It was a case of good news/bad news for Major League Baseball and the New York Yankees on Monday.
A three-judge panel on the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of a lawsuit, Olson v. MLB, brought by daily fantasy sports contestants. Those contestants maintain that had they known the Houston Astros, New York Yankees and Boston Red Sox were using technology to cheat, the contestants would have spent their money picking different players and outcomes in DFS contests.
But the panel also affirmed the unsealing of a letter, sent by MLB commissioner Rob Manfred to Yankees general manager Brian Cashman on Sept. 14, 2017, that the Yankees and MLB had sought to keep confidential.
The letter’s contents aren’t known nor are they specified or explained in court filings. The letter, however, is portrayed as potentially contradicting Manfred’s public statements about the Yankees’ involvement. The DFS contestants insist the letter, obtained during pretrial discovery and filed under seal, bolsters their argument that MLB engaged in unlawful business practices.
In court filings, the Yankees insist the letter’s release would “generate” a “confusing scenario” about the team’s culpability. The franchise asserts it will suffer “significant and irreparable reputational harm.” MLB, for its part, blasts efforts to release the letter as motivated by “perceived shock value, or to cause potential embarrassment.”
In 2017, MLB fined the Yankees and Red Sox for stealing signs through technology. The Yankees were accused of using cameras provided by the YES Network and illicitly relying on a dugout phone. The Red Sox were linked to a scheme involving Apple Watches. A few years later, MLB severely punished the Astros for using a hidden camera and sending coded messages via bangs on a trash can. The Astros were fined $5 million and docked two first round picks and two second round picks.
Writing on behalf of himself and Chief Judge Debra Ann Livingston and Judge Gerard Lynch, Judge Joseph Bianco found Manfred’s letter to be in the public interest—a conclusion previously reached by SDNY Judge Jed Rakoff in June 2020. A redacted version of the letter is expected to be released in a matter of weeks, but as explained below, the timing depends on the scope of proposed redactions.
Bianco identified three key reasons.
First, Manfred’s letter is classifiable as a judicial document, a category of materials entitled to a presumption of public access. Absent limited circumstances, court records and accompanying filings are public.
A potential discrepancy between Manfred’s letter and his public statements, Bianco wrote, “could provide a basis for a plausible fraud claim.” And though the plaintiffs fell short in proving fraud, the letter still “assists the public in evaluating the merits of the court’s decision.”
Second, the Yankees and MLB were deemed to have minimal interests in keeping the letter sealed. Under MLB’s constitution, which governs the legal relationship between the 30 teams and the league, teams contractually consent to the commissioner’s right to investigate any matters “not in the best interests” of the game and, as the commissioner sees fit, take action. Teams lack the capacity to prevent the commissioner from making findings public.
The judge also stressed that the Yankees’ privacy interests were diminished when, a day after Manfred wrote to Cashman, MLB released a press release wherein it “voluntarily disclosed major portions of the content and pertinent conclusions of the internal investigation, as summarized in the Yankees letter.” The press release revealed that while there was insufficient evidence of a supposed plot involving the YES Network decoding signs, the Yankees nonetheless broke rules through the use of a dugout phone.
“Any argument,” judge Bianco wrote, “regarding the chilling effect on future MLB internal investigations was substantially undermined not only by the public disclosure of the results of the investigation detailed in the Yankees Letter, but also by MLB’s decision to issue similar press releases regarding other internal investigations into alleged sign-stealing schemes.”
Lastly, MLB can release the letter as a redacted document. MLB can therefore remove names and possibly titles and take other measures so long as they don’t “unduly interfere with the public’s right to access judicial documents in order to address privacy concerns.”
By when MLB must release a redacted letter is unsettled. Judge Rakoff, as the trial court judge, will presumably oversee the letter’s release and whether proposed redactions comport with the law.
As to the lawsuit itself, the panel wasn’t persuaded the DFS contestants had suffered the kind of harm the law is intended to remedy. “Alleged misrepresentations or omissions by organizers and participants in major league sports,” Judge Bianco stressed, “about the competition itself—such as statements about performance, team strategy, or rules violations—do not give rise to plausible claims sounding in fraud or related legal theories.”
While cheating by MLB teams may have harmed DFS contestants, it’s the kind of risk that apparently comes with the territory.
Plaintiff Kristopher Olson, an attorney and journalist in Massachusetts, told Sportico on Tuesday that “it was always going to be a difficult challenge to get a court to wrap its head around the process people use when constructing DFS lineups, specifically why it would be so crucial to know that the Astros were creating a ‘second Coors Field’ through electronic sign stealing.”
He added that he is “disappointed, though not entirely surprised,” that the courts didn’t “recognize the distinction between diffuse, random acts of rules breaking, like the use of corked bats by individual players, and a concentrated, coordinated campaign like the one in which the Astros engaged and MLB took steps to downplay and conceal.”
Olson said even though MLB defeated him and his co-plaintiffs in court, “I’m proud of what we did . . . we brought this case in part to stress to MLB that it needs to take greater care not to mistreat its customers, the fans, of which DFS players are a subset . . . It was a message worth trying to send.”
This story has been updated in the final three paragraphs with reaction from the plaintiff in Olson v. MLB.