Using the Economic Espionage Act to Protect Trade Secrets in Baseball

Using the Economic Espionage Act to Protect Trade Secrets in Baseball

By: Brette Trost*

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In 2016, Christopher Correa, a former employee of the St. Louis Cardinals, was sentenced to forty-six months in prison for violating the Computer Fraud and Abuse Act when he accessed a Houston Astros database without authorization. However, these were not the only charges Correa could have faced. This note uses the Correa case to illustrate how the Economic Espionage Act can be used to prevent trade secret theft in Major League Baseball. More specifically, this note asserts that the sabermetric data systems used by MLB teams to evaluate and track players are legally protectable trade secrets. Furthermore, due to the fluid nature of the baseball analytics talent pool and barriers to civil prosecution inherent in baseball’s structure, the Economic Espionage Act presents the best way to combat the misappropriation of this information. The note goes on to distinguish between teams’ off-field and on-field tactics and discusses how, if at all, this framework should apply to the collection and use of biometric data.



Sports are the paradigm of competition. They are perhaps the arenas of business in which winning is most objectively quantifiable and competition is on display every night. On the field, competitive tactics are expected and gamesmanship is routine. Yet behind the scenes, there is an army of data scientists who are competing in their own way. Their competition does not revolve around which team collects the most runs after nine innings but rather around who can discover the most effective means of evaluating the players on the field.

This facet of the game is no secret. However, the extent to which some are willing to go to gain a competitive edge became strikingly apparent in 2016, when Christopher Correa, a member of the St. Louis Cardinals’ baseball operations staff, received a forty-six-month prison sentence for hacking into a Houston Astros’ database.[1] The database, known as “Ground Control,” was built by the Astros’ baseball operations department to house scouting reports, trade discussions, proprietary statistical analysis, injury histories, projections for players, contract information, and more.[2]

Major League Baseball (“MLB”) has undergone a major transformation over the last two decades. A game that once largely relied on subjective analyses and gut instincts to assess players, professional baseball—through the collection and study of statistical data—is now obsessed with an objective search for truth.[3] This objective analysis, or sabermetrics as it is commonly known, began as a hobby held by a few people scattered throughout the baseball world,[4] but it has since turned into an industry-wide practice, rapidly becoming the fixation of nearly every team in the league.[5] Teams now hire the most technical and scientific minds in the country, such as NASA engineers, data scientists from leading statistical software companies, and PhDs in cognitive neuroscience, applied statistics, and machine learning, in order to gain any slight competitive edge in discovering the most intricate details of a player’s ability.[6]

Sabermetrics, named after the Society of American Baseball Research (“SABR”), is defined as “advanced statistical collection and analysis to develop objective knowledge about baseball for use in player evaluation and tactical decision-making.”[7] Collecting certain statistics, such as batting average and earned run average, has been a part of the game since baseball’s inception.[8] However, for most of the twentieth century, the examination of more granular data was only performed by “amateur statisticians from outside the baseball establishment” and “statistically-inclined fans.”[9] By the end of the century, several companies, such as Baseball Prospectus and STATS LLC, began to collect more extensive data, including the speed and type of every pitch thrown during a game. Nonetheless, while baseball has been played in the United States since 1840, it was not until 2003, when Michael Lewis published the book Moneyball: The Art of Winning an Unfair Game,[10] that baseball industry insiders awoke to the potential of using analytical techniques to assess talent. Lewis’ book focused on one team, the Oakland Athletics, as it embarked on what was seen at the time as a unique and innovative process.[11] Now, every team relies at least to some extent on the use of analytics.[12]

Baseball teams own many of the same types of information as that which traditional businesses own, such as customer lists, pricing data, and marketing strategies. These categories of information are generally considered trade secrets when companies take reasonable measures to protect them.[13] Unlike traditional businesses, however, teams collect and store a plethora of data specific to the baseball industry, including statistical analyses (such as compilations and algorithms for new metrics),[14] scouting reports, trade proposals or discussion notes, playbooks, verbal or hand signals used on the field, player skill techniques, player training techniques, dietary and nutritional regimens, physical therapy techniques, psychological assessment techniques, and biometric analyses.[15] Many people in the baseball industry assert that such baseball-specific-data, which teams store and collect, constitute trade secrets.[16]

Despite the many potential trade secrets, there have not been any cases that discuss what material qualifies as a trade secret in baseball. Although Correa misappropriated information from Ground Control, a system that housed almost all of the Astros’ proprietary information, Correa was instead prosecuted under the Computer Fraud and Abuse Act (CFAA)[17] for hacking Ground Control.[18] What was criminalized was the fact that he accessed the information “without authorization,”[19] not the misappropriation of the information he obtained, and likely used, from the hacking. Due to the lack of court decisions (criminal or civil), there is no direct precedent holding that these types of analytics databases are in fact trade secrets. Nor is there extensive analysis of how teams keep this data secret and whether those controls are effective. Further, strategies the industry and public accept as part of the competitive nature of sports, such as on-field tactics to gain a competitive advantage like “stealing signs,” could be more intensely scrutinized if the legal system is used to police what should be considered fair competition in baseball.

Part I of this note will argue that the sabermetric data systems used by MLB teams to evaluate and track players are legally protectable trade secrets. Part II will examine the fluid nature of the baseball analytics talent pool, and will suggest that because of this aspect of the industry, the best way to prevent the misappropriation of these trade secrets is through criminal prosecution under the Economic Espionage Act of 1996 (EEA).[20] Part III will discuss on-field strategies, arguing that although the improper acquisition of on-field plays through tactics like sign-stealing may, in certain cases, technically meet the definition of theft of trade secrets under the EEA, this behavior does not warrant the imposition of criminal sanctions. Finally, Part IV will briefly analyze future questions on the proprietary nature of baseball data, noting that the focus will be less on sabermetric statistical systems and more on the collection, compilation, and ownership of biometric data.

I. Trade Secret Law and Its Application in Baseball[21]

Since teams deal with many different types of information, Lara and Nathaniel Grow surveyed the general counsels of teams across the four major North American professional sports leagues—baseball, basketball, football, and hockey—on what they believed to be trade secrets.[22] The survey, which received responses from nineteen teams, including two in MLB, revealed that 89.47% claimed that their scouting reports were trade secrets, 78.95% asserted trade secret protection over trade proposal or discussion notes, 73.68% asserted trade secret protection over statistical analyses, and 52.63% asserted trade secret protection over player skill development techniques and biometric analyses.[23] Variations among the general counsels’ responses is likely due to the different information-collection practices between the four major North American sports leagues—that is, differences in the amount and type of data collected in one sport compared to the other three sports and differences in how biometric data is relied upon in one sport compared to the other three sports.[24]

Given the general counsels’ apparent zeal for believing that their scouting reports, trade proposals and discussion notes, statistical analyses, player skill development techniques, and biometric analyses constitute trade secrets,[25] it is worthwhile to analyze whether such information actually satisfies the EEA’s requirements for trade secret protection. Using baseball as a case study, this note begins by exploring whether sabermetric data systems fall within the EEA.

Under the EEA, a trade secret is defined as “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible,” provided that the “owner . . . has taken reasonable measures to keep such information secret,” and the information “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable . . . by, another person who can obtain economic value from the disclosure or use of the information.”[26] While people in the baseball industry have asserted that the data they collect and the systems they create are trade secrets,[27] there are almost no legal precedents that deal directly with this issue. Though Correa was not charged with violating any trade secret laws, his case provides insight into how baseball data could be subject to trade secret protection and potential criminal prosecution. This note argues that much of the content stored on sabermetric data systems, especially scouting reports and statistical analyses of player talent, can and should receive trade secret protection under the EEA.

A. An Overview of Trade Secret Law

Though laid out in its current form above, how the law, specifically the criminal law, defines a trade secret has changed over the last decade. To help clarify and strengthen trade secret protection, Congress amended the EEA through the enactment of the Theft of Trade Secrets Clarification Act of 2012[28] and the Defend Trade Secrets Act of 2016 (DTSA).[29]

In 1996, Congress passed the Economic Espionage Act to fill a hole in the statutory scheme. Lawmakers recognized the necessity of protecting the intangible assets of companies in the United States in response to the challenges prosecutors faced in fitting the misappropriation of these assets into statutes like mail and wire fraud,[30] the National Stolen Property Act,[31] and the CFAA, which were not designed for this type of prosecution.[32] President Bill Clinton acknowledged a growing need for a statute dedicated solely to the protection of these assets through the criminal law, noting that “[t]rade secrets are an integral part of virtually every sector of our economy and are essential to maintaining the health and competitiveness of critical industries operating in the United States.”[33]

The EEA provides a fine, a prison sentence of up to ten years, or both for individuals who steal or without authorization appropriate trade secrets as follows:

Whoever, with intent to convert a trade secret, that is related to a product or service used in or intended for use in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly steals, or without authorization appropriates . . . such information . . . shall . . . be fined under this title or imprisoned not more than 10 years, or both.[34]

Much of the jurisprudence that defines trade secrets relies on interpretations under the Uniform Trade Secrets Act (UTSA),[35] a model state law which as of January 2019 has been adopted in forty-seven states and the District of Columbia.[36] The UTSA and EEA provide largely identical definitions of a trade secret, especially following the enactment of the DTSA.[37] Judicial interpretations of trade secrets under the UTSA have provided a body of case law to guide the interpretation of the EEA.[38]

B. Definition of Trade Secrets Under the EEA

In order to be a trade secret under the EEA, the prosecutor or plaintiff must show three distinct elements: (i) the alleged trade secret falls within a listed type of information; (ii) the owner has taken “reasonable measures” to keep that information secret; and (iii) the information derives “independent economic value” from not being generally known or ascertainable through “proper means.”[39]

The threshold element, that the alleged trade secret falls within a listed type of information, is fairly simple to meet.[40] To fall within the EEA, the alleged trade secret must be “financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible.”[41]

In Nat’l Football Scouting, Inc. v. Rang,[42] the U.S. District Court for the Western District of Washington addressed the question of whether scouting reports fall within the listed types of information. Rang is the “only reported court decision considering the status of proprietary sports-related knowledge under trade secrecy law.”[43] In that case, National Football Scouting, Inc. (“National”) sued Robert Rang, a part-time sportswriter, and the website for which he wrote, Sports Xchange, for copyright infringement and misappropriation of trade secrets under the UTSA. National’s business involved providing scouting reports to NFL teams. The reports were compiled and produced by National’s own scouts. Twenty-one NFL teams had each paid $75,000 for access to the reports. The reports assigned each player an overall “Player Grade,” which was “a numerical expression representing National’s opinion of the player’s likelihood of success in the NFL.”[44] National sued Rang for writing articles which disclosed the Player Grades.

Rang argued that the Player Grades did not qualify as “information” within the meaning of the UTSA because they were subjective opinions, rather than “factual information.”[45] The court rejected this argument, saying “the fact that National has assigned a Player Grade to a certain player is not an idea or opinion.”[46] Instead, the Player Grades constituted “information” under the statute.[47] The court believed a factual dispute existed as to whether National reasonably kept the information secret and whether the grades had an independent economic value. This, the court held, was a question for the trier of fact. Ultimately, the parties settled.[48]

While the court held that the Player Grades were “information” under the UTSA, it did not take a stance on whether the reports would have constituted “information” had they merely comprised a scout’s thoughts on a given player, rather than assigning a Player Grade. It is common practice for scouts to provide a numerical grade when assessing baseball players.[49] However, would scouting reports which lack numerical player values also qualify as “information” under the EEA? The plain meaning of the term “information” and the function of scouting information in relation to the business of running a professional sports team suggest that scouting reports which lack numerical player values would likely still qualify as “information” under the EEA.[50]

The compilation of baseball statistics would also qualify as “information”’ under the EEA. For example, Inside Edge, a baseball analytics company,[51] reviews at-bats of every player to identify and compile specific indicia useful in determining what percentage of those at-bats lead to “well-hit” balls.[52] The EEA expressly includes “compilations,” as long as they meet the statute’s other prerequisites. Further, the “method” of compiling that data (i.e., through algorithms and code) and the “design” of that information, are also types of information listed in the EEA’s definition of a trade secret.[53] Finally, most of these analyses are performed with the aid of proprietary computer programs, which would undoubtedly qualify.

Under the EEA, the second element to qualify as a trade secret is that the owner must take “reasonable measures”[54] to keep the information secret. The DTSA addresses from whom the information must be kept secret to qualify as a trade secret under the EEA. Originally, the EEA stated that the information must be kept secret from “the public.”[55] The DTSA made the definition identical to the UTSA, such that the information must be kept secret from “another person who can obtain economic value” from the disclosure.[56] This narrowed the scope of the provision, as there might be information that is commonly known within an industry but not known to the public.[57]

What qualifies as a “reasonable measure”[58] to keep information secret? Determining reasonableness usually takes the form of cost-benefit analysis to find the optimal level of precaution that is not overly burdensome given the risk.[59] Although this would be fact-specific to each case, media reports reveal that teams use the same types of protections as other businesses in securing their materials, such as “walling off” information from those who do not need to know it, using computer security methods (i.e., passwords, firewalls, and surveillance), and having employees sign non-disclosure or non-compete agreements.[60] Contractual provisions can be especially important in this analysis, as a lack of a non-disclosure agreement “may alone defeat [a] trade secret claim.”[61]

Under the EEA, the third requirement for qualifying as a trade secret is that the information’s economic value derives from the fact that it is not “generally known to” or “readily ascertainable” by “another person who can obtain economic value” from the information.[62] Detailed scouting reports, statistical analysis, and other means of player evaluation help teams create a more competitive product on the field. If another team gains access to these methods of evaluation, it could recreate them at a lower cost. If a team knows what strategy its competitor is going to use, it could more precisely tailor its own strategy. If a competitor knows which players a team values via its scouting reports or the type of statistics the team measures, it could use that in trade negotiations or adopt those strategies if they prove successful and recognize talent before others. To a certain extent, the foregoing relies on the assumption that a more competitive team will lead to a more profitable franchise. Although this metric is slightly undercut by the fact that teams operate as part of a league, which has revenue sharing and as a whole may benefit from a more even playing field,[63] given the expenditures teams make on personnel to create analytics databases[64] and the fact that there are individual revenue streams that increase when a team is more competitive,[65] it seems fairly clear that there is economic benefit to having these secret programs.

It may be, at first, counterintuitive to think of scouting reports and sabermetric databases as trade secrets, especially given that all the action being observed and measured occurs in public and is largely preserved on video. However, the fact that the data, in the aggregate, comprises a compilation has important implications for evaluating its secrecy. Although each play is public information, the compilation transforms the constituent parts, which are public, into information that gives the team a competitive advantage and economic benefit, thereby becoming a trade secret.[66]

That is, the analysis that goes into the making of a statistic is what makes it a trade secret. While the Player Grades disseminated in Rang and the analysis provided by Inside Edge represent types of analytical compilations accessible to and bought by many teams, teams themselves create closely guarded compilations. For example, the Astros created an algorithm for determining when a player in the minor leagues is ready to be promoted to the major leagues. When the player meets the criteria in the algorithm, a green arrow appears next to that player’s name. A grey arrow next to the player signals that the player should be demoted, and a black arrow means the player should be cut.[67] This system is one example of the many ways in which teams create their own proprietary trade secrets. The team must decide what data to collect (i.e., speed, direction, distance, angle), how to collect it (human review, cameras, or software), and how to combine and present it (numbers, graphs, charts, graphics, computer programs, or symbols). Scouting reports, even if done through first-hand observation and annotation of results by scouts, contain some of the same compilation features as do statistics (i.e., what attributes of the player to write down and focus on, how to weigh each of those attributes, how to present the report, and how to measure the importance of each individual scouting report when assessing the overall performance of a player within a larger database). The creation of these evaluation systems all required time, money and effort, making them competitively valuable.[68]

C. The Interstate Commerce Requirement and Intent

Once the plaintiff has established that the information at issue is a trade secret, the EEA has two further threshold requirements for criminal prosecution. First, the trade secret must meet the statute’s interstate commerce requirement.[69] Second, the prosecution must establish a mens rea requirement—that the actions were taken “with intent.”[70]

The interstate commerce requirement of the EEA has been subject to some controversy. As the Act was originally written, the trade secret had to be “related to or included in a product that is produced for or placed in interstate or foreign commerce.”[71] The Theft of Trade Secret Clarification Act of 2012 revised this language to its current form, requiring the trade secret to be “related to a product or service used in or intended for use in interstate or foreign commerce.”[72] This amendment was passed in response to the Second Circuit’s holding in United States v. Aleynikov.[73] In Aleynikov, a Goldman Sachs employee stole source code for a high-frequency trading system, which was used to make large volumes of trades in securities and commodities. The court held that Aleynikov did not violate the EEA because the source code did not meet the interstate commerce requirement as it was not “produced for” or “placed in” commerce.[74] Much of the court’s reasoning in Aleynikov could have applied to the information at issue here (i.e., it was for internal use only and there was no intention to sell or license the product). However, Congress closed this loophole by expanding the statute to cover services (in addition to products) and by broadening the language to include products or services intended for use in interstate commerce.[75]

Here, the statistical databases and scouting reports relate to a “product” used in interstate commerce, namely the sport of baseball. Although baseball may not be a product in the tangible sense, it is surely a product in the same way that most forms of viewable entertainment are products. Professional athletes playing baseball is what the teams are marketing and selling to the public. Baseball is intended for public consumption through the attendance of live events and the viewing of television broadcasts. Given the congressional intent to broaden the EEA’s interstate commerce requirement, it is not a stretch to say that the systems are intended for use in baseball, which is a product used in interstate commerce. Further, though baseball has historically been subject to an antitrust exemption, which was rooted in a finding that the business of baseball was not a part of interstate commerce,[76] the United States Supreme Court later clarified in Flood v. Kuhn[77] that “[p]rofessional baseball is a business and it is engaged in interstate commerce.”[78]

Finally, the EEA distinguishes itself from its civil counterpart by including a high mens rea requirement for the remaining elements. The alleged thief must (i) intend to convert the trade secret to the economic benefit of someone other than the owner, (ii) intend or know that the theft will injure the owner of the trade secret, and (iii) knowingly misappropriate the trade secret through one of the delineated unauthorized acts.[79] Each element requires a fact-specific inquiry.

D. The EEA as Applied to Correa’s Case

As suggested above, Correa’s case provides an illustration as to how the EEA could apply to trade secrets in baseball. Correa was charged with violating five counts of the CFAA. The application of criminal law to the sports world is neither novel nor extreme, and there have been many other instances in which the government has taken a keen interest in criminal activity in the sports industry. For example, the federal government extensively investigated and prosecuted the use of performance enhancing drugs.[80] The New England Patriots’ involvement in the so-called “Spygate” incident garnered significant political interest, with many calling for criminal prosecution.[81] Currently, the Department of Justice is investigating MLB’s international signing practices.[82]

Correa worked for the Cardinals from 2009 until he was charged in 2015. During the beginning of his tenure with the Cardinals, Correa worked closely with Jeff Luhnow and Sig Mejdal. His relationship with Mejdal, in particular, was contentious—the two were considered “rivals” who engaged in “heated disputes.”[83]

In December of 2011, the Astros hired Luhnow as General Manager. In January of 2012, Luhnow brought Mejdal along to head the Astros’ analytics department.[84] Mejdal, a NASA engineer, was brought in to “make sense of all the new data that [was] becoming available for assessing ballplayers.”[85] When Mejdal left the Cardinals, he was directed to hand over his computer and password to Correa.[86] At the time, the Astros and Cardinals were division rivals.[87] While Luhnow and Mejdal were with the Cardinals, the analytics staff used a database tool called “Red Bird Dog,” and Luhnow and Mejdal “had clear ideas of what they wanted after using [that] system.”[88] At the Astros, the two went on to build Ground Control, which housed “a variety of confidential data, including scouting reports, statistics, and contract information, all to improve the team’s scouting, communication, and decision-making for every baseball-related decision.”[89] The system, which takes “variables and weights them according to the values determined by the team’s statisticians, physicist, doctors, scouts and coaches,” was referred to as the “repository of the organization’s collective baseball knowledge—the Astros’ brain.”[90]

When Mejdal left to join the Astros, he used a password similar to the one he had used while working at the Cardinals.[91] Correa guessed the new password and accessed Mejdal’s Ground Control and email accounts.[92] In March of 2013, Correa viewed scouting information, including the Astros’ scouts’ rankings of all players eligible for the 2013 Amateur Draft, a weekly digest page which listed statistics and notes on the performance and injuries of players whom the Astros were considering drafting, other web pages containing the Astros’ evaluations of the Cardinals’ prospects, and notes on trade discussions.[93] In June of 2013, the day before the 2013 Amateur Draft, Correa sorted the Astros’ draft page to see which prospects the Astros rated highest, as well as other scouting reports.[94] Before day three of the Draft, Correa viewed the draft page to look for players not yet drafted, including the page of Adam Nelubowich, whom the Cardinals drafted later that day, and three players the Cardinals had drafted the day before.[95] On July 31, 2013, the day of the non-waiver trade deadline, Correa again accessed Ground Control to view trade discussions between the Astros and other teams.[96]

On March 8, 2014, the Houston Chronicle published an in-depth article about Ground Control.[97] In response, the Astros enhanced their security precautions by changing Ground Control’s URL and requiring Ground Control users to change their passwords. The team reset the database to a system-wide default password, which was emailed to users. However, since Correa had access to Mejdal’s email, he also gained access to the new URL and default password. Correa used this information to access Luhnow’s account, viewing 118 web pages containing confidential information specifically relating to players the Astros were targeting in the 2014 Amateur Draft. Correa also viewed the “task page” for the Astros’ analytics department, which “listed the projects that the department was researching.”[98] In March of 2014, Correa allegedly leaked embarrassing confidential information about the Astros’ trade discussions to Deadspin, a sports blog. In so doing, Correa allegedly sought retaliation for a recent Sports Illustrated article, which praised Luhnow and Mejdal’s reportedly outstanding analytical methods and predicted that the Astros would win the 2017 World Series.[99] During these unauthorized intrusions, Correa used software to conceal his identity, his location, and the type of device he was using.

In December of 2014, Correa was promoted to Director of Scouting, where his duties involved scouting and the amateur draft—areas in which his access to Ground Control would have been particularly relevant. Though the government only charged Correa with accessing Ground Control on five occasions, the prosecution’s sentencing memo alleges that Correa in fact accessed Ground Control on forty-eight occasions, using the accounts of five different Astros employees.[100] The sentencing memo further states that Correa improperly accessed Mejdal’s email account over a two-and-a-half-year span.[101]

Correa claimed he was looking at Ground Control because he believed that the Cardinals’ proprietary data had been “improperly transferred to the Astros’ system by former Cardinals employees who had been hired by the Astros”[102] and asserted the Astros had replicated “key algorithms and decisions tools” created by the Cardinals.[103] No charges were ever brought against the Astros.

Correa waived indictment and pleaded guilty to five counts of “Unauthorized Access of a Protected Computer” under the CFAA for intrusively accessing the Astros’ database from March 2013 to June 2014.[104] Correa was sentenced to forty-six months in prison and ordered to pay criminal monetary penalties, including over $279,000 in restitution to the Astros.[105] In addition, the MLB Commissioner ordered the Cardinals to give the Astros their top two draft picks in the 2017 Draft and pay the Astros $2,000,000, the maximum punitive fine that the MLB Commissioner has the authority to direct pursuant to the MLB Constitution.[106]

While Correa pleaded guilty under the CFAA, could he have also been convicted under the EEA? Correa did not appropriate the operational code of Ground Control itself, nor did he appropriate Ground Control’s algorithms used to evaluate input data. Instead, he took the analytical conclusions generated by Ground Control—that is, the results produced by the system. It seems clear that such results would fit the EEA’s definition of a “trade secret.”

First, the content which Correa accessed falls within the types of information listed in section 1839(3). The rankings which the Astros assigned to players whom they were interested in drafting are analogous to those provided in Rang, and the scouting reports, trade discussions, and medical reports that Correa accessed would qualify as “business information” within the meaning of the EEA.

Second, the Astros took several “reasonable measures” to keep their information secret, as required by section 1839(3). Ground Control was not only protected by a password, but this password was reset after the Houston Chronicle article, showing that the organization was actively vigilant in protecting its system. Additionally, certain functions were only permitted to be used by certain employees. For example, Correa’s bouts of unauthorized access involved intruding into the accounts of two minor league players who, according to the government’s sentencing memorandum, had more limited access than other personnel.[107] Prior to Correa’s hacking, Luhnow said that the team was taking “as many measures as we can to protect the information,” such as walling off access, inhibiting the ability to download the data, and logging users’ activity on the system.[108]

Third, the information in Ground Control derived “independent economic value” from not being generally known or ascertainable through “proper means.” The government argued, and the court agreed, that “the deliverable from all of [the scouting] expenses was the information that they put in” Ground Control.[109] As the government noted, in order to diminish the strong likelihood that years and money will be fruitlessly invested in talented individuals who never end up graduating to major-league caliber, teams have poured increasingly massive amounts of resources into the consideration of which players to acquire.[110] The Astros’ proprietary data that was stored in Ground Control was only economically valuable because it was not generally known to other baseball teams. By developing its own tools and metrics, the Astros were able to better evaluate talent, thereby gaining a competitive edge over other teams. Analogizing the secrecy-based value of proprietary sabermetrics, one journalist contended that Correa’s actions were “tantamount to stealing the secret formula for Coke.”[111] The plea agreement asserts that the intended loss to the Astros was $1.7 million.[112]

Further, the data Correa accessed related to a product intended for use in interstate commerce. As discussed above, baseball, as a form of viewable entertainment in which tickets are sold and marketing is conducted throughout the country, is a product of interstate commerce.[113]

Compared to satisfying section 1839’s definition of a “trade secret” and section 1832’s interstate commerce requirement, the EEA’s mens rea element would likely be more difficult to prove. This may explain why the government refrained from pursuing charges under the EEA. Correa proffered that his intent was not to injure the Astros for his own benefit but to assess whether the Astros had stolen information from the Cardinals.[114] Had the government prosecuted Correa under the EEA and had his case proceeded to trial, Correa may have argued that he did not intend to injure the Astros or convert it for his or the Cardinals’ benefit.[115] There may have been no conclusive evidence that Correa intended to injure the Astros.

That said, such intent could be inferred from the fact that Correa allegedly leaked the Astros’ confidential trade discussions to Deadspin—a move which inflicted foreseeable reputational damage on the Astros and seemed to serve no purpose other than to injure and embarrass. Also, as the government pointed out in its sentencing memorandum, the information Correa looked at did not relate to the Cardinals, but rather included the Astros’ trade discussions with other teams. Such trade discussions had no bearing on whether the Astros stole information from the Cardinals, suggesting that Correa’s intent was to injure the Astros (and not to assess whether the Astros had stolen information from the Cardinals).

Moreover, Correa personally benefited from the hack insofar as he was promoted to Director of Scouting in 2014. The specific content Correa accessed in the Astros’ Ground Control database was directly related to drafting and scouting, which were areas core to Correa’s new job responsibilities. As the prosecution highlighted in its court filings, Correa’s access to Ground Control gave him the ability to “corroborate his judgment calls” by “check[ing] what another analytics-minded organization thought.”[116] In addition, Ground Control enabled Correa to know which projects the Astros found promising and which they discarded.

Two principle questions remain. First, why did the prosecution not bring charges against the Cardinals as well? The Commissioner clearly saw it fit to sanction the organization through a fine and loss of draft picks. Further, it would have been possible to introduce evidence that Correa acted within the scope of his employment, thus making the Cardinals liable pursuant to the doctrine of respondeat superior. Perhaps because the government knew that MLB had its own internal mechanisms for disciplining and fining clubs, there was less of a need for the government to impose its own sanctions.

Second, why did the government not prosecute Correa under the EEA? Certainly, the CFAA charge was the more straightforward claim to pursue since the EEA has a more intricate mens rea requirement. As previously mentioned, to succeed on an EEA charge, the prosecution would need to establish that the defendant (i) intended to convert the trade secret for the benefit of someone other than the owner; (ii) intentionally or knowingly injured the owner; and (iii) knowingly misappropriated the trade secret through one of the delineated unauthorized acts.[117] Further, the prosecution would have had to prove that the content which Correa accessed on the Astros’ Ground Control constituted a trade secret. It is possible that the Astros were reluctant to reveal information about Ground Control, especially given the media scrutiny. Indeed, the prosecution “agreed to a more restrained sentence,” including the decision not to add additional charges such as aggravated identity theft,[118] and noted that the plea agreement was “the product of extended negotiations between the parties, both of whom made concessions over several months.”[119] While the prosecution specifically noted that they chose not to charge Correa with aggravated identity theft, there is no discussion of the EEA. Declining to charge Correa under the EEA may have been part of the prosecution’s strategy of taking a lenient posture in order to reach a plea deal.

II. There Are Policy Reasons to Apply the Economic Espionage Act to Trade Secret Theft in Baseball

Ground Control is not the exception in the baseball industry. Many teams have similar databases that house information used to make player-related decisions, including the Cardinals (who have since moved on from Red Bird Dog but refuse to disclose the name of their new system),[120] the Boston Red Sox (Beacon),[121] and the Cleveland Indians (DiamondView).[122]

Correa was charged under the CFAA for accessing the Astros’ database “without authorization.” In so doing, the prosecution neglected the heart of the wrong Correa committed. The prosecution failed to address the true focus of Correa’s misdeeds—not the means of accessing the information (a problem which brings to mind questions of password sharing discussed in United States v. Nosal[123]), but the proprietary nature and use of the information itself. This point is underscored by the fact that Correa accessed Ground Control not via the use of technical skill but rather by receiving Mejdal’s password when Mejdal turned over his computer upon leaving the Cardinals. Because Mejdal failed to significantly change his password, Correa had an easy means of entry.

Correa’s case provides an important lesson concerning the nature of the intellectual property risks which baseball teams face. The main threat is not from “outside” hackers who illicitly access computer databases but from those already embedded within the industry who impermissibly use secret information. Accordingly, the EEA, which focusses on the impermissible use of secret information, addresses the risks faced by baseball teams more directly than does the CFAA, which focusses on the illicit access from outside hackers. The importance of this shift is driven home by a few considerations.

A. The Fluidity of Personnel in Baseball Creates a High Risk for Misappropriation

While employee turnover is a common feature of many industries, the fluidity of baseball operations staff is practically a definitional feature of the baseball industry.[124] Just as a player is traded from team to team, front office staff routinely move from team to team as well. The Milwaukee Brewers’ baseball operations department provides one example. The team’s current General Manager, David Stearns, joined the Brewers from the Houston Astros, and he had previously worked for the Cleveland Indians, New York Mets, and Pittsburgh Pirates. The team’s Assistant General Manager, Matt Arnold, had stints with the Tampa Bay Rays, Los Angeles Dodgers, Texas Rangers, and Cincinnati Reds. The team’s senior advisor, Doug Melvin, had prior experience with the Rangers, Baltimore Orioles, and New York Yankees. Taken together, Stearns, Arnold, and Melvin alone have inside experience with one third of the league, including two division rivals.[125]

An examination of the thirty General Managers at the start of the 2018 season reveals that nine have worked for four or more teams, and thirteen have worked for two or three teams.[126] While that leaves eight General Managers who have only worked for one franchise, every team has baseball operations department staff with experience working for multiple teams.[127]

This “incestuous shuffling of scouting and front office talent” poses a serious risk to teams that have developed proprietary data systems.[128] The information one team has in assessing players is directly applicable to the core business of a competitor team.

At first glance, increasing criminal enforcement of trade secret laws produces undesirable consequences, such as a restricting employee mobility. Limits on employee movement within an industry can have “detrimental effects on innovation, market competition, and economic growth,”[129] because preventing “talented individuals from standing upon the shoulder of giants, sharing knowledge, and making use of their human capital,” harms innovation.[130] Thus, perhaps using the CFAA would be less detrimental to employee mobility and the cross-pollination of ideas because the CFAA focuses on the access to that information rather than how it is used. However, as discussed above, Correa’s case illustrates why the CFAA is inadequate on other grounds. The statute’s vague notions of what constitutes “hacking” fails to address what society wishes to express as the true harm of Correa’s actions. We do not want to punish Correa solely because he guessed a password. Rather, we want to punish Correa because he used that password to give his team an illicit and illegal competitive advantage.

