MLB, Astros, Red Sox Win DraftKings Players Sign Stealing Appeal

DraftKings fantasy sports players lost their bid to revive claims against Major League Baseball, the Houston Astros, and the Boston Red Sox stemming from the league sign-stealing scandal, after the Second Circuit ruled Monday they failed to state any plausible claims.

The U.S. Court of Appeals for the Second Circuit also denied the New York Yankees’ motion to keep sealed a letter from MLB commissioner Robert Manfred to Yankees general manager Brian Cashman about the league’s sign-stealing investigation.

The privacy considerations of the MLB and the team don’t outweigh the presumption of public access to a judicial document, the court said.

The plaintiffs alleged the MLB and the Houston and Boston teams wrongfully promoted fantasy baseball wagering competitions that they “caused to be, and knew or should have known were, corrupt and dishonest.”

The proposed class members asserted that the defendants represented the MLB fantasy contests would be conducted as “games of skill,” while knowing that sign stealing was distorting the player statistics on which the games were based.

The players’ claims fail because any statements the defendants made about fantasy baseball contests being “games of skill” are “not rendered plausibly false due to the existence of rules violations, including electronic sign-stealing,” the appeals court said.

The plaintiffs also failed to show that they relied on any alleged misrepresentation, the court said.

Their consumer protection claims can’t survive either because the alleged misrepresentations and omissions “do not support a plausible deceptive or unfair practice under any of the applicable consumer protection statutes,” the court said.

Ruling on the Yankees’ cross-appeal, the court said the club’s concern that the letter could be “distorted” to make it appear that the Yankees violated the MLB’s sign-staling rules “can be remedied by the widespread availability of the actual content” of the document to the public, and the ability of MLB and the Yankees to publicly comment on it.

The investigation originally focused on a complaint by the Yankees about the Boston Red Sox’s use of an Apple smart watch in the dugout to relay game information during the 2017 MLB season, the Yankees said in appellate court filings.

The investigation expanded after the Red Sox complained the Yankees made improper use of a broadcaster’s camera, “a meritless claim for which MLB found no evidence,” the Yankees say.

Despite this, the Yankees said, “the plaintiffs tried to falsely portray the Yankees as having engaged in sign stealing in violation of MLB’s rules.”

Following media reports, an MLB investigation concluded that during the 2017 and 2018 seasons, the Astros illegally used a camera system to steal signs. A player or staff member would convey the upcoming pitch to the batter by banging on a trash can.

The league also found that the Red Sox video replay operator, on some occasions during the 2018 season, used game feeds in the replay room to revise sign sequence information he had given to players before the game.

The Astros were ordered to pay a $5 million fine as a penalty for the sign-stealing, and to forfeit their regular first and second round selections in the 2020 and 2021 first-year player drafts. The Red Sox forfeited their second round selection in the 2020 first-year player draft.

Judge Joseph F. Bianco wrote the opinion, joined by Judges Gerard E. Lynch and Debra Ann Livingston.

Silver Golub & Teitell LLP and Radice Law Firm PC represented the plaintiffs.

Sullivan & Cromwell LLP represented the MLB. Boies Schiller Flexner LLP represented the Yankees.

Vinson & Elkins LLP represented the Astros. Cravath, Swaine & Moore LLP represented the Red Sox.

The case is Olson v. Major League Baseball, 2d Cir., No. 20-1831, 20-1841, 3/21/22.