NASCAR Teams Seek Protective Measures in Lawsuit Over Competition Letters
Two NASCAR teams, one owned by NBA legend Michael Jordan, presented arguments before a federal judge on Tuesday. The goal is to obtain a preliminary injunction that recognizes them as chartered organizations until their antitrust lawsuit against the racing series concludes.
The 11-page document, filed in the U.S. District Court for the Western District of North Carolina, responds to NASCAR’s notification to Judge Kenneth Bell. The racing series reported that it will not redistribute any letters to new participants while the case moves toward the December 1 hearing date.
NASCAR’s decision on Friday came a day after a heated hearing. This included the disclosure of emails and text messages with explicit language from Jordan and other high-profile plaintiffs.
23XI Racing, the team of Jordan and Denny Hamlin, three-time Daytona 500 winner, along with Front Row Motorsports, owned by Bob Jenkins, are suing NASCAR for antitrust claims related to the charter system. A charter is the equivalent of a franchise. It guarantees charter cars a place in the weekly competition and a significantly larger portion of the payments.
Last September, after more than two years of negotiations, NASCAR presented its final offer on charter extensions to the teams. 13 organizations signed the agreements, but 23XI and Front Row refused.
Initially, the two teams obtained a restraining order to be recognized as holders of charters for this season. This was revoked, and currently 23XI and FRM compete as “open” teams. NASCAR seeks to recover the money that was paid to the teams during the part of the season in which they had a charter.
The teams have also appealed for the charter status to be reinstated, but NASCAR argued in court last week that it has a buyer interested in one of the six charters previously in the possession of 23XI and FRM, and plans to redistribute the charters immediately. Bell is expected to issue a ruling on the injunction this week.
NASCAR maintains that by refraining from redistributing the charters, 23XI and FRM are no longer at risk of suffering irreparable harm. The teams argued on Tuesday that the threat still exists “due to the risk of claims for breach of contract from their irreplaceable drivers and the loss of sponsors in the absence of charter rights.”
Tyler Reddick, from 23XI, has a clause in his contract stating that the team would be in breach if his Toyota doesn’t have a charter. Jeffrey Kessler, the lawyer for both teams, indicated in court that Reddick has notified 23XI about the breach.
Kessler also argued that NASCAR’s agreement not to redistribute any charter now “does not moot the plaintiffs’ motion for a preliminary injunction nor eliminate the plaintiffs’ irreparable harm if relief is not provided.”
The 13 teams that have competition letters are frustrated with the case. Bell warned last week that the entire letter system risks collapsing if an agreement is not reached. The teams that are not suing believe their valuations are affected by the litigation.
Dan Towriss, majority owner of NASCAR’s Spire Motorsports team, as well as owner of Cadillac F1, Andretti Global and other motorsports properties, expressed his “great disappointment with the direction” the lawsuit has taken.
Towriss said at last weekend’s IndyCar season finale: “We had meetings with NASCAR’s top brass a few weeks ago and it was ‘How can we help?’ What we saw [in court], what was revealed in that case, is very inconsistent with what they [NASCAR] say in private. And so I need to understand, ‘Who am I dealing with? What is it? Is it the people we meet with in private, or is it what they say when we’re not around?'”
Towriss also expressed his desire for NASCAR to reach an agreement with 23XI and FRM.