Further, concerns over the EEA restricting employee mobility in baseball are overstated. First, because the EEA includes such a high mens rea requirement, trade secret prosecutions would be brought sparingly in baseball. Under the EEA, the prosecution must establish as to each element of the crime that the defendant (i) intended to convert a trade secret to the economic benefit of someone other than the owner, (ii) intended or knew that such conversion would injure the owner of the trade secret, and (iii) knowingly misappropriated the trade secret through one of the delineated unauthorized acts.[131] Given the EEA’s demanding mens rea requirement, prosecutors will likely only go after those with a truly “evil-meaning mind.”[132] That is, employees moving between organizations without “evil-meaning minds” will not have to fear prosecution. Still, as with any criminal statute, prosecutorial discretion will ultimately reign supreme on when and whether these cases will be brought.

Second, baseball teams already have internal mechanisms in place to stifle employee fluidity and movement, meaning that any chilling effect on employee mobility from the EEA would be relatively unpronounced. Among other mechanisms, teams require employees to ask for permission before interviewing with another MLB team. These rules stem from the prohibition against tampering “with negotiations or dealings respecting employment” found in the Official Professional Baseball Rules Book.[133] The rule reads:

[T]here 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 . . . 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.[134]

On its face, the provision extends to “managers,” a term which, along with individual team policies, could be and has been broadly interpreted to encompass a host of employees.[135] Although individual teams’ employee policies are generally not public information, there have been some media reports of teams amending their employee policies in response to employees getting poached by other teams. For example, in 2011, the Toronto Blue Jays amended their employee policy so that employees in their baseball operations department would not be granted permission to interview with other teams for positions that did not represent a promotion from their current position.[136] Teams generally have a “widely observed policy of letting other clubs interview their employees for positions that would represent promotions.”[137] Even so, in some rare cases teams have exercised this power in restricting employees from interviewing with other teams even if the employee would be offered a promotion.[138] Given the general trend of vast movement of executives between teams, this system still seems largely perfunctory. Nonetheless, the system shows that the industry is trying to put its thumb on the scale against employee movement, thereby overshadowing any theoretical chilling effect the EEA may have on employee mobility.

Third, even assuming that the EEA would stymie employee mobility, this would not necessarily harm the baseball industry. Limiting employee fluidity may in fact be healthy for the industry. Sports are built on the notion of discovering who has the best competitive strategy and advantage. Sharing ideas between teams breaks down the fundamental competitive fabric and function of the system. Unlike industries which may provide for a more concrete connection to economic growth, public utility, or the public good, sports are a gratuitous demonstration of who can outcompete whom, who can come up with the best strategy, and who can win a game. Professional sports are built on the fundamental idea of secret gamesmanship. Unlike in other industries where employees working together across companies may enhance the public good, employees sharing secrets in sports undermines the gamesmanship of the sport, harms the public’s confidence in the integrity of the game, and reeks of collusion. Furthermore, the confined and unique nature of the sports industry lessens costs to innovation that may be more harmful in other settings.

The Correa case is one example of the effects of employee turnover, both from a psychological and competitive perspective. Correa’s psychological paranoia resulting from Luhnow and Mejdal’s departure allegedly led him to access Ground Control. It was not ludicrous of Correa to worry that Luhnow and Mejdal may have taken proprietary information with them¾as one commentator noted, “the secrets were inside their heads.”[139] Even a Houston Chronicle article that predated the Correa case alluded to this phenomenon, noting that “were a member of the Astros front office to leave, some of the team’s operating secrets would leave with them.”[140]

Moreover, the Correa case illustrates what a competitor can do once this type of data is acquired. Among numerous occasions, Correa accessed Ground Control on three key instances: right before and during the 2013 Amateur Draft and the day of the non-waiver trade deadline. By accessing Ground Control on these dates, Correa was able to see the players in which the Astros were interested as well as gain more information in assessing the Cardinals’ own picks. For example, Correa accessed scouting information for a pitcher, Marco Gonzales, who was the Cardinals’ first-round draft pick.[141]

It remains to be seen whether teams will take the Correa case as a cautionary tale. The Commissioner, Rob Manfred, insinuated that there must be a shift in the way teams think about guarding proprietary data, noting that “30 years ago intellectual property in this business was what some GM carried around in his head and he was going to take it with him when he left . . . . There wasn’t much you could do about that. Today the business has changed.”[142] Implicit in the Commissioner’s statement is an acknowledgment that some secrets cannot be kept simply due to the fluidity of the industry. His statement points to a worry of hackers accessing data, not leaks from a team’s own employees. However, the idea that the threat does not come from employees changing teams is misguided, as Correa was only able to gain access to the Astros’ database because Mejdal gave Correa his old password.

Luhnow himself condoned some type of misappropriation, saying “if someone leaves, they’re allowed to take . . . anything they remember in their head.” [143] The Director of Baseball Research for the Minnesota Twins echoed this sentiment, saying “if they can remember it you cannot stop them from taking it.”[144]

Accordingly, some argue that the EEA does criminalize “theft by memory.”[145] The idea of theft of trade secrets by memory is not wholly foreign. Under state law, several state courts have held that memorizing trade secrets constitutes a basis for civil liability.[146] For example, in Stampede Tool Warehouse, Inc. v. May,[147] former employees of an automotive equipment distributor argued their “taking” of the company’s customer list could not be a violation of the Illinois Trade Secrets Act[148] because they memorized the list instead of physically or digitally taking the information. The court disagreed, holding: “[a] trade secret can be misappropriated by physical copying or by memorization. . . . Using memorization to rebuild a trade secret does not transform that trade secret from confidential information into non-confidential information.”[149] Though state courts, under state trade secret laws, have imposed civil sanctions on those who misappropriate trade secrets via memorization, to date, criminal liability has been mostly limited to theft of information in a tangible medium.[150]

Nonetheless, the literal language of the EEA suggests that prosecuting theft by memorization could be even easier than prosecution under most state trade secret laws. First, the definition of trade secrets under the EEA is broader than that of the UTSA. The EEA says information can be a trade secret “whether or how stored, compiled, or memorialized,”[151] whereas the UTSA lacks such elaboration.[152] The fact that a trade secret need not be stored or memorialized under the EEA points to an expansive definition of intangible objects as trade secrets. Further, the EEA provides that one who “communicates[] or conveys such information” without authorization, has committed a prohibited activity.[153] This suggests there is no requirement that a person must physically or electronically take trade secrets to be prosecuted under the EEA. The UTSA contains no such language. Thus, the EEA seems to contemplate the risk of misappropriation via memorization more than state laws do. Further, despite the fact that the statute has undergone numerous amendments since its enactment, Congress has done nothing to clarify this potential ambiguity.

Still, although the language of the EEA is amenable to criminalizing the memorization and disclosure of trade secrets, the EEA—in practice—has not been used to prosecute such conduct (perhaps because criminal sanctions for this type of misappropriation would “unduly endanger legitimate and desirable economic behavior”[154]). Turning to the EEA’s legislative history, theft by memory was not the type of misappropriation Congress had in mind.[155] Although a section of the EEA was removed during reconciliation which said that “the general knowledge and experience that a person gains from working at a job is not covered,”[156] this language was removed because Congress found it “unnecessary and redundant.”[157] Remembering information from one’s previous job is often an incidental fact to employee movement, and society may not view this behavior as culpable enough to warrant criminal sanctions.

Coupled with the lack of prosecution under the EEA for trade secret theft by memorization, baseball industry executives have taken a seemingly permissive attitude towards such conduct, thereby creating uncertainty as to when society should deem this behavior wrongful. Limited information sharing is tolerated in baseball culture. For example, one unnamed R&D Director noted that scouts often trade advance reports in exchange for favors or simply as an act of kindness among industry friends.[158] Teams openly admit that the reason they hire analysts is often because of the projects said analysts have worked on with a competitor.[159] While baseball executives have deemed some information sharing impermissible, where they seem to draw the line (as to what trade secret misappropriation they consider wrongful versus what they consider permissible), they seem to do so arbitrarily with no grounding in any legal framework. For example, while one unnamed executive said that copying source code to a Dropbox would constitute prosecutable behavior, they opined that if a developer still had access to code in his or her email and used that for a new team, that would be a “gray area.”[160]

This permissive approach is misguided. Uncertainty as to conduct that companies deem improper has a detrimental effect on ex ante behavior and destroys any prospect for notice or ability to shape expectations as to what type of information teams value, what type of conduct is permitted, and what employees can take with them should they—or perhaps more accurately, when they—switch employers. The necessary normative guidance that shapes employee behavior is lacking in the baseball industry, so the threat of criminal prosecutions may be necessary to discourage misconduct that harms competition and fair play, on and off the field. Accordingly, the EEA can and should provide guidance to employees over what type of behavior should be considered wrongful.

B. How Disputes Are Resolved in the Absence of Criminal Sanctions

A wide variety of internal disputes in MLB are subject to arbitration clauses. If the controversy involves disciplining a player, the league is required to go to arbitration as prescribed in the collective bargaining agreement with the MLB Players Association.[161] For disputes involving two teams, the Major League Baseball Constitution (“MLB Constitution”) sets forth arbitration procedures. The latter is more applicable for cases of trade secret theft. The MLB Constitution states:

All disputes and controversies related in any way to professional baseball between Clubs . . . (including . . . owners, officers, directors, employees and players) . . . shall be submitted to the Commissioner, as arbitrator, who, after hearing, shall have the sole and exclusive right to decide such disputes and controversies and whose decision shall be final and unappealable.[162]

The Commissioner also has the separate power to impose punitive action on “Major League Clubs, owners, officers, employees or players” for any conduct “deemed by the Commissioner not to be in the best interests of Baseball.”[163]

Any action a team might seek to take against another team for the misappropriation of trade secrets by a former employee (i.e., under a state trade secrets law) would be subject to the arbitration clause of the MLB Constitution. Because teams are precluded from entering the courts to adjudicate these disputes, criminal law, where appropriate, could fill the gap. The fact that there is a separate system for internal discipline may lead some to believe that the need for criminal prosecution is reduced (or perhaps completely eliminated), as the league has come up with its own way for handling these types of disputes. However, the record of punishments imposed upon teams under the arbitration framework is sparse and opaque,[164] and the Commissioner is under no duty to disclose the punishments imposed.[165] Arbitration eliminates the advantage of the public process and transparency the legal system brings to the resolution of these disputes. Further, the standards in a criminal trial (i.e., beyond a reasonable doubt) in conjunction with the extensive mens rea requirements (especially for the EEA) allow for a more rigorous and thorough investigation of the issue than does private arbitration between teams.

Unlike civil disputes which fall within MLB’s mandatory arbitration rules, criminal prosecutions under the EEA would be adjudicated in the courts. In failing to prosecute EEA violations in the context of baseball, prosecutors have, in effect, empowered MLB to define the scope of trade secret law in baseball and to relegate such disputes to private arbitration. This is contrary to the will of the legislature, which has elected to make trade secret theft a crime. As discussed above, baseball teams—many which feel powerless to stop the sharing of proprietary information in the face of the industry’s employee fluidity—generally take a permissive attitude towards information leaving an organization when employees move teams. Where a private industry feels powerless to stop wrongful behavior is precisely where the criminal law should step in, not where the criminal law should stand down. Section 1832 of the EEA was written with this kind of misappropriation in mind. The importance of this information was underscored by Senator Herbert H. Kohl, when he said: “[B]usinesses spend huge amounts of money, time, and thought developing proprietary economic information . . . . This information is literally a business’s lifeblood. And stealing it is the equivalent of shooting a company in the head.”[166] Teams should not resign to letting their trade secrets, into which they have invested time and money, be taken to other teams. There may be more of a “league-think” attitude in baseball as opposed to other industries since each team is part of a larger collective, but undermining the competitive nature of the sport by allowing employees to bring proprietary information with them when they leave a team will eventually disincentivize teams from investing in these types of program and harm the league more than help it.

Finally, the reality is that prosecutors tend to use the EEA sparingly, often only in “egregious and ‘open-and-shut’ cases.”[167] The Correa case likely meets the elements set out by the EEA and would have been a good opportunity for the government to use the EEA in a high-profile case to both publicize the EEA and more concretely broaden trade secret protection in sports.

C. Conventional Methods of Protecting Trade Secrets Are Ineffective

Though teams use many conventional tactics which qualify as reasonable precautions to keep information secret under the EEA, such methods are inadequate to stop the misappropriation of proprietary information on their own. One tactic that teams take is walling off certain information from certain employees.[168] This approach has several pitfalls. First, it does nothing to address what occurs when the General Manager, who is not walled off from any information, moves teams (which, as discussed above, is common practice). Second, creating “information silos” is bad for cooperation and employee morale.[169] It also leads to fewer people making more decisions and increases the likelihood of error.[170] Third, the baseball industry is highly reliant on the use of interns. The sheer number of low level analysts who cycle through an organization makes walling off difficult. As one former Yankees baseball operations intern noted, the number of interns was often so high that there were “more interns than office space.”[171] Further, as fewer (or no) criminal prosecutions are brought, the onus will be on the team to come up with more effective ways to prevent the misappropriation of proprietary information. As a result, teams may wall off more data from certain employees, stifling an organization’s synergy and ability to perform to its full potential.

Alternatively, teams may turn to contract law. The two types of contractual provisions generally used to protect trade secrets—non-disclosure agreements and non-compete agreements—may be inadequate in the context of professional baseball. Non-competes are especially problematic since they receive vastly different treatment from state to state. This could put teams in states which generally prohibit non-competes, such as California (where five teams, or one sixth of the league, are located), at a significant disadvantage.[172] Further, a breach of these agreements would not be adjudicated in the courts. As mentioned above, disputes between teams (for example, an employee disclosing a trade secret in violation of a non-disclosure agreement) are subject to the MLB Constitution’s mandatory arbitration clause. Accordingly, inter-team disputes over non-disclosure agreements would not receive the protections and additional sanctions available through the legal system.

III. On-Field Tactics

One commentator called Correa’s actions a “high-tech version of what’s been going on forever in baseball—stealing signals.”[173] This comment illustrates the potential for complex legal questions to arise if the government more aggressively prosecutes the misappropriation of information in this context. In baseball, the ubiquity of sign-stealing has essentially been baked into the game.[174] In baseball, a sign is when a manager, coach, or player performs a series of physical movements (i.e., touching his hat, nose, or ear) to instruct the player to run a certain play (i.e., stealing a base or putting down a bunt).[175] Though in some situations, stealing signs could technically meet the standard under the EEA or other trade secret statutes, such on-field tactics should not be subject to adjudication in the courts.

A. Non-Verbal Signals Could Meet the Definition of a Trade Secret

The EEA definition specifically provides that the information does not have to be tangible. Though this was likely added to address digital forms of information, hand signals used during a game are a type of intangible business information. Although the signal is displayed in public, the meaning of the signal is not public information nor is the timing as to when the play will be deployed. The secrecy is key to the successful implementation. If a team knows what is coming, it can prepare to counteract that move. Some coaches create decoy signs in which they add a slight variation to the sign so the player knows that play should not actually be implemented. This can help assess the extent to which the signs have been compromised. The timing is also imperative. Even if a player can anticipate what type of pitch will be thrown, the timing of knowing exactly when that pitch will be thrown is where the value of the secret lies. Teams “closely guard . . . the various signals (hand, verbal, or otherwise) used by coaches to relay play calls to players during a game.”[176]

Does a team stealing an opposing team’s signs constitute misappropriation of a trade secret within the meaning of the EEA? If the player notices that a change-up is thrown every time the catcher puts down four fingers and communicates that to the batter while he is standing on second base, did he knowingly steal information? This scenario likely fails to meet the requirement of misappropriation. Rather, it is more akin to reverse engineering. Reverse engineering is when one “start[s] with [a] known product and work[s] backward to divine the process which aided in its development or manufacture.”[177] Here, the player used public information and decoded what the signal meant based on his powers of observation, thereby not acquiring the secret by improper means.[178] Although stealing signs in the manner described is technically “sign-stealing,” it is very common and is not something the criminal law or government should have a hand in.

However, a distinction must be made between signs that are stolen via the naked eye and signs stolen via the aid of other devices. There have been several cases of “sign-stealing” in which teams used more sophisticated means of acquiring the signs than merely observing signals and their outcomes. Teams have used various technologies and devices to decode or intercept signs, such as the use of video cameras or binoculars. In football, where teams communicate plays via electronic headsets, some teams have used electronic means of eavesdropping on these conversations. While non-video sign-stealing is an accepted part of the game, the use of other devices has been treated more seriously. In fact, while there is no official rule against sign-stealing in the MLB Rulebook, MLB issued a memo to clubs in 2001 specifically prohibiting the use of electronic equipment in connection with sign-stealing[179] (and the MLB Commissioner can punish teams for any conduct that is not in the “best interests” of baseball under the Rule Book[180]). This prohibition against the use of other devices in connection with sign-stealing was reiterated by Commissioner Manfred in 2017.[181] Another example comes from professional football, where the New England Patriots videotaped New York Jets coaches sending signals to their players during a game. It was not the stealing of the signs that got the Patriots in trouble but the fact that they did so using a camera.[182]

In 2017, the Yankees filed a claim with the Commissioner alleging that members of the Red Sox staff watching the game in the clubhouse used Apple Watches to communicate with training staff in the dugout about what signs the Yankees were using. Through a series of signals, the Yankees further alleged, the Red Sox training staff in the dugout then communicated this information to their players at the plate. The Red Sox filed a claim in response alleging that the Yankees used its camera from its regional sports network, YES, to steal signs during the game as well. Both teams were fined an “undisclosed amount” by the Commissioner.[183]

B. The Legal System Should Not Be Involved in Adjudicating Disputes over On-Field Misappropriation

On-field tactics like sign-stealing should not be subject to the criminal law, whether it is done with the naked eye or with the help of an electronic device. This is because there is a difference between illegal behavior and “gamesmanship.”[184] Unlike the stealing of sabermetric data or scouting reports, which have a corollary to the broader business world and are akin to the types of material Congress sought to protect when enacting the EEA, policing what is “against the rules” in a sporting event is no place for the judiciary. Sign-stealing is not only a common practice but has also been “lauded as good coaching.”[185] As one law professor argues, “nothing done on the field of play is cheating. What happens on the field, even if it violates the rules of the game, is still the game.”[186]

Questionable on-field tactics—even when done through sophisticated means like cameras or other equipment—are more appropriate for the disciplinary mechanisms built into the league’s arbitration forums. As it relates to on-field play, some level of “cheating” is accepted, and it should be up to those in charge of policing the sport, not judges, to delineate what is proper.[187]

Additionally, the sign must “derive[] independent economic value.”[188] While stealing signs can give teams a meaningful competitive edge[189] and some commentators believe “a sports play can be just as valuable to a sports team as a product, design, formula, or process may be to a manufacturing corporation or product developer,”[190] it would be more difficult to quantify how much a specific play is “worth” to the business. In contrast, the time, money and effort put in to creating analytical databases is easier to calculate and more congruent to what trade secret law was designed to protect.[191] Thus, a line should be drawn between “conduct primarily affect[ing] the integrity of the game” and conduct relating to the business of the enterprise and the information and programs a team creates, which “more closely align with business concerns.”[192] In his note, Andrew Barna puts forth several other policy reasons against adjudicating sign-stealing in the courts, including the fact that signs can be changed easily and at a minimal cost, the customary nature of sign-stealing within the game, and the Commissioner’s ability to impose penalties—such as loss of draft picks—which courts may not impose.[193]

IV. The Future of Sports Data

The data that Correa accessed included several players’ private medical records. Though keeping medical records is nothing new, teams have been pouring more resources into refining and leveraging this type of data. Every team now has in-house sabermetricians,[194] meaning the competitive advantage teams once gained from using sabermetrics has been reduced. As one consultant noted, “by the time someone has taken a statistical method elsewhere, has been able to implement it and is in a position to use that information to influence the decision-making of other teams, we would probably be onto the next thing.”[195] While sabermetric analysis has become the lifeblood of every team, injury avoidance mechanisms have become a greater priority.[196] To that end, teams have turned to biometric data to recapture the competitive edge that was once secured through the early adoption of statistical analysis.

If teams can better harness data to identify the factors that put players at risk for injury, they will have a significant advantage. As injuries derail careers (and cost teams millions of dollars), any informational edge in preventing them is coveted. One focus has been on the jarring increase in tears in the ulnar collateral ligament (“UCL”) of pitchers.[197] UCL tears take on average a period of twelve to sixteen months for recovery, but they can take as many as thirty months.[198] These injuries “keep a tremendous amount of money in the dugout.”[199]

The monitoring systems many teams are beginning to use are extensive and invasive. For example, the Seattle Mariners work with Fatigue Science to monitor player sleeping habits. Players wear wristbands, which were originally developed by the U.S. military to measure fatigue in pilots and soldiers.[200] Teams “speak only in vague terms about their efforts, fearful of publicizing any experiment that could become a competitive advantage,” which shows that teams are taking steps to keep these procedures secret and see some economic value in them.[201] Other examples include the use of harnesses to document “heart rate variability, respiration rate, activity and calories burned”[202] and arm sleeves embedded with 3D sensors to measure the force on the elbow joint of each throw.[203]

The collection and analysis of athletes’ biometric data raises ethical and privacy questions that are outside the scope of this paper.[204] For example, should employers be allowed to keep this kind of information private if it could lead to innovative breakthroughs in preventing injury in the future? If a team discovers a way to minimize or completely avoid the prevalence of a certain kind of injury, should there be a duty to disclose this information so players can protect themselves?[205] What are the ramifications if this information gets stolen? Should the precautions employers take to maintain the secrecy of this data differ from those taken for their normal statistical talent evaluations given the private nature of the data collected?

The collection, disclosure, and storage of biometric data would likely implicate other federal laws such as the Health Insurance Portability and Accountability Act of 1996 (HIPAA)[206] and the Genetic Information Non-Discrimination Act of 2008 (GINA).[207] Further, some states, such as Illinois, have enacted laws relating to employer collection of biometric data. The Illinois Biometric Information Privacy Act (BIPA) requires private entities to “store, transmit, and protect from disclosure all biometric identifiers and biometric information using the reasonable standard of care within the private entity’s industry.”[208] BIPA and similar laws could require teams to implement higher safeguards for the protection of player biometric data than merely protecting their databases with passwords, lest they be subject to liability for inadequately securing biometric data. As long as medical information is housed in the same place as other player data,[209] as was the case with Ground Control, teams should be motivated to strengthen the precautions they take for all their collectively-stored property. As the gathering of this data becomes more widespread and the benefits of its collection become clearer, the law will need to confront novel questions relating to protecting biometric data.


Although Correa was not charged under the EEA, he was ultimately sentenced to a significant amount of time in prison. Nonetheless, the changes over the last two decades in baseball—which have transformed the industry into one obsessed with the collection and analysis of data—show the need for greater legal protection of expensive and labor-intensive proprietary systems, such as Ground Control. Though teams take a somewhat relaxed attitude toward the realities of information sharing when employees switch teams, stronger trade secret protection in baseball is necessary to maintain the public’s confidence in the integrity of the game. The EEA provides one way for the government to stop the misappropriation of this kind of information as personnel move from team to team. The criminal law may not have a place on the baseball field, but it certainly has a place inside the office.


Baseball’s Fluid Talent Pool

* J.D. Candidate, New York University, 2019; B.A., English, University of Pennsylvania, 2013. The author would like to thank Professor Harry First for his expertise and guidance.

[1] Judgement in a Criminal Case at 1-3, United States v. Correa, No. 4:15-CR-00679 (S.D. Tex. July 21, 2016).

[2] Evan Drellich, Astros’ Formula for Success Builds on Its Own Data Bank, Hous. Chron. (Mar. 10, 2014, 9:00 AM),

[3] See generally Leigh Steinberg, Changing the Game: The Rise of Sports Analytics, Forbes (Aug. 18, 2015, 3:08 PM), (describing analytics as the “present and future of professional sports” and that any team not using them is at a “competitive disadvantage”).

[4] Lara Grow & Nathaniel Grow, Protecting Big Data in the Big Leagues: Trade Secrets in Professional Sports, 74 Wash. & Lee L. Rev. 1567, 1575 (2017) [hereinafter Grow & Grow] (“[P]ractically every team in MLB today utilizes sabermetric principles to at least some extent . . . .”).

[5] Id.

[6] Ben Baumer, In a Moneyball World, a Number of Teams Remain Slow to Buy into Sabermetrics, MLB article within The Great Analytics Rankings, ESPN (Feb. 23, 2015),

[7] R. Mark Halligan & Matthew J. Frankel, Nixon Peabody CLE Presentation: Secret Sabermetrics: Trade Secret Protection in the Baseball Analytics Field (Apr. 9, 2012),

[8] Grow & Grow, supra note 4, at 1571-72 (“As early as 1845 . . . newspapers began printing box scores recapping the statistical achievement of players in amateur baseball contests.”).

[9] Id. at 1574, 1575.

[10] Michael Lewis, Moneyball: The Art of Winning an Unfair Game (2003).

[11] Grow & Grow, supra note 4, at 1575.

[12] Id. (“[P]ractically every team in MLB today utilizes sabermetric principles to at least some extent . . . .”).

[13] See United States v. Nosal, 844 F.3d 1024, 1042-43 (9th Cir. 2016) (customer lists), In re Dana Corp., 574 F.3d 129, 152 (2d Cir. 2009) (pricing data), Optic Graphics, Inc. v. Agee, 591 A.2d 578, 586 (Md. Ct. Spec. App. 1991) (marketing strategies).

[14] Statistical analyses include, for example, the calculation of probabilities for defensive positioning, which has led to the proliferation of the infield shift. The infield shift typically involves moving infielders away from their standard positions to better account for a batter’s tendency to put the ball in play on one side of the field. For a brief discussion of the infield shift, see David Waldstein, Who’s on Third? In Baseball’s Shifting Defenses, Maybe Nobody, N.Y. Times (May 12, 2014),

[15] See Grow & Grow, supra note 4, at 1605 (surveying the general counsels of teams across the four professional sports as to what categories of information they deem be trade secrets).

[16] See id.; see also Rich Lederer, An Unfiltered Interview with Nate Silver, Baseball Analysts (Feb. 12, 2007), (referring to the detailed formulas in Nate Silver’s analytics system, PECOTA, as a trade secret); Jenny Vrentas, Mets Statistical Analyst Has Seen Growth and Evolution of Sabermetrics in MLB, Star-Ledger (Apr. 23, 2010), (quoting Ben Baumer saying teams are guarded about the statistical analyses they engage in because “it’s trade secrets”).

[17] Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (2012).

[18] Information at 2, 5, United States v. Correa, No. 4:15-CR-00679 (S.D. Tex. July 21, 2016) (charging Correa with violating 18 U.S.C. §§ 1030(a)(2)(C), 1030(c)(2)(B)(iii)).

[19] 18 U.S.C. § 1030(a)(2)(C) (“Whoever intentionally accesses a computer without authorization . . . and thereby obtains . . . information from any protected computer . . . shall be punished as provided in subsection (c) of this section.”).

[20] Economic Espionage Act of 1996, Pub. L. No. 104-294, 110 Stat. 3488 (codified as amended at 18 U.S.C. §§ 1831-1839).

[21] This will examine only trade secret law in the United States. There is one baseball team in Canada, the Toronto Blue Jays, and thus Canadian law could be implicated. However, for the purposes of this paper, only provisions of U.S. law will be examined. For a brief summary of Canadian trade secret protection in this context, see Grow & Grow, supra note 4, at 1599-1601.

[22] Grow & Grow, supra note 4, at 1605.

[23] Id.

[24] Of the nineteen respondents, two responses came from MLB, seven from the NBA, four from the NFL, and six from the NHL. Each sport has different approaches to the use of data, specifically biometric data. Players in the NHL, NBA, and NFL have been more outspoken with privacy concerns relating to the collection of biometric data and have sought to restrict the use of biometric devices during games. See, e.g., Jeremy Venook, The Upcoming Privacy Battle over Wearables in the NBA, Atlantic (Apr. 10, 2017), When it comes to collecting analytical material in general, sports have relied on analytics at different paces. For example, the NFL has “lagged behind other professional leagues amid an otherwise widespread analytics revolution . . . .” Kevin Clark, NFL’s Brewing Information War, Ringer (June 22, 2016, 1:13 PM),

[25] Grow & Grow, supra note 4, at 1605.

[26] 18 U.S.C. § 1839(3) (2012 & Supp. IV 2017).

[27] See Lederer, supra note 16 (referring to the detailed formulas in Nate Silver’s analytics system, PECOTA, as a trade secret); Vrentas, supra note 16(quoting Ben Baumer saying teams are guarded about the statistical analyses they engage in because “it’s trade secrets”).

[28] Theft of Trade Secrets Clarification Act of 2012, Pub. L. No. 112-236, 126 Stat. 1627 (codified as amended at 18 U.S.C. § 1832(a) (2012)).

[29] Defend Trade Secrets Act of 2016, Pub. L. No. 114-153, 130 Stat. 376 (codified as amended in scattered sections of 18 U.S.C.).

[30] See 18 U.S.C. § 1341, 1343 (2012) (mail and wire fraud).

[31] 18 U.S.C. §§ 2314-2315.

[32] See R. Mark Halligan, Revisited 2015: Protection of U.S. Trade Secret Assets: Critical Amendments to the Economic Espionage Act of 1996, Marshall Rev. Intell. Prop. L. 476, 480 (2015) (“Before the EEA, federal prosecutors relied primarily upon the National Stolen Property Act and the wire and mail fraud statutes to commence criminal prosecutions for trade secret theft. Both statutes were ineffective.” (citation omitted)).

[33] Id. at 480-81.

[34] 18 U.S.C. § 1832(a).

[35] Unif. Trade Secrets Act § 1(4) (amended 1985), 14 U.L.A. 438 (1990).

[36] Trade Secrets Act, Uniform Law Commission, (last visited Jan. 2, 2019).

[37] Defend Trade Secrets Act of 2016, Pub. L. No. 114-153, 130 Stat. 376 (codified as amended in scattered sections of 18 U.S.C.).

[38] See, e.g., United States v. Chung, 659 F.3d 815, 825 (9th Cir. 2011) (“[W]e consider instructive interpretations of state laws that adopted the UTSA without substantial modification.”); see also United States v. Hanjuan Jin, 833 F. Supp. 2d 977, 1007 n.3 (N.D. Ill. 2012) (“Although there are some differences between the definitions of a trade secret found in the UTSA and the EEA, the Court also considers cases that have interpreted the requirements for a trade secret under state law based on the UTSA.”).

[39] 18 U.S.C. § 1839(3).

[40] See Rice Ferrelle, Combatting the Lure of Impropriety in Professional Sports Industries: The Desirability of Treating a Playbook as a Legally Enforceable Trade Secret, 11 J. Intell. Prop. L. 149, 164-65, 168-69 (2003), (listing some of the more obscure types of information that have been considered trade secrets under state law, including “a method of producing unique watercolor paintings,” “techniques for personal spiritual advance,” and a “technique for barbecuing meats”).

[41] 18 U.S.C. § 1839(3).

[42] Nat’l Football Scouting, Inc. v. Rang, 912 F. Supp. 2d 985 (W.D. Wash. 2012).

[43] Grow & Grow, supra note 4, at 1617.

[44] Rang, 912 F. Supp. 2d at 988.

[45] Id. at 995.

[46] Id. at 996.

[47] Id.

[48] Matthew J. Frankel, Hackers Strike Out: Recent Cases of Alleged Sports Analytics IP Theft, 1 J. Sports Analytics 83, 85 (2015).

[49] Alan Siegel, Baseball Scouts Use Numbers, Too, FiveThirtyEight (Aug. 11, 2014, 9:40AM),

[50] See N. Highland, Inc. v. Jefferson Mach. & Tool, Inc., 898 N.W.2d 741, 768. (Wis. 2017) (“Dictionary definitions of ‘information’ suggest that the term encompasses a broad class of knowledge.”).

