“In their opening brief, defendants use overblown rhetoric and hyperbole to attack the district court’s reasoning. They assert that the judge did not understand antitrust law and abused his discretion. But the ‘errors’ defendants identify are not errors at all. The district court applied well-established precedent to the extensive fact and expert record, properly exercising its discretion to grant a narrowly tailored preliminary injunction that protects the rights of all parties and the public until trial. Each of defendants’ arguments against this narrow injunction is meritless.”
This is the shorthand version of how 23XI Racing and Front Row Motorsports will argue in the Fourth District of Appeals come a hearing on May 9.
NASCAR is attempting to override a federal district judge’s decision to grant 23XI and Front Row charter status this season in advance of a December 1 trial over the federal antitrust lawsuit that both sides have now filed against each other.
On February 13, NASCAR filed a brief with the appeals court and made the argument that the district judge’s decision was ‘riddled with errors.’ NASCAR argued that the preliminary injunction forced NASCAR into a binding agreement with teams but only on the terms agreeable to 23XI and Front Row.
NASCAR disagreed with the judge, who ruled that 23XI and Front Row were likely to suffer irreparable harm without some form of charter status this season, but only after the teams provided evidence that Tyler Reddick had an opt-out clause in his driver contract with 23XI that would trigger if the team didn’t have a charter. Front Row claims that several sponsors have several similar provisions.
The teams addressed that in their Friday response:
“Driver Tyler Reddick gave notice under his agreement that 23XI had 30 days (until December 18) to assure him that he would drive a chartered car in 2025. Driver Bubba Wallace said he needed to know ‘immediately’ how 23XI intended to compete so he could explore opportunities with other teams. Driver Corey Heim did the same, telling 23XI he needed answers ‘right away’ so that he could ‘speak with other Cup race teams to see if any other opportunities would exist.’
“A major 23XI sponsor revoked one promotion and rescinded an opportunity for a multi-year deal because it was ‘scared that both [23XI cars] could miss the Daytona 500 … [and] that Reddick will leave the team’ at the end of 2024. And a key sponsor informed Front Row that it was ‘evaluating options to reduce, eliminate or redirect [its] financial commitments’ given the uncertainty over charter status. (“If you don’t qualify or are not allowed to race in the Daytona 500, it will be a breach of our agreement. The Daytona 500 is not a race you can remedy us [if you miss it].”)
The Sanctioning Body also believes the ruling was a contradiction in providing charter status as relief when it says the lawsuit is effectively about deeming the entire system as unlawful.
The teams said in response on Friday that they ‘needed to—and did—show only that they will likely be able to prove that they are suffering antitrust injury by receiving below-competitive market prices for selling their services in a monopsony market.’
The teams say, ‘the complaint does not seek to invalidate the entire charter agreement’ and that their complaint only alleges that contractual provisions that prevent participating teams from suing NASCAR on antitrust grounds and not competing in other similar racing divisions are violations of the law.
Just as NASCAR did in its brief, the teams also spent much of their response detailing the history of the conflict between the two parties but from their vantage point, explaining why it believed they were dealing with a monopsony:
- acquiring premier racetracks and refusing to grant any other stock car races access to this necessary resource;
- contractually forbidding Cup Series racetracks that NASCAR does not own from hosting other stock car races;
- acquiring its closest rival to prevent it from growing into a competitor to the Cup Series;
- forbidding chartered teams from competing in other stock car races or owning a share of any competitor to the Cup Series;
- requiring chartered teams to use and pay for expensive “Next-Gen” cars that cannot be used in competing stock car races; and
- as a condition of competing in Cup Series events, imposing a release that defendants assert would bar plaintiffs from pursuing their antitrust claims against NASCAR.
That competing rival referenced in (3) was ARCA, a dubious claim at best as ARCA never had an adversarial relationship with NASCAR and was always a sister series of sorts, even before its acquisition in 2018.
This filing also included the first verbatim reference to what the lawsuit release clause in the charter document said.
“Team Owner … hereby releases and forever discharges [NASCAR] … from all [claims] … arising out of or relating to the criteria used by [NASCAR] to determine whether or not to enter into, or to offer to enter into, a Charter Member Agreement with the Team Owner or any other Person …”
The teams said similar language appeared on the entry blanks for non-chartered participants for Cup Series races and that NASCAR only removed that language on November 15 after the lawsuit was filed.
Much of the response filing is 23XI Racing and Front Row lead attorney Jeffrey Kessler pulling key quotes and assertions from Judge Kenneth D. Bell’s ruling:
- losing drivers due to not having charter status could not be remedied through final judgement
- That NASCAR ‘would not be harmed at all’ by allowing the two teams to race under chartered terms in 2025
- And that public interest favored this decision, that the consumer (fans) pay to watch the best drivers and teams compete for the championship
The teams also used the Daytona 500 as providing ‘no evidence that the preliminary injunction caused any harm to NASCAR, which hailed the race as a great success.’
The teams say NASCAR disagreeing with the court’s decision does not make it an error.
NASCAR, which has now threatened to end the charter system should it lose this case, has argued that 23XI and Front Row are arguing to dismantle the agreement if they in fact find it to be unlawful. The teams have only specified key elements of the agreement it found unlawful:
“ … plaintiffs here do not seek to dissolve the parties’ entire contractual relationship (the charter system) as a Sherman Act violation. In fact, the opposite is true. Plaintiffs want to be part of the charter system—but on fair, market-based terms. …”
NASCAR would say, and has claimed in filings, that the lawsuit is only an attempt from the teams to secure better terms than the ones 13 of 15 teams ultimately agreed to and is not otherwise based in legal standing.
In closing, the teams defend the injunctive relief as fair to both sides:
“It protects plaintiffs from the one exclusionary charter provision (the Release) that defendants argue would preclude this case (and therefore plaintiffs’ ability to challenge any of defendants’ exclusionary acts at trial), without forcing plaintiffs’ businesses to suffer irreparable injury from racing without charter rights. For defendants, the injunction kept in place all but one of the 2025 charter terms—terms that defendants demanded and ‘repeatedly represented’ benefit them.
The only thing ‘paradoxical’ is the defendants’ objection that the preliminary injunction should be vacated because it is too narrow because it does not enjoin the covenant not to compete that the complaint alleges is an unlawful exclusionary act. If taken seriously, that is an argument for expanding, not jettisoning, the injunction. If that is what defendants want, plaintiffs do not object.”
That is in fact not what NASCAR wants, for what it’s worth.
Full document
Lawsuit timeline
23XI Racing, Front Row decline to sign NASCAR’s final 2025-2031 charter document
Why 23XI, Front Row filed a lawsuit against NASCAR
23XI, Front Row makes his case in antitrust lawsuit against NASCAR
Richard Childress says he had ‘no choice’ but to sign charter document
How drivers feel about the lawsuit
Michael Jordan comments on his team’s lawsuit against NASCAR
Meet NASCAR’s antitrust defense lawyer
NASCAR files injunction to be included in charter system through lawsuit
NASCAR motions against team’s preliminary injunction request
NASCAR, teams consent to redacting charter details in filings
Teams make case for injunctive relief, expedited discovery
NASCAR’s lengthy rebuttal to injunction, lawsuit
Teams respond to NASCAR response over injunction
23XI, Front Row and NASCAR go to court over injunctions
Judge rules against teams preliminary injunction request
Denny Hamlin says 23XI may not race next year
What preliminary injunction denial means for lawsuit
NASCAR drops ‘lawsuit release clause’ in open agreement
Appeal timeline rebuttal filed by NASCAR
Why 23XI may not have to race in the Clash without charters
Teams drop appeal, may re-file in district court
23XI, Front Row re-file injunction request
NASCAR opposes expedited timeline
France, NASCAR motion to dismiss, deny SHR charter transfer request
NASCAR says injunctive request still fails to show irreparable harm
Teams say NASCAR went back on its word over SHR charters
23XI, Front Row respond to NASCAR’s motion to dismiss
Judge orders NASCAR to issue charters to 23XI, Front Row
NASCAR plans to appeal injunction ruling; other details
Judge grants partial stay of injunction in blunt response to NASCAR
Teams accuse NASCAR of petulance in response to delay request
Why Judge Bell did not delay his injunction order
NASCAR wants 23XI, FRM to post bond covering 2025 charter pay
Both sides meet in court to argue motion to dismiss, bond payment
Judge rules against NASCAR’s motion to dismiss, trial on schedule
Injunction appeal formally filed by NASCAR
NASCAR files counterclaim
Why NASCAR is counter-suing the teams
