Fantasy Baseball Players Are Striking Out In The Wake Of The Houston Astros Sign-Stealing Scandal
Fans may not be at the ballparks this year, but that does not mean Major League Baseball (“MLB”) can forget about them just yet. While the MLB was busy disciplining the Houston Astros and Boston Red Sox for violating MLB rules, Kristopher R. Olson, a citizen of Massachusetts, was busy filing a class action complaint for himself and similarly situated DraftKings daily fantasy baseball players.
Olson’s class action complaint arose from the Houston Astros sign-stealing scandal that drew widespread public attention in January of 2020. While sign-stealing in and of itself is not against MLB rules, electronic sign-stealing is. In 2017, the Red Sox were caught violating this rule. The MLB warned the rest of the league against using similar practices. Despite this warning, MLB discovered that in 2017 and 2018, the Astros used live video feeds to steal signs from opposing teams. MLB further discovered the Red Sox had continued their violation. Following investigations of both the Astros and Red Sox, MLB disciplined both teams for violating MLB rules by using electronic communication to assist in sign-stealing. Despite MLB’s actions to discipline the violating teams, certain daily fantasy baseball participants felt that they were personally harmed by MLB, the Houston Astros, and the Boston Red Sox. Accordingly, they sought legal relief.
The complaint made claims for relief for fraud, negligent misrepresentation, violation of consumer protection laws, and unjust enrichment.
Judge Jed S. Rakoff, a District Judge of the United States District Court for the Southern District of New York, struck down not only the original class action complaint, but also the amended class action complaint. He opened his opinion and order by admitting that “[a] sport that celebrates ‘stealing,’ even if only of a base, may not provide the perfect encouragement to scrupulous play.” However, Judge Rakoff went on to conclude that the relationship between the alleged harm and conduct was too attenuated to support any of the claims for relief. A question of particular importance was whether Defendants owed any duty to Plaintiffs. Judge Rakoff did not find a sufficient nexus between DraftKings and Defendants. He rejected Plaintiffs’ theory that MLB and DraftKings were joint venturers due to DraftKing’s designation as MLB’s “Official Daily Fantasy Game.” As the Houston Astros noted in their motion to dismiss, this determination aligns with courts’ repeated holding that “disgruntled fans” do not have a private right of action.
In their appeal brief, Plaintiffs dispute all of Judge Rakoff’s holdings. To mention a few of the allegations, Plaintiffs maintained there was a sufficient nexus between DraftKings and MLB due to their “comprehensive league partnership,” and MLB’s active marketing of the fantasy contests. Further, Plaintiffs emphasized that fantasy baseball is a “game of skill,” based on real-life performance of baseball players. Thus, they stated it is a matter of fact, not law, whether fantasy players can justify reliance on misrepresentations not explicitly about fantasy baseball.
This case could be part of an increase in litigation due to the legalization of sports betting. Since the Supreme Court struck down the Professional and Amateur Sports Protection Act in 2018, which banned authorization of sports betting, states are free to permit betting on sports. Many states have passed such legislation, and even more have legislation pending. Though states are split on whether fantasy sports are gambling or not (depending on whether fantasy contests are considered games of skill or luck), this case exemplifies the “zealous passion” fans can have towards sports bets and games.
These fantasy baseball players have already struck out twice in District Court and are now awaiting an opinion from the Second Circuit. Ultimately, I do not believe the Second Circuit’s holding will have widespread ramifications. If it affirms Judge Rakoff’s decision, it will extend the trend that fans do not have a private right of action to fantasy players. If it reverses Judge Rakoff’s decision, the holding would apply to a small subset of fans—those who play fantasy sports using a service sponsored by the league and its teams. However, if Plaintiffs do succeed, it would invite sports gamblers of all types to litigate when games do not go as planned.
 Statement of the Commissioner, Robert D. Manfred, Jr., Comm’r of Baseball, Major League Baseball (Jan. 13, 2020).
 Decision and Findings of the Commissioner in the Red Sox Investigation, Robert D. Manfred, Jr., Comm’r of Baseball, Major League Baseball (Apr. 22, 2020).
 See Statement of the Commissioner, Robert D. Manfred, Jr., Comm’r of Baseball, Major League Baseball (Jan. 13, 2020); Decision and Findings of the Commissioner in the Red Sox Investigation, Robert D. Manfred, Jr., Comm’r of Baseball, Major League Baseball (Apr. 22, 2020).
 See generally Class Action Complaint, Olson v. Major League Baseball, No. 1:20-cv-00632 (S.D.N.Y. Jan. 23, 2020).
 See Olson v. Major League Baseball, 20-cv-632 (JSR), 2020 WL 1644611, at *10 (S.D.N.Y. Apr. 3, 2020); Olson v. Major League Baseball, 20-cv-632 (JSR), 2020 WL 3025280, at *6 (S.D.N.Y. June 5, 2020).
 Olson, 2020 WL 1644611, at *1.
 Id. at 10.
 Id. at 2.
 Houston Astros, LLC’s Memorandum of Law in Support of its Motion to Dismiss, Olson, at 13; see e.g., Mayer v. Belichick, 605 F.3d 223, 225 (3d Cir. 2010) (dismissing a class action brought by a New York Jets season ticket holder who alleged that the New England Patriots’ “Spygate” scandal violated his contractual expectations and rights).
 Brief for Plaintiffs-Appellants at 22, 40, Olson v. Major League Baseball, No. 20-1831 (2d Cir. Aug. 12, 2020).
 Id. at 14-15.
 Id. at 41-42.
 See Adam Liptak & Kevin Draper, Supreme Court Ruling Favors Sports Betting, N.Y. Times (May 14, 2018), https://www.nytimes.com/2018/05/14/us/politics/supreme-court-sports-betting-new-jersey.html; Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461 (2018).
 See Interactive Map: Sports Betting in the U.S., Am. Gaming Ass’n (last updated Aug. 17, 2020), https://www.americangaming.org/research/state-gaming-map/.
 See Jennifer Chu, Researchers find most fantasy sports are based on skill, notluck, Phys.org (Nov. 7, 2018), https://phys.org/news/2018-11-fantasy-sports-based-skill-luck.html; Michael Levenson, Fantasy Sports Contests Are Illegal Gambling, New York Appeals Court Rules, N.Y. Times (Feb. 6, 2020), https://www.nytimes.com/2020/02/06/us/28-Fan-duel-draft-kings-law.html.
 Olson, 2020 WL 3025280, at *6.
 That cohort might be wider in states that consider fantasy sports gambling.