[51] As of May 2018, twenty of the thirty MLB clubs used Inside Edge’s analytics services. See Jeff Arnold, Remarkable Brings Sports Data to Life, One Stat at a Time, (May 31, 2018),

[52] Alan Schwartz, Score That a Hit (But Was It Well Hit?), N.Y. Times (Oct. 22, 2006),

[53] 18 U.S.C. § 1839(3) (2012).

[54] Id.

[55] Economic Espionage Act of 1996, Pub. L. No. 104-294, § 101(a), 110 Stat. 3488 (codified as amended at 18 U.S.C. § 1839(3)(B)).

[56] Defend Trade Secrets Act of 2016 § 2(b)(1)(A), 18 U.S.C. § 1839(3)(B) (2012 & Supp. IV 2017).

[57] Adam Cohen, Feature: Securing Trade Secrets in the Information Age: Upgrading the Economic Espionage Act After United States v. Aleynikov, 30 Yale J. on Reg. 189, 204 (2013) (“Insiders in a business are considerably more likely to know about particular processes and methods than is the public.”).

[58] 18 U.S.C. § 1839(3)(A).

[59] Grow & Grow, supra note 4, at 1585.

[60] See id. at 1606 (survey finding that 94.74% of teams used computer security methods, 94.74% used non-disclosure agreements, and 78.95% used non-competes); see also Thomas Gorman, Prospectus Q&A: Mark Johnson, Baseball Prospectus (May 11, 2005), (referencing the Cardinals’ Mark Johnson’s non-disclosure agreement); Jon Greenberg, Q&A: New Cubs ‘Saberist’ Tom Tango, ESPN (Jan. 30, 2013), (noting the Chicago Cubs’ Tom Tango’s non-disclosure agreement); Jack Moore, How Wall Street Strangled the Life out of Sabermetrics, Vice Sports (Oct. 22, 2014, 5:30 AM), (discussing how Andrew Friedman’s consultants at the Tampa Bay Rays were “greeted by non-disclosure agreements).

[61] Halligan & Frankel, supra note 7.

[62] 18 U.S.C. § 1839(3)(B).

[63] J.C. Bradbury, Encouraging the Poor to Stay Poor, N.Y. Times (Aug. 28, 2010),

[64] For example, the Los Angeles Dodgers paid Andrew Friedman, their President of Baseball Operations, $35 million. Baumer, supra note 6. A team’s President of Baseball Operations makes all of the final decisions regarding baseball strategy and talent acquisition and helps to shape the analytics department through both hiring personnel and spearheading the development of new analytical tools and programs.

[65] See Ferrelle, supra note 40, at 166-67 (“[T]eam victories . . . in turn lead[] to increased advertising, television, and radio exposure. This exposure often translates into increased merchandise sales or lucrative media contracts. . . . As a team organization garners more victories, it reaps increased financial rewards.”); see also Samuel J. Horovitz, If You Ain’t Cheating You Ain’t Trying: “Spygate” and the Legal Implications of Trying Too Hard, 17 Tex. Intell. Prop. L.J. 305, 312 (2009) (“Profitability correlates to on-field success.”).

[66] See Restatement (Third) of Unfair Competition § 39 cmt. f (Am. Law Inst. 1995) (“[I]t is the secrecy of the claimed trade secret as a whole that is determinative. The fact that some or all of the components of a trade secret are well-known does not preclude protection for a secret combination, compilation, or integration of the individual elements.”); see also United States v. Nosal, 844 F.3d 1024, 1042 (9th Cir. 2016) (“The source lists in question are classic examples of a trade secret that derives from an amalgam of public and proprietary source data. To be sure, some of the data came from public sources . . . . But cumulatively, the Searcher database contained a massive confidential compilation of data . . . .”).

[67] Joshua Green, Extreme Moneyball: The Houston Astros Go All in on Data Analysis, Bloomberg Businessweek (Aug. 28, 2014, 3:00PM),

[68] Restatement (Third) of Unfair Competition § 39 cmt. f (Am. Law. Inst. 1995). (“[I[f acquisition of the information through an examination of a competitor’s product would be difficult, costly, or time-consuming, the trade secret owner retains protection . . . .”).

[69] 18 U.S.C. § 1832(a) (2012) (“Whoever, with intent to convert a trade secret, that is related to a product or service used in or intended for use in interstate or foreign commerce . . .”).

[70] Id.

[71] Economic Espionage Act of 1996, Pub. L. No. 104-294, § 101(a), 110 Stat. 3489.

[72] Theft of Trade Secrets Clarification Act of 2012, Pub. L. No. 112-236, 126 Stat. 1627 (codified as amended at 18 U.S.C. § 1832(a)).

[73] United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012); 158 Cᴏɴɢ. Rᴇᴄ. H6,848 (daily ed. Dec. 18, 2012) (statement of Rep. Smith).

[74] Aleynikov, 676 F.3d at 79-82.

[75] 158 Cᴏɴɢ. Rᴇᴄ. H6,848 (daily ed. Dec. 18, 2012) (statement of Rep. Smith) (“The Second Circuit’s Aleynikov decision revealed a dangerous loophole that demands our attention. In response, the Senate unanimously passed S. 3642 in November.”).

[76] Fed. Baseball Club of Balt. v. Nat’l League of Prof’l Base Ball Clubs, 259 U.S. 200, 208-09 (1922).

[77] Flood v. Kuhn, 407 U.S. 258 (1972).

[78] Id. at 282. Though it would likely not be difficult to prove that, despite the antitrust language, the business of baseball is connected to interstate commerce, the fact that this question may be less straightforward and that case law like Aleynikov illustrates that this requirement is not something courts are willing to simply look past, prosecutors may be more reluctant to bring charges under the EEA in the context of baseball.

[79] 18 U.S. Code § 1832(a) (“Whoever, with intent to convert a trade secret . . . to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly” misappropriates a trade secret through an enumerated act shall be subject to punishment).

[80] See, e.g., Congress Asks DOJ to Prove Whether Clemens Lied Under Oath, Associated Press (Feb. 27, 2008),; Del Quentin Wilber & Ann E. Marimow, Roger Clemens Acquitted of All Charges, Wash. Post (June 18, 2012),

[81] Horovitz, supra note 65, at 324 n.101 (“Given the level of Congressional attention Spygate and other sports stories have received recently, the notion of federal prosecution hardly seems farfetched.”).

[82] Jon Werthem, Exclusive: The Evidence that Persuaded U.S. Department of Justice to Investigate MLB Recruitment of Foreign Players, Sports Illustrated (Oct. 2, 2018), https:/

[83] See Sentencing Memo of the United States at 4, United States v. Correa, No. 4:15-CR-00679 (S.D. Tex. July 21, 2016).

[84] Brian McTaggert, Astros Hire Luhnow as General Manager, MLB (Dec. 8, 2011, 12:10 AM),; Brian McTaggert, Analyze This: Astros’ Mejdal Takes on Unique Role, MLB (Jan. 31, 2012, 11:37 AM),

[85] Green, supra note 67.

[86] Sentencing Memo, supra note 83, at 2.

[87] The Astros and Cardinals were both members of the National League Central division before the Astros moved to the American League in 2013.

[88] Drellich, supra note 2.

[89] Plea Agreement at 7, United States v. Correa, No. 4:15-CR-00679 (S.D. Tex. July 21, 2016).

[90] Green, supra note 67.

[91] Plea Agreement, supra note 89, at 8.

[92] Id.

[93] Id.

[94] Sentencing Memo, supra note 83, at 3.

[95] Id. at 4.

[96] Plea Agreement, supra note 89, at 9.

[97] Drellich, supra note 2.

[98] Plea Agreement, supra note 89, at 10.

[99] See Sentencing Memo, supra note 83, at 6 (describing the Deadspin leak).

[100] Id. at 1.

[101] Id.

[102] Ex Parte Motion for Issuance of Subpoena & Prehearing Production of Materials at 1, United States v. Correa, No. 4:15-CR-00679 (S.D. Tex. July 21, 2016) (recounting Correa’s statement made at rearraignment); see also Rearraignment at 9:8-24, United States v. Correa, No. 4:15-CR-00679 (S.D. Tex. July 21, 2016).

[103] Derrick Goold, Correa Gives His Account of Hacking Case, St. Louis Post-Dispatch, Feb. 1, 2017, at B1.

[104] Plea Agreement, supra note 89, at 1.

[105] Judgment in a Criminal Case, supra note 1, at 3, 6.

[106] Tom Verducci, Lax Hack Smack: MLB, Rob Manfred Let Cardinals off Easy in Hacking Scandal, Sports Illustrated (Jan. 30, 2017), See generally Major League Const. art. II, § 3, available at (“In the case of conduct by Major League Clubs, owners, officers, employees or players that is deemed by the Commissioner not to be in the best interests of Baseball, punitive action by the Commissioner for each offense may include . . . a fine, not to exceed $2,000,000 . . . .”).

[107] Sentencing Memo, supra note 83, at 5.

[108] Joshua Green, My Time with the Architect of the Astros’ ‘Ground Control, Bloomberg Businessweek (June 16, 2015, 3:47 PM),

[109] Rearraignment, supra note 102, at 11:8-9.

[110] Responses to Defendant’s PSR Objections at 6, United States v. Correa, No. 4:15-CR-00679 (S.D. Tex. July 21, 2016).

[111] Green, supra note 108.

[112] Plea Agreement, supra note 89, at 4. The prosecution reached the $1.7 million figure by taking the number of players Correa viewed “by 200,” dividing that by the number of players that were eligible to be drafted and multiplying by the scouting budget of the Astros that year. See Rearraignment, supra note 102, at 10:22-11:4. The actual monetary loss incurred by Correa’s victims was established as just over $279,000, and this substantially smaller figure was pertinent to the determination of Correa’s sentence pursuant to the U.S. Sentencing Guidelines.

[113] See Flood v. Kuhn, 407 U.S. 258, 282 (1972) (“Professional baseball is a business and it is engaged in interstate commerce.”).

[114] Goold, supra note 103.

[115] In his guilty plea, Correa conceded that he acted with intent to injure the Astros. See Plea Agreement, supra note 89, at 10 (“The Parties agree that the defendant’s intended loss under the U.S. Sentencing Guidelines definition for all of his intrusions is $1.7 million.”). Conceding that he acted with intent may have been a condition of his guilty plea. However, it does not bear on how Correa would have argued had his case proceeded to trial.

[116] Responses to Defendant’s PSR Objections, supra note 110, at 6.

[117] 18 U.S.C. § 1832(a) (2012).

[118] Responses to Defendant’s PSR Objections, supra note 110, at 7 (“[T]he parties agreed that a more restrained sentence was appropriate, so they agreed on the loss calculations and the sophisticated means enhancement, and to not charge aggravated identity theft.”).

[119] Id.

[120] See Derrick Goold, MLB Commissioner: Teams Need to Protect Intellectual Property, St. Louis Post-Dispatch (Nov. 10, 2015), (“The Cardinals have long since abandoned ‘Red Bird Dog’ for an internal database whose nickname they don’t even want to share.”).

[121] Alex Speier, Red Sox to Retire ‘Carmine, Bos. Globe, Feb. 23, 2017, at D.1.

[122] Alex Kaufman, Moneyball, Before Moneyball Was Cool, SweetSpot (June 7, 2014),

[123] United States v. Nosal, 844 F.3d 1024 (9th Cir. 2016). In Nosal, an employee gave former employees her password so they could continue to access the company’s confidential database. Nosal was convicted under the CFAA, and as Judge Reinhardt noted in his dissent, the application of the CFAA to this scenario had the potential to criminalize broader types of password sharing. Nosal, 844 F.3d at 1048 (Reinhardt, J., dissenting).

[124] See Dean Pelletier, Trade Secrets: Extra Edges on the Diamond, Pelletier L. (Mar. 8, 2015), (calling employee mobility “part of the fabric of all professional sports”).

[125] 2018 Milwaukee Brewers Media Guide 10-12 (Mike Vassallo et al. eds.).

[126] See infra Appendix.

[127] Data was compiled using each team’s 2018 Media Guide. Employees holding the title of “General Manager” were included in this study. The Boston Red Sox’s Dave Dombrowski, the Miami Marlins’ Michael Hill, and the Baltimore Orioles’ Dan Duquette were included in this study, as those three teams do not employ anyone with the title “General Manager.”

[128] Ben Lindbergh, Baseball’s Ever-Expiring Secrets, Ringer (Feb. 6, 2017, 11:49 AM),

[129] Orly Lobel, The New Cognitive Property: Human Capital Law and the Reach of Intellectual Property, 93 Tex. L. Rev. 789, 835 (2015).

[130] Id.; see also Cohen, supra note 57, at 229 (“Diminished labor mobility is costly not only for individual workers, but for the nation as a whole. The economy is at its most efficient when workers are able to take their labor where the market would value it most highly.” (internal citations omitted)).

[131] 18 U.S.C. Code § 1832(a) (2012) (“Whoever, with intent to convert a trade secret . . . to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly” misappropriates a trade secret through an enumerated act shall be subject to punishment).

[132] Morissette v. United States, 342 U.S. 246, 251 (1952).

[133] Office of the Comm’r of Baseball, The Official Professional Baseball Rules Book, R. 3(k) (2018) [hereinafter MLB Rules Book],

[134] Id.

[135] For an example of an investigation into tampering regarding a team’s manager, see Associated Press, MLB Rules No Tampering Found in Cubs’ Hiring of Joe Maddon, ESPN (Apr. 29, 2015),

[136] Doug Harrison, Jays Amend Employee Policy to Quell Farrell Rumours, CBC Sports (Oct. 25, 2011, 12:39 PM),

[137] Lindbergh, supra note 128.

[138] For example, the Chicago White Sox denied then Assistant General Manager Rick Hahn permission to interview for General Manager of the Seattle Mariners.

[139] Lindbergh, supra note 128.

[140] Drellich, supra note 2.

[141] Responses to Defendant’s PSR Objections, supra note 110, at 4.

[142] Bill Shaikin, Former Cardinals Executive Pleads Guilty, Admits Hacking Astros’ Computers, L.A. Times (Jan. 8, 2016, 6:54 PM),

[143] Drellich, supra note 2.

[144] Lindbergh, supra note 128.

[145] Geraldine Szott Moohr, The Problematic Role of Criminal Law in Regulating Use of Information: The Case of the Economic Espionage Act, 80 N.C. L. Rev. 853, 878 (2002) (“The EEA may be read to protect trade secrets that exist only in the mind of the holders against misappropriation through memorization of another.”).

[146] See, e.g., Allen v. Johar, Inc., 823 S.W.2d 824 (Ark. 1992); see also Ed Nowogroski Ins. v. Rucker, 971 P.2d 936 (Wash. 1999).

[147] Stampede Tool Warehouse, Inc. v. May, 651 N.E.2d 209 (Ill. App. Ct. 1995).

[148] 765 Ill. Comp. Stat. Ann. 1065/1-9 (West 2017).

[149] Stampede Tool Warehouse, Inc., 651 N.E.2d at 217.

[150] Cohen, supra note 57, at 227 (“[M]ost [states] appear to limit criminal liability to cases in which there has been some kind of physical taking and do not require employees to wipe clean the slates of their memories.” (internal quotation marks omitted)).

[151] 18 U.S.C. § 1839(3) (2012) (emphasis added).

[152] Unif. Trade Secrets Act § 1(4) (amended 1985), 14 U.L.A. 438 (1990) (“‘Trade secret’ means information, including a formula, pattern, compilation, program, device, method, technique, or process . . . .”).

[153] 18 U.S.C. 1832(a)(2).

[154] 142 Cong. Rec. S12,213 (daily ed. Oct. 2, 1996) (Managers’ Statement for H.R. 3723, The Economic Espionage Bill).

[155] Id. at S12,212 (daily ed. Oct. 2, 1996) (statement of Sen. Kohl) (“[W]e do not want this law used to stifle the free flow of information or of people from job to job.”).

[156] Id.

[157] Id. at S12,213 (Managers’ Statement for H.R. 3723, The Economic Espionage Bill).

[158] Lindbergh, supra note 128.

[159] Id. (“Most of the time in offices that are more inclusive by nature you will be exposed to the development and actual usage of the systems you develop and as such when you leave you take that with you. In fact, in most cases that is part of the reason you are being hired to begin with.” (quoting the former General Manager of the Colorado Rockies, Dan O’Dowd)).

[160] Id.

[161] 2017–2021 Collective Bargaining Agreement Between Thirty Major League Clubs and the Major League Baseball Players Association art. XIII (Dec. 21, 2016),

[162] Major League Const. art. VI, § 1, available at

[163] Id. art. II, § 3.

[164] Michael McCann, Breaking Down Chris Correa’s Prison Sentence For Hacking Astros, Sports Illustrated (July 18, 2016), (“The record of team punishments is fairly barren.”).

[165] See, e.g., Matt Snyder, MLB Rules on Red Sox-Yankees Sign Stealing and Fines Both Teams, CBS Sports (Sep. 15, 2017), (discussing fines of an “undisclosed amount” levied on the Red Sox and Yankees in a recent dispute over sign-stealing).

[166] 142 Cong. Rec. S740 (daily ed. Feb. 1, 1996) (statement of Sen. Kohl).

[167] Halligan, supra note 32, at 499.

[168] Drellich, supra note 2 (“There are ways to protect yourself by making sure that people have access to the data that they only need to make the decisions in the area.” (quoting Luhnow)).

[169] Lindbergh, supra note 128 (“It creates real morale issues in the staff if they are walled off from things, particularly once you get into director and higher levels. Everyone doesn’t need to know every piece of information, but if you start excluding department heads from certain things in the fear that they might leave, you are sort of inviting them to leave for somewhere else where they will be more involved and more trusted.” (quoting an unnamed executive)).

[170] Id. (“A walled-off employee can’t make as many direct contributions, and the smaller the pool of potential peer reviewers, the more likely it is that mistakes will survive.”).

[171] Id.

[172] Grow & Grow, supra note 4, at 1618.

[173] Tyler Kepner, Former Cardinals Executive Pleads Guilty to Hacking Astros, N.Y. Times (Jan. 8, 2016),

[174] See, e.g., Tim Kurkjian, Sign-Language Hidden Cameras, Phony Signals, Double-Dealing Espionage. No This Isn’t the CIA—We’re Talking About the Game Within the Game of Baseball, Sports Illustrated (July 28, 1997), (quoting former Minnesota Twins Manager Tom Kelly saying that “stealing signs is part of the job”); Scott Lauber, Dustin Pedroia Downplays Scandal: ‘Don’t Think This Should Be News, ESPN (Sept. 6, 2017), (quoting the Boston Red Sox’s Dustin Pedroia calling sign-stealing “part of the game”).

[175] For a more thorough explanation of the history and different variations of signs in baseball, as well as how each element of the UTSA and EEA may be applied to sign-stealing, see Andrew G. Barna, Note, Stealing Signs: Could Baseball’s Common Practice Lead to Liability for Corporate Espionage?, 8 Berkeley J. Ent. & Sports L. (forthcoming 2019).

[176] See Grow & Grow, supra note 4, at 1579; see also, Barna, supra note 175, at 19-20 (“Per industry practice, MLB teams take many measures to protect their signs. They use false signs, change signs throughout the game, change signs after players get traded, ensure the pitcher is not ‘tipping’ his signs, and speed up the pitcher’s delivery.”).

[177] Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 476 (1974).

[178] Delineating the line between misappropriation and superior knowledge or an educated guess is a common difficulty in the criminal law, especially in the insider trading context. See, e.g., SEC v. Steffes, 805 F. Supp. 2d 601 (N.D. Ill. 2011).

[179] Ken Rosenthal, Red Sox Crossed a Line and Baseball’s Response Must Be Firm, Athletic (Sept. 5, 2017),

[180] MLB Rules Book, supra note 133, at R. 21(f).

[181] Robert D. Manfred, Jr., Commissioner’s Statement Regarding Red Sox-Yankees Violations, MLB (Sept. 15, 2017),

[182] See generally Horovitz, supra note 65.

[183] Scott Lauber, Red Sox, Yankees Fined Separate as Part of MLB Investigation Into Sign-Stealing, ESPN (Sept. 15, 2017), (discussing the Commissioner’s determination that there was “insufficient evidence” to back the Red Sox claim against the Yankees, but nonetheless fined the Yankees after uncovering evidence that the Yankees had engaged in improper conduct in connection with the use of a dugout phone in a previous season).

[184] Horovitz, supra note 65, at 327 (“The blurring of the cheating-gamesmanship line is of paramount legal importance—the former is intuitively misappropriation, the latter proper.”).

[185] Id. at 318 (internal quotation marks omitted).

[186] Id.

[187] Id. at 328-29 (“It would be difficult for courts to accurately determine what is proper or improper in a world governed by unwritten laws that are hardly unanimous.”).

[188] 18 U.S.C. § 1839(3)(B) (2012).

[189] Barna, supra note 175, at 5.

[190] Ferrelle, supra note 40, at 167.

[191] Horovitz, supra note 65, at 329 (“[T]he core focus of trade secret law is still the business world.”).

[192] Id. at 330. (“[T]he more conduct is directly related to business (that is, the more it is removed from pure athletic competition), it not only more closely aligns itself with the core justifications for trade secret protection but it also becomes easier and more natural for courts to classify as proper or improper.”).

[193] Barna, supra note 175, at 22.

[194] Ben Lindbergh & Rob Arthur, Statheads Are the Best Free Agent Bargains in Baseball, FiveThirtyEight (Apr. 26, 2016, 11:04 AM),

[195] Lindbergh, supra note 128 (quoting director of analytics Jesse Smith).

[196] Associated Press, Putting Data Science on the Pitcher’s Sleeve, N.Y. Times (Apr. 2, 2016), (quoting Glenn Fleisig calling biometric data collection “the next sabermetrics”).

[197] Jonah Keri, The Tommy John Epidemic: What’s Behind the Rapid Increase of Pitchers Undergoing Elbow Surgery, Grantland (March 10, 2015), (twenty-five percent of major league pitchers and fifteen percent of minor league pitchers in 2015 had Tommy John Surgery to repair the ulnar collateral ligament, and more pitchers had the surgery in 2014 than all of the 1990s).

[198] Tommy John FAQ, MLB: Pitch Smart, (last visited Dec. 20, 2017).

[199] Joe Greenberg, Q&A: New Cubs ‘Saberist’ Tom Tango, ESPN (Jan. 30, 2013),

[200] Brian Costa, Baseball’s Fight with Fatigue, Wall St. J. (Feb. 23, 2015, 12:45 PM),

[201] Id.

[202]The Sports Industry’s New Power Play: Athlete Biometric Data Domination, SportTechie (March 3, 2017),

[203] Grow & Grow, supra note 4, at 1578.

[204] For a discussion of the ethical and privacy issues surrounding the collection of athletes’ biometric data, see id. at 1619-20.

[205] See id. at 1620.

[206] Health Insurance Portability and Accountability Act of 1996, Pub. L. No. 104-191, 110 Stat. 1936 (codified in scattered sections of 26, 29, and 42 U.S.C.).

[207] Genetic Information Nondiscrimination Act of 2008, Pub. L. No. 110- 233, 122 Stat. 881 (codified in scattered sections of 26, 29, and 42 U.S.C.).

[208] 740 Ill. Comp. Stat. Ann. 14/15 (West 2017).

[209] For example, Correa viewed medical pages that were housed in Ground Control for 1B/DH/LF Conrad Gregor and 1B Chase McDonald. See Responses to Defendant’s PSR Objections, supra note 110, at 1.

[210] Thank you to Mike Passanisi for helping design this image.

Morals Clauses: Past, Present and Future

Morals Clauses: Past, Present and Future
By Caroline Epstein* Download a PDF version of this article here.  


Imagine you are the chief executive of a major news network. You have just signed a multi-million dollar contract with your top news anchor, Fred Fabricate. Just as you are congratulating yourself on your shrewd negotiations, you notice a troubling headline trending on Facebook, Twitter, and your Daily Beast Cheat Sheet: “Fred Fabricate’s Web of Lies!” According to the articles, your golden boy has falsified details of past news reports. You call your lawyers in distress, and thankfully they have a solution. Fabricate has a morals clause in his contract with the network, and his conduct is grounds for termination of the agreement. You sigh in relief, thankful that this disaster can be resolved with minimal financial liability. This example is adapted from the recent fallout surrounding Brian Williams and NBC News. Unfortunately for NBC, the separation was not as seamless as the hypothetical above. Williams has been a presence on the Network since 1993, and was a rare bright spot in the struggling network news industry.[1] Since the revelations of Williams’ exaggerations of his experiences in Iraq, NBC has scrambled to perform damage control for their popular Nightly News program.[2] Initially, Williams issued a public apology and stepped away from the show for several days.[3] Then, rumors began to swirl that Williams’ embellishments went beyond this singular occurrence. A six-month suspension without pay quickly followed.[4] Ultimately, Williams was jettisoned to MSNBC, NBC’s ratings-challenged cable analogue.[5] Concerns remain whether Williams can “win back the trust of both his colleagues and his viewers . . . [and] abide by the normal checks and balances that exist” for those in the news industry.[6] The incident “set off a debate about the level of trustworthiness required from someone who explained the world to nearly 10 million people a night”; however, NBC’s primary concern was “protecting the integrity of its news operation, once called the crown jewel of the company.”[7] NBC made clear that the incident provided a right to terminate Williams pursuant to the morals clause in his personal services contract. The Fabricate hypothetical and its real-life counterpart are merely illustrations of how a morals clause might be activated in a talent contract. A morals clause is:
A contractual provision that gives one contracting party (usually a company) the unilateral right to terminate the agreement, or take punitive action against the other party (usually an individual whose endorsement or image is sought) in the event that such other party engages in reprehensible behavior or conduct that may negatively impact his or her public image and, by association, the public image of the contracting company.[8]
The television, motion picture, athletic, and advertising industries all include morals clauses in talent agreements.[9] The value of a morals clause lies in the protection it provides to the contracting company.[10] Companies employ talent to achieve “meaning transference”; they aim to use a “‘celebrity’s established familiarity and credibility’ to make a product [or] project ‘similarly familiar and credible’ to consumers.”[11] Unfortunately, meaning transference cannot be limited to only positive associations with talent; incidental transfers of negative meanings may also occur when talent misbehaves in a professional or personal context.[12] Businesses spend considerable sums of money to cultivate the ideal image, and negative associations can wreak havoc upon their efforts.[13] Because a morals clause allows the contracting company to swiftly sever its relationship with troublesome talent,[14] it is an excellent form of corporate protection.[15] This note will argue that morals clauses remain essential and influential in entertainment contracts of all kinds, despite the considerable changes in social norms since they were first implemented, and the obstacles such changes represent. Part I will begin with a discussion of the history of morals clauses. Part II will examine the two categories of morals clauses: express and implied. Part III will address the use of morals clauses in various sectors of the entertainment industry: motion picture, television, athletics, and advertising. Part IV will discuss the outgrowth of reverse morals clauses, which protect the employee from improprieties of the employer. Part V will address drafting concerns, and Part VI will explore the implications of social media and the current moral climate.

I. History of Morals Clauses

Despite the increasing prevalence of cases involving morals clauses in the public consciousness, the clauses themselves are not new and history provides important context in understanding them. Morals clauses were successful and unabashed contract mechanisms used not only to sever contracts due to moral misconduct, but also to censor political activity. The seminal case that triggered the use of morals clauses in talent contracts, was the moral impropriety of Fatty Arbuckle.[16] In 1921, Comedian Roscoe “Fatty” Arbuckle had just signed a three-year, three-million-dollar contract with Paramount Pictures when a female guest at his party was found severely injured in his hotel suite.[17] After the guest died from her injuries,[18] Arbuckle was arrested on rape and murder charges, turning public opinion against the previously beloved performer.[19] Although he was ultimately acquitted at trial, the court of public opinion had already made its damning judgment.[20] Universal Studios was not involved with the Arbuckle case, but the fallout from the incident inspired Universal to begin including morals clauses in all of their talent contracts.[21] During the late 1940s and 1950s, movie studios more frequently used the clauses to challenge political expression than immoral conduct.[22] For example, morals clauses were used as grounds for dismissal of controversial talent known as the Hollywood Ten.[23] These ten influential actors and screenwriters were jailed and blacklisted by big movie studios for publicly denouncing the activities of the House Committee on Un-American Activities (HUAC) during its investigation of Communist influence in Hollywood at the height of the McCarthy Era.[24] “Fearing widespread boycotts amid a shrinking market share of consumer leisure spending, studios used the morals clause, a customary clause in talent agreements for twenty-five years, to terminate and disassociate themselves from the scandalized Hollywood Ten.”[25] The controversial activity and its perceived impact on the studio’s image were cited as grounds for their dismissal.[26] The three most notorious of the Hollywood Ten cases were litigated before the Ninth Circuit Court of Appeals between 1947 and 1957 and are referred to as the “Hollywood Ten Trilogy.”[27] In Loew’s, Inc. v. Cole,[28] MGM[29] dismissed a member of the Hollywood Ten, Lester Cole, more than a month after he testified before HUAC.[30] Cole sued MGM based on the suspicious delay between his testimony and firing, but the Ninth Circuit ruled that the damage dealt to the studio’s image was sufficient grounds for his dismissal.[31] The parties eventually settled the case.[32] The other two cases in the trilogy, Twentieth Century-Fox Film Corp. v. Lardner[33] and Scott v. RKO Radio Pictures, Inc.,[34] relied on similar reasoning, finding in favor of the studios at the expense of Fox writer, Lardner, and RKO producer and director, Scott. In both cases, the courts relied on Cole’s rationale that “the natural result of the artist’s refusal to answer the committee’s questions was that the public would believe he was a Communist.”[35] Because much of the population was opposed to communism, this was considered a violation of the express morals clause, and constituted grounds for termination.[36] In recent decades, morals clauses have become even more common in talent contracts, but the changing moral landscape has posed challenges to their efficacy and legality. Nonetheless, the growth of social media, the greater publicity given to once private information, and the speed with which private information is disseminated have augmented the need for morals clauses.[37]

II. Types of Morals Clauses

There are two basic types of morals clauses, express and implied. Each represents different considerations on the part of the talent and the contracting company and each poses unique interpretative challenges.

A. Express Morals Clauses

Express morals clauses are drafted as part of the employment agreement. A typical express morals clause reads as follows:
The spokesperson agrees to conduct herself with due regard to public conventions and morals, and agrees that she will not do or commit any act or thing that will tend to degrade her in society or bring her into public hatred, contempt, scorn or ridicule, or that will tend to shock, insult or offend the community or ridicule public morals or decency, or prejudice the [contracting company] in general. [Contracting company] shall have the right to terminate this Agreement if spokesperson breaches the foregoing.[38]
Clauses can range widely based on the talent and contracting company involved, as well as the context of the agreement.[39] The standard punishment for violation of a clause under New York and California Law, where the clauses are frequently invoked, is termination of the agreement.[40] New York and California case law define the scope of behavior prohibited by morals clauses, which goes beyond a mere requirement to obey the law, and includes a duty “to refrain from behavior that tends to ‘shock, insult, and offend the community and public morals and decency,’ bring the artist into ‘public disrepute, contempt, scorn and ridicule,’ or hurt or prejudice the interests of, lower the public prestige of, or reflect unfavorably upon, the artist’s employer or the industry in general.”[41] Loew’s, Inc. v. Cole, Twentieth Century Fox Film Corp. v. Lardner, Scott v. RKO Radio Pictures, Inc.,[42] and Nader v. ABC Television Inc.[43] are the primary cases exploring morals clauses in talent contracts under contract law principles[44] and help illustrate how an express morals clause operates.[45] Compliance with express morals clauses is difficult because their requirements can be unpredictable, a problem that is further exasperated by the tremendous consequence of violating the clause. When talent knows an express morals clause is included in their contract, it is in their interests to moderate their actions to minimize the possibility of breach. However, moderation is not always easy. For instance, the members of the Hollywood Ten probably would have risked termination based on the slightest opposition to HUAC, because of the political tenor of the times.[46] In Nader, violation of the “disrepute” trigger would be impossible to predict ex-ante because the reviewing court only found it enforceable after external review, based upon an inherently unpredictable reasonableness standard.[47] Therefore, this lack of predictability can present distinct challenges to talents’ compliance with an express morals clause. Because of the cost and unpredictability of morals clauses, they can be a point of contention between artists and employers in contract negotiations. Given that the current moral climate is more socially liberal than eras past,[48] many employers no longer require them and will delete them if necessary in a negotiation.[49] However, if a morals clause is necessary, there are several ways for companies to reduce the impact of a morals clause.[50] Lawyers can draft morals clauses to require plaintiffs to show evidence of a negative reaction before the court will find a violation.[51] In addition to contractual limitations on morals clauses, state law can also impact their enforceability. New York and California provide the broadest protections for employees and do not allow employers to make decisions based on an employee’s lifestyle.[52] In contrast, Delaware does not have any laws of this nature, meaning that unless the basis of termination is a protected characteristic such as race, religion, gender or age, the employer can be the judge of conduct warranting termination.[53] In all states, clauses that improperly infringe on a performer’s rights, such as First Amendment rights guaranteed by the United States Constitution, are not permitted.[54] Although express morals clauses remove some of the ambiguity associated with permissible employee behavior, lack of predictability as to when they might be triggered undoubtedly persists. As social norms continue to shift and evolve, this issue will only become more acute.

