any Confidential or Highly Confidential Document — submitted to the Court in connection with any motion, application, or proceeding that may result in an order and/or decision by the Court.

“The Court’s very discussion of both the 2017 Press Release and the Yankees Letter demonstrates that both letters were integral to the Court’s reasoning in this case. As a result, a member of the public — or perhaps the substantial putative class on whose behalf plaintiffs acted — seeking to understand the Court’s reasons would require access to these letters.

“While the parties may not wish to publicize the particular wording included in the Yankees Letter, its substance, as MLB itself argued in its motion for reconsideration briefing, is already public. Thus, the Yankees Letter is not a particularly private affair. Furthermore, neither MLB nor the Yankees has pointed to a particularly significant injury that will result from disclosure.

“The Yankees argue that they have a strong privacy interest because public disclosure of the Yankees Letter would cause the Yankees significant reputational injury. While this may be the case, the gravity of this concern is again lessened by the fact that the contents of the Yankees Letter have already been discussed in some form by the 2017 Press Release.

“Furthermore, embarrassment on the part of MLB or the Yankees about the precise contents of the letter is not particularly weighty. … As a final note, although MLB and the Yankees attempt to impugn the motives of plaintiffs’ opposition to continued sealing of the letter, they offer no evidence of plaintiffs’ bad faith beyond speculation.”

That’s the hurdle the Yankees must clear.

The DraftKings DFS players get routed in court

As noted earlier, the five DFS players didn’t fare nearly as well in their accusations of fraud against the Red Sox, Astros, and MLB — a claim based on DFS being “a game of skill” and participating in a baseball DFS contest without awareness of sign stealing undermining the skill element.

“For decades in the Twentieth Century and into this Century, defendant Major League Baseball (“MLB”) stridently opposed the legalization of sports gambling in this country and, in particular, legalization of gambling on baseball,” wrote the attorney for the plaintiffs. “MLB argued that the honesty and integrity of Major League Baseball would be jeopardized if gambling on baseball was permitted.

“Defendant MLB’s attitude toward wagering on baseball changed — secretly in 2013 and then publicly in 2015 — as MLB recognized and sought to take advantage of the enormous popularity and lucrative financial opportunities presented by fantasy sports wagering competitions.”

That language refers to MLB’s equity stake in DraftKings that was established quietly in 2013.

The January claim was rejected by Rakoff in April, however, because he found that there was little to no connection between DraftKings and MLB in this instance even with their partial business partnership.

“While the verbose, rhetorical, and largely conclusory complaint does manage to plausibly allege a few misrepresentations by defendants, these statements, which are unrelated to fantasy baseball, do not plausibly support plaintiffs’ claims of reliance,” Rakoff wrote. “Moreover, plaintiffs provide no basis for imposing a duty to disclose on defendants absent a transaction or other relationship between themselves and the defendants.”

On June 5, Rakoff also rejected an amended complaint by the DFS players — one each from the states of Texas, Massachusetts, Colorado, California, and Florida.

“Although the Court appreciates the appropriately zealous passion with which plaintiffs press their suit, in the end they do not even make it to first base,” Rakoff concluded.

Still more baseball word play

“A sport that celebrates ‘stealing,’ even if only of a base, may not provide the perfect encouragement to scrupulous play,” Rakoff added. “Nor can it be denied that an overweening desire to win may sometimes lead our heroes to employ forbidden substances on their (spit)balls, their (corked) bats, or even their (steroid consuming) selves.

“But as Frank Sinatra famously said to Grace Kelly (in the 1956 movie musical High Society), ‘There are rules about such things.'”

(Rakoff wryly noted in a footnote: “Frank was referring, of course, to a different kind of sport.”)

“One of these rules,” Rakoff continued, “forbids the use of electronic devices in aid of the players’ inevitable efforts to steal the opposing catcher’s signs. In 2017 and thereafter, the Houston Astros, and somewhat less blatantly the Boston Red Sox, shamelessly broke that rule, and thereby broke the hearts of all true baseball fans.

“But did the initial efforts of those teams, and supposedly of Major League Baseball itself, to conceal these foul deeds from the simple sports bettors who wagered on fantasy baseball create a cognizable legal claim? On the allegations here made, the answer is no.”

Even so, the Red Sox and Astros might be tempted to offer free tickets to these five DFS players if publication of the letter leads to “embarrassment” of the Yankees and to diminished ribbing by Yankees fans — and by Yankees players — of their two American League rivals.

Photo by Troy Taormina / USA Today Sports

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