There isn’t a team in Major League Baseball that wouldn’t jump at the chance to sign Mike Trout, whose two MVP awards in his first five years of big league service vastly underrepresent how good he really is. And there isn’t a team that could afford to do so that wouldn’t throw hundreds of millions of dollars in his direction if they were legally allowed to do so. In fact, the only reason there won’t be a bidding war of historic proportions to sign the 25-year-old phenom any time soon is that he’ll be under contract with the Angels through 2020 after signing a six-year, $144.5 million contract extension back in 2014.
But over at FanGraphs, law professor Nathaniel Grow explores a legal loophole that could allow California-based baseball players to enter free agency ahead of what the CBA—and even voluntarily-signed contract extensions—currently allow. In a detailed and convincing breakdown, Grow explains how under Section 2855 of the California Labor Code employers cannot hold their employees to contracts that last beyond seven years. In other words, after the seven year mark, regardless of the contract’s specific terms, an employee can opt out.
This would specifically contrast the rules under MLB’s CBA, which dictate that teams control players for any combination of up to seven years in the minor leagues and six in the major leagues—a maximum of 13 years total—before they’re eligible for free agency. Grow contends that Section 2855 would allow players on California-based teams who have been with the same franchise for seven years to claim free agency early.
This means that any player who was originally acquired by a California franchise in 2009 or before, and who has subsequently remained with the team, could now potentially opt-out of his contract and declare for free agency, even if he hasn’t yet accrued six years of MLB service time.
Grow is assuming an application of the law that doesn’t differentiate employment with the farm system versus the major league club, even though players only enter the union in the majors. We reached out to Grow to expand on this point and he explained, “I don’t think the lack of unionization would come into play. If anything, it would help the case because it would make any CBA issues less relevant.” Undercutting the relevance of the CBA would be a key point if this issue were to go to the courts, but we’ll get to that in a minute.
Grow speculates that this hasn’t come up yet because the inevitable costly litigation presents a strong deterrent, or because agents simply aren’t aware of the potential, or else because players are already using threats of Section 2855 lawsuits as leverage in their negotiations behind closed doors. (He cites a rumor that doing just that was how Don Drysdale and Sandy Koufax ultimately succeeded in their salary holdout against the Dodgers back before free agency existed.)
Setting aside Trout’s personal opinions (he seems to enjoy playing in Southern California), there’s never been a player who’s stood to gain more by getting out of his contract early. So what’s the legal likelihood that this would actually work?
As Grow mentions, a baseball player’s attempt to void his contract would be the first time Section 2855 was used by a member of a union, and one tactic MLB might take in fighting back would be to claim that since National Labor Relations Act governs collective bargaining, the CBA sometimes acts as federal law, and would thus supersede the California state law. In order for this argument to work, MLB would have to show that matter of free agency either requires an interpretation of the CBA or that Section 2855 specifically impinges on conduct that’s protected or prohibited by the NLRA. Neither of these seem especially promising for MLB, although the former seems more promising than the latter. This is also why Grow speculated that the exclusion of minor league players from the MLBPA would actually help the cause of player in Trout’s position, arguing that the CBA does not preempt California state law.
As of this past season, Trout has accumulated seven years in the Angels’ system, but in his case it isn’t just the rules under the CBA that prevent him from exploring free agency—or at least, it won’t be after this next season, his sixth in the majors. The contract extension he signed in 2014 keeps him underpaid and with the Angels for an additional two years.
Whether the 2014 deal constitutes a continuation of the original contract or whether it restarts the clock for another seven years would likely be the primary issue if Trout were to actually take this to court. At FanGraphs, Grow cites one example, involving Oscar De La Hoya of all people, in which the courts ruled that an employee could opt out of a contract after seven years, even in the midst of a voluntary contract extension.
At first, this seems somewhat specious. That case involved a federal court construing state law, and since it’s not officially reported, it has limited value as a precedent. But digging into the arguments of that case, which was decided in 2001, we found that the decision was based on legislative history. “Starting in 1985, the California Legislature repeatedly considered amendments to section 2855 to permit new or superseding contracts to restart the seven-year period,” Matthew Byrne, Jr. wrote in the decision.
In other words, the court considered preventing exactly what Trout would be relying on for his case. Since Section 2855 was later reenacted specifically without these proposed amendments, it’s fair to assume that contract extensions would not be exempt from the seven-year limit.
However, the De La Hoya case stipulates that extensions only act as continuations if they’re signed while still under the original contract. Any gap in time between contracts would restart the clock. This matters because for the first six years of a baseball player’s career, during which time he cannot enter free agency, he is not on one contract but rather a series of one-year contracts. If at any point there was a break before re-tendering, that would negate Section 2855.
Regardless of whether or not Trout could opt out of his contract with the Angels to pursue another career entirely, it remains possible that MLB could claim that having not yet granted him official free agency, any team that subsequently signs him would be in violation of the CBA. Section 2855 would clear the Angels and Mike Trout of any culpability, but MLB could potentially take the signing team to court, the fear of which would lower Trout’s market value.
The real reason it probably hasn’t been pursued yet is just because litigation inevitably drags on for longer even than this blog post. By the time the courts decided if Trout could walk away from the Angels, he’d have put in another couple MVP-caliber seasons and be facing free agency anyway. But if a player ever did want to take up the mantle? Well, they’d have a pretty good case.