B. Implied Morals Clauses

Morals clauses can also be implied from principles of common law, which impose a duty upon talent to refrain from activities that are detrimental to the employer or that might devalue the talent’s performance.[55] Whether a morals clause should be implied is a question of fact, and requires an evaluation of the circumstances of the employment and conduct at issue.[56] Under both New York and California law this obligation of good conduct is considered an implied morals clause and is recognized as grounds to terminate an employment agreement.[57] Importantly, an implied moral obligation does not arise solely in the absence of an express provision; rather, these common law duties exist alongside any provisions in an employment agreement.[58] There are hurdles to establishing this implied duty. Principally, an implied morals clause requires a common law employment relationship, which is more difficult to establish in the current film industry than it was in the past for several reasons. One reason for this is the shift from the “star system,” which engendered exclusive contracts between talent and studios, to the “free agency system,” where actors work with many studios and function more like independent contractors than common law employees.[59] Another reason is that the tax-motivated system of creating “loan out” corporations challenges the employment relationship. “Loan outs” contract directly with studios to provide the personal services of the actor. This arrangement potentially destroys privity between the studio and actor by making the actor the common law employee of the loan-out rather than the studio.[60] Nonetheless, for the purposes of employment law, actors are traditionally considered common law employees, rather than independent contractors in New York and California courts.[61] Furthermore, both jurisdictions disregard the “loan out” when determining if there is an employment relationship.[62]

III. Application of Morals Clauses in Entertainment Industries

Morals clauses are common in many sectors of the entertainment industry. This section will explore the application of morals clauses to the television, motion picture, sports, and advertising industries.

A. Morals Clauses in the Television Industry

Historically, branding has dominated the television industry. Television programming was once entirely dominated by advertisers, who bought time from a network and then created programming.[63] Because the sponsor held a franchise on his time period, network consent was considered pro-forma and “[m]any programs were ad agency creations, designed to fulfill specific sponsor objectives.”[64] In the mid-1950s, numerous factors converged to bring an end to sponsor-franchised programming, and control shifted to the networks. Advertisers nonetheless provide the primary support for the medium, and when their support falters, the programming will often change to accommodate them and maintain their backing.[65] Because of the historical importance of advertising in the television industry, morals clauses are essential to protect advertising relationships, the brand of productions, and company image.[66] “[N]etworks have adopted a conservative bias [toward programming], with no risks and no controversy that would exclude, alienate, or miss parts of the audience.”[67] The talent, program, and sponsors are still closely related, and morals clauses are used to quickly sever the connection with talent that poses a threat to public image.[68] Morals clauses have remained important in the television industry. The effect of these clauses has been shown in high profile terminations of television actors, newscasters, and reality television stars.
1.Television Actors
The Southern District of New York addressed the issue of morals clauses in television actors’ contracts in Nader v. ABC Television.[69] Michael Nader portrayed Dimitri Marick on “All my Children” from 1991 to 1999. When ABC asked Nader to return to the show in 2000, his agreement contained the network’s standard “morals” clause, allowing ABC “to immediately terminate the contract if Nader engaged in conduct that ‘might bring [him] into public disrepute, contempt, scandal or ridicule, or which might tend to reflect unfavorably on ABC.’”[70] During the contract Nader was arrested and charged with criminal sale of cocaine and resisting arrest. ABC immediately suspended Nader and he entered rehab.[71] When ABC informed Nader that they were terminating his employment contract for his violation of the morals clause, Nader filed a lawsuit challenging this decision.[72] The court found the morals clause valid, and held that Nader had breached it due to the media coverage of his arrest.[73] Several other high profile disputes involving television stars’ contractual morals clauses have dominated the news in recent years. Most prominent is that of Charlie Sheen, who WBTV fired from its television show “Two and a Half Men” after he exhibited erratic behavior and publicly ridiculed the show’s executive producer Chuck Lorre.[74] He challenged his termination in a $100 million lawsuit.[75] This conduct is a classic example of what might fall within a traditional morals clause violation; however, Sheen’s contract did not have a traditionally worded morals clause.[76] The “moral turpitude clause” in his contract essentially required a felony conviction before termination could be triggered, making the process more complicated.[77] As a result, WBTV relied upon the “force majeure” clause in the contract instead, citing Sheen’s incapacitated state as grounds for his termination.[78] The parties eventually settled the case.[79] Another example of a high profile dispute occurred when Mel Gibson made anti-Semitic remarks during an arrest for drunk driving, and ABC subsequently cancelled his contract for their miniseries on the Holocaust.[80] A recent and ongoing example is the mounting allegations of sexual misconduct Bill Cosby is facing, and the considerable media attention it has received, which led NBC and Netflix to shelve planned collaborations with him.[81] Although the Cosby situation does not appear to be a case involving a morals clause, it raises interesting implications for the value and image of Cosby’s legacy as America’s favorite dad, Heathcliff Huxtable.[82] Overall, morality clauses in television actors’ contracts illustrate the contracting company’s concerns with public opinion and most importantly, the talent’s ability to work. Because television is dependent on a regimented production schedule and good ratings, factors that might derail filming or sour public opinion could prove fatal.[83] For example, although Charlie Sheen’s remarks were alarming, the public seemed to revel in the entertainment value of his outlandish public persona.[84] The bigger concern seemed to be Sheen’s questionable lifestyle habits affecting his performance, and the producer’s general desire to eliminate him from the cast.[85] The Nader case involved similar concerns, given the incapacitating nature of Nader’s cocaine addiction and the bad press it engendered.[86] On the other hand, the cases of Mel Gibson and Bill Cosby represent different concerns because the morally offensive allegations turned public opinion against them. Cosby has suffered widespread shaming in the media, especially given his towering cultural presence beforehand.[87] To this day, it appears Gibson’s career has yet to recover.
2. Newscasters
Morals clauses have also been an issue for television newscasters. These clauses are key for news broadcasters, because newscasters must maintain credibility in order for viewers to trust them. Understandably, the public seems to have less tolerance for the controversial antics of those they trust to relay the news. Bad publicity that might undermine their credibility can wreak havoc on their popularity and the network’s viewership. For example, Alycia Lane, a popular Philadelphia anchorwoman on a CBS subsidiary, attracted considerable negative public attention when she was arrested and charged with assault in New York City.[88] Lane allegedly hit a female police officer and called her a homophobic slur.[89] Although she pled not guilty and contested the charges, the incident activated the morals clause in her contract, and CBS terminated her employment.[90] Lane’s alleged reprehensible statements proved to be the downfall of her career as an anchorwoman. Another incident involved Virginia Galaviz, a reporter covering the “Crime Beat” for a TV station in San Antonio who was similarly terminated based on a morals clause in her contract.[91] Galaviz was involved in three incidents that garnered negative media attention. She had a confrontation with a city councilman whom she was dating, she had an interaction with another woman whom her boyfriend was dating, and an altercation with her fiancée in which both of them were arrested.[92] Although she challenged her termination and argued that the language of her morals clause was ambiguous, the trial and appeals court both held that her conduct was covered and her termination was justified.[93] Understandably, an arrestee with a violent record is no longer considered a credible crime reporter. Brian Williams, discussed in the introduction, is the most recent example of a morals clause affecting a newscaster. Williams’ contract contained the standard NBC News morals clause: If artist commits any act or becomes involved in any situation, or occurrence, which brings artist into public disrepute, contempt, scandal or ridicule, or which justifiably shocks, insults or offends a significant portion of the community, or if publicity is given to any such conduct … company shall have the right to terminate.[94] NBC executive Stephen Burke and Comcast CEO Brian Roberts had the ultimate responsibility of determining whether Williams breached his duties under the clause.[95] The fallout surrounding Williams has led to a major loss of credibility for both himself and NBC. His trustworthiness ranking has tumbled,[96] and the network has turned against their former star.[97] NBC lost nearly 700,000 viewers in the wake of the scandal, and it is still unclear if the scandal has permanently damaged the network’s image and ratings.[98] Due to Williams’ presence as a major news anchor with his own show, it is curious that his contract would contain the same morals clause as all other NBC News employees. Because of this clause, even if producers preapproved his comments and his lies, any resultant public disrepute would still activate the clause. Given his relative youth and success, it will be interesting to see if his reputation can be rehabilitated. His ultimate fate will be telling for the implications of bad press and the loss of credibility for television newscasters.
3. Reality Television Stars
Finally, morals clauses have become a huge issue within the burgeoning reality TV industry. Americans delight in the misbehavior of these stars and live vicariously through their transgressions. Catering to this public demand, while censoring the more outlandish actions and outbursts of talent, has posed a legitimate challenge to TV networks. Networks have been using morals clauses in an attempt to constrain the more controversial reality stars. This phenomenon is aptly illustrated by the recent examples of controversies surrounding reality shows “Duck Dynasty” and “Here Comes Honey Boo Boo.” Phil Robertson, the patriarch of Duck Dynasty’s starring family was suspended by A&E after making anti-gay remarks in GQ magazine.[99] Although specifics of his agreement were not revealed, it was widely speculated that his suspension was based upon a morals clause in his contract with the network.[100] When A&E ended his suspension amidst fan protestation, they “saw ratings plummet nearly 50 percent from the show’s heights.”[101] Similarly, after revelations that “Here Comes Honey Boo Boo” star “Mama June” Shannon was dating Mark McDaniel, a convicted sex offender who had recently been released from prison after a decade behind bars, TLC cancelled the show.[102] Shannon lost payment for the early termination of the contract based upon the morality clause in her agreement with the network.[103] Because the other cast members did not violate their morals clauses, they still received the full benefit of their contracts.[104] These examples demonstrate the ever-present risks facing reality TV producers: “handing worldwide platforms to dubious people in questionable circumstances” and hoping those people will not implode until the show’s popularity is already in decline.[105] The consistent popularity of reality shows, built upon the misbehavior of their stars, demonstrates that the American public is far less concerned with the good morals of reality stars. However, morality clauses are essential to protect the network’s interests in the event that a talent’s antics polarize public sentiment and destroy ratings.[106]

B. Morals Clauses in the Motion Picture Industry

Movie studios also use morals clauses in contracts with talent. While the motion picture industry also faces the branding and advertising concerns of the television industry, these concerns are mitigated because motion pictures developed more independently from advertising than television did.[107] Although movie executives use product placement and co-marketing to “close the gap on budgets,”[108] advertisements are not as essential as they are to television networks. Motion pictures lack dependence on advertisers, but that does not render morals clauses irrelevant. The industry employs morals clauses to protect the value of a film’s brand. Studios and their marketing partners have an economic interest in keeping a movie’s brand value high, and morals clauses insure that talent does not compromise this value.[109] As brand value increases, actors or actresses that become a liability to maintaining this value are eliminated.[110] The protective value of a morals clause in the motion picture context is therefore largely dependent on the specific parties and projects at issue.[111] Illustrative examples include the high profile cases Loew’s, Inc. v. Cole,[112] Twentieth Century-Fox Film Corp. v. Lardner,[113] and Scott v. RKO Radio Pictures, Inc.,[114] discussed in Part I. Additionally, the movie industry has several noteworthy prohibitions on express morals clauses. Both the Director’s Guild of America and the Writer’s Guild of America expressly prohibit morals clauses in any agreements signed by guild members as a response to the removal of screen credit for violators.[115] Although the Screen Actors Guild does not have such a blanket prohibition, many contracts between studios and major talent do not contain a morals clause because these famous actors are influential enough to eliminate this contractual language.[116] As a result, a morals clause is often the first thing stricken from a contract.[117] However, studios may attempt other methods to coerce talent into behaving properly, such as threatening liability for monetary damages to a production or distancing a production from the studio.[118] Movie studios have concerns similar to those of television networks when it comes to morals of the talents. Due to huge production budgets and the importance of ticket sales, incapacitated talent or bad press can derail the success of a movie. Therefore, studios consider morals clauses important to protecting their bottom line.

C. Morals Clauses in Sports Contracts

Morals clauses have also existed throughout the history of professional sports. Given the “tough guy” image cultivated by many professional athletes, morals clauses have different implications in the context of sports. The harbinger of the modern sports’ morals clause was that of Babe Ruth, who had a provision in his contract requiring him to abstain from alcohol and to be in bed by 1:00 am during the baseball season.[119] Although his clause differed from modern morals clauses because violation did not result in termination of his contract, it did allow legal action upon breach, laying the foundation for the modern usage of morals clauses in professional sports.[120] Morals clauses have become routine in national league contracts. “As of 2008, the collective bargaining agreements in the National Football League,[121] National Basketball Association,[122] National Hockey League,[123] and Major League Baseball[124] each contained a standard player agreement that included a morals clause.”[125] Collective bargaining agreements leave little room for negotiation between individual players and teams on the subject of morals clauses because they are negotiated for the league as a whole.[126] Morals clauses in athletes’ league contracts are employed by teams and leagues in an attempt to moderate the athletes’ off-duty behavior. For example, the NFL suspended Adam “Pacman” Jones for the entire 2007 season after being arrested five times in less than two years. “Despite being reinstated by the NFL with clearly delineated requirements for avoiding subsequent suspensions, Jones became involved in an alcohol-related fight with a member of his security team during the 2008 season,” resulting in another suspension.[127] Morals clauses are not always effective in this context. In an effort to circumvent these clauses, the leagues have been lenient in their interpretation of immoral conduct. For example, when Jayson Williams was indicted on manslaughter charges in 2002, his agent argued that the morals clause in his contract did not apply because the clause required intentional moral impropriety, and there was no allegation that his conduct was intentional.[128] Similarly, an NBA Grievance Arbitrator reinstated player Latrell Spreewell’s contract with the Golden State Warriors after finding that choking one’s coach does not meet the NBA’s “moral turpitude” standard.[129] When videos surfaced of Baltimore Ravens running back Ray Rice knocking unconscious his now-wife Janay in an Atlantic City elevator, he was initially suspended indefinitely, but won his appeal and was reinstated.[130] After public sentiment turned against Rice, the Ravens, and the NFL for how they handled the incident, the NFL strengthened its domestic violence policy.[131] As these examples illustrate, although national sports leagues attempt to control their athletes’ behavior through morality clauses, they have not been entirely effective.

D. Morals Clauses in Advertising

Morals clauses are prevalent in advertising contracts between brands and spokespeople. Many companies use celebrity spokespeople to distinguish their brands from other similar products.[132] In choosing celebrity endorsers, advertisers emphasize “trustworthiness, values, image, reputation and publicity risk.”[133] Studies illustrate that celebrity endorsements affect consumers favorably and commingle the public perception of the celebrity and the product.[134] However, this so called “meaning transference” can be a double-edged sword. When the celebrity offends the public, this negative perception can transfer from the person to the product.[135] “Advertisers worry that once a celebrity’s image is connected with a product, it may become an albatross if it is besmirched by allegations of impropriety.”[136] Therefore, companies often include morals clauses within endorsement contracts that allow them to protect themselves from these risks by quickly severing ties and disassociating the connection between offensive talent and products.[137] A typical morals clause in an endorsement contract is similar to a standard express morals clause, but the talent can negotiate for narrower clauses.[138] Courts have held that an express morals clause gives the brand owner a reasonable amount of time to determine the public perception of a clause violation and decide if they want to terminate the endorsement arrangement.[139] Although these clauses provide an exit opportunity for brand owners, endorsement agreements are still risky. Even if the fallout is minimized, there is potential for damage based on existing products featuring the celebrity’s likeness, or the previously established association between the celebrity and the brand.[140] A striking example of the drawbacks of meaning transference is illustrated by the misstep of the “creator of branding,” P&G. After choosing spokeswoman Marilyn Briggs, P&G suffered fallout when an adult film she starred in was released the same week as millions of Ivory soap boxes featuring her likeness.[141] Numerous reviews of the film mentioned the association, and “Ivory’s association with ‘purity,’ ‘mildness’ and ‘home-and-hearth values’ was fiercely bruised.”[142] Many other similar mishaps have occurred with companies and their spokespeople in recent years.[143] For instance, when pictures surfaced of Kate Moss doing cocaine, retailer H&M and designers Chanel and Burberry dropped her from their advertising campaigns.[144] Less famous spokespeople are not immune from the effects of morals clauses either. Benjamin Curtis, most famous for being the “Dell Dude,” was dismissed from his contract with Dell Inc. after being arrested for marijuana possession in 2003.[145] The most prominent morals clause mishaps have been violations of athletes’ endorsement contracts. OJ Simpson, who led the way for sports stars to become spokespeople, also illustrated the importance of morals clauses when he was indicted for a double murder while serving as the spokesman for Hertz, among other brands.[146] Since then, these clauses have become more prevalent in sports endorsement contracts. While a 1997 survey found that less than half of all sports endorsement contracts had morals clauses, by 2003 that number had grown to at least seventy-five percent.[147] Commentators suggest that the growing use of morals clauses in endorsement contracts is due to a combination of factors: the significant amounts of money at stake, the increasing youth of athletes and the concerns posed by an athlete’s potential volatility.[148] There are many other examples of athletes falling victim to morals clauses in endorsement contracts. In 1999, former Sacramento King’s player Chris Webber successfully challenged the termination of his endorsement agreement with sportswear brand Fila pursuant to the morals clause.[149] Furthermore, after Kobe Bryant was charged with sexual assault in 2003, he lost endorsement deals with McDonald’s, Nutella, Spalding, and Coke, altogether totaling $4 million.[150] When Atlanta Falcons quarterback Michael Vick was indicted on dogfighting charges in 2007, Nike, Reebok and Donruss dropped him from endorsement deals.[151] After the adultery scandal that surrounded Tiger Woods in 2009, he lost $22 million in endorsement deals with companies including Gatorade, Accenture, and AT&T.[152]Finally, aided by a broadly-worded morals clause, Nike ended its endorsement deal with seven-time Tour de France winner, Lance Armstrong, in 2012 following mounting allegations that he abused performance enhancing drugs over the course of his career.[153] As all of these examples illustrate, morals clause violations in sports endorsement contracts are widespread. Because advertisers try to appeal to a wide audience and sell products to the public, they are likely to have lower tolerance for controversies and any bad press about a spokesperson. Any desirable attention that talents’ misbehavior might offer to a movie studio or television network is undercut by the risks of meaning transference: a spokesperson’s controversial persona becoming irrevocably intertwined with the contracting company’s image.

IV. Talent’s Response: Reverse Morals Clauses

Recent developments in the corporate realm have encouraged performers to seek the protection afforded by a morals clause for themselves by using reverse morals clauses. This “reciprocal contractual warranty . . . [is] intended to protect the reputation of talent from the negative, unethical, immoral, and/or criminal behavior of the endorsee-company or purchaser of talent’s endorsement,” and give talent, “the reciprocal right to terminate an endorsement contract based on such defined negative conduct.”[154] Such a clause seeks to protect talent from vulnerability they would otherwise have, even if they are aware of the company’s misconduct prior to any public scandal.[155] The history and drafting considerations of reverse morals clauses are essential to understanding their function.

A. History of Reverse Morals Clauses

The first example of a reverse morals clause was between Pat Boone and Bill Cosby’s record label, Tetragrammaton Records, in 1968.[156] Boone was a religious man with a clean image, and he was concerned about signing a deal with Tetragrammaton due to the provocative cover art featured on the label’s new release “Two Virgins,” which depicted John Lennon and Yoko Ono nude. Tetragrammaton was “sympathetic to his religious concerns and agreed to a ‘reverse morals clause – Boone’s contract would lapse if the record company . . . did something unseemly.” Ultimately, no formal contract was drawn up.[157] Boone’s “novel advocacy of a reverse-morals clause was most likely achievable due to his iconic stature in the entertainment world and his integrity aura in arguably a more conservative era in American history.”[158] Although reverse morals clauses originated with Boone in the 1960s, they have become more relevant due to the financial instability of recent years. The Enron case provides a compelling example of the need for reverse morals clauses in certain cases.[159] In 1999, Enron signed a $100 million, 30-year deal, with the Houston Astros to name the team’s new ballpark Enron Field.[160] Two years later, “Enron filed what was then the largest bankruptcy in American history [and] . . . [s]ince then, the word ‘Enron’ has been embedded in the national psyche and lexicon as being the icon of corporate avarice and the perpetuation of a Ponzi-type scheme on the public.”[161] Because many Astros fans had lost their jobs as a result of the Enron scandal, the Astros spent the next two months trying to buy the balance of the contract for over $2 million to remove Enron’s name from the stadium.[162] Even though the Astros secured a new naming rights sponsor, Minute Maid, this change caused it further pecuniary damages because naming rights decrease with rebranding.[163] Although Enron is a landmark example of the need for a reverse morals clause, it was certainly not the last.[164] In 2009, professional golfer Vijay Singh signed a five-year $8 million endorsement deal with Stanford Financial Group, just one month before allegations that Stanford had participated in a large scale Ponzi scheme surfaced.[165] In 2011, Dior terminated its creative director John Galliano after he was videotaped while shouting anti-Semitic slurs, angering the public and Israeli-born Dior spokesmodel Natalie Portman.[166] These examples illustrate the importance of endorsees protecting themselves with reverse morals clauses. Because reverse morals clauses are a relatively new development, there is little scholarship and no case law regarding their use, and parties who have drafted them have not released them to the public.[167] However, these clauses are increasingly requested by talent in their contracts, and they serve an important function in times of financial uncertainty.[168] Given that talent have been subject to traditional morals clauses for so long, it seems appropriate they are afforded mutuality.

V. Drafting Morals Clauses

In order to ensure that a morals clause is enforceable and inclusive, it is essential that it is properly drafted. Because of the obstacles posed by the modern and evolving moral climate, phrasing is key in both express and reverse morals clauses. There are several important elements to an effective morals clause. First, the term of the clause must be stipulated. Some clauses only apply to future conduct, while others apply to past conduct.[169] Second, clauses may include acts that have the mere potential to bring harm to the employer, in addition to acts that cause actual injury.[170] If potential injury language is included, the fact finder must examine the facts objectively and subjectively, and stipulate termination if this future injury can be proved.[171] Third, a clause can protect related parties, as opposed to just the employer.[172] Fourth, employers should consider language that both reserves rights not expressed in the contract, and also does not give talent a right to cure.[173] Fifth, the scope of the language of the clause is essential; employers prefer expansive language, while talent prefers narrow language, creating a potential sticking point in contract negotiations.[174] Finally, and most importantly, ambiguity must be minimized to the greatest extent possible.[175] Even given proper care in drafting, clauses vary widely in breadth. The major issue is the type of transgression covered by the clause. While some clauses protect against only crimes, felonies, or convictions, others are comprehensive enough to encompass any conduct breeding adverse moral sentiment. Charlie Sheen’s weak “moral turpitude” clause is an example of the former and the strong clause in Williams’ contract represents the latter. Some agreements are so broad that even alleged violations that turn out to be false,[176] or conduct that “may be considered” a violation, can trigger the clause.[177] If a person has done something in the past that might fall into the categories of conduct included in the clause, the morals clause can be triggered if the past conduct is publicized during the contract term.[178] Remedies can also vary, and can include termination of the agreement and/or the right to remove or withhold credit.[179] Therefore, based on variations in drafting, clauses can differ greatly in their force. The drafting process for reverse morals clauses differs slightly from that of express morals clauses. As an initial matter, talent must determine the necessity of a reverse morals clause by searching the corporate history of the contracting company.[180] However, not all talent has the leverage to bargain for inclusion of a reverse morals clause, and companies may resist the imposition of moral reciprocity.[181] In addition, drafting concerns are reversed: talent will want a broadly-phrased reverse morals clause, while the employer will desire a narrowly-phrased clause.[182] Finally, talent is concerned with limiting who can invoke the clause and stipulating which corporate entities are bound by it.[183] This will prevent contracting companies from purposely engaging in the proscribed conduct to activate the clause or escaping unscathed when entities violate the agreement.

VI. Implications for Morals Clauses in Contemporary Society

The rise of the Internet and development of social media has made morals clauses more important in today’s society. “Due to the proliferation of new forms of media, which has greatly increased the speed with which information is disseminated to the public, talented individuals are now significantly more scrutinized than they have been in the past.”[184] An examination of the current moral climate and social media restrictions demonstrate this phenomenon.

A. The State of Morals Today

What constitutes “morality” can be hard to define. “The concept of moral behavior, insofar as it relates to the law, is constantly in a state of flux as it reacts to changes in community standards and incorporating natural evolutionary advancements associated with the growth and development of a society.”[185] American culture has become significantly less concerned with morality. Not only has talent gotten away with misbehavior in the court of public opinion, but contracting companies have also expressed less concern about the moral missteps of talent. Employer leniency can be attributed to the recognition that in the current moral climate, nearly any publicity is good publicity.[186] Christian Slater, Robert Downey Jr., and Charlie Sheen are just a few stars whose misconduct has been tolerated by the industry.[187] Robert Downey Jr. exacted a stunning recovery, going from felon and drug addict to star of one of Hollywood’s most lucrative franchises, Ironman.[188] Different industries have diverse views on morality, which accounts for the discrepancies in morals clause enforcement. Although a newscaster’s reputation hinges upon his or her intellectual credibility, a rap artist’s depends only on his street credibility, or “street cred.”[189] While the former entails avoiding damaging public actions and statements, the latter demands the precise opposite. In the sports and radio industries, morality of the individual athletes and on-air talent seems less of a concern. In radio, provocative statements can be the key to success. Howard Stern made a career out of his outlandish radio behavior, until the FCC imposed formidable fines on the “shock jock,” and Stern announced he would leave traditional radio for Sirius Satellite Radio, a medium free of FCC regulation.[190] In sports, being violent is occasionally part of the job description, but athletes struggle to sequester this behavior to the playing field. Players’ violent off-field antics have resulted in public criticism of the NFL in recent years. Because each industry has unique concerns, each has a different conception of morality. Despite the diverse views on morality across industries, public opinion has placed more emphasis on comments than actions. Comments that are homophobic, racist, anti-Semitic, or sympathetic to terrorism have elicited substantial public backlash. For instance, after admitting past use of racial slurs in a deposition, The Food Network dropped celebrity chef Paula Deen and a slew of sponsors.[191] Deen’s image has yet to recover from the incident, and she has recently incited controversy again for a racist social media post.[192] Meanwhile, offensive public actions seem to have far less impact. Lindsay Lohan, notorious for her drug use, car accidents, and arrests for driving under the influence, cashed in on her controversial image by advertising car insurance during the Superbowl.[193] Similarly, the public has been largely ambivalent toward Florida State Quarterback Jameis Winston, despite public rape allegations against him. In fact, most of the news surrounding the NFL hopeful centers upon the “risk” of drafting him, rather than disapproval of his actions.[194]

B. Morals Clauses and Social Media

There are a growing number of contractual provisions aimed at promoting confidentiality and prohibiting disparaging remarks on social media platforms, which might fall within the purview of a morals clause. “The virtually instantaneous exposure and, in some cases, embarrassment that can accompany a celebrity’s missteps thanks to social networking tools is yet another reason to address and manage that individual’s activity through a contractual provision.”[195] Due to this trend, social media restrictions will likely be an increasing presence in morals clauses.[196] For example, ABC guidelines encourage “tweeting”, but list seven specific prohibited practices surrounding this activity, including “making disparaging remarks about the show.”[197] These restrictions and guidelines are not intended to ban social media, but instead to make talent more mindful of their expression and statements on these platforms.[198] The proliferation of such clauses, and the important role they play in a technologically advancing society has led an industry expert to say, “[e]very celebrity endorsement contract of any kind in the future must have a Twitter/Social Media clause . . . I will be so bold as to state that the failure to not have such a clause would be tantamount to endorsement contract drafting malpractice.”[199] The relationship between morals clauses and social media is complex.[200] First of all, “[e]mployer restrictions on off-duty speech and conduct are troubling in that they squelch expression and individual autonomy and may compromise the employee’s right to a private life, especially when restrictions are unilaterally imposed after employment commences.”[201] Although there has not been an obvious backlash against these restrictions yet, this is likely due to their novelty. Furthermore, clauses limiting social media expression are in direct tension with another studio practice, leveraging the social media popularity of talent to promote a project.[202] In fact, social media postings have replaced traditional advertising in some talent contract negotiations.[203] Ensuring that the parties specify what mediums of communication are covered is essential to promoting the proper operation of morals clauses without unfairly trammeling talents’ freedom of expression.[204] As social media becomes more prominent and varied in today’s society, platforms such as Facebook, Twitter, and Instagram have significantly expanded the scope of what parties must address in talent contracts. Celebrities use these mediums to express themselves, and it is unlikely that they would respond favorably to contractual social media censorship. However, these platforms offer increased, direct contact between celebrities and the public, and create more opportunities for talent to get into trouble. An offensive post on Instagram takes only moments to complete but could take years to live down. James Franco learned this the hard way when he faced public embarrassment after trying to seduce an underage girl on Instagram.[205] This contrasts starkly with times past, when contact talent had with the public was limited to pre-scripted television and radio appearances or transient personal encounters. Restrictions seem necessary given the dangers these platforms engender; a misstep on any one of them could mean the instantaneous destruction of an entire project, employment relationship, or public persona if the conduct rouses the public enough.
1. Case Study: Twitter
Twitter provides a useful case study of the risks of social media usage and the value of such restrictive clauses. Twitter has become a popular way for celebrities to communicate with fans, but the instantaneous nature of the site begets significant risks of misuse and reputational damage.[206] “Armed with Twitter, talent are just possibly one tweet away from scandal or a morals clause violation.”[207] There are numerous examples of the destructive effects of Twitter use, specifically with regard to its potential to terminate talents’ endorsement deals. For example, after the voice of the AFLAC duck, Gilbert Gottfried, tweeted insensitive jokes about a tsunami in Japan, the insurance company terminated his contract.[208] Olympic swimmer Stephanie Rice was dropped from her endorsement deal with Jaguar after she tweeted a homophobic comment.[209] Hanesbrands terminated Rashard Mendenhall, Steelers running back and Champion brands spokesman, for violating his morals clause after he tweeted controversial commentary relating to 9/11.[210] Mendenhall brought a $1 million suit against Hanesbrands for breach of the implied covenant of good faith and fair dealing.[211] “Mendenhall’s attorneys began building what will henceforth be known here as the ‘Charlie Sheen defense’: pointing to another celebrity who has said outrageous things and putting the onus on the other party to explain why one endorsement deal was terminated and another wasn’t.”[212] Although the suit survived a motion to dismiss, the parties eventually settled.[213] Thus, Twitter presents a compelling example of the destructive effects of social media upon morals clauses.


