23XI Racing, Front Row Motorsports want NASCAR countersuit dismissed

NASCAR: EchoPark Automotive Grand Prix — Credit: Jamie Harms-Imagn Images

23XI Racing and Front Row Motorsports have motioned to dismiss the antitrust countersuit brought to them by NASCAR on Wednesday afternoon.

This is a response to the countersuit filed by NASCAR — one that alleges that the two teams suing the sanctioning body were actually the ones in violation of sports antitrust laws in the form of a conspiracy led by 23XI investor Curtis Polk who attempted to undermine both the business of the sanctioning body and the charter extension negotiation with Cup Series teams.

NASCAR’s interpretation of Section 1 of the Sherman Antitrust Act paints 23XI and Front Row as ‘separate economic actors who agreed to join together to collectively negotiate with NASCAR’ which would be different than a collectively bargained position from entities that are equal participants, like players of a stick and ball sport.

Also Read:
Why NASCAR is countersuing 23XI Racing and Front Row Motorsports

Both 23XI and Front Row issued separate motions to dismiss, outlining their case both collectively and individually.

23XI Racing stated that NASCAR agreed to the joint negotiation between itself and the ‘Team Negotiating Committee,’ which was spearhead by Polk (23XI) and also included Jeff Gordon (Hendrick Motorsports), Steve Newmark (RFK Racing) and (Joe Gibbs Racing) Dave Alpern.

From the 23XI filing:

“When NASCAR’s joint negotiations with the TNC over the terms of the 2025 Charter Agreement did not lead to an agreement, proceeded with individual negotiations with each of the teams.”

23XI Racing is arguing that these negotiations were deemed acceptable by the Sanctioning Body until it could not get all the teams to agree to terms through the TNC.

“There is no allegation that the teams refused to engage in individual negotiations with NASCAR. To the contrary, it is undisputed that individual negotiations led to every one of the chartered teams, except 23XI Racing and Front Row Motorsports, individually agreeing to NASCAR’s final terms for the 2025 Charter Agreement.”

23XI Racing is saying there could be no conspiracy because NASCAR ultimately reached agreeable terms with 13 of the 15 teams individually.

Front Row Motorsports points out that the counterclaim against them should be dismissed on the grounds alone that it wasn’t even represented by the TNC. There was no one from Front Row ownership or leadership included on that committee.

The following is from the FRM filing:

“And there are no other specific allegations in the counterclaim to plausibly claim that Front Row was a participant in the alleged conspiracy. Front Row’s motion to dismiss can thus be granted on this ground alone.”

Front Row also pointed out that its membership in the Race Team Alliance is also in and of itself not enough to produce anticompetitive behavior.

“Membership in a trade association like the RTA cannot, by itself, be the basis for pleading concerted action among the members of such an association.”

Meanwhile, 23XI also points out that the existence of the RTA predates the involvement of Polk, with their team only entering the sport in 2021.

Further, 23XI Racing argued that the TNC was merely an efficient way to negotiate with NASCAR. 23XI referenced as a precedence, Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., as a case that showed that such a effort produced procompetitive effects and not anticompetitive ones.

“Indeed, even joint purchasing and selling arrangements outside of the sports business— where there is not the same need for common terms of competition—have been recognized by the courts and antitrust regulators as having potential procompetitive benefits and efficiencies.”

In its countersuit, NASCAR points to an alleged boycott of the 2023 Duel at Daytona qualifying race for the Daytona 500, one that it states was orchestrated by Polk. 23XI says NASCAR can’t prove an ‘attempt’ to boycott, and even further, ‘an attempt’ isn’t enough to warrant a Section 1 Sherman Antitrust suit on the merits.

“There is no allegation that such a threatened boycott of qualifying races ever took place. This too defeats NASCAR’s Section 1 claim, as there is no ‘attempt’ liability under Section 1. NASCAR’s claim of a threatened boycott of qualifying races that never happened does not satisfy the Section 1 test.”

Once again, Front Row Motorsports also pointed out there is no evidence that they conspired to participate in any such boycott.

“There are also no allegations that Front Row engaged in any specific conduct related to the allegedly threatened group boycott of NASCAR qualifying races or the alleged efforts to interfere with NASCAR’s media rights deal.”

NASCAR also argued that the Polk led TNC boycotted a scheduled meeting with NASCAR in April of 2023 and that it produced harm upon the Sanctioning Body.

“(NASCAR) fails to allege any facts to plausibly show that either the threatened qualifying race boycott that did not come to fruition or a lone missed quarterly business meeting could have caused any reduction in competition that inflicted any antitrust injury on NASCAR.”

All told, 23XI Racing says NASCAR failed to produce evidence of any antitrust injury inflicted upon it by the two teams in how it negotiated with the Sanctioning Body. NASCAR also accused Polk and TNC of interfering with broadcast rights negotiations through the alleged qualifying race boycott.

23XI Racing said in its filing that NASCAR has done nothing but applaud where it ended up with FOX, NBC, Amazon Prime and Turner Sports.

“Mr. Phelps (as in NASCAR president Steve Phelps) publicly heralded NASCAR’s new media rights deal as a remarkable achievement in the face of declining NASCAR TV viewership; that is the opposite of an antitrust injury.”

On one hand, NASCAR asked the court to remove Section 3(a) from the 2025 charter agreement, which is what guarantees all members of the agreement guaranteