NASCAR Suffers Legal Setback: Judge Dismisses Counterclaim Against Suing Teams
A federal judge ruled in favor of 23XI Racing and Front Row Motorsports, dismissing NASCAR’s counterclaim in a legal dispute over allegations of anti-competitive practices. U.S. District Judge Kenneth Bell issued a summary judgment in favor of 23XI Racing and Front Row Motorsports, rejecting NASCAR’s claim that Curtis Polk, co-owner of 23XI, illegally conspired with other teams during negotiations for new bylaws. 23XI is owned, among others, by Michael Jordan, NBA Hall of Famer, and Denny Hamlin, three-time Daytona 500 winner. Polk, in turn, has been Jordan’s longtime business manager. NASCAR argued in its counterclaim that a 2023 boycott of the meeting of the team owners council negatively impacted its media rights negotiations, and that the unification of the 15 organizations for the talks on the statutes allowed the teams to obtain a better deal.Judge Bell determined that 23XI and FRM did not participate in an “unreasonable restraint of trade”, as NASCAR’s individual meetings with the teams resulted in some changes to the charter agreement, and that the teams’ collaboration in the negotiations was reasonable, given that all charter agreements would be the same for all teams. Judge Bell must also rule on two other summary judgment motions: one from NASCAR seeking a ruling in its favor and another from 23XI and FRM to designate the market as “premier stock-car racing.” Despite two days of mediation last week, this legal dispute was not resolved, and the trial is still scheduled for December 1 in North Carolina. 23XI and FRM are the only two organizations out of 15 that refused to sign extensions to the charters, which are fundamental to NASCAR’s business model. A car with a charter is guaranteed income and access to weekly races, and without them, both teams claim they would almost certainly go bankrupt.The boycott was a negotiation tactic “that seemed to have little impact” because NASCAR began individual negotiations shortly thereafter.
Judge Kenneth Bell
NASCAR said in a statement that it is still awaiting an agreement. The season concludes with Sunday’s championship final in Phoenix, and Hamlin is one of the four drivers eligible for the Cup title. NASCAR stated that it respects the court’s decision, although it does not agree with its legal reasoning. Its priority is to resolve this matter quickly so that all parties can focus on the championship weekend and continue to grow the sport. If a resolution is not reached, NASCAR intends to appeal the decision at the appropriate time.Today’s decision has only reaffirmed my clients’ unwavering pursuit of a fairer and more equitable sport. Their determination remains strong as we continue our efforts for a resolution that benefits everyone: teams, drivers, employees, partners, and fans.
Jeffrey Kessler, attorney for 23XI/FRM