You breathe a sigh of relief. Fred Fabricate has been released from his contract based on his morals clause violation. Unfortunately, your enthusiasm is short lived; Fabricate’s replacement is not as popular, and the network experiences marked drops in ratings. Were you too hasty in your decision to invoke the morals clause? Is this decline in popularity due to the bad press from the incident, or does America just want their favorite anchor back? You have minimized your financial liability, but at what expense? Will Fabricate’s image ever recover, and if so, will you lose out on the profit? This hypothetical presents many of the same concerns surrounding morals clauses today. Companies use the clauses to temper the link between themselves and talent, controlling their unpredictable behavior and protecting themselves from their potential missteps. Nonetheless, it is often unclear when these clauses have been triggered, when they should be invoked, and the potential repercussions that may occur. Diverse conceptions of morality and opposition to inhibiting freedom of expression present distinct obstacles to morals clauses today. Although morals clauses have played an important role in motion picture, television, athletics, and advertising contracts for over a century, it is unclear what effect they will have in the future. On the one hand, morals clauses may lose their relevance entirely due to the increasingly lax moral climate. Under this view, morals matter far less, and there is no sense in attempting to censor them. An initial criticism of this argument is that although cosmopolitan regions of the country have relaxed views on morality, there are still many sectors of the population with a strong religious consciousness and correspondingly rigorous conception of moral conduct. Because these individuals also form a captive audience for the industries in question, their attitudes must also be considered by both courts and employers in enforcing morals clauses. The deeply imbedded cultural opposition to stigmatized concepts of racism, homophobia, anti-Semitism, terrorism and violence also contradict this trend. In the alternative, morals clauses may only become more important as social media and the speed with which information is disseminated increases public awareness of and contact with talent. The consistent scandal surrounding celebrity expression on social media and the upswing of contractual clauses addressing these issues evidences this inclination. Despite the merits of the argument that the morals clause is in decline, the clauses remain relevant, effectual, nuanced, and flexible. Even in the case of Brian Williams, a context in which a morals clause is not the most obvious recourse, the provision has demonstrated its pervasive power. Given the proliferation of social media and the backlash of talent through reverse morals clauses, this dynamic area of contract law shows no sign of fading into obscurity.
* J.D. Candidate, New York University School of Law, 2016; B.A. English & Government, magna cum laude, Georgetown University, 2013. The author would like to thank the 2015-16 Editorial Board of the Journal of Intellectual Property & Entertainment Law, as well as Professor Day Krolik, for their invaluable assistance in the editing process.
[1] See Emily Steel, Brian Williams Scandal Prompts Frantic Efforts at NBC to Curb Rising Damage, N.Y. Times (Feb. 11, 2015),
[2] Id.
[3] Id.
[4] Id.
[5] Emily Steel, Brian Williams Return is Part of Revamp at MSNBC, N.Y. Times (Sept. 21, 2015),
[6] Id. (internal quotation marks omitted).
[7] Steel, supra note 1.
[8] Fernando M. Pinguelo & Timothy D. Cedrone, Morals? Who Cares About Morals? An Examination of Morals Clauses in Talent Contracts and What Talent Needs to Know, 19 Seton Hall J. Sports & Ent. L. 347, 351 (2009).
[9] Noah B. Kressler, Using The Morals Clause in Talent Agreements: A Historical, Legal and Practical Guide, 29 Colum. J.L. & Arts 235, 239 (2005).
[10] See Sarah D. Katz, “Reputations…A Lifetime to Build, Seconds to Destroy”: Maximizing Mutually Protective Value of Morals Clauses in Talent Agreements, 20 Cardozo J. Int’l & Comp. L. 185, 187 (2011).
[11] Id. at 190.
[12] Id. at 191.
[13] See Margaret DiBianca, Bad Boys, Bad Boys: Whatcha Gonna Do When They Work for You?, 13 No. 2 Del. Emp. L. Letter 1 (2008).
[14] Katz, supra note 10, at 192.
[15] See Pinguelo & Cedrone, supra note 8, at 366–67.
[16] See Pinguelo & Cedrone, supra note 8, at 354.
[17] Id.
[18] The guest, Virginia Rappe, died of a ruptured bladder. It was speculated that the 266 pound Arbuckle had crushed her bladder while sexually assaulting her. Gilbert King, The Skinny on the Fatty Arbuckle Trial, Smithsonian Mag. (Nov. 8, 2011),
[19] Pinguelo & Cedrone, supra note 8, at 354.
[20] See King, supra note 18.
[21] “As a direct result of the Arbuckle case in San Francisco, Stanchfield & Levy, attorneys for the Universal Film Manufacturing Company, have drawn up a protective clause . . . to [be] inserted in all existing and future actors’, actresses’, and directors’ contracts with the company.” Pinguelo & Cedrone, supra note 8, at 354; see also Morality Clause for Films, N.Y. Times, Sept. 22, 1921, at 8, available at
[22] Pinguelo & Cedrone, supra note 8, at 355.
[23] Id.
[24] “During the investigative hearings, members of HUAC grilled the witnesses about their past and present associations with the Communist Party . . . [M]ost individuals either sought leniency by cooperating with investigators or cited their Fifth Amendment right against self-incrimination. . . [T]he Hollywood Ten[] not only refused to cooperate with the investigation but denounced the HUAC anti-communist hearings as an outrageous violation of their civil rights, as the First Amendment to the U.S. Constitution gave them the right to belong to any political organization they chose.” Hollywood Ten, A+E Networks (2009),
[25] Kressler, supra note 9, at 238.
[26] For example, RKO’s letters of dismissal to Adrian Scott and Edward Dmytryk, two members of the Hollywood Ten, stated: “By your conduct . . . and by your actions, attitude, public statements and general conduct . . . you have brought yourself into disrepute with large sections of the public, have offended the community, have prejudiced this corporation as your employer and the motion picture industry in general, have lessened your capacity fully to comply with your employment agreement and have otherwise violated your employment agreement with us.” Selz et al., Entertainment Law: Legal Concepts and Business Practices § 9:107 (3d ed. 2014).
[27] Pinguelo & Cedrone, supra note 8, at 358.
[28] Loew’s, Inc. v. Cole, 185 F.2d 641, 645 (9th Cir. 1950).
[29] MGM was the trade name for Loew’s at the time. Pinguelo & Cedorone, supra note 8, at 358.
[30] Selz et al., supra note 26, at § 9:107.
[31] Pinguelo & Cedrone, supra note 8, at 359. The court opined, “[a] film company might well continue indefinitely the employment of an actor whose private personal immorality is known to his employer, and yet be fully justified in discharging him when he so conducts himself as to make the same misconduct notorious.” Cole, 185 F.2d at 658.
[32] Pinguelo & Cedrone, supra note 8, at 359.
[33] Twentieth Century-Fox Film Corp. v. Lardner, 216 F.2d 844 (9th Cir. 1954).
[34] Scott v. RKO Radio Pictures, Inc., 240 F.2d 87 (9th Cir. 1957).
[35] Kressler, supra note 9, at 245.
[36] Id.
[37] See discussion infra Part VI.
[38] Sarah Osborn Hill, How to Protect Your Brand When Your Spokesperson Is Behaving Badly: Morals Clauses in Spokesperson Agreements, 57 Fed. Law 14, 14 (2010).
[39] See Kressler, supra note 9, at 251–54.
[40] Id. at 244.
[41] Id. at 244– 45.
[42] See discussion supra Part I.
[43] Nader v. ABC Television Inc., 150 F. App’x. 54; see discussion infra Section III(i).
[44] Pinguelo & Cedrone, supra note 8, at 358. Although some other cases have involved morals clauses in contracts, they were not resolved on these grounds. Id. at 358 n. 57; see, e.g., Marilyn Manson, Inc. v. New Jersey Sports & Exposition Auth., 971 F. Supp. 875, 887 (D.N.J. 1977) (deciding the case primarily on First Amendment grounds); Vaughn v. Am. Basketball Assoc., 419 F. Supp. 1274, 1278-79 (S.D.N.Y. 1976) (deciding the case based on jurisdictional issues), and Revels v. Miss N.C. Pageant Org., 627 S.E.2d 280, 284 (N.C. Ct. App. 2006) (ordering the case to be resolved in arbitration).
[45] Lardner, Scott, and Cole each had contracts containing a similar morals clause. Kressler, supra note 9, at 245.
[46] See Pinguelo & Cedrone, supra note 8, at 361-62.
[47] Katz, supra note 10, at 214. Sometimes it is unclear to talent whether they are violating a morals clause. For example, Nader had previously maintained his job despite arrests, making him believe this case would not be handled differently. See id.
[48] See discussion infra Section VI(A).
[49] Selz et al., supra note 26, at § 9:107.
[50] Id.
[51] For example, “the words ‘tend to’ and ‘may’ [can] [be] removed, so that a demonstrably negative reaction is required before the clause can be triggered,” and “most companies will agree to remove the right to terminate employment so that the only remedy is the right to remove a credit.” Id.
[52] DiBianca, supra note 13.
[53] Id.
[54] See, e.g., Marilyn Manson, Inc. v. New Jersey Sports & Exposition Auth., 971 F. Supp. 875, 887 (D.N.J. 1977) (holding New Jersey Sports and Exhibition Authority’s requirement that performers agree to a morals clause problematic from a constitutional First Amendment standpoint); see also Pinguelo & Cedrone, supra note 8, at 377.
[55] Kressler, supra note 9, at 246.
[56] Id.
[57] Id. at 246-47; see, e.g., Drayton v. Reid, 5 Daly’s Rep. 442, 444 (N.Y. Ct. Com. Pl. 1874) (holding that an actress’s public scandal resulting from immoral conduct was just cause for termination of her employment contract); Scott v. RKO Radio Pictures, Inc., 240 F.2d 87, 89 (9th Cir. 1957) (finding that an employee’s conduct before a congressional committee breached “an implied covenant . . . not to do anything which would prejudice or injure his employer”).
[58] Kressler, supra note 9, at 250; see also Twentieth Century-Fox Film Corp. v. Lardner, 216 F.2d 844, 850 (9th Cir. 1954) (finding that, despite the application of expressio unius, the parties intended to bolster potential remedies, not waive given common law rights, and Fox retained the right to discharge its employee for an unspecified cause).
[59] Kressler, supra note 9, at 247-48.
[60] Id. at 248; see generally Mary LaFrance, The Separate Tax Status of Loan-Out Corporations, 48 Vand. L. Rev. 879 (1995) (discussing the tax considerations of loan-out corporations).
[61] See Kressler, supra note 9, at 249-250. This is a multi-factor analysis, the most significant factor being the degree of control the employer maintains over the alleged employee. See, e.g., Makarova v. United States, 201 F.3d 110, 114 (2d Cir. 2000) (finding that a performer was an employee because her producer maintained artistic control over her performance); Johnson v. Berkofsky-Barret Prods., Inc., 260 Cal. Rptr. 1067, 1073 (Cal. Ct. App. 1989) (finding an actor to be an employee because the production company “directed and supervised the manner in which he performed . . . ”).
[62] Kressler, supra note 9, at 249; see, e.g., Welch v. Metro-Goldwyn-Mayer Film Co., 254 Cal. Rptr. 645, 655 (Ct. App. 1988) (finding a talent agreement that contained specific obligations between an actor and studio as forming an employment relationship), rev’d on other grounds, 769 P.2d 932 (Cal. 1989); Berkofsky-Barret Prods., Inc., 260 Cal. Rptr. at 1072 (holding that the court “need not focus on . . . [that] link in the employment chain”).
[63] Kressler, supra note 9, at 241.
[64] William Leiss et al., Social Communication in Advertising 108-09, (2d ed. 1997) (quoting Barnouw, The Sponsor: Notes on a Modern Potentate 33 (1978)).
[65] Kressler, supra note 9, at 241-42.
[66] Pinguelo & Cedrone, supra note 8, at 368.
[67] Katz, supra note 10, at 222.
[68] Kressler, supra note 9, at 243
[69] Nader v. ABC Television, 150 F. App’x 54 (2d Cir. 2005).
[70] Morals Clause, Not Drug Addiction, Reason for Soap Star’s Termination, 19 No. 4 Litig. Rep. 12 (2004).
[71] Id.
[72] James G. Murphy, Soap Star Slips Up on Morals Clause in Contract, 11 No. 10 N.Y. Emp. L. Letter 7 (2004).
[73] Kressler, supra note 9, at 245-46; see also Murphy, supra note 72 (“The court held, among other things, that the provisions of the morals clause weren’t so vague, overly broad, and ambiguous as to render it void.”).
[74] Sheen’s antics included drug abuse, hospitalization, domestic abuse, rehab, and a series of bizarre interviews and tweets. Emily Yahr, Let’s All Remember the Infamous Charlie Sheen ‘Two and a Half Men’ Meltdown, Washington Post Style Blog (Feb. 19, 2015),
[75] Id.
[76] Eriq Gardner, Charlie Sheen’s Contract: Was There Actually a Morals Clause?, Hollywood Reporter (Mar. 8, 2011, 9:13 AM),
[77] Id.
[78] Id.
[79] Nellie Andreeva, Charlie Sheen, Warner Bros TV & Chuck Lorre Announce Settlement, Deadline Hollywood (Sept. 26, 2011, 3:12 PM), (official statement of Warner Bros. studio) (“Warner Bros. Television, Chuck Lorre and Charlie Sheen have resolved their dispute to the parties’ mutual satisfaction. The pending lawsuit and arbitration will be dismissed as to all parties. The parties have agreed to maintain confidentiality over the terms of the settlement.”).
[80] Pinguelo & Cedrone, supra note 8, at 349.
[81] Dorothy Pomerantz, Netflix and NBC Back Away from Bill Cosby, Forbes (Nov. 19, 2014, 2:35 PM),
[82] See Nellie Andreeva, Bill Cosby Controversy is NBC Conundrum: Will America Accept Him Playing a Family Man Again?, Deadline Hollywood (Nov. 17, 2014, 8:30 AM), Given that cast members of The Cosby Show were made to sign morality clauses, widely speculated to be the basis of Lisa Bonet’s abrupt departure, it is possible that the publicity surrounding Cosby’s misdeeds has implications for his prior body of work. See Kara Kovalchik, 10 Actors’ Dramatic Departures from Popular Shows, Mental Floss (Sept. 12, 2011, 5:30 AM),
[83] This challenge has also paved the way for the success of streaming platforms like Netflix. Todd Spangler, TV Ratings Have Hurt Creative Side of Television, Says Netflix Content Boss Sarandos, Variety (Dec. 8, 2014, 12:46 PM),
[84] Media sources still revel in the entertainment value of Sheen’s “meltdown.” See, e.g., Yahr, supra note 74.
[85] See id. Although, it does not appear his antics were unforgivable; as it was widely Sheen would return for the finale of Two and a Half Men. Lynette Rice, It’s Official: Charlie Sheen Will Have a Presence on the Two and a Half Men Finale – But There’s a Catch, People (Feb. 6, 2015, 7:30 AM),
[86] See Katz, supra note 10, at 213-14. His argument that he had been fired based on a disability, his cocaine addiction, was rejected by the court. Andrews Emp. Litig. Rep. 12, supra note 70.
[87] Cosby has lost millions of dollars, had several honorary degrees revoked, and has been accused of tarnishing the Cosby show legacy. See e.g., Daniel Bukszpan, How Bill Cosby’s Fortune and Legacy Collapsed, Fortune (Jul. 15, 2015, 10:18 AM),; Sydney Ember & Colin Moynihan, Honorary Degrees in Unwanted Spotlight, N.Y. Times, Oct. 7, 2015, at C1, available at; Nancy Dillon & Corky Siemaszko, Actor Who Played Bill Cosby’s Son on ‘The Cosby Show’ Says Rape Allegations Have ‘Tarnished’ Show’s Legacy, N.Y. Daily News (Oct. 10, 2015, 12:06 AM),
[88] DiBianca, supra note 13.
[89] Id.
[90] Id.
[91] Morals Clause Forecloses Claim of San Antonio TV Reporter, 21 No. 8 Tex. Emp. L. Letter 2 (2010).
[92] Id.
[93] Galaviz v. Post-Newsweek Stations, 380 F. App’x 457, 459-60 (5th Cir. 2010); see also TV Reporter Fired Due to Morals Clause Violation, Not Sex Bias, Prac. Guide, 2013 WL 422203 (2009).
[94] Emily Smith, Contract ‘Morality Clause’ Could Determine Brian Williams’ Future, N.Y. Post: Page Six (Feb. 15, 2015, 10:33 PM),
[95] Id.
[96] Lloyd Grove, Peacock Panic: NBC Suspends Brian Williams for Six Months, Daily Beast (Feb. 10, 2015, 5:55 AM),
[97] It is alleged that NBC seriously considered firing Williams before his 6-month unpaid suspension. Aaron Feis, NBC Considered Firing Brian Williams Before Suspending Him, N.Y. Post: Page Six (Feb. 12, 2015, 12:04 PM),
[98] “The viewer hemorrhage was magnified by the fact it happened in the winter — traditionally the most competitive season for network newscasts.” Michael Starr, ‘NBC Nightly News’ Loses 700K Viewers After Brian Williams Scandal, N.Y. Post (Feb. 18, 2015, 12:17 PM),
[99] Tim Kennealley, ‘Duck Dynasty’ Star Phil Robertson: What Are His Legal Options?, TheWrap (Dec. 19, 2013, 6:06 PM),
[100] Id.; see also Scott Collins, ‘Duck Dynasty’: A&E Warned Phil Robertson About Speaking Out Too Much, L.A. Times (Dec. 20, 2013, 4:55 PM), (“Phil and other family members also probably signed contracts containing ‘morals clauses’ in which they promised to, among other things, avoid anything that would embarrass or bring shame to A&E or the brand.”).
[101] Eric Deggans, TLC’s ‘Honey Boo Boo’ Cancellation Shows Dangers Of Exploitative TV, Nat’l Pub. Radio (Oct. 24, 2014, 4:08 PM),
[102] Id.
[103] Ryan Arciero, ‘Honey Boo Boo’: Mama June Is Losing Salary, New Child Molestation Interview, Examiner (Nov. 1, 2014, 4:26 PM),
[104] Id.; see also Karen Butler, ‘Mama’ June Shannon Won’t Be Fully Paid for Final ‘Honey Boo Boo’ Season, United Press Int’l (Nov. 1, 2014, 2:50 PM),
[105] Deggans, supra note 101.
[106] As illustrated by the cases summarized, morals clauses can help minimize damaging fallout for networks. See, e.g., id.
[107] Kressler, supra note 9, at 243.
[108] Id.
[109] Id. at 244.
[110] For example, they made the third American Pie movie without troubled and headline prone actress Tara Reid. See id.
[111] Katz, supra note 10, at 223.
[112] Loew’s, Inc. v. Cole, 185 F.2d 641, 658 (9th Cir. 1950).
[113] Twentieth Century-Fox Film Corp. v. Lardner, 216 F.2d 844 (9th Cir. 1954).
[114] Scott v. RKO Radio Pictures, Inc., 240 F.2d 87 (9th Cir. 1957).
[115] Credit is the lifeblood of writers and directors, who do not enjoy the same level of notoriety and recognition as on screen talent. SAG and AFTRA do not include such prohibitions. Katz, supra note 10, at 198-99.
[116] For example, “[w]hen Tom Cruise entered the ‘danger zone[,] with public tirades about psychiatry, Scientology, and postpartum depression,’ Paramount Pictures was still obligated by contract to release Mission: Impossible III,” and “when Mel Gibson was arrested for drunk driving in 2006, Disney had no right to terminate its distribution agreement for Gibson’s movie Apocalypto.” Katz, supra note 10, at 199-200.
[117] Id.
[118] Morgan Creek productions threatened to do as much when Lindsay Lohan misbehaved consistently on the set of Georgia Rule. Id. at 200 & n.84.
[119] Porcher L. Taylor III, Fernando M. Pinguelo & Timothy D. Cedrone, The Reverse-Morals Clause: The Unique Way to Save Talent’s Reputation and Money in a New Era of Corporate Crimes and Scandals, 28 Cardozo Arts & Ent. L. J. 65, 75–76 (2010).
[120] See id.
[121] Under § 11 of the NFL Player Contract, a football club may terminate the player contract “[i]f at any time, in the sole judgment of Club, . . . [the] Player has engaged in personal conduct reasonably judged by Club to adversely affect or reflect on Club.” National Football League Collective Bargaining Agreement 2006-2012, at 252 (2006), available at
[122] Under § 16 of the NBA’s Uniform Player Contract, a basketball team may terminate a player contract “if the Player shall . . . at any time, fail, refuse, or neglect to conform his personal conduct to standards of good citizenship, good moral character (defined here to mean not engaging in acts of moral turpitude, whether or not such acts would constitute a crime), and good sportsmanship.” National Basketball Association Collective Bargaining Agreement, at A-16 (2011), available at
[123] Under the NHL Standard Player’s Contract, § 2(e), each NHL player agrees “to conduct himself on and off the rink according to the highest standards of honesty, morality, fair play and sportsmanship, and to refrain from conduct detrimental to the best interest of the Club, the League or professional hockey generally.” Collective Bargaining Agreement Between National Hockey League and National Hockey League Player’s Association, at 245 (2005), available at
[124] Under § 7(b) of the Major League Baseball Uniform Player’s Contract, a baseball club “may terminate [a player contract] . . . if the Player shall at any time . . . fail, refuse or neglect to conform his personal conduct to the standards of good citizenship and good sportsmanship.” 2012-2016 Basic Agreement, at 284 (2011), available at Id. at 284.
[125] Pinguelo & Cedrone, supra note 8, at 364.
[126] Id.
[127] Id. at 373.
[128] Tom Canavan, Williams Will Still Be Paid from Nets Deal, Agent Says: Morals Clause Does Not Apply to Remaining $24 Million, Record (Newark), Feb. 28, 2002, at A04.
[129] Katz, supra note 10, at 208-09.
[130] Jill Martin & Steve Almasy, Ray Rice Wins Suspension Appeal, CNN (Nov. 30, 2014, 12:59 AM),
[131] Josh Levs, NFL Toughens Policy Addressing Assault and Domestic Violence, CNN (Dec. 10, 2014, 10:45 PM),
[132] Hill, supra note 38, at 14.
[133] Kressler, supra note 9, at 240-41.
[134] Id.
[135] Id.
[136] Id.
[137] Id.
[138] Success will depend on the talent’s leverage. Pinguelo & Cedrone, supra note 8, at 364.
[139] Hill, supra note 38, at 14-15.
[140] See id. at 15.
[141] Kressler, supra note 9, at 239.
[142] Id.
[143] “Other such deals include . . . Seven-Up with Flip Wilson (later arrested for trafficking cocaine), Mazda with Ben Johnson (later implicated in an Olympic steroid scandal), Gillette with Vanessa Williams (later appearing nude in Penthouse magazine), Beef Industry Council with Cybil Shepherd (later telling a journalist she did not like to eat beef), Pepsi-Cola with Michael Jackson (later canceling his world tour amid charges of child molestation and admitting that he was addicted to painkillers), Pepsi-Cola with Madonna (later releasing her controversial video for “Like a Prayer”), Pepsi-Cola with Britney Spears (later appearing in numerous magazines drinking Diet Coke), O.J. Simpson with Hertz (later arrested for two murders), and National Fluid Milk Processors Board (“Got Milk?”) with Mary-Kate and Ashley Olsen (the former later checked into a treatment facility for an eating disorder).” Id. at 241–43.
[144] Id. at 235; see also Pinguelo & Cedrone, supra note 8, at 347; Kate Moss: Sorry I Let People Down, CNN (Sept. 22, 2005, 3:13 PM),
[145] Pinguelo & Cedrone, supra note 8, at 372; see also Anthony Ramirez, “Desperate Housewives” Actor Arrested on Marijuana Charge, N.Y. Times, May 19, 2005, at B2, available at
[146] See Bruce Horovitz, Simpson Ads Opened Door to Endorsements by Athletes Marketing: Sponsors Are Leery of Controversy. Hertz is Expected to at Least Temporarily Suspend Its Use of Ex-Football Star, L.A. Times, June 15, 1994, at 18, available at Morals clauses in these contracts allowed the brands to sever the relationship, but the damage was already done, specifically in the case of Hertz.
[147] Daniel Auerbach, Morals Clauses as Corporate Protection in Athlete Endorsement Contracts, 3 DePaul J. Sports L. & Contemp. Probs. 1, 4 (2005).
[148] See id.; see also Pinguelo & Cedrone, supra note 8, at 369 (stating that in the sports industry alone, “as of May 31, 2008, Nike, Inc., owed more than $3.8 billion in endorsement deals” and the “aggregate of sponsorship deals for the 2008 Beijing Olympics was approximately $2.5 billion”).
[149] Webber argued that paying an administrative fine did not constitute the conviction necessary to trigger the clause, winning a $2.61 million judgment in arbitration. Pinguelo & Cedrone, supra note 8, at 377-78; see also ‘Prematurely Terminated’ – Kings’ Webber Wins Ruling Against Fila, CNN/Sports Illustrated (July 8, 1999, 4:07 PM),
[150] In “the greatest marketing comeback in the history of sports marketing,” less than six years later, Bryant was re-engaged by Nike and Coke’s Vitaminwater, put at number 10 on the Forbes Celebrity 100 list, and his jersey outsold all others in the NBA for the second time in the three years. Bryant’s success at making the public and endorsing corporations “forget” his crimes is nothing short of astounding. Taylor, Pinguelo & Cedrone, supra note 119, at 101-02; see also Darren Rovell, Bryant Is NBA’s Most Marketable Again, CNBC (June 15, 2009, 9:34 AM),
[151] Pinguelo & Cedrone, supra note 8, at 375. Although Vick suffered a “‘catastrophic and very public fall’ from sports stardom,” and had to “climb a steep hill to repair his tarnished image,” he has appeared to have fully recovered. See Taylor, Pinguelo & Cedrone, supra note 120, at 103. In 2011, nearly four years after they cancelled his contract, Nike signed him to a new deal. See Nike Re-signs Vick, N.Y. Times, July. 2, 2011, at D3, available at
[152] Nike, Woods’ biggest endorser since he went pro in 1996, stood by the golfer. Will Wei, Tiger Woods Lost $22 Million in Endorsements in 2010, Business Insider (July 21, 2010, 1:19 PM). Despite the fallout suffered by Woods in the wake of the scandal, he seems to have recovered, signing his biggest deal since with Hero Motorcorp in December 2014. Bob Harig, Tiger’s New Deal Biggest in Years, ESPN (Dec. 3, 2014, 6:55 PM),
[153] “The termination of Armstrong as an endorser of the Nike brand was likely simplified by the inclusion of a broadly worded ‘morals clause’ within the cyclist’s endorsement contract with Nike. Morals clauses are typically worded in such a way as to allow a brand to immediately terminate an endorsement contract, without any penalty, should the athlete endorser act in a certain manner that would tarnish the reputation of the brand.” Darren Heitner, Nike’s Disassociation from Lance Armstrong Makes Nike a Stronger Brand, Forbes (Oct. 17, 2012, 10:22 AM),
[154] Taylor, Pinguelo & Cedrone, supra note 119, at 66-67.
[155] Mark Kesten, Reputation Insurance: Why Negotiating for Moral Reciprocity Should Emerge as a Much Needed Source of Protection for the Employee, Cornell Hum. Resource Review, Nov. 23, 2012,
[156] Taylor, Pinguelo & Cedrone, supra note 119, at 80.
[157] See id. at 80; see also Joseph Reiner, Pat Boone, (1995), – 2-1G2:3493100014-full.
[158] Taylor, Pinguelo & Cedrone, supra note 119, at 80.
[159] Id. at 66.
[160] Id. at 68.
[161] Id.
[162] Id. at 68–69.
[163] Id. at 69; see also Ric Jensen & Bryan Butler, Is Sport Becoming Too Commercialised? The Houston Astros Public Relations Crisis, 9 Int’l J. Sports Marketing & Sponsorship 23, 27, 29-30 (2007).
[164] Additionally, “in less scandalous cases, where companies that bought the rights for the stadia of the Baltimore Ravens (PSI Net), St. Louis Rams (Trans-World Airlines), St. Louis Blues (Savvis), and Carolina Panthers (National Car Rental) went bankrupt or out of business, the teams were compelled to buy back the naming rights, which can be costly, as reflected in the Baltimore Ravens having to pay $5.9 million to the bankrupt PSI Net in 2002.” Taylor, Pinguelo & Cedrone, supra note 119, at 70.
[165] Oliver Herzfeld, Why Jay-Z and Other Talent Should Seek Morals Clause Mutuality, Forbes (Jan. 2, 2014, 9:24 AM),
[166] Id.
[167] See Taylor, Pinguelo & Cedrone, supra note 119, at 71.
[168] “Citigroup, the largest government bailout recipient in November 2008, precipitated a scandal of sorts, when it announced that it would charge ahead with the costliest naming-rights deal in sports history with the New York Mets, even though the financial giant had just laid off 52,000 employees and was treading water with almost $20 billion in losses for 2008.” Id. at 89.
[169] Kressler, supra note 9, at 254.
[170] Id. at 255.
[171] Id.
[172] Id.
[173] Id.
[174] Id. at 255-56.
[175] Katz, supra note 10, at 212.
[176] Nicolas Cage was accused of being arrested twice for drunk driving and stealing a dog, allegations that turned out to be false, but that could have triggered a morals clause. Pinguelo & Cedrone, supra note 8, at 353; see also Fox News, Kathleen Turner Apologizes to Nicolas Cage Over Dog Theft Allegation, Fox News (Apr. 4, 2008),
[177] Selz et al., supra note 26, at § 9:107.
[178] Id.
[179] Id.
[180] Taylor, Pinguelo, & Cedrone, supra note 119, at 92.
[181] Id. at 99, 105.
[182] Id. at 105.
[183] Id. at 105-06.
[184] Pinguelo & Cedrone, supra note 8, at 367.
[185] Id. at 352; see generally Calvin Woodard, Thoughts on the Interplay Between Morality and Law in Modern Legal Thought, 64 Notre Dame L. Rev. 784 (1989) (examining the circumstances that have contributed to attitudes regarding the relationship between law and morality); Robert P. Burns, On the Foundations and Nature of Morality, 31 Harv. J. L. & Pub. Pol’y 7 (2008) (discussing historical observations and arguments relevant to contemporary moral debates).
[186] Selz et al., supra note 26, at § 9:107.
[187] See id. Each of the stars has had highly-publicized brushes with the law involving drugs and violence. See, e.g., Actor Christian Slater Gets Jail for Drunk Driving, L.A. Times, Apr. 3, 1990, at B2; Charlie Sheen Hospitalized in Fair Condition After Overdose, L.A. Times, May 22, 1998, at B4; Drug Charges Filed Against Robert Downey Jr., L.A. Times, July 17, 1996, at B4.
[188] Lacey Rose, Will Charlie Sheen Ever Work Again?, Hollywood Reporter (Feb. 28, 2011, 6:38 PM),
[189] See Ronn Torossian & Karen Kelly, For Immediate Release: Shape Minds, Build Brands, and Deliver Results with Game-Changing Public Relations 219 (2011).
[190] Sheila Marikar, Howard Stern’s Five Most Outrageous Offenses, ABC News (May 14, 2012),
[191] “The Food Network, owned by Scripps Networks Interactive (SNI), let Deen’s contract run out, and she was dumped by a slew of sponsors and business partners, including pork producer Smithfield Foods, the casino chain Caesars (CZR), the diabetes drugmaker Novo Nordisk (NVO) and retailers Wal-Mart (WMT), Target (TGT), Home Depot (HD), Sears (SHLD) and JCPenney (JCP).” Aaron Smith, Paula Deen’s Coming Back, CNN Money (Feb. 12, 2014, 3:13PM),
[192] Deen posted a photo of her son in brownface. She later blamed her “Social Media Manager” who was fired after the incident. Emanuella Grinberg, Paula Deen Under Fire for Photo of Son in Brownface, CNN (July 7, 2015, 4:05 PM),
[193] Lindsay Lohan — I’m the Queen of Car Crashes… So I’m Selling Insurance!, TMZ (Jan. 18, 2015, 12:55 AM),
[194] E.g., Bill Pennington, The Tricky Calculus of Picking Jameis Winston, NY Times, Jan. 30, 2015, at D1, available at
[195] John G. Browning, The Tweet Smell of Success: Social Media Clauses in Sports & Entertainment Contracts, 22 Tex. Ent. and Sports Law J. 5, 6 (2013).
[196] See Taylor, Pinguelo & Cedrone, supra note 119, at 111.
[197] Andrew Wallenstein & Matthew Belloni, Hey, Showbiz Folks: Check Your Contract Before Your Next Tweet, Hollywood Reporter (Oct. 15, 2009, 1:19 PM),
[198] Id.
[199] Browning, supra note 195, at 20-21.
[200] Katz, supra note 10, at 226.
[201] Patricia Sánchez Abril, Avner Levin & Alissa Del Riego, Blurred Boundaries: Social Media Privacy and the Twenty-First-Century Employee, 49 Am. Bus. L. J. 63, 90 (2012) (“Some organizations have restricted their employees’ off-duty use of social networking sites or have prohibited using them altogether. For example, the National Football League has prohibited players’ access to social media immediately before, during, and after football games.”).
[202] For example, Rihanna was cast in “Battleship” partially because of the exposure she offered through her extensive fan base on social media, including 26 million twitter followers. Browning, supra note 195, at 21; see also Wallenstein & Belloni, supra note 197.
[203] Peter Hess, the co-head of commercial endorsements for Creative Artists Agency said, “We’re starting to have in negotiations, ‘We’d like to include X number of tweets or Facebook postings.’ It’s similar to traditional advertising – instead of two commercials, now we want two tweets.” Browning, supra note 195, at 21.
[204] See Katz, supra note 13, at 225.
[205] Jay Hathaway, James Franco Apparently Tried to Hook Up with a Teenager on Instagram, Gawker (Apr. 3, 2014, 9:29 AM),
[206] Courtney Love, Alice Hoffman, Mark Cuban, and Michael Beasley are among the many celebrities who have experienced backlash from comments made on the social media site. Taylor, Pinguelo & Cedrone, supra note 119, at 109-10.
[207] Id. at 110-11.
[208] Browning, supra note 195, at 20.
[209] Id.
[210] Mendenhall tweeted about Osama Bin Laden, “[w]hat kind of person celebrates death? It’s amazing how people can HATE a man they never even heard speak. We’ve only heard one side . . . ” And of the 9/11 attacks, the player tweeted, “[w]e’ll never know what really happened. I just have a hard time believing a plane could take a skyscraper down demolition style.” Browning, supra note 195, at 20. Hanesbrands claimed that these tweets fell within the purview of the morals clause within Mendenhall’s endorsement agreement, because they “concluded that his actions meet the standards set forth in the Agreement of bringing Mr. Mendenhall ‘into public disrepute, contempt scandal or ridicule, or tending to shock, insult or offend a majority of the consuming public or any protected class or group thereof . . . .’” Because of these actions, he was considered no longer an effective spokesperson for Champion. Katz, supra note 10, at 227.
[211] Id.; see also Mendenhall v. Hanesbrands, Inc., 856 F. Supp. 2d 717 (M.D. N.C. 2012).
[212] Eriq Gardner, Settlement Reached in Lawsuit Filed by NFL Star Fired as Pitchman for 9/11 Conspiracy Tweets, Hollywood Reporter (Jan. 15, 2013, 3:20 PM),
[213] Id.; Marc Edelman, Rashard Mendenhall Settles Lawsuit with Hanesbrands over Morals Clause, Forbes (Jan. 17, 2013, 12:02 PM),

Part of the Team: Building Closer Relationships Between MLB Teams and Independent Agents in the Dominican Republic through an MLB Code of Conduct

Part of the Team: Building Closer Relationships Between MLB Teams and Independent Agents in the Dominican Republic through an MLB Code of Conduct
By Dustin Williamson* A pdf version of this article may be downloaded here.  


