I am in the midst of a multipart exploration of the Major League Baseball (MLB) investigation into allegations that the Houston Astros engaged in a multi-year scheme to steal signs and signals from opposing teams. MLB issued a Statement of the Commissioner (MLB Report) detailing the investigation protocol, findings, disciplinary actions taken and conclusions. The entire sordid affair provides every compliance practitioner with multiple lessons to be learned that they can use in every corporate compliance program. Yesterday, I looked at the background. Today, I want to focus on the penalties assessed against Jeff Luhnow and AJ Hinch.

Even after the September 15, 2017 Memo from MLB Commissioner Rob Manfred making illegal precisely the type of sign stealing scheme the Astros were using, they continued to do so for the remainder of the 2017, including through their 2017 World Series championship run. The only difference is that it was now illegal under MLB law. In March 2018, the Commission’s office issued another Memo on the subject had the following highlighted in bold “To be clear, the use of any equipment in the clubhouse or in a Club’s replay or video rooms to decode an opposing Club’s signs during the game violates this Regulation.” Once again it does not appear that General Manager Luhnow circulated it to the team or “confirm that the players and field staff were in compliance with MLB rules and the memoranda.”

Unfortunately for the Astros, in the early part of the 2018 season, they continued their illegal sign stealing, cheating scheme. They ended the scheme for about as banal a business reason as you could imagine; the players no longer thought it helped them. From the MLB Report, it seems the Astros players knew they were cheating at the time they were doing it. The MLB Report stated, “Many of the players who were interviewed admitted that they knew the scheme was wrong because it crossed the line from what the player believed was fair competition and/or violated MLB rules. Players stated that if Manager A.J. Hinch told them to stop engaging in the conduct, they would have immediately stopped.” Further they went out of their way to hide the evidence when opposing teams got too close to finding the monitor and other physical evidence of the cheating scheme.

As noted, General Manager Jeff Luhnow was “adamant” in claiming he was not aware or nor did he participate in the sign stealing scheme. However the MLB Report does note “there is both documentary and testimonial evidence that indicates Luhnow had some knowledge of those efforts, but he did not give it much attention.” What was made clear in the MLB Report is that the General Manager did not circulate either the September 2017 Memo or March 2018 to the team or take any steps to assure compliance with either Memo.

Field Manager AJ Hinch “neither devised the banging scheme nor participated in it.” Indeed he did not support it and took an aforementioned baseball to the monitor more than once. Each time he did so it was repaired or replaced. Beyond this, Hinch appears to have done nothing to stop the practice. He did not tell the players to stop and did not even tell his Bench Coach, Alex Cora to stop his involvement. Commissioner Manfred found Hinch’s conduct unacceptable, stating, “As the person with responsibility for managing his players and coaches, there simply is no justification for Hinch’s failure to act.” Both men were assessed penalties of one-year suspensions by the Commissioner and subsequently both men were terminated by Houston Astros owner Jim Crane. Luhnow was also required to take an “appropriate program of management/leadership training to ensure that no incidents of the type described in this report occur in the future.” Hinch was further banned from “Major League, Minor League, or Spring Training facilities, including stadiums”.

The responses from both men were telling. Hinch accepted full responsibility for his actions, or rather his inactions. He released a Statement which said, in part “As a leader and Major League Manager, it is my responsibility to lead players and staff with integrity that represents the game in the best possible way. While the evidence consistently showed I didn’t participate in the sign stealing practices, I failed to stop them and I am deeply sorry.” Luhnow took very different approach, releasing a Statement that intoned “I am not a cheater” and that anyone who knows him can attest to his “integrity”. He blamed the players and Bench Coach Alex Cora. I guess he forgot he was in charge.

While not as damning as the cheating allegations, perhaps an equally troubling aspect of the findings by MLB was about the culture of the Astros. The actions of Brandon Taubman during the MLB playoffs were revisited. As reported in SI.com, this affair began when the (now former) Assistant General Manager of the Houston Astro, Brandon Taubman, screamed at a reporter, Stephanie Apstein and three other female reporters ““Thank God we got Osuna! I’m so f—— glad we got Osuna!”. Taubman referring to Roberto Osuna, the closer the Astros acquired while he was suspended 75 games for violating MLB’s domestic-violence policy, during the time he played for the Toronto Blue Jays. One of the reporters he targeted was wearing a domestic-violence awareness bracelet.

The Astros initially claimed that this female reporter made up the story and refused to apologize or even acknowledge the error. Finally, the Astros began to heal this huge FUBAR with a letter sent from owner Jim Crane to Sports Illustrated reporter Stephanie Apstein, which read in full, “On behalf of the entire Astros organization, I want to personally apologize for the statement we issued on Monday October 21st,” Crane wrote. “We were wrong and I am sorry that we initially questioned your professionalism. We retract that statement, and I assure you that the Houston Astros will learn from this experience.”

The Astros culture was broken, toxic and this culture lead directly to both the Taubman incident and the sign stealing, cheating scandal. The MLB report stated, “it is very clear to me that the culture of the baseball operations department, manifesting itself in the way its employees are treated, its relations with other Clubs, and its relations with the media and external stakeholders, has been very problematic. At least in my view, the baseball operations department’s insular culture – one that valued and rewarded results over other considerations, combined with a staff of individuals who often lacked direction or sufficient oversight, led, at least in part, to the Brandon Taubman incident, the Club’s admittedly inappropriate and inaccurate response to that incident, and finally, to an environment that allowed the conduct described in this report to have occurred.”

Tomorrow I will consider lessons for the compliance professional from this imbroglio.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2020