NASCAR Wins Legal Battle Against Michael Jordan and Front Row Teams
A three-judge federal panel ruled in favor of NASCAR this Thursday in the antitrust lawsuit filed by two teams, one owned by Michael Jordan, and overturned a court order that required 23XI and Front Row to be recognized as “charter” status teams while their case proceeds through the legal system. Both racing teams sued NASCAR late last year after refusing to sign new agreements on the renewal of their “charters”. The “charters” system is similar to franchises in other sports, but the “charters” are revocable by NASCAR and have expiration dates. 23XI, owned by Michael Jordan and Denny Hamlin, three-time winner of the Daytona 500, joined Front Row in the lawsuit against NASCAR after 13 other organizations signed the renewals and these two organizations refused.The two teams sued and requested a temporary restraining order recognizing them as “charter” teams for this season. The antitrust case is not scheduled to be heard until December. 23XI and Front Row have 14 days to appeal to the full court, and the court order is unrelated to the merits of the antitrust case. The soonest NASCAR can treat teams as non-“chartered” – a “charter” guarantees its organizations a starting spot each week and prize money – is one week after the deadline to appeal, provided there is no pending appeal. NASCAR hasn’t said what it would do with the six “charters” held by the two organizations if they are returned to the sanctioning body. There are only 36 “chartered” cars for a field of 40 cars. If the teams don’t appeal, the six entries would have to compete as “open” cars, which means they would have to qualify by speed each week to participate in the race and would receive a fraction of the money. The teams said they needed the court order because the current “charter” agreement prohibits them from suing NASCAR. 23XI also argued that it would be harmed because Tyler Reddick’s contract would have made him a free agent if the team could not guarantee him a “charter”-protected car. It’s unclear what would happen with Reddick’s contract. Last year’s regular season champion is going to Michigan this weekend ranked sixth in the Cup standings. Both organizations are still seeking a win this season; Hamlin’s three wins are with Joe Gibbs Racing, the team he races for. The original judge ruled that NASCAR’s “charter” agreement likely violated antitrust law by granting the injunction. But when they heard arguments last month, the three judges on the U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia, indicated they were skeptical of that decision. The judges said in Thursday’s ruling that they were unaware of any case supporting the lower court’s antitrust law theory, so they overturned the injunction. In summary, because we have not found any evidence to support the proposition that a business entity or person violates antitrust laws by requiring a prospective participant to grant a release for past conduct as a condition of doing business, we cannot conclude that the plaintiffs clearly demonstrated that they were likely to succeed on the merits of that theory. And without satisfaction of the likelihood of success element, the plaintiffs were not entitled to a preliminary injunction.We are disappointed by today’s ruling by the Fourth Circuit Court of Appeals and are reviewing the decision to determine our next steps. This decision is based on a very limited consideration of whether a release of claims in “charter” agreements is anticompetitive and does not affect our chances of winning at the trial scheduled for December 1. We remain confident in our case and committed to competing throughout this season as we continue our fight to create a fair and equitable economic system for stock car racing that is free from anticompetitive and monopolistic conduct.
Jeffery Kessler, attorney for 23XI and Front Row