Every year in the Dominican Republic, hundreds of boys enter baseball academies run by one of Major League Baseball’s (MLB) franchise teams.[1] While there, the players pursue baseball with a single-minded passion, with drills, games, and other instructional activities from dawn until dusk.[2] Competition is fierce, and many players take performance-enhancing drugs to better their chances of advancing within the system.[3] The dream of every player is to be sent to the team’s farm system in the United States and from there to be called up to the major leagues, where many Dominican players, including the New York Yankee’s Robinson Cano and the Boston Red Sox’s David Ortiz, have gone on to make millions of dollars. The reality of the situation, however, is much less glamorous. Over the last decade, only two percent of players signed out of the Dominican Republic made it to the major leagues.[4] That means that for every Cano or Ortiz, there are 50 players who never even make the League’s minimum salary. While academies provide shelter and a salary for the athletes, only an exceptional few provide an educational component beyond some basic English classes and classes on American culture.[5] This means that when the vast majority of these athletes, who have devoted their lives to baseball, eventually wash out of the academy system after two or three years, they are thrown back into the working population with little education and no transferrable skills to show for the years they spent playing baseball.[6] The situation is exacerbated by the treatment that players receive before they even get to the MLB academies. In the Dominican Republic, potential baseball players are cultivated as early as their preteen years by independent handler-agents known as buscones.[7] Children represented by buscones may be encouraged (or possibly coerced) to drop out of school in order to focus on baseball full time.[8] Most buscones operate independent baseball academies, which, unlike the MLB academies, may not provide any education outside of that needed to develop as a baseball player.[9] And again in contrast to the official academies that are overseen by MLB and governed by MLB rules, (insofar as the latter provide any guidance) the buscón-run academies receive little oversight. Given the young age at which many athletes join unofficial academies, not only are they deprived of secondary education, but potentially primary education as well. While MLB does not contract with buscones or have any official connection with the independent camps, MLB, with its network of official academies and scouts throughout the Caribbean, is the only significant outlet for players produced through this system.[10] This article proposes that, given the type and scope of labor rights violations that occur as a result of MLB’s presence in the Dominican Republic, MLB should promulgate a voluntary corporate code of conduct to govern the relationship between MLB and buscones in the Dominican Republic. In Part I, I explain the differences between the recruitment processes for players in the United States, the United States’ territories, and Canada, who are covered by the draft, and for players from the rest of the world, who are signed through international free agency. I then explain the practical effects of international free agency on how MLB operates in the Dominican Republic. In Part II, I draw an analogy between the academy system in the Dominican Republic, which produces MLB players, and a multinational corporation’s (“MNC”) supply chain. I then use this analogy to identify potential labor and human rights violations that may occur in the Dominican Republic as a result of the system that produces MLB players. In Part III, I introduce the example of corporate social responsibility as a movement under which MNCs have made efforts to self-regulate both their behavior and the behavior of their suppliers, through corporate codes of conduct. In Part IV, I examine the unique features of MLB and how these features affect the potential scope and shape of a code of conduct. In Part V, I examine specific aspects of a code of conduct that could be implemented, including a licensing program for buscones and independent academies. While at least one commentator has suggested an MLB code of conduct that would govern behavior in the Dominican Republic academies, I argue that a strict, penalty-based code of conduct would likely be counterproductive. A licensing program with a commitment to dialog instead of punishment might have a better chance of positively affecting the lives of young baseball players. Central to my argument is the recognition that, while MLB may contribute to labor law violations in the Dominican Republic, it also spends a substantial amount of money in the country. Additionally, players who “make it” in in the major leagues typically send some part of their earnings back to their families and communities in the Dominican Republic. As such, any solution should encourage cooperation between MLB, the teams, buscones, and the Dominican government, instead of punishing players or forcing teams to leave the Dominican Republic if violations are found. In Part VI, I discuss the problem of applying pressure to MLB to adopt a corporate code of conduct for the Dominican Republic.

I. The Selection of Players and Its Effect on the Dominican Republic

A. Major League Baseball Recruiting

The Major League Rules (MLR) governs the method by which MLB teams recruit baseball players.[11] Under the current rules, teams wishing to sign players who are not already within the MLB system must abide by the draft rules for players from the United States, Puerto Rico, and Canada, or by a different set of rules for international players who are not covered by the draft. Under Rule 3 of the MLR, players who are residents of the United States, Puerto Rico, and Canada are subject to the amateur draft[12] held every June.[13] Players who are eligible for the draft cannot bargain for the best deal that they can reach with any team; rather, teams pick individual players during successive rounds of drafting. MLB supplies suggested signing bonuses for different draft slots. The slotting system is not binding, and the most eagerly sought after players often garner signing bonuses far above the suggested value.[14] Players who do not sign with the team that drafted them are prohibited from signing with a different team but may enter the draft again in the future.[15] This often occurs with players who are just out of high school and would rather go to college before signing with a team, or players who are already in college and would either like to wait for a better offer in the future or finish college. The most significant restriction on draft eligibility is that teams may not draft players who are currently in high school.[16] In addition, although teams may sign high school graduates, they are typically prohibited from signing college players until after their junior year.[17] The NCAA and other university regulatory systems may also require teams to abide by additional rules when dealing with college players. Therefore, although there are a few players who sign when they are as young as 17, most players are adults, and a large portion have at least a couple of years of junior college or university education when they sign with an MLB team.[18] Players from the rest of the world are not subject to the draft, but instead are signed as international free agents. The MLR puts few restrictions on how such players are signed. The main restriction is the 17-year-old rule, which prohibits teams from signing international players younger than 17.[19] Even under this rule, a player may be signed when they are 16, so long as they will turn 17 by the end of the current baseball season.[20] Under this system, teams may bid against each other for a player’s talents; though if a player is relatively unknown, a team may be the only one to make an offer.[21] In addition to the MLB’s 17-year-old rule, the country from which the player is drafted may impose additional restrictions on MLB recruitment. For instance, in Japan, another country with a developed professional baseball league, an MLB team wishing to sign a player must pay the player’s team a substantial sum even to open negotiations with the player.[22] The Dominican Republic, on the other hand, does not have its own professional league, nor does it have independent requirements supplemental to the 17-year-old rule. This means that players from the Dominican Republic are usually lesser known than players coming out of other countries MLB teams target, such as Japan and South Korea. Given the lack of regulation, the chance of finding an underexposed player, and the economic conditions, which lead to lower bonuses and salaries for Dominican players, teams are highly motivated to scout the Dominican Republic for cheap players.

B. MLB in the Dominican Republic

MLB scouting in the Dominican Republic is run out of each team’s baseball academy. Once signed by an MLB team, the vast majority of players, whether signed through the draft or as an international free agent, spend years honing their skills in the team’s minor-league affiliates, spread throughout the United States.[23] Most players from the Dominican Republic begin by playing for up to three years at the MLB team’s academy before even being called up to the United States to play in the minor leagues. Currently, 28 out of the 30 MLB teams run a baseball academy in the Dominican Republic.[24] It has been estimated that MLB has invested more than $75 million in the Dominican Republic and created more than 2,000 jobs in the country.[25] Players in the academies are signed according to the 17-year-old rule. In the past, teams may have hidden younger players at academies and then signed them when eligible; this practice allowed them to avoid having to bid against another team for the player’s services and kept the signing bonus owed to the player much lower.[26] This type of subterfuge may not be as much of a problem as it once was, since under the current rules teams may only allow an unsigned player to remain at an academy for a month.[27] On the other hand, given deficiencies in the Dominican Republic’s record keeping system, players younger than the signing age may routinely be admitted to academies under a false birth certificate.[28] In a highly publicized case, it was discovered that employees of the Los Angeles Dodgers falsified records to sign the Dominican baseball player Adrian Beltre, who was found to have been 15 when he signed with the team.[29] As a result, MLB shut down the Dodger’s academy in the Dominican Republic for a year.[30] Conditions at the camps vary. While some may be relatively luxurious, others are more spartan.[31] When journalists first reported on the academies, they found the facilities to be overcrowded and lacking in basic medical facilities—resembling prisons more than athletic training facilities.[32] Today, even on the low end, the academies are much improved, though there are exceptions. After visiting the Chicago Cubs academy for a 2010 article, Time magazine reporter Sean Gregory gave the following account of the facility:
At the Cubs academy one hazy afternoon, 10 prospects piled into a room that, at best, could comfortably fit two or three. There were four bunk beds crammed into the space; two kids napped while sharing a mattress on the floor. Several players said they all lived in that room. I snapped a picture of the scene and showed it to Sandy Alderson, the veteran baseball executive who was tapped by MLB commissioner Bud Selig earlier this year to clean up the sport in the D.R. He said the conditions were “not acceptable,” though he later insisted that not all 10 prospects actually lived in that room and that players sometimes sleep on the floor because it’s cooler. Still, he stood by his “unacceptable” assessment. It’s difficult to disagree with a Dominican man who also saw the scene. “It looked like f______ county lockup,” he said.[33]
In most academies there is little to do besides play baseball. Players in the academies get up, have breakfast, and are on the field by 7:30; other than a lunch break, they practice until the sun goes down.[34] Competition within the camps is fierce. Given the lower cost of signing and training Dominican players, teams are able to take a “quantity over quality approach,” signing a large number of players for the same price it would have cost to sign a single American player.[35] Because the investment in most Dominican players is small, teams are more concerned with finding a diamond in the rough than developing talent.[36] Consequently, only about two percent of academy players ever make it to the American major league system.[37] The small percentage of players who make it to America through the minor leagues and onto an MLB team will be able to provide for themselves, their families, and their communities, even if they only play in the majors for a short period, since the league minimum salary is high. For instance, in 2011, players who made the league minimum were paid $400,000 for the season.[38] By comparison, the per capita GDP in the Dominican Republic is $8,300,[39] and 34.4% of the country lives below the poverty line.[40] Therefore, the players’ incentive is to gain any advantage they can over other players. This includes pushing themselves to their physical limits day after day. It may also include hiding injuries—and thereby exacerbating them—for fear of being cut from the academy.[41] The pressure to succeed may also lead to the use of performance-enhancing drugs.[42] Such drugs both exacerbate the risk of immediate injury and can contribute to life-long health problems.[43] At most camps, the only supplemental education that the participants receive are classes in basic English and classes designed to prepare athletes for life in the United States,[44] although some camps have partnered with local schools.[45] A few camps provide educational facilities on site.[46] When compared with the astronomical salaries paid to MLB players, the cost of running an educational program is small. In 2010, the Pittsburg Pirates, MLB’s poorest team, spent only $75,000 to run its educational program, a partnership with a local provider that offered high school classes to the athletes in its Dominican academy.[47] Before players ever get to an academy, most spend time either at an independent camp or under the control of a Dominican agent, known as a buscón.[48] A buscón is similar to an agent in that he or she represents unsigned Dominican players in negotiations with a team that wishes to sign the athlete. However, instead of representing a player for a span of his professional career, a player’s relationship with a buscón ends when he is signed by an academy.[49] The player receives a signing bonus; the buscón takes a percentage cut; and the relationship is severed.[50] While players younger than 16 may occasionally make it into an MLB academy because of forged papers, buscones routinely recruit players as young as 10 or 12.[51] These children may drop out of school and enter the custody of the buscón.[52] Instead of completing compulsory education, which in the Dominican Republic is 8 years,[53] these children spend their formative years developing their baseball skills with the sole goal of being signed by an MLB academy. Unlike the MLB camps, which are regulated to some extent by the league through its office in Santo Domingo,[54] the buscones and independent academies have no substantive supervision. Simply put, the Dominican Republic has not made it a priority to regulate the system that places Dominican youths with teams in MLB, an organization that has made significant capital investments in the country.[55] Therefore, the worrisome behavior that may occur at an MLB academy, including overwork and the use of performance-enhancing drugs, is rampant throughout the domestic system that produces players.[56] Likewise, problems that may occur less frequently in the MLB system, such as players younger than 16 taking part in the academies, are a fact of life in domestic Dominican baseball.[57] Exacerbating all of these problems is the fact that a buscón has no financial stake in a player once he has signed with an academy. Therefore, a buscón may not care about players’ long-term health or ability to play baseball for any length of time after leaving their care.

II. Potential Labor and Human Rights Violations: An Analogy to a Multinational Corporation Supply Chain

A. Overview

While it may seem unfair in some general, moral sense that MLB academies do not provide transferrable skills for many of the players that pass through their gates, by itself, this treatment is not that much different from how any minor league player is treated; most players wash out of baseball before making it to the majors and without ever making significant money.[58] The major difference between the treatment of players in the Dominican Republic and in the United States is that while most U.S.-born players will enter professional baseball with at least a high school education,[59] the combination of the rules governing the signing of international players and the Dominican Republic’s poor education system, leads many young players to drop out of school at a much earlier age. Since there is no domestic professional baseball,[60] the only reason these children take up baseball (either willingly or because they are coerced by a buscón or parent) is the hope of being signed by an MLB team. Because MLB is the dominant employer of Dominican baseball players who take up baseball with the aim of playing professionally, we should establish a legal duty that runs from MLB to the players to protect the labor and human rights of Dominican players inside official MLB academies, as well as children who have not signed but have spent their childhood preparing for the opportunity, under a buscón’s care. While it may be difficult to bring a legal claim based on the duty, the existence of one would provide labor and human rights advocates leverage to convince MLB to better regulate their behavior. Any solution must also take into account MLB’s large investment in the country and the fact that those players who are signed, especially those who eventually make major league salaries, typically send a large percentage of their earnings to their families and communities.[61] The first step is to identify the ways in which MLB owes an obligation to protect labor and human rights. Then, Part D will identify, which, if any, labor and human rights standards have been violated.

B. Is This Labor At All? An Analogy to the Multinational Corporation Supply Chain

In the globalized economy, MNCs operate across national borders. While the international scope of economic activity is nothing new, globalized MNCs exhibit a cohesiveness that prior forms of international economic activity did not.[62] As described by Gary Gereffi, globalized supply chains may be divided into two types – “producer-driven” and “buyer-driven” global commodity chains:[63]
Producer-driven commodity chains are those in which large, usually transnational, manufacturers play the central roles in coordinating production networks . . . . This is characteristic of capital- and technology intensive industries such as automobiles, aircraft, computers, semiconductors, and heavy machinery. Buyer driven commodity chains, on the other hand, refer to those industries in which large retailers, marketers, and branded manufacturers play the pivotal roles in setting up decentralized production networks in a variety of exporting countries, typically located in the third world. This pattern of trade-led industrialization has become common in labor-intensive, consumer goods industries such as garments, footwear, toys, handicrafts, and consumer electronics. Tiered networks of third world contractors that make finished goods for foreign buyers carry out production. Large retailers or marketers that order the goods supply the specifications.[64]
In a buyer-driven commodity chain, companies often receive goods or services from many low-level suppliers, or through an intermediary.[65] While a lead firm may have a contract with some of its suppliers, those suppliers, in turn, deal with their own constellation of lower-level suppliers.[66] At the lowest end, or in very small shops, individuals supply piecemeal work to other unregulated firms—some within a lead firm’s chain, but often supplying to many different firms.[67] While a lead firm may have a direct relationship with some other firms on the supply chain, it likely does not know that the firms on the lowest end even exist, let alone have a contractual relationship with them.[68] Typically, even if an MNC would like to do so, lead firms have a difficult time policing the bottom rungs of their supply chain.[69] However, as I show in the following sections, through the advent of corporate codes of conduct, MNCs have developed a system to attempt to regulate the behavior of their suppliers, as well as those their suppliers buy from. MLB shares characteristics with both producer-driven and buyer-driven supply chains. At higher levels, such as in MLB’s minor leagues, or even the MLB-owned academies in Latin America, MLB teams are directly responsible for molding the growth of their potential major leaguers, even though that development is relegated to a lower rung of the organization. In this way, MLB teams can be seen as producer-driven: a central entity coordinating its disparate production network.[70] The independent academies and the demand for cheap players from the Dominican Republic (and other parts of Latin America) lends this arrangement an aspect of the buyer-driven supply chain, in which MLB teams “buy” players. However, even though this arrangement may, at first glance, resemble the bottom rung of a buyer-driven supply chain, there are aspects of the relationship between MLB and the buscones that run the independent academies that may allow us to categorize these academies as entities analogous to a subsidiary branch of the MLB. While MLB teams do sign players from these independent academies, the players are neither raw recruits nor fully formed baseball players. Unlike a buyer-driven supply chain, in which the producers at the lowest rung produce textiles or shoes,[71] players produced by the independent academies are not fungible; MLB teams must scout players at the independent academies, deal directly with buscones, and decide which players to sign.[72] Finally, as noted earlier, MLB’s presence in the Dominican Republic is responsible for the development of the independent academy system.[73] Although the MLB teams do not have a contract with the buscones, similar to low-level suppliers in a buyer-driven supply chain, the actual teams operate in the Dominican Republic and deal directly with the buscones and players in the independent academies.[74] As such, MLB’s relationship with the bottom rung is, in some ways, more like a producer-driven supply chain and is certainly a closer relationship than a typical MNC with its suppliers in a buyer-driven supply chain.[75] The lack of a contractual relationship and the fact that buscones operate according to their own prerogatives may prevent us from defining the independent academies as subsidiaries of MLB as a legal matter, but the analogy to a supply chain would lend legitimacy to a movement to pressure MLB to adopt a code of conduct for dealing with buscones. Even if independent academies can be analogized to the bottom rung of a supply chain, can the activities performed by Dominican players be defined as labor in such a way that it would be recognized under international labor and human rights standards? In the case of athletes who enter the official academies, this question is easily answered in the affirmative. Quite simply, the players in the official academies are employees as defined by common law master-servant agency principles,[76] and accordingly, the employment relationship is subject to the international laws described in the proceeding section, which apply to employment conditions. Under agency law, although no one factor is determinative, the issues to consider when determining whether someone is an employee include the following:
[T]he skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party . . . .[77]
In the case of the official MLB academies, these factors weigh heavily in favor of classifying the players as employees. The players sign contracts with the individual teams, receive pay for the time spent playing and training at the academy, and while there, are under the control of the staff of the academy.[78] However, as noted in the previous section, while there may remain a problem within the official academies, MLB understands that they bear some responsibility to the players in those academies. The argument about the regulation of official academies is an argument over the scope, not the existence of a duty. The independent academies, on the other hand, are a substantively different problem. It is not immediately clear that what the players at these academies do is labor in a traditional sense, despite the long hours and physical toll that life in the academy may have on their bodies. Although many have argued that the activity of amateur college athletes constitutes labor and should be covered by U.S. labor and employment law,[79] unlike college athletes, players in independent academies do not play for revenue generating teams. Just because one trains to become a baseball player does not automatically qualify that activity as labor. Millions of children spend substantial amounts of time practicing an athletic or artistic skill; whatever obligations the parent(s) of a young oboe player owes the child, it would be a stretch to argue that international labor standards apply to teenage musicians’ practice regimes. Similarly, although attending school may require a good deal of work in the form of studying, writing papers, and taking tests, that activity is not labor; rather, it is a personal investment in cultivating skills that will lead to a better job than one could get without such education. However, the role of the buscones in the independent academies lends a unique feature to the situation that is not present in typical training programs; the children in the academies spend their time training to become the player that is produced by the academies, from which the buscones make their living.[80] Unlike the intensive training that takes place under the tutelage of, say, a gymnastics or swimming coach in the United States, the buscones receive their money when the player signs with a team, not upfront from a parent whose child is an Olympic hopeful. Buscones make a living by training players and then taking a cut of the player’s signing bonus or receiving a finder’s fee for their services.[81] While the time at which the trainer receives her money might seem like a semantic distinction, under the master-servant principles enumerated above, this distinction militates in favor of treating the young athletes under the care of a buscón as servants and thus employees. If a parent sends his child to an independent academy, as opposed to paying to board their child with a coach, the food, shelter, and training provided by the buscón is a form of payment for the athlete’s services. The fact that not every child under the buscón’s care eventually makes it to an MLB team makes this more like a traditional employment relationship than some sort of deferred payment scheme for the training that the athletes receive, since the buscón pays out whether or not the athlete makes him money. If one views the room, board, and potential stipend as payment, the rest of the factors for determining whether the athletes under the buscón’s care are employees weigh in favor of categorizing them as such.[82] The athletes train on facilities controlled by the buscones; the relationships can exist from the time the athletes are in their preteens until they are signed by an MLB academy; the type and extent of training is dictated by the buscones; and, the buscones are in the business of training players, from which they make their living.[83] Also, the temporal difference likely has a large effect on how the child athletes are treated. While children under both a traditional coach and a buscón may be pressed to their physical limit, a coach also has a stronger incentive to maintain her reputation. If, for instance, word gets out that a coach treats the athletes under her care poorly, she may lose customers. Similarly, if a parent discovers that her child is being neglected in favor of another athlete, that parent may simply find another coach. The buscón’s incentives, on the other hand, only run towards getting the largest signing bonuses for the athletes under his care. This means he is likely to push a large number of athletes whose skills are on the margins to the breaking point in search of the handful that have the talent and training necessary to sign with an MLB academy.[84] A parent may object to the treatment of players, but given the poverty and lack of education in the Dominican Republic, they may feel they have little choice other than to send their children to train with the buscón who gives them the best deal.[85] This feature further highlights the particularly coercive and controlling nature of the buscón-athlete relationship under the master-servant analysis. Because there is no other significant outlet for the training the players receive at the academies, the academies operate as the de facto bottom rung of MLB’s supply chain, analogous to very low-level manufacturing on an integrated supply chain that ultimately provides players—as both goods and laborers—to MLB teams. Since the players produce themselves and the buscones make a living off of those players, it is sufficiently analogous to labor to be so understood when determining whether the regulated party, in this case the buscones, is violating international human rights and labor laws. Although independent academies and the buscones who run them are similar to typical low-level suppliers in some ways, such as their lack of contracts with MLB, there are ways in which they are different that would make it easier for the league to regulate them. Unlike low-level manufactures that supply goods to MNCs, either to a number of MNCs or a large supplier of goods, independent academies only supply MLB teams and the number of players “sold” is small.[86] Agents of the teams must scout the players represented by a buscón and come to an agreement with both the player and the buscón.[87] As described above, the connection in this regard has elements of a production-based supply chain, in which the MNC is more finely attuned to the behavior down the supply chain.[88] This means that the connection between MLB and the independent academies, despite the lack of a legal contract, may be much tighter than that between a supplier of widgets and the MNC that eventually buys them, thereby making it more feasible to regulate than it would be in a scenario in which hundreds of micro manufacturers ship fungible products to the next step up the supply chain.[89]

C. Sources of Potentially Applicable Labor and Human Rights Standards

Given the fact that under an analogy to an MNC supply chain, MLB may owe a duty to child athletes in independent academies, the next step is identifying the duties that MLB and the Dominican Republic may have under international law, as well as potential violations of such duties. Although I am not advocating bringing a claim before an international body, especially given the fact that the duty owed by MLB is only analogous to a typical MNC supply chain, sources of international law serve as a reference point for corporate codes of conduct developed under a corporate social responsibility model.
1. International Labor Organization (ILO)
The International Labor Organization (ILO) promulgates conventions that set international labor standards.[90] Both the United States and the Dominican Republic are members of the ILO.[91] Countries that ratify any given convention are obligated to make the convention a part of their national law.[92] However, in addition to voluntary ratification, in 1998 the ILO adopted the “Declaration of Fundamental Principles and Rights at Work.”[93] In the declaration, the ILO noted that the following are fundamental rights: “(a) freedom of association and the effective recognition of the right to collective bargaining; (b) the elimination of all forms of forced or compulsory labour; (c) the effective abolition of child labour; and (d) the elimination of discrimination in respect of employment and occupation.”[94] Whether or not a country has ratified the conventions underlying the fundamental rights, they “have an obligation arising from the very fact of membership in the Organization to respect, to promote and to realize, in good faith and in accordance with the Constitution, the principles concerning the fundamental rights which are the subject of those Conventions.”[95]
2. UN Convention of the Rights of the Child
In 1989, the UN General Assembly adopted and opened for ratification the Convention of the Rights of the Child.[96] The Convention covers a broad spectrum of rights tailored to the specific needs and dangers present for developing, non-autonomous children, covering such topics as child labor,[97] education,[98] and health and safety.[99] Both the United States and the Dominican Republic have ratified the Convention without reservation.[100] The UN Committee on the Rights of the Child oversees compliance with the Convention.[101] The countries that have ratified the Convention are required to prepare reports documenting their compliance.[102] In addition, NGOs are allowed to file “alternative reports” with the committee if they believe the government’s report is not an accurate reflection of the conditions for children in the country.[103]

D. Potential Violations

1. Child Labor
One of the ILO’s core tenets is the prohibition of child labor, including the Minimum Age Convention (No. 138),[104] to which the Dominican Republic is a signatory.[105] The fundamental convention sets the minimum age for employment at 15.[106] However, there is an exception for countries “where the economy and educational facilities are insufficiently developed,” in which case the minimum allowable working age is 14[107] (13 for light work).[108] The Dominican Republic ratified under the exemption.[109] No matter which standard governs the Dominican Republic, if official MLB academies admit children under the age of 14, either because the children lie about their age or are taken in without a contract, the team’s actions would violate the treaty. Although there may be ambiguity as to whether players in unofficial academies are employees, players in the official academies undoubtedly are, as they receive a salary and the MLB academies are an extension of their respective team’s minor league system. However, it appears such violations are isolated, and if not accidental, then at least not flagrantly willful either.[110] If we extend the earlier analogy of the independent academy as a small firm, at the domestic level there may be widespread violations of the child labor standard.[111] Although baseball may be a game and buscones would likely dispute the characterization of their young charges as employees, these independent agents make their living by “producing” baseball players for the official MLB academies. In such a situation, to the extent that the production of players results in conditions that would violate the convention, it makes sense to apply the convention to the players as a means of regulating the buscones. Therefore, in instances where a Dominican player is under the age threshold and is primarily pursuing baseball as a career—instead of playing in a school or recreational league as an ancillary matter to attending school—under the above conception of the domestic Dominican baseball industry as the bottom rung of a multinational supply chain, that activity is sufficiently analogous to employment to be a violation of the Minimum Age Convention.
2. Education
The UN Convention of the Rights of the Child (Article 28)[112] and the UN Declaration of Human Rights (Article 26)[113] raise education to the level of a human right. The right to education is a human right with a labor rights connection since it puts a laborer in a better position to realize her other rights, whether human, labor, political, or economic. The declarations and conventions call for compulsory primary education and insist on the right to secondary education.[114] Other than in the rare instance in which a player would use deception to get into an MLB academy, it does not appear that the academies directly violate the right to education by taking players of an age that the international and regional communities declare should otherwise receive primary education. And while there might be pressure to drop out of high school to attend an academy, it does not appear that athletes are, strictly speaking, required to do so. On the other hand, the presence of the MLB academies is the sole reason for the existence of the domestic baseball training system. In the domestic system, there is no doubt that children are dropping out of school to pursue playing baseball in the academies.[115] The buscones and independent academies that take in young children and prevent them from going to school directly violate the child’s right to education. The players that are then lucky enough to be signed by an academy often arrive without the requisite education. The players that are not signed by MLB academies are returned to the labor market with very little education—not even the rudimentary English skills taught in most MLB academies.[116] Although the Dominican Republic requires nine years of compulsory education, it is clear that most children do not receive the required level.[117] Therefore, the argument could be made that the independent academy system does not make the situation any worse in the Dominican Republic than it would be without such a system. However, even if most participants in baseball academies might drop out in any event, the academies arguably violate the right to education by providing a reason for doing so. This argument is made stronger in cases in which it would be impossible or at least incredibly difficult, given the time commitment, for children both to train at a buscón-run facility and to finish compulsory education. As outlined above and developed further below, I believe MLB should bear responsibility for the actions further down the player production chain as the party ultimately responsible for the existence of the buscones and independent academies.
3. Health and Safety
The ILO has promulgated standards regarding occupational health and safety.[118] Although the Dominican Republic has ratified some health and safety standards for particularly dangerous employment sectors, such as construction,[119] it has not ratified broader, cross-industry standards.[120] While academy athletes do not toil under life-threatening working conditions, they may be at risk of preventable injuries, and may not receive adequate care for the injuries they do receive (perhaps just getting cut from the program instead of receiving any treatment for injuries). Likewise, to the extent that steroid use is under regulated, it presents health and safety concerns. Given the fierce competition and the all-or-nothing stakes, despite a testing program, players appear to abuse steroids in high numbers.[121] As with any of the potential violations noted in this article, the violations are likely worse and more pervasive in buscón-run independent academies. Since the buscón has no economic commitment to the players outside of the bonus they receive—a relationship that is severed the moment the buscón gets his cut of the bonus—some may actively promote steroid use or otherwise disregard player’s injuries and long-term health.[122] More broadly, Article 32 of the UN Convention of the Rights of the Child recognizes the right of children to be “protected from economic exploitation and from performing any work that is likely to be hazardous or to interfere with the child’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral or social development.”[123] There is no question that steroid use that is either forced or enabled by baseball organizations and personnel in the Dominican Republic violates Article 32. Likewise, a system of child labor that leaves the child susceptible to routine injury, as is the case in baseball—both as a matter of accidents and stress injuries that result in muscle, tendon, and ligament damage—without adequate preventative measure, would violate the Convention. Moreover, even without steroid use and injury concerns, any situation in which adults make money by taking a share of any eventual signing bonus received by children coerced to drop out of school and take up a profession that provides few transferrable skills and a low probability of success is surely both economically exploitative and harmful to a child’s development. As such, no matter how pervasive the use of steroids is,[124] the treatment of young baseball players in the Dominican Republic surely violates Article 32.

