There have been several new developments in the 23XI Racing and Front Row Motorsports versus NASCAR lawsuit and the preliminary injunction case that must precede it.
For one, on Wednesday, the case was assigned to a different district judge, moving from Frank D. Whitney to Kenneth D. Bell. No reason was provided but earlier in the case, Whitney moved to recuse himself due to a previous working relationship with one of the attorney’s representing NASCAR but the attorneys representing the two teams said that would not be necessary and the case continue.
Since then, there has been dozens of filings, arguments held over an oral hearing, a judgment on the preliminary injunction, an appeal and then a refiling of the injunction in the district court. Effectively, this case will now start over in front of Judge Bell.
Teams claim NASCAR went back on its word
Before the lawsuit itself can proceed, the two teams are asking the Western District of North Carolina to order NASCAR to provide what amounts to temporary charters over the duration of the lawsuit to maintain a sense of status quo until a resolution is reached.
Its argument has been that competing without a charter, which guarantees revenue and starting positions in every race, would lead to irreparable harm to its respective businesses and standing within the industry.
NASCAR has responded that any harm is speculative and not certain, and the losses would be covered under judgement, should the teams ultimately prevail in its antitrust lawsuit against the sanctioning body.
Now, in the Thursday filing the teams argue that harm is both imminent, and occurring now, also alleging that the sanctioning body went back on its word to approve the transfer of charters both teams purchased from the shuttered Stewart-Haas Racing once the lawsuit was filed.
The teams’ filing reads:
“Now, NASCAR has inflicted further irreparable harm by reneging on its agreement to approve the transfer of a Stewart-Haas Racing, LLC (“SHR”) charter to Front Row. NASCAR is withholding approval of this transfer, [REDACTED] unless Front Row agrees to abandon its antitrust claims. The law does not require Plaintiffs to suffer financial ruin before obtaining preliminary relief. Nor does it allow Defendants to continue inflicting irreparable harm with impunity while blaming Plaintiffs for refusing to acquiesce to their monopolistic abuses.”
In its rebuttal asking the court to deny the temporary charters, NASCAR says it is not approving the transaction because those two charters were signed by a team that agreed to the 2025-2031 terms that 23XI and Front Row did not before pursuing antitrust litigation.
NASCAR says a lawsuit is not the appropriate avenue for a third party to rewrite the terms of a document agreed upon by the sanctioning body and Stewart-Haas Racing.
The teams did not mince words in their response to that assertion, bold type emphasis is theirs:
“Defendants’ arrogance cannot change the reality that circumstances have changed. Plaintiffs are already incurring irreparable harm without charter rights due to Defendants’ monopolization.”
What that harm specifically is has been publicly redacted but adds ‘Plaintiffs are suffering a loss of goodwill that will not be compensable in monetary damages.’
NASCAR claims that any harm upon 23XI Racing and Front Row racing has been self-inflicted and a result of their decision to not agree to the charter extension renewal terms after two years of negotiations. NASCAR’s position is that the two teams are only claiming a monopolization because it did not secure everything it wanted after the two plus years of going back and forth.
The two teams assert that the results of the negotiations has no bearing on whether or not NASCAR acts anticompetitively.
“Nor is this irreparable harm self-inflicted. … The fact that Plaintiffs were the only two teams who would not acquiesce to NASCAR’s demands does not change the fact that Defendants’ monopolization is causing Plaintiffs’ irreparable harm. Blaming victims for asserting their antitrust rights is not a defense to a Sherman Act violation.”
In the email exchange above, Front Row general manager Jerry Freeze appears to have received a written confirmation that the charter transfer from Stewart-Haas Racing would be approved at a $50,000 transfer rate if completed before the end of the year.
That charter was purchased on April 18.
NASCAR’s final charter offer was issued to teams on September 9. Freeze and NASCAR president Steve Phelps had a phone call conversation on September 11 before that email exchange on September 12. Freeze wrote in an affidavit:
“On September 11, 2024, I had a telephone conversation with NASCAR President Steve Phelps. During that conversation, Phelps volunteered that Front Row was already approved for the SHR charter transfer and only needed to submit the customary transfer documents.
“On September 12, 2024, I emailed Phelps to confirm his September 11 statement
that Front Row was approved for the charter transfer, would not need to submit paperwork on the matter, and would pay the transfer fee [REDACTED] Phelps replied, “You are correct, Jerry,” [REDACTED]
The filing states that Front Row submitted the Transfer Approval Form to NASCAR on November 14, a month after filing the lawsuit, and after a back-and-forth standard financial conversation with NASCAR legal’s Scott Prime, a denial came in over the lawsuit.
Freeze writes:
“NASCAR informed us on December 5, 2024 that it objected to the transfer and would not approve it, in contrast to the previous oral approval for the transfer confirmed by Phelps before we filed the lawsuit … NASCAR made it clear that the reason it was now changing course and objecting to the transfer is because NASCAR is insisting that we drop the lawsuit and antitrust claims against it as a condition of being approved. …
“NASCAR’s refusal to approve the transfer is causing additional irreparable harm to Front Row. In reliance on Phelps’ assurances of approval on September 11 and 12, we have made significant investments in our operations as part of our plans to operate a third chartered car for the 2025 Cup Series. We have also made several commitments with sponsors in preparation for running the third chartered car.
“At this time, we have just 7 weeks to be prepared to race in the first event of the 2025 season, so preparations have been underway for some time for the expansion which we were led to believe was already approved by NASCAR. As part of our plans to run the third car in 2025 [REDACTED]
At this point, the Freeze affidavit contains a long list of redactions.
There is also a signed affidavit from Stewart-Haas president Joe Custer wrote testimony that NASCAR signaled to him that the transfers would be approved and that the one remaining car under its purview, as Haas Factory Team, is not capable of retaining the two extra charters.
Custer writers:
“Stewart-Haas Racing, LLC has sold one NASCAR Charter Agreement and has executory contracts to sell two more NASCAR Charter Agreements and related assets (collectively, the Sales Transactions”) to Front Row Motorsports, Inc., a Tennessee cotporation, and 2311 Racing, LLC, a North Carolina limited liability company, or their affiliated assignees …
“NASCAR officials conveyed to me on more than one occasion that once the Buyers submitted their Transfer Approval Forms and signed their respective Joinder Agreements, NASCAR would promptly provide the necessary approvals to transfer the Charter Agreements to the Buyers.
“In anticipation of consummating the Sales Transactions in the first two weeks of December 6, Stewart-Haas Racing, LLC has taken many material and irretractable actions to wind down its operations and cease doing business by December 31, 2024, including. but not limited to:
- Releasing two professional race car drivers
- Terminating over two hundred employees and facilitated their reemployment with competitors
- Foregoing renewing contracts to acquire use of necessary engines
- Returning, selling or cancelling orders for necessary equipment
- Selling two airplanes
- Terminating sponsorship contracts
- Issuing multiple statement
Custer said Stewart-Haas will suffer irreparable harm if the transfers are not approved by NASCAR because it ‘does not have the personnel or resources to operate pursuant to the Charters intended to be sold to the Buyers …’
All told, the teams are also now asking the court to force NASCAR to approve the charter transfer while also granting charter status for the other two cars in both stables through the duration of the lawsuit.
The full response
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
