NASCAR Wins Legal Battle Against Michael Jordan’s Teams
A three-judge federal panel ruled in favor of NASCAR this Thursday in the antitrust lawsuit filed by two teams, one of which is owned by Michael Jordan. The decision overturns a court order that required 23XI and Front Row to be recognized as franchised teams while the case proceeds in the legal system.
Both racing teams sued NASCAR late last year after refusing to sign new agreements on the renewal of franchises. The franchise system in NASCAR is similar to franchises in other sports, but the franchises are revocable by NASCAR and have expiration dates.
23XI, owned by Michael Jordan and Denny Hamlin, three-time Daytona 500 winner, joined Front Row in the lawsuit against NASCAR after 13 other organizations signed the renewals and these two refused.
The teams demanded and requested a temporary restraining order recognizing them as franchised teams for this season. The antitrust case is scheduled to be heard in 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.We are disappointed by today’s ruling from the Fourth Circuit Court of Appeals and are reviewing the decision to determine our next steps. This ruling is based on a very narrow consideration of whether a release of claims in franchise agreements is anticompetitive and does not affect our chances of winning at the trial scheduled for December 1st.
Jeffery Kessler, attorney for 23XI and Front Row
The soonest NASCAR can treat teams as non-franchised, a franchise 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 has not said what it would do with the six franchises 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 do not appeal, the six entries would have to compete as “open” cars, meaning 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 franchise 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 car protected by the franchise.
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 Series 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 franchise 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 that they were skeptical of that decision.
The judges said in Thursday’s ruling that they were unaware of any case that supported the lower court’s antitrust law theory, so they overturned the injunction.
In summary, because we have not found any support for the proposition that a business entity or person violates antitrust laws by requiring a prospective participant to give a release for past conduct as a condition of doing business, we cannot conclude that the plaintiffs have clearly shown that they are likely to succeed on the merits of that theory,” the court said. “And without satisfaction of the likelihood of success element, the plaintiffs were not entitled to a preliminary injunction.”