III. Corporate Codes of Conduct

A. Overview

There are two obvious places at which pressure could be directed to remedy the labor and human rights abuses taking place within baseball academies: the Dominican government and Major League Baseball. Most commentators have suggested primarily pressuring one or the other.[125] At least one writer has suggested that the situation in the baseball academies is primarily a Dominican problem, since she believes that to the extent abuses occur, they occur almost exclusively within independent Dominican-run academies; therefore, any violation of domestic or international law falls squarely at the feet of the nation responsible for such conditions.[126] Even if this claim is true, I believe that MLB is responsible for conditions in the independent academies. The presence of MLB is the primary, if not the only, reason such academies exist.[127] In that way, as outlined above, the independent academies are analogous to supplier factories from which MNCs buy commodities to make their goods. In fact, since the independent academies (and the Dominican Republic more generally) are producing players almost exclusively for MLB teams, MLB’s connection to the player protection chain is tighter than it might be for other MNCs, even when a MNC has a supplier contract with a factory in a buyer-driven commodity chain.[128] While buscones may not be employees of MLB, independent academies are sufficiently analogous to supplier factories to apply pressure to MLB to help regulate the behavior of buscones. In other words, both the Dominican Republic and MLB should share responsibility for abuses. If pressure is only applied to the Dominican Republic, there is little hope of changing the status quo. Although the Dominican Republic is a signatory to the ILO and has education laws on the books that ostensibly make some of the practices within the independent academies illegal, because of intense poverty and an otherwise low level of development, there is little chance that increased scrutiny of labor practices alone would provide sufficient incentives to the Dominican Republic to turn off or even regulate the spout of cheap, young talent flowing into the MLB academies.[129] This is doubly unlikely given the island nation’s fascination with baseball and the large amount of money that MLB spends in the Dominican Republic each year.[130] As such, it is necessary to make MLB shoulder some of the burden to ensure that players have not had their rights abused. Unlike the Dominican Republic, MLB is highly susceptible to public pressure. Part of the product they sell is a sense of sportsmanship and fair play. In this way, MLB is no different than the countless consumer brands that offer a good or service that depends in some degree on the goodwill of the consumer.[131] I believe that a combined approach, bringing attention to the Dominican Republic’s failure to protect its young players and using that information to expose MLB’s role in that failure, stands the best chance of improving the conditions for Dominican baseball players. Although legal channels may be technically available, such as bringing a claim against MLB under the Alien Tort Claims Act (ATCA), such a claim is highly unlikely even to get far enough to expose MLB to substantial negative publicity.[132] Although the ATCA has been used to prosecute torts “in violation of the law of nations,”[133] the state of the law is in flux.[134] It is currently unclear whether a corporation can be found responsible under the ATCA, and if one is, to what degree a corporation must be aiding and abetting a state action.[135] In this case, it is even less clear whether MLB owes a duty to the players in the independent academies that could be violated under the ATCA. Even if someone brought a claim against the Dominican Republic for labor rights abuses, the claim is highly unlikely to get any traction with a court. In its broadest reading, claims under the ATCA typically deal with extreme issues, such as political murder and forced labor.[136] Therefore, the most efficacious way to improve conditions for young baseball players in the Dominican Republic is for the public and NGOs to push MLB to develop a code of conduct that puts MLB in the position of working with the Dominican Republic to ensure that players who enter MLB academies have received the proper education and are not exploited as child laborers. Recognizing the limits of a legal challenge to conditions in the academies, this type of campaign would rely on the moral underpinnings of the domestic and international law as opposed to the formal mechanisms of the various international institutions. In this way, the campaign would resemble the anti-sweat shop campaigns that led MNCs such as Nike and Levi Strauss to develop corporate codes of conduct (CCOC) under which these companies attempt to regulate their suppliers. While another commentator has suggested a code of conduct as a method to remedy potential abuses,[137] previous scholarship has promoted an “all-or-nothing” approach that would do more harm than good to both the children in independent academies as well as the Dominican Republic more broadly.

B. MLB and a Corporate Code of Conduct

Major League Baseball is a MNC whose success is highly dependent on fan perception.[138] One way in which other MNCs whose business depends on public goodwill have attempted to garner approval is through the development of a CCOC for dealing with supplier factories and other contractors in the developing world.[139] Because of their vast economic power, the presence of MNCs may overwhelm the public regulatory system of many developing states. This outcome occurs even in situations where the company does not make a conscious effort to subvert regulation of labor standards. Where the country and its citizens are desperate for contract work, the race (to the bottom) to produce goods at low cost creates a situation where the country would rather have jobs than enforce the domestic labor laws. During the 1990s, in response to a number of reports on horrible working conditions in supplier factories for some of the leading apparel and sporting goods companies,[140] companies began to see the benefit of corporate social responsibility (CSR), one part of which was establishing CCOC as a method of dealing with public outrage over MNCs’ complicity in labor and human rights abuses. While some of the codes of conduct may have been drafted proactively and presented to the public as an altruistic reflection of the corporation’s moral principles, many such codes were passed in response to a human or labor rights scandal, uncovered by activists, non-governmental organizations (NGOs), or journalists, implicating the company.[141] Over time, some corporations have also seen CCOC as a means to achieve other business ends, such as efficiency and retention of employees[142] and not merely as a public relations ploy. Whatever the reason for passing the code of conduct, the measure of success of any code of conduct is both the substance of the code itself, and, more importantly, the tangible steps taken by the MNC to prevent abuses. Although many CCOC began as vague, aspirational statements of principles, increased transparency, monitoring and enforcement efforts, including the use of independent agencies, have moved many CCOC past hortatory claims to enforceable regulatory mechanisms. [143] Companies such as Levi Strauss,[144] Nike,[145] and Reebok[146] want to appear to be good corporate citizens. They have done so, in part, by developing codes meant to establish the company’s commitment to core labor, human, social, or economic rights. Organizations such as the Federation Internationale de Football Association (FIFA), the Swiss organization that governs international professional soccer, have created labeling programs that require suppliers of “official” gear to abide by such standards.[147] Under either type of code, many CCOC incorporate labor standards as set out by the ILO “Declaration of Fundamental Principles and Rights at Work.”[148] This often means making sure that the factories that are part of their production chain, either as producers of the product or the raw materials from which the products are made, respect certain minimum rights. Because it appears to be particularly frowned upon by Western consumers, the use of child labor is of core importance. Levi Strauss is an example of a MNC with a highly developed, self-imposed code of conduct. Levi Strauss initially developed its code not just for ethical reasons, but also to protect its brand image in the face of other scandals implicating apparel companies in the abusive labor practices of their overseas contractors.[149] Levi’s dealings with contractors in countries across the globe are governed by the two-part “global sourcing and operating guidelines.”[150] Through its “country assessment guidelines,” Levi Strauss determines if a country in which it is considering doing business meets minimum levels of health and safety protections, human rights guarantees, a functioning legal system, and political stability.[151] If Levi Strauss decides to do business within a country, it then monitors the conditions in its contracting factories under its “Terms of Engagement” (TOE).[152] The TOE covers wages and benefits, working hours, child labor, prison and other kinds of forced labor, discrimination, and disciplinary practices.[153] Levi Strauss works with the third party, non-profit monitoring organization, Verité, to ensure that its suppliers comply with the code of conduct.[154] In some instances, Levi Strauss has withdrawn from countries for violations of the TOE.[155] According to a self-published case study, Levi Strauss says it withdrew production from Mauritius because of TOE violations as a result of discrimination against migrant workers in Mauritian factories.[156] According to the company, it met with the U.S. government to ask them to pressure Mauritius to investigate and change labor practices within the country as a condition to retaining trade benefits with the U.S.[157] Levi Strauss maintains that its actions led the Mauritian government to create the “Inter-Ministerial Committee on Foreign Labor” to examine labor conditions for migrant workers and strengthen labor protections.[158]

IV. An MLB Corporate Code of Conduct for the Dominican Republic

A. Features of MLB that Would Effect the Implementation of a CCOC

The hierarchy of the League is a unique feature that could make it easier to monitor and enforce a code of conduct. MLB as an organization oversees and coordinates 30 franchise teams. It, along with the players association, has developed a complicated set of rules governing how teams operate and how they treat their players.[159] Since MLB already operates as a top-down governing body of the teams, it is in a position to promulgate a CCOC that applies to the behavior of the franchises. It is also better able to monitor and enforce a code against teams, since unlike a manufacturer who receives the products produced by noncompliant suppliers, violations by low level producers (independent academies and buscones) directly benefit only the franchises. Because the League has less of a stake in whether a team is able to exploit players,[160] it will be better able to make sure that the teams are living up to their obligations. However, while this might be theoretically true, it is also true that MLB has been reticent to act as a monitor and enforcer in the past, such as when it was pressured to institute a drug-screening program in the wake of steroid scandals in the league.[161] The issue of developing a code of conduct for MLB academies would not likely be contentious in the same way, since the players association does not represent the players in the Dominican academies. There are also a number of ways in which MLB’s relationship with the Dominican Republic is different than the typical MNC-developing country relationship, which make it difficult for MLB to enforce a code or create a situation in which strictly enforcing a code would have a deleterious impact on the same young athletes MLB should be trying to help. For instance, MLB’s relationship with buscones and independent academies is different than that between MNCs and in-country contractors. As noted earlier, MLB academies do not have an ongoing contractual relationship with independent academies and buscones. In fact, although MLB teams may visit independent academies or meet with scouts to determine which players they would like to sign, the only contractual relationship is likely to be between the boys and the buscones who represent them. The lack of a contractual relationship makes it even harder to regulate the behavior at the very bottom.[162] Even if MLB develops a CCOC that calls for compulsory education and the prevention of the usage of child labor, buscones, parents, and players will continue to see a system that results in very large payout for those that make it to the top. CCOC or not, it would be nearly impossible for MLB to have in-school monitors to make sure potential future players are receiving an adequate education. Likewise, if a young boy is a promising baseball talent, but dropped out of school before completing compulsory education, there is an incredibly strong incentive for that child to forge the proper documentation or otherwise shirk the CCOC. This problem is exacerbated by the fact that the education system is poor in the Dominican Republic to begin with, and that, baseball player or not, many children drop out of school after the 5th grade.[163] After all, the player very literally has nothing to lose and everything to gain. Similarly, even if MLB were to institute a code that requires players to receive compulsory education and prohibits independent academies from engaging in practices that amount to the use of child labor, an all-or-nothing approach would likely end up only hurting the Dominican Republic as a whole. This is analogous to a CCOC that requires a company to pull out of a country entirely if it finds that the factory or the country in which it operates is a flagrant violator of code provisions. A CCOC with such an enforcement mechanism gives the MNC leverage to make its partner accede to its demands—at least where the partner country or factory is able to meet those demands.[164] However, there are situations in which a partner cannot meet the standards set by the MNC. If the only recourse is ending business with that firm or in that country, while it might assuage the guilt of Western consumers, it does little to improve the conditions for workers in that country or factory who could have used the capital that the MNC would have expended to improve their economic situation, perhaps long term. This situation is exacerbated in an industry like baseball and in a country like the Dominican Republic, where the primary focus of the code would be the regulation of behavior at the very bottom of the production chain. This behavior is typically difficult to regulate, given the fact that employees’ only competitive advantage is the low cost of their labor. This is especially true since every boy is in competition with every other boy; there is every incentive to cheat the system, especially when complaining about one’s treatment is likely the surest way to lose one’s chance to advance.[165] Even in the face of MLB pulling out of the country, as long as individual buscones see that other scouts and players are able to get an advantage out of not following the CCOC, they will also cheat the system. If an individual follows the rules and others do not, the individual loses out. If MLB pulls out of the country because the independent academies and buscones refuse to follow the rules en mass, the individual does not lose any more, but the rest of the country does, since MLB takes its $75 million a year investment with it. Also, without MLB in the country developing talent, there would be fewer Dominican players in the league and, therefore, less money being sent back by such players to families and communities throughout the Dominican Republic. Instituting a corporate code of conduct vis-a-vis independent academies in the Dominican Republic presents another unique challenge. The product that the academies produce is not a good but a laborer in the form of baseball players. This presents problems because, in addition to creating ambiguity as to whether a player should be considered a laborer at all, it compounds the enforcement issues outlined above. If a code of conduct prohibits an MLB academy from signing a player who was taken out of school or otherwise exploited, it is an injury almost exclusively borne by the individual player. Therefore, any code of conduct adopted by MLB regarding the Dominican Republic should be drafted to avoid harming players, who, through little fault or their own, may have already been exploited by overzealous buscones. Any solution should work to create a closer connection between MLB and the independent academies and scouts who provide the academies with players. Likewise, instead of merely pulling out of the country or even scaling back its investment, any solution should provide incentives for MLB, the Dominican Republic, and domestic academies to work together to make sure core labor and human rights standards are met. This would go beyond the all-or-nothing approach of many codes and could lead to both a greater investment in the country by MLB and an increased commitment to public regulation by the Dominican Republic.

B. Suggested Features of an MLB Code of Conduct

1. Establish a Buscón Licensing Program
One way that MLB could potentially attempt to remedy the situation would be the adoption of a code of conduct that includes a buscón licensing program under which buscones would not be allowed to represent players unless they can verify that players under their control have finished compulsory education and have not been exposed to unduly hazardous conditions while under a buscón’s care. In the Dominican Republic, children are currently required to finish eight years of compulsory education.[166] However, most children drop out after the fifth grade.[167] Even if this is the case, since entrance to MLB is the primary reason such children take up baseball and its academies are the only real conduit for talent off of the island, MLB has an imperative to make sure that it is not responsible for children leaving school. Given both the state of the Dominican education system and the international norm of requiring only compulsory education,[168] requiring players to have graduated high school is currently an unrealistic goal. In fact, such a standard would do more harm than good. If MLB teams were unable to sign Dominican players who have not completed high school, MLB teams would have to scale back their operations in the Dominican Republic without a corresponding educational benefit to potential players. A code of conduct provision requiring documentation of completion of compulsory education would also have the effect of reducing any child labor violations within the independent academies. Requiring children to finish compulsory education would help correct the school-baseball balance. If baseball training was relegated to an after school activity, it would be less likely to qualify as employment under common law agency principles, since both the duration of the activity would be shortened and the player would be better able to set the bounds of his participation.[169] One Note has argued that creating an obligation on the part of MLB to make sure academy players received an adequate education is not feasible because, even if MLB has an obligation to make sure the children who play in its academies have received an education, MLB’s efforts would not affect the children playing in independent academies.[170] If a code of conduct results in only baseball players receiving a better education in the Dominican Republic, I would consider it a success. MLB might have a general obligation to all children on some vague moral level, but as I argue in my prior analysis, it has a specific obligation to the children who drop out of school to become baseball players and enter the independent academies that supply players to MLB academies. There are also the indirect effects of both drawing more attention to the Dominican Republic’s poor educational system and contributing to the solution.[171] Heightened public awareness of the educational crisis in the Dominican Republic may spur further action by the Dominican government, NGOs, and other MNCs. Therefore, even if MLB only has an obligation to its players, that encompasses an obligation to verify that baseball players entering its academies have received adequate education. By enforcing such a rule, MLB would help children throughout the Dominican Republic. Commentator Adam Wasch, focusing on prohibiting child athletes from working at the expense of education, provides an example of what a code of conduct of this kind might look like:
Enforcement of MLB’s Child Labor Code of Conduct. Major League Baseball will discontinue cooperation with any third-party that persists in non-compliance with our MLB Child Labor Code of Conduct. Apprenticeship Programs. Major League Baseball accepts apprenticeship programs for children between the ages of fourteen and sixteen years, but only under certain conditions. The total number of hours spent on work and school together should never exceed seven hours per day. The apprentice must prove that work is not interfering with the child’s education, that the apprenticeship is limited to a few hours per day, that the work is light and clearly aimed at training, and that the child is properly cared for, housed, and fed. Apprenticeship program directors must file a report with the league that details that their apprentices are receiving a quality, formal education. We will not work with apprenticeship programs that do not comply with these terms. Special Recommendations. Major League Baseball acknowledges that according to Article 1 of the UN Convention on the Rights of the Child, a person is a child until the age of eighteen. We therefore recommend that children in the age group of 14-18 be treated accordingly (i.e., by limiting the total number of working hours per day and implementing appropriate rules for overtime). Children in this age group are not allowed to perform strenuous work that will impair their ability to receive an education.[172]
While his proposed Child Labor Code of Conduct is a decent first step, it would likely be insufficient to remedy the child labor and education violations committed by buscones. First, it has been established that the record keeping system in the Dominican Republic is open to manipulation.[173] As such, an enterprising player or buscón could likely forge any required documentation to show that the requisite education has been received. This is especially true for exceptionally talented players, for whom there is an incentive to forge documentation or to do a less than thorough job of investigating dubious documents.[174] On the other hand, it is necessary because it makes the Dominican Republic responsible for enforcing its own education laws if it wishes to keep MLB academies in the country. After all, if verification becomes too difficult, MLB teams might significantly scale back their operations in the country. Likewise, Wasch’s code suffers from an adversarial, all-or-nothing approach. Under his code, independent providers of baseball players would operate under a cloud of suspicion; and, if they fail to meet the strictures of the code, they will be cut out.[175] In a country without adequate regulation to prevent buscones from violating labor rights, a code that treats each buscón or academy as an independent data point will likely be ineffective in bringing the domestic system in line with international labor standards. As long as some independent actors are able to get away with violating labor standards, there will be intense pressure for others to push their luck. A potentially more effective approach, which would retain the same thrust as Wasch’s code, is one that creates a closer partnership between MLB and the independent actors which supply the MLB academies with players, as well as the government of the Dominican Republic. For instance, the code could require Dominican scouts and independent academies to apply for a license from MLB. The license would require the independent provider to abide by certain minimum labor and educational standards, as set by Dominican law. In turn, MLB would require the teams in the league to sign only players who are represented either by a licensed scout or institution. Alternatively, MLB teams could sign players who are at least 17 years old and are currently attending or have already graduated from high school and, therefore, have received both the compulsory education required by Dominican law and are eligible to be signed under MLB rules governing international players. This combined approach would provide incentives for independent providers to abide by Dominican law but would not punish those players who decided to stay in school past the compulsory period. In fact, creating a closer relationship with buscones would inure to the benefit of the scouts, since only they would be allowed to make a premium off of players signed by MLB teams, likely more than offsetting the cost of compliance with the code. The franchise structure of MLB could be useful in facilitating a partnership between the teams, buscones, and government. Since MLB is a corporation that exists outside of the teams it oversees, it has the ability to implement a code that governs the teams and buscones without the need for an outside monitoring group (though perhaps there is a role for such a group). Through the monitoring program, MLB would oversee the independent producers. Under this approach, instead of immediately withdrawing a license when violations are found, MLB should require the independent actors to demonstrate why they are unable to meet their obligations and what steps they are taking to reach compliance. MLB already has an international office in Santo Domingo.[176] If it implements a licensing program for buscones, it could use its office in the Dominican Republic to serve as a meeting place for all of the regulated entities to discuss violations, as well as successes and concerns with the program. For instance, buscones may complain that the education system in the country is in bad shape; children are not actually required to finish compulsory education and, in fact, most do not—therefore, the independent operators are unable to meet their obligations under the licensing program. The dialogue created through a partnership between MLB and independent baseball scouts could then be used to pressure the government to better enforce its education laws.[177] A code that produces communication instead of merely the threat of withdrawal of benefits would likely benefit young baseball players and the Dominican Republic.
2. Require Teams to Provide Additional Education, Either On-Campus or Through a Partnership with Local Schools
Even if MLB develops partnerships with buscones and independent academies, given the economic jackpot that a player receives if they are skilled enough to make it to the major leagues, the pressure to cheat would still be intense. Therefore, MLB may need to take additional proactive steps to ensure that its presence in the Dominican Republic does more good than harm. One method would be to require MLB academies to offer additional education to players in the academy. This could be accomplished either by bringing teachers to the academies to teach classes in addition to the English and American culture classes already taught, or alternatively, academies could provide busing from the academies to nearby schools. This educational component would be required for the high-school-age players (16-18) and, perhaps, could also be offered to older players who did not graduate high school as an optional program. In fact, some MLB teams have already instituted additional education at the academies. As noted earlier, five teams currently either bus players to nearby schools[178] or have on-site educational facilities.[179] Given the relatively low cost to the teams,[180] the high value to the players, and the remedial benefit for athletes who dropped out of school to pursue baseball, there should be a push to get MLB to add such a provision to any code of conduct it adopts. The policies of the MLB academies would be easier to monitor than those in the independent academies. If MLB discovers that a team is not fulfilling the educational requirement, the league could impose fines and implement the program itself, charging the cost to the team. While MLB should be more willing to penalize a team than they would an independent operator, the penalty should be aimed at improving conditions for players and should not include forcing the team to close the academy, since the effects of that penalty would be felt most strongly by the Dominican players.
3. International Draft
Perhaps the mechanism most likely to change the fortunes of players in the Dominican Republic is the institution of an international draft. In fact, the latest collective bargaining agreement (CBA) between MLB and the Major League Baseball Players Association calls for an investigation into instituting such a draft.[181] An international draft would require teams to pick all first-time signers, instead of leaving those players subject to free agency and the vagaries of the market. Players chosen in an international draft may fall into “slots” with corresponding signing bonus values.[182] Even if there were not a hard slotting system with mandatory signing bonuses, a player would only be able to negotiate with the team that picked him. Proponents of an international draft believe it would be more fair, both to players from developing countries as well as to players already subject to the draft, who may not be able to command the same kind of premium that a proven talent from Japan or Korea could get.[183] Most significantly, the institution of an international draft would largely undercut an MLB team’s incentive to maintain an academy in the Dominican Republic. The academy could still be the first stop for many drafted Dominican players; however, the reason that teams run academies is so they are able to give a large number of cheap players a test run before making a larger commitment to the players and sending them to the U.S. to play in the minor, and perhaps eventually, the major leagues. If teams were only allowed to sign the limited number of players that fell to them through a draft, which encompassed not only Dominican players but players from all over the world, this key function of the academies would be lost. Some have argued that undercutting MLB teams’ incentive to operate academies in the Dominican Republic is a good thing.[184] While MLB’s current policies may contribute to labor and human rights violations in the country, the background conditions in the Dominican Republic are not rosy. MLB teams spend a significant amount of money in the country, including providing some infrastructure improvements.[185] Likewise, players in the official MLB academies make a wage that is many times higher than the prevailing factory wages.[186] Therefore, while there may be gains, such as more children pursuing occupations other than baseball, the goal should be for MLB to make a greater commitment to helping the Dominican Republic reach international standards—not reducing MLB’s investment in the country. After the institution of an international draft, there might not even be an appreciable decline in Dominican boys dropping out of school to pursue it; even without an academy system, there is still the lure of the enormous payday and a tradition of players who went on to become international sporting celebrities. Likewise, while there may be less money to go around, an international draft would likely not undercut the incentives for buscones to develop, represent, and garnish the signing bonuses of players to the same degree that it would reduce MLB’s investment in the country. Therefore, while it might be an inevitable development, it is not likely a good one for the Dominican Republic or its baseball players.

V. Development of an MLB Corporate Code of Conduct

Currently, MLB does not have a corporate code of conduct independent of the collective bargaining agreement (CBA) negotiated between team owners and the Major League Baseball Players Association (MLBPA), whose only relevant provision for this discussion is the requirement that MLB teams offer English-as-a-second-language courses if any major league player requests it.[187] Additionally, MLB maintains an office in Santo Domingo in the Dominican Republic, which has established rules regarding field conditions, housing, and nutrition in the academies.[188] Therefore, the rules governing MLB’s conduct in the Dominican Republic are the bare-bones requirements found in Rule 3(a)(1)(B)(i) and (ii) requiring that players are either 17 when signed, or will be 17 by the end of the current season.[189] That means most players in the Dominican MLB academies receive little outside training besides baseball-related English classes, and even then it is generally agreed that players do not develop English skills until they come to the United States.[190] Given the unique features of the academy system—including very young players, dire poverty, lack of government regulation, and an incredibly small chance of success—it is unlikely that Dominican players will develop the bargaining power necessary to substantially change their conditions. Any player who speaks out would likely be immediately let go from the academy. As such, the pressure to develop a code of conduct will need to come from an outside combination of public and MLBPA pressure, backed by the guidelines furnished by international labor and human rights law. Although the MLB rules govern player selection and development, whenever there is conflict between the rules and the CBA, the CBA governs.[191] This means that players through the MLBPA have the ability to shape the rules to protect labor rights in the Dominican Republic. In fact, given the strength of the player’s association, its cooperation may be required to institute any rule change or corporate code of conduct governing MLB behavior in the Dominican Republic. Therefore, while an independent corporate code of conduct would help protect Dominican players, the player’s association insistence on adding the code to the CBA would carry additional moral force and operate not only as a self-imposed code but also as a binding contract with the MLBPA. One potential problem with taking this approach is convincing the MLBPA to use their bargaining power to protect players not currently in the association. Even Dominican players, who make up a substantial minority of MLB players,[192] may not see the benefit in pushing for better treatment of other Dominican players; after all, they made it out of the Dominican system—some of them as millionaires. Also, as one commentator has pointed out, Dominican players may also be acutely aware of their fragile position as foreign baseball players, and may not be willing to stick their neck out, lest they be labeled troublemakers.[193] In fact, given the precarious position of most MLB players, even those who believe the situation in the Dominican Republic needs to change may be unwilling to rock the boat for the benefit of young future players. However, if the issue in the Dominican Republic could be shown to have a negative effect on the major leagues, the MLBPA might make a greater push toward remedying the education and child labor problems in the Dominican Republic. Perhaps the MLBPA would become stronger advocates for change in the Dominican Republic if it could be shown that the lower bonuses and salaries paid to players signed in the Dominican Republic suppress salaries across the league. Similarly, the MLBPA might take a lead role if the relatively unregulated international free-agent market leads MLB to focus attention on the Dominican Republic, churning through many players, few of whom become members of the association, instead of focusing on countries covered by the draft, in which a higher percentage of players initially signed, eventually make it to the majors. In that instance, the MLBPA would be most likely to push for a fix that levels the playing field for all potential major league players, such as the institution of an international draft. Even without the involvement of the player’s association, MLB could adopt a corporate code of conduct that requires MLB teams operating in the Dominican Republic or elsewhere to abide by a set of rules, since those players are not currently covered by the CBA. In fact, unlike other codes of conduct, by which companies self-regulate, there is more distance between MLB and its independently owned franchises; while still self-regulation, this structure separates enforcement and compliance. However, MLB has been reticent to fully confront the labor rights violations that their presence in the Dominican Republic might cause. This reticence persists despite years of media coverage on the potential problems caused by academies.[194] The plight of Dominican players was even documented in the feature film Sugar.[195] Therefore, it may require additional public pressure for MLB to see that a CCOC is in its best interest. Admittedly, a public campaign faces some pitfalls that were not present in the campaigns against sweatshop labor in the 1990s. For one, the problem is potentially more nuanced. Unlike a sweatshop where all of the workers, perhaps including child laborers, make subsistence (or lower) wages for work performed under dangerous conditions, there are large numbers of Dominican-born players in MLB that make millions of dollars a year, some of whom are the face of their franchise.[196] The plight of school-age children may not seem so pressing when there is such dramatic upside for a few lucky players. Similarly, unlike the anti-sweatshop movement, which drew strength from many interrelated groups and causes,[197] there may not be a similar block of baseball fans dedicated to labor rights. I have no doubt that there are individual baseball fans who care about labor conditions in the Dominican Republic, but baseball is, after all, a spectator sport, and many baseball fans wish to escape real-world problems. If the average fan’s critical faculties are engaged, they are likely directed toward dissecting the decisions of the team on the field, not the labor conditions that produced the players on the team.[198] However, it is likely that the prospect of getting Western consumers to care about the conditions under which their jeans and shoes were produced seemed similarly dire in early days of the anti-sweatshop movement. On the other hand, because the problem is less extreme than some labor law violations, such as widespread labor and health and safety violations throughout a global supply chain, and the fixes would cost less, it may take less pressure before MLB decides that the benefit of implementing a code of conduct regarding players in the Dominican Republic is worth the cost. In fact, through continued discussions about possibly instituting an international draft, MLB may be coming to the conclusion that its brand will suffer if it continues to ignore the circumstances that produce players in the Dominican Republic. The degree to which a commitment to even an international draft is real, and not just a way of kicking the can down the road, is yet to be seen.[199] Although management and the players association may both agree with the draft in principle, neither appears to be willing to expend bargaining power to make it a reality. Without additional public pressure, even this small change may never come to pass.


While MLB has delivered benefits to the Dominican Republic, including making some of its citizens very rich, baseball has left many aspiring Dominican players who pursue a career in the big leagues with little educational or vocational skills. Exacerbating this problem is the presence of buscones, who have no incentive to make sure the children they train get a proper education or receive sufficient medical care. Given that MLB has contributed to this situation, as the only organization paying for young baseball players, it should bear some responsibility for remedying the educational and health deficit. Like MNCs, MLB should adopt a corporate code of conduct to regulate its behavior in the Dominican Republic. A corporate code of conduct, which institutes a licensing program for buscones, would go part of the way toward ensuring that children receive a better education and are not otherwise abused by licensed buscones. However, since such a licensing program would promote dialog over rigid punishment, the code of conduct may also need to require MLB academies to provide supplemental education, at least until improvement is shown in school attendance and conditions improve for child players at independent academies. Some commentators have called for the institution of an international draft. While an international draft may help prevent abuses, it would also have the effect of removing the incentives for MLB to invest in the Dominican Republic. Finally, any solution to the problem would require increased public pressure, since MLB has been slow to confront the scope of its obligation in the Dominican Republic. Although the prospect of rallying baseball fans around labor conditions in the Dominican Republic may seem daunting, given the scope of the harm and the relatively small changes required, it may not be as insurmountable a task as it seems.
* J.D., 2013, New York University School of Law; B.A., 2005, University of Wisconsin-Milwaukee. I would like to thank Cynthia Estlund for her helpful substantive and structural suggestions. [1] See Sean Gregory, Baseball Dreams: Striking Out in the Dominican Republic, Time, Monday July 26, 2010, available at time/magazine/article/0,9171,2004099-1,00.html. [2] See Diana L. Spagnuolo, Swinging for the Fence: A Call for Institutional Reform as Dominican Boys Risk Their Futures for a Chance in Major League Baseball, 24 U. Pa. J. Int’l Econ. L. 263. [3] See Gregory, supra note 1. [4] Id. [5] See Jesse Sanchez, Creating Complete, Healthy Players,, 2215646&vkey=news_mlb&fext=.jsp&c_id=mlb. [6] See Gregory, supra note 1. [7] Id.; Steve Fainaru, The Business of Building Ballplayers, Washington Post, June 17, 2001, at A01, available at [hereinafter Fainaru, Business of Building]. [8] See Gregory, supra note 1. [9] See Spagnuolo, supra note 2, at 275. [10] See Bob Ruck, Baseball’s Recruiting Abuses, Americas Quarterly, available at (describing MLB’s overwhelming presence in the Caribbean, and how this presence led to the development of the buscón system). [11] See Major League Rules, available at [hereinafter MLR]. [12] Id. § 3(a)(1)(A) (“A player who has not previously contracted with a Major or Minor League Club, and who is a resident of the United States or Canada, may be signed to a contract only after having been eligible for selection in the First-Year Player draft.”). [13] Id. § 4(a). [14] J.P. Breen, Hard Slotting is Bad for Baseball, Fangraphs (Nov. 9, 2011), [15] MLR, supra note 11, § 4(h) (“A player who is selected at a First-Year Player Draft and who does not sign a Major or Minor League contract before being removed from the selecting Club’s Negotiation List . . . shall be subject to selection at the next First-Year Player Draft at which the player is eligible for selection.”). [16] Id. § 3(a)(2)(A). [17] Id. § 3(a)(3)(B)-(E). [18] Even though the percentage of high school players drafted rose between the 2011 and 2012 draft, high school players still only make up 30% of the players drafted. See Kevin Askeland, MLB Draft 2012 by the Numbers, Max Preps, Yb40hby1E0Ocecbsw72k9w/mlb-draft-2012-by-the-numbers.htm. [19] MLR, supra note 11, § 3(a)(1)(B)(i). [20] Id. § 3(a)(1)(B)(ii). [21] Arturo Marcano & David P. Fidler, The Globalization of Baseball: Major League Baseball and the Mistreatment of Latin American Players, 6 Ind. J. Global Legal Stud. 511, 538 (1999) (“The power of the MLB scouts vis-a-vis a baseball prospect in Latin America is greater than it was in the United States (generally speaking) because of the poverty and relative lack of education suffered by the prospect and his family. As a representative of a MLB team, a scout with the power to sign prospects has tremendous leverage over a vulnerable young player from a poverty-stricken country. In addition, although many MLB teams scout in Latin America, potential prospects may not see scouting frenzies over their talent because the scouting system is not as well structured as the pre-draft American system was. These factors lead to Latino prospects who are generally willing to sign anything a MLB scout puts in front of them without receiving anything close to the kind of signing bonuses received by American baseball draftees.”). [22] See Posting System, Baseball Reference, (in 2011, MLB’s Texas Rangers paid the Hokkaido Nippon Ham Fighters over $51 million to negotiate a contract with their star pitcher Yu Darvish). [23] See Teams by Affiliation,, [24] See Sanchez, supra note 5. [25] See Adam Wasch, Children Left Behind: The Effects of Major League Baseball on Education in the Dominican Republic, 11 Tex. Rev. Ent. & Sports L. 99 (citing Office of the Commissioner MLB-Dominican Republic, MLB Investment in the Dominican Republic, [26] See Spagnuolo, supra note 2, at 269-270 (“Many allege that not all players at the academies are actually signed, and that boys between the ages of twelve and sixteen often attend the camps.”). [27] See Spagnuolo, supra note 2, at 275; Vanessa Marie Zimmer, Dragging Their Devotion: The Role of International Law in Major League Baseball’s Dominican Affairs, 4 Nw. U. J. Int’l Hum. Rts. 418, 421 (2005). [28] See Zimmer, supra note 27, at 421 (noting that while it is clear that forging documentation is a problem, it might be more prevalent at the other end of the spectrum with players falsifying their ages to appear younger than they are. This behavior only reinforces the notion that players believe teams put a premium on youth.). [29] See Spagnuolo, supra note 2, at 270. [30] Id. [31] See Gregory, supra note 1. [32] Id. [33] Id. [34] See Spagnuolo, supra note 2, at 272-73. [35] See id., at 271 (referring to this method of signing Dominican players as the “Boatload Mentality”). [36] See Spagnuolo, supra note 2, at 271(“Critics argue that this unabashed behavior by scouts only proves their point: MLB sees these players as commodities and fails to recognize the long-term negative implications that some of their actions might have on the players’ lives.”). [37] See Gregory, supra note 1. [38] Major League Baseball-Major League Baseball Player’s Association Collective Bargaining Agreement, § 7(B)(1) [hereinafter CBA]. In November 2011, MLB and MLBPA negotiated a new CBA extending through the 2015 season, by the end of which the minimum salary will be $500,000 per season. Jayson Stark, Major League Baseball Players, Owners Sign New Labor Agreement,, major-league-baseball-players-owners-sign-new-labor-agreement. [39] See Gregory, supra note 1. [40] CIA, The World Factbook, [41] In fact, it appears that those players who are cut due to injury after they sign may never receive their signing bonus. See Marcano & Fidler, supra note 21, at 545. [42] If fact, it appears this “succeed at all costs” mentality does not end once Dominican players reach the United States. Between 2005 and 2007, 58.5% of all players who tested positive for performance-enhancing drugs across major and minor league operations, including those in Latin America, came from the Dominican Republic. See Arturo J. Marcano Guevara & David Fidler, Fighting Baseball Doping in Latin America: A Critical Analysis of Major League Baseball’s Drug Prevent and Treatment Program in the Dominican Republic and Venezuela, 15 U. Miami Int’l & Comp. L. Rev. 107, 123-24 (2007). [43] The dangers are exacerbated by the fact that many players take steroids intended for animals. See Fainaru, Injecting Hope—and Risk: Dominican Prospects Turn to Supplements Designed for Animals, Washington Post, June 23, 2003, at A01, available at forums/mess-hall/122165-injecting-hope-risk.html [hereinafter Fainaru, Injecting Hope]. [44] See Sanchez, supra note 5. [45] See Sanchez, supra note 5. The article notes that four MLB teams, the Boston Red Sox, Cleveland Indians, New York Mets and Seattle Mariners, have established connections with high schools in Santo Domingo. [46] See Wasch, supra note 25, at 108 (noting that the San Diego Padres built class rooms at their facility and have also “partnered with the Dominican Government, the American Chamber of Commerce in the Dominican Republic and the U.S. Agency for International Development (USAID) to improve the quality of basic public education in the Dominican Republic, specifically, . . . the surrounding schools that sit only a few miles away from the team’s new multi-million dollar baseball academy”). [47] See Gregory, supra note 1(noting that in 2010, of the 31 prospects in the academy during that school year, 29 passed their current grade level and 5 were expected to earn high school diplomas). [48] See Gregory, supra note 1; Fainaru, Business of Building, supra note 7. [49] See Gregory, supra note 1; Fainaru, Business of Building, supra note 7. [50] Fainaru, Business of Building, supra note 7 (stating that not only do buscones take a cut, but in some cases steal the signing bonus from the player). [51] Fainaru, Business of Building, supra note 7. [52] Fainaru, Business of Building, supra note 7. [53] U.S. Dep’t of Labor, Bureau of Int’l Labor Affairs, Dominican Republic (2005) available at dominican-republic.htm#_ftnref1332 [hereinafter ILAB]. [54] See Santo Domingo Office Mission Statement, MLB.comDR, [55] See Wasch, supra note 25. [56] See Fainaru, Injecting Hope, supra note 43. [57] See Gregory, supra note 1. [58] See Mike Rosenbaum, Examining the Percentage of MLB Draft Picks Who Reach the Major Leagues, Bleacher Report (June 12, 2002), While Rosenbaum notes that sixty-six percent of first round draft picks reach the major leagues, the percentage drops precipitously from there, with players in the last rounds of the draft reaching the major leagues less than ten percent of the time. [59] Id. [60] There is a professional “winter league” in the Dominican Republic, but its players are drawn mostly from MLB players looking to stay in shape in the offseason, as opposed to a long-term domestic employment opportunity. See Dominican League,, (last visited Feb. 20, 2013). [61] Spagnulo, supra note 2, at 278 (“Remittances from family members in the United States are one of the largest contributors to the Dominican economy.”). [62] “‘Internationalization’ refers to the geographic spread of economic activities across national boundaries. As such, it is not a new phenomenon. Indeed, it has been a prominent feature of the world economy since at least the seventeenth century when colonial empires began to carve up the globe in search of raw materials and new markets for their manufactured exports. ‘Globalization’ is much more recent than internationalization because it implies functional integration between internationally dispersed activities.” Gary Gereffi, Outsourcing and Changing Patterns of International Competition in the Apparel Commodity Chain (2002), available at [63] Id. [64] Id. [65] Citing a Department of Labor Study, one commentator mapped J.C. Penny’s complex supply chain: “J.C. Penney purchases its childrens’ apparel from Renzo, a U.S.-based importer; Renzo imports from Robillard Resources, its Filipino agent; Robillard purchases from a number of contractors in the Philippines, one of whom is Castleberrry [sic]; Castleberry subcontracts to about thirty plants; these plants employ factory workers and subcontract out certain jobs like smocking or embroidery to home workers on a piece work basis.” Maria Gillen, The Apparel Industry Partnership’s Free Labor Association: A Solution to the Overseas Sweatshop Problem or the Emperor’s New Clothes?, 32 N.Y.U J. Int’l. L. & Pol. 1059, 1085 (2000). [66] Id. [67] Id. [68] Id. [69] See Gillen, supra note 65 and accompanying text. For instance, the soccer federation, FIFA, has had difficulty regulating the production of soccer balls, in part because the production is spread between many low-level suppliers. In 1996, after the use of child labor to make “official” FIFA soccer balls was exposed, labor unions and international soccer’s governing body reached an agreement by which FIFA would regulate the labor conditions of soccer ball manufacturers. See Frederick B. Jonassen, A Baby-Step to Global Labor Reform: Corporate Codes of Conduct and the Child, 17 Minn. J. Int’l L. 7, 39-40 (2008). In addition to the physical requirements (such as size and weight), manufactures that wished to produce FIFA soccer balls, which included the corresponding label, would be required to meet the core ILO labor standards. Id. However, after FIFA established the program, NGOs uncovered continued use of child labor in the manufacturer of “official” FIFA soccer balls. Id. In 2003, FIFA and the ILO entered into an agreement to try and stop the use of child labor called “The Red Card to Child Labor.” Id. (citing FIFA Tolerates Massive Violations of Labour Law, Berne Declaration, (Feb. 5, 2002), available at However, as late as 2010, NGOs were still reporting widespread use of child labor in the manufacture of soccer balls. See Press Release, World Cup Soccer Balls: Exploitation Still the Norm, Clean Clothes Campaign, (June 7, 2010), available at [70] See Gereffi, supra note 62. [71] See id. [72] See Ruck, supra note 10. [73] Id. [74] See Gereffi, supra note 62. [75] See Gillen, supra note 65 and accompanying text. When set against the attenuated buyer-side supply chain that Gillen describes, the relationship between MLB teams and buscones seems exceedingly familiar. [76] In a series of cases, the United States Supreme Court has determined the statutory scope of the term “employee,” when used in a statute, and otherwise undefined, as describing the master-servant relationship as understood by common-law agency doctrine. See Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322-23 (1992) (citing Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 439-40 (1989). In looking at the situation in the Dominican Republic, I believe common-law agency principles are applicable here, especially since I am proposing guidelines to govern the behavior of a U.S. multinational. [77] Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 751-752 (1989). This list is adapted from the Restatement (Second) of Agency, which provides the following factors to determine whether one is a servant or independent contractor:
(a) the extent of control which, by the agreement, the master may exercise over the details of the work; (b) whether or not the one employed is engaged in a distinct occupation or business; (c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; (d) the skill required in the particular occupation; (e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work; (f) the length of time for which the person is employed; (g) the method of payment, whether by the time or by the job; (h) whether or not the work is a part of the regular business of the employer; (i) whether or not the parties believe they are creating the relation of master and servant; and (j) whether the principal is or is not in business.
§ 220(2). [78] See Gregory, supra, note 1. [79] See, e.g., Robert A. McCormick & Amy Christian McCormick, The Myth of the Student-Athlete: The College Athlete as Employee, 81 Wash. L. Rev. 71 (2006); Jonathan L. H. Nygren, Forcing the NCAA to Listen: Using Labor Law to Force the NCAA to Bargain Collectively with Student-Athletes, 2 Va. Sports & Ent. L.J. 359 (2003); Stephen L. Ukeiley, No Salary, No Union, No Collective Bargaining: Scholarship Athletes Are an Employer’s Dream Come True, 6 Seton Hall J. Sports L. 167 (1996). [80] See Fainaru, Business of Building, supra note 7. [81] Id. [82] See Cmty. for Creative Non-Violence, 490 U.S. 730. [83] See Gregory, supra, note 1. [84] As noted above, this can include the use of steroids. See Fainaru, Injecting Hope, supra note 43. [85] See Ruck, supra note 10 (“Parents, who are most often poorly educated and know little about the business of baseball, rarely serve as a check on less-than-ethical buscones.”). [86] The number of players entering the academies each year is only in the hundreds, as opposed to the millions of small pieces that may be manufactured when making small machinery, or, say, shoes. See Gregory, supra note 1. [87] See Fainaru, Business of Building, supra note 7. [88] See Gereffi, supra note 62. [89] Id. (noting that an “attenuated supply chain is . . . perhaps the biggest obstacle to ensuring a code of conduct is implemented at all levels of production.”). [90] Constitution of the International Labour Organisation, available at (last visited Apr. 13, 2012) [hereinafter ILO]. [91] Alphabetical List of ILO Member Countries, (last visited Apr. 13, 2012). [92] See ILO, supra note 90, 19 ¶ 5(d). [93] ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up (adopted June 18, 1998 (Annex revised June 15, 2010)), available at–en/index.htm (last visited Apr. 13, 2012). [94] Id. ¶ 2 (emphasis added). [95] Id. [96] UN Convention on the Rights of the Child, adopted Nov. 20, 1989, 1577 U.N.T.S. 44 (entry into force Sep. 2, 1990), available at [97] Id. at Article 32. [98] Id. at Article 28. [99] Id. at Article 32. [100] Status of treaty ratification as of Apr. 13, 2012, available at [101] Monitoring the Fulfilment of States Obligations, UNICEF, (last updated Nov. 5, 2005). [102] Id. [103] Id. [104] Convention Concerning Minimum Age for Admission to Employment, June 26, 1973, 1015 U.N.T.S. 297 [hereinafter Minimum Age Convention]. [105] Ratifications of C138 – Minimum Age Convention, 1973 (No. 138), Int’l Lab. Org., (last visited Mar. 8, 2013) [hereinafter Ratifications C138]. [106] Minimum Age Convention, supra note 104, art. 2, no. 3, at 300. [107] Id. at art. 2, no. 4. [108] Id. at art. 7, no. 1, at 302. [109] Ratifications C138, supra note 105. [110] See Zimmer, supra note 27, at 421 and text accompanying note 128. [111] See Fainaru, Business of Building, supra note 7; Gregory, supra note 1. [112] See UN Convention of the Rights of the Child, supra note 96, art. 28, at 53. [113] Universal Declaration of Human Rights, G.A. Res. 217 (III) A, art. 26, U.N. Doc. A/RES/217(III) (Dec. 10, 1948). [114] See id.; United Nations Convention of the Rights of the Child, supra note 96, art. 28, at 53. [115] See Fainaru, Business of Building, supra note 7. [116] See Gregory, supra note 1. [117] See Wasch, supra note 25, at 107 (noting that only the Dominican Republic spends only 2.3% of GDP on education and that only 58.9% of Dominican boys who enter first grade complete fifth grade). [118] Occupational Health and Safety, Int’l Lab. Org., occupational-safety-and-health/lang–en/index.htm (last visited Mar. 7, 2013). [119] Ratifications of C167 – Safety and Health in Construction Convention, 1988 (No. 167), Int’l Lab. Org., (last visited Mar. 7, 2013). [120] Ratifications of C155 – Occupational Safety and Health Convention, 1981 (No. 155), Int’l Lab. Org., (last visited Mar. 22, 2013). [121] See Guevara & Fidler, supra note 42, at 123-24. [122] See Fainaru, Injecting Hope, supra note 43. [123] See U.N. Convention of the Rights of the Child, supra note 96, art. 32, at 54. [124] See Fainaru, Injecting Hope, supra note 43; Guevara & Fidler, supra note 42, at 123-24. [125] Also, one writer has suggested that the United States and Latin American countries producing baseball players enter into a multinational agreement that would govern the situation. See Jessica N. Trotter, Rooting for the “Home Team”: How Major League Baseball and Latin America Can Better Provide for the “Safe”-ty of Their Players, 13 Sw. J.L. & Trade Am. 445 (2006). [126] See Zimmer, supra note 27. [127] See Ruck, supra note 10. [128] See Gillen, supra note 65, at 1065-67 (identifying attenuation in the international production chain that “allows multinationals to disclaim responsibility for the inhumane labor standards” in developing countries). [129] See Natasha Rossel Jaffe & Jordan D. Weiss, The Self-Regulating Corporation: How Corporate Codes Can Save Our Children, 11 Fordham J. Corp. & Fin. L. 893, 901 (2005) (“Underdeveloped countries benefit greatly from the presence of MNCs, and the incentives are skewed against regulating them. They create wealth in the states where they operate by providing jobs, producing goods and services, introducing technologies, and developing markets.” (footnotes omitted)). [130] See Wasch, supra note 25, at 101. [131] See Jonassen, supra note 69, at 42-48 (describing the responses of a number of MNCs to scandals over labor conditions within their supply chains). [132] Terry Collingsworth, The Key Human Rights Challenge: Developing Enforcement Mechanisms, 15 Harv. Hum. Rts. J. 183, 202 (2002) (“The ATCA presents the potential to address claims involving intentional physical or mental harm, but is not likely to reach less extreme but much more common claims, including abominable working conditions.”). [133] 28 U.S.C. § 1350 (2006). [134] The Supreme Court is currently deciding Kiobel v. Royal Dutch Petroleum Co., where the questions include whether the ATCA applies to corporations, and whether and under what circumstances the ATCA applies to violations occurring within the territory of a sovereign other than the United States. No. 10-1491 (U.S. argued Oct. 1, 2012). [135] See Collingsworth, supra note 132, at 197. [136] See Collingsworth, supra note 132, at 185-95. [137] See Wasch, supra note 25, at 123. [138] One needs look no further than the ongoing steroid scandals in baseball for evidence of how difficult it is for baseball to deal with issues of integrity. Although baseball attendance did not decline during the so-called “steroid” era, that period of baseball history has left a stain on the current game, including seriously tarnishing the reputations and post-baseball careers of those persons implicated. See Wayne G. McDonnell, Jr., A Hall of Fame Quandary Involving Sportsmanship, Integrity and Character, Forbes (Jan. 4, 2013, 9:25 PM), [139] Of course, a CCOC need not only apply to a MNC’s operations in the developing world. I am focusing on codes that do so apply because they represent a private regulatory enforcement function that is likely to exist in the absence of a functioning public regulatory system in many developing countries. [140] See Jonassen, supra note 69, 42-46. [141] Famous sweatshop scandals include the discovery by a New York Times journalist of sweatshop conditions in a factory in El Salvador where GAP clothing was made, and the National Labor Committee allegations that Kathie Lee Gifford-brand clothing was made with the use of child labor in Honduras. Kathie Lee Gifford later became an outspoken advocate against the use of child labor. See Jonassen, supra note 69, 42-46. [142] These values are espoused by consultancy organizations such as Business for Social Responsibility. BSR, (last visited Mar. 7, 2013). [143] The movement from code to a regulatory mechanism often requires additional public pressure. For example, media scrutiny of—and subsequent consumer displeasure with—the conditions under which Apple products are made at the FoxxConn Factories in China has led Apple and FoxxConn to agree to a more intrusive self-regulatory scheme, including allowing independent monitoring firms access to the factories. See Charles Duhigg & Steven Greenhouse, Electronic Giant Vowing Reforms in China Plants, N.Y. Times (Mar. 29, 2012), 2012/03/30/business/apple-supplier-in-china-pledges-changes-in-working-conditions.html?pagewanted=1. [144] See Levi Strauss & Co., Social and Environmental Sustainability Guidebook (2010), available at librarydocument/2010/6/ses-2010-guidebook.pdf. [145] See Nike, Inc., Code of Conduct (2010), available at [146] See Adidas Grp., Workplace Standards (2007), available at English_Workplace%20Standards.pdf. [147] See Jonassen, supra note 69, at 39-40. [148] In fact, Levi-Strauss references ILO-equivalent standards throughout its code of conduct. See Levi Strauss & Co., Levi Strauss and Co. Global Sourcing and Operating Guidelines [hereinafter Levi Global Sourcing], available at librarydocument/2010/4/CitizenshipCodeOfConduct.pdf. [149] See Jonassen, supra note 69, at 43. [150] See Levi Global Sourcing, supra note 148. [151] See Levi Global Sourcing, supra note 148. [152] See Levi Global Sourcing, supra note 148. [153] Id. [154] Verité, Client Testimonials, (last visited Apr. 12, 2012). [155] Lisa G. Baltazar, Government Sanctions and Private Initiatives: Striking a New Balance for U.S. Enforcement of Internationally-Recognized Worker’s Rights, 29 Colum. Hum. Rts. L. Rev. 687, 719 (1998). [156] Levi Strauss, “LS & CO. Affects Positive Change in Mauritian Labor Conditions,” available at [157] Id. [158] Id. [159] See MLR, supra note 11. [160] Though of course MLB has a stake in the production of star players, since such players drive interest in MLB generally. [161] For a timeline of MLB’s response and eventual implementation of a drug testing program see Drug Policy Coverage,, (last visited Apr. 20, 2012). [162] See Gillen, supra note 65, at 1085. [163] See Wasch, supra note 25, at 107. [164] See Baltazar, supra note 155, at 718-19 (noting that under Levi-Strauss’s guidelines, it may withdraw from countries which fail to comply with its code of conduct). [165] See Zimmer, supra note 27, at 428. [166] See ILAB, supra note 53, at 152. [167] See Wasch, supra note 25, at 107. [168] See Wasch, supra note 25, at 107. [169] See Cmty. for Creative Non-Violence, 490 U.S. 730. [170] See Zimmer, supra note 27, at 427. [171] See Robert J. Liubicic, Corporate Codes of Conduct and Product Labeling Schemes: The Limits and Possibilities of Promoting International Labor Rights Through Private Initiatives, 30 Law & Pol’y Int’l Bus. 111, 152-56 (1998) (detailing indirect effects of CCOC). [172] See Wasch, supra note 25, at 123-4. [173] See Zimmer, supra note 27, at 421. [174] Note the case of Adrian Beltre, who was signed at age 15, perhaps knowingly, by the Los Angeles Dodgers. See Spagnuolo, supra note 2, at 270. [175] See Wasch, supra note 25, at 123 (“Major League Baseball will discontinue cooperation with any third-party that persists in non-compliance with our MLB Child Labor Code of Conduct.”). [176] See Sanchez, supra note 5. [177] Although Levi’s did withdraw before it entered into negotiations to push the Mariatas to adopt stronger anti-discrimination laws, given MLB’s position as the major employer of Dominican baseball players, it likely has more leverage to negotiate with the Dominican government without taking such a drastic measure. See Levi Strauss, “LS & CO. Affects Positive Change in Mauritian Labor Conditions,” supra note 156. [178] See Wasch, supra note 25, at 108-9. [179] See Gregory, supra note 1. [180] As noted earlier, the Pittsburg Pirates, MLB’s poorest team, paid $75,000 in 2010 to run an educational program at its academy. Id. [181], “MLB, MLBPA reach new five-year labor agreement,” 26025138&vkey=pr_mlb&c_id=mlb (last accessed Apr. 12, 2012) (“By December 15, 2011, the parties will form an International Talent Committee to discuss the development and acquisition of international players, including the potential inclusion of international amateur players in a draft or in multiple drafts.”). [182] Although the current draft also has a suggested slotting system, it is not clear that teams and players feel bound by the suggested signing bonus figures. [183] Incredibly, one commentator has argued that the current system disadvantageous players in the draft to the benefit of international free agents to such a degree that it amounts to national origin discrimination. See Daniel Hauptman, The Need for a Worldwide Draft to Level the Playing Field and Strike Out the National Origin Discrimination in Major League Baseball, 30 Loy. L.A. Ent. L. Rev. 263 (2010). In fact, some players have threatened to establish residency in another country to escape the strictures of the draft, and presumably command a higher signing value. See id. at 264. However, the bargaining power that a player in that position has is greater than a player with equal skills who grew up in a developing country. [184] See Timothy Poydenis, The Unfair Treatment of Dominican-Born Baseball Players: How Major League Baseball Abuses the Current System and Why it Should Implement a Worldwide Draft in 2012, 18 Sports Law. J. 305 (2011); Wasch, supra note 25; Spagnuolo, supra note 2. [185] See Wasch, supra note 25, at 108. [186] According to the interviews conducted by Spagnuolo in 2001, players in the academies made between $600 and $700 per month, while garment workers made around $100 per month. See Spagnuolo, supra note 2, at 273. [187] CBA, supra note 38, § 15(F). [188] See Wasch, supra note 25, at 106 (quoting [189] MLR, supra note 11, § 3(a)(1)(B)(i)-(ii). [190] Tom Weir and Blane Bachelor, Spanish-Speaking Players Get Lesson in American Life, USA Today (Apr. 4, 2004), sports/baseball/2004-04-13-cover-latinos_x.htm. [191] See CBA, supra note 38. [192] In 2010, over 10% (86 of 833) of players on MLB opening day rosters were from the Dominican Republic. See Gregory, supra note 1. [193] See Zimmer, supra note 27, at 428. [194] See Gregory, supra note 1; Fainaru, Business of Building, supra note 7. [195] Sugar (2008). Although Sugar was a drama, not a documentary, it showed the path of one player who began his career in the Dominican academies, made it to the American minor leagues, but due to injury and lack of an adequate support system, dropped out of baseball. Unlike players who stop playing baseball while still in the Dominican Republic, after the protagonist in Sugar leaves baseball, he is left to fend for himself in the United States with no education and rudimentary English skills. [196] David Ortiz of the Boston Red Sox and Robinson Cano of the New York Yankees, to give two prominent examples. [197] See Michele Micheletti & Dietlind Stolle, The Politics of Consumption/The Consumption of Politics: Mobilizing Consumers to Take Responsibility for Global Social Justice, 611 Annals 157, 163-64 (2007) (noting that the global anti-sweatshop movement was made up of “more than one hundred organizations representing church groups; student groups; think tanks; policy institutes; foundations; consumer organizations; international organizations; local to global labor unions; labor-oriented groups; specific antisweatshop groups; no-sweat businesses; business investors; and international humanitarian and human rights organizations, networks, and groups.”). [198] Commentators such as Noam Chomsky have posited that there is a real danger in the vigor with which people consume sports, in that the energy used to follow, and criticize a sports team takes up critical thinking skills and might otherwise be used to examine and criticize institutional power. See Noam Chomsky, Manufacturing Consent: Noam Chomsky and the Media (1992). [199] Although, the institution of an international draft has been floated for many years, the latest collective bargaining agreement merely says that the issue will be revisited at the end of the current agreement, which expires at the end of 2015. See, supra note 181.

Student-Athletes and the NCAA: Playing by the Rules

By Steven Olenick* A pdf version of this article may be downloaded here. Prized basketball recruit Renaldo Sidney has yet to step foot on the court for the Mississippi State Bulldogs.   His eligibility status remains uncertain due to an ongoing investigation by the National Collegiate Athletic Association (NCAA) into his amateurism status regarding receiving improper benefits.[FN1]Oklahoma State star wide receiver, Dez Bryant, was ruled ineligible by the NCAA this past season for lying about a meeting with NFL great Deion Sanders.[FN2] Major League Baseball prospect Andrew Oliver was suspended by Oklahoma State University because he had violated Bylaw 12.3.1 by allowing his former attorney to contact a Major League club and by having his former attorney present when a Major League Baseball club tendered him a contract.[FN3] Recently, another Major League Baseball prospect, James Paxton, had his eligibility questioned for his dealings with a Major League Baseball club.[FN4] One theme remains constant in all of these aforementioned matters: student-athlete amateurism status.   Under the NCAA Bylaw’s, any student-athlete will be ruled ineligible in any collegiate sports if he or she has committed themselves verbally or in writing to be represented by an agent.[FN5] The NCAA furthers their stance by not allowing a student-athlete to enter into a representation agreement verbally or in writing until after the student-athlete has completed their eligibility.[FN6] The NCAA’s position is intended to keep professionals away from student-athletes.[FN7] The NCAA is not directly prohibiting student-athletes from engaging professionals, such as attorneys, so long as they do not have direct contact with professional teams.[FN8] The NCAA carries out these bylaws by requiring student-athletes to sign a non-negotiable waiver which bars them from competing in intercollegiate sports in the event that they do not sign the form.  Although this may appear to be a constitutional violation, depriving a student-athlete of his or her Fourteenth Amendment due process right, the NCAA’s conduct is not actionable under state law when a private organization does not adopt state rules, but, rather, holds collective membership within a private organization.[FN9] So where does this leave potential professional prospects needing proper guidance in the agent selection process and player contract negotiation?  The NCAA does not prohibit hiring an attorney or business manager; however, neither can represent the student-athlete openly during negotiations with a professional team. [FN10] Attorneys and business managers can discuss the merits of a deal with a student-athlete and guide him or her  appropriately throughout the agent selection process, however, at no time may they initiate discussions between the team and player, nor directly contact the team on the player’s behalf.[FN11] This anachronistic approach by the NCAA may appear to monopolize student-athletes.  History suggests that the NCAA does not want anyone to challenge its loosely worded bylaws pertaining to agent legislation.[FN12] Additionally, the paucity of case law suggests that the NCAA is very sensitive in resolving any matter attacking these specific bylaws to uphold its existing form. One possible panacea would be to strongly encourage the NCAA to work in concert with all governing professional sports leagues to ensure that student-athletes who have  the ability to play post-college have access to a checks and balance system that would provide them with proper guidance in evaluating a post-collegiate career.  The NCAA determines whether schools have proper oversight and compliance, but it can be argued that their bylaws may be widely interpreted.  The NCAA is intended to protect student-athletes and provide them the best opportunity to succeed both on and off the court.  Unfortunately, however, for the few select student-athletes that have the ability to extend their career beyond the collegiate ranks, the NCAA could be limiting their ability to obtain proper guidance and receive credible information that could sway their decision making process.  By modifying the NCAA bylaws to allow for the NCAA to become the mediator between the potential professional prospect and the professional team, the NCAA could monitor the discussions and obtain the proper information to pass along to the student-athlete for him or her to decide on his or her potential professional future.  Additionally, implementing an effective checks and balance approach would allow student-athletes to receive proper oversight during the decision making process and allow for the NCAA to provide the much needed oversight currently lacking in student-athlete decision making.  Until the NCAA introduces alternative measures to minimize the lack of oversight and information relayed to student-athletes, student-athletes will not be able to obtain proper guidance to help them through the difficult decision making process of declaring for professional drafts or foregoing collegiate eligibility. *** * Steven Olenick is an Associate in the Entertainment, Media & Publishing, Advertising, Marketing & Promotions and Intellectual Property Groups of Davis & Gilbert. He counsels individuals, entertainers, current and retired professional athletes, coaches, start-ups, sports agencies, marketing companies, advertising companies and digital media companies in connection with all aspects of advertising, marketing, digital technology and sports and entertainment. In addition, Mr. Olenick counsels and provides strategic business advice to current and retired professional athletes and sports agencies all over the world. Prior to joining the firm, Mr. Olenick worked for Entersport Management, Inc, an agency that specializes in the representation of professional basketball players internationally.  Mr. Olenick began his legal career at Paul, Weiss, Rifkind, Wharton & Garrison LLP, a firm widely recognized as a leader in litigation and corporate transactions.
[FN1] Mike DeCourcy, Attorney: Mississippi State Mishandling Renardo Sidney’s Eligibility, Sporting News, Jan. 8, 2010. [FN2] Thayer Evans, Oklahoma State Declares Star Receiver Bryant Ineligible, N.Y. Times, Oct. 8, 2009 at B17, also available at [FN3] Division I Agents, Amateurism and Elite Student-Athletes,,%20Ama%20and%20ESA%20OL.pdf (Last visited Mar. 25, 2010). See also (Last visited Mar. 25, 2010). [FN4] See id. [FN5] See id. [FN6] See id. [FN7] See id. [FN8] See id. [FN9] See NCAA v. Tarkanian, 488 U.S. 179 (1988). [FN10] See idSee also Pitt’s Blair Declares for NBA Draft, (last visited Mar. 26, 2010). [FN11] Id. [FN12] Rendall Rogers, Report: Kentucky Ace Pitcher James Paxton Sues School, Destination: Omaha, Dec. 3, 2009,,206373See also Liz Mullen, OSU P Andy Oliver Files Suit Against NCAA, Former Advisor, SportsBusiness Journal, July 2, 2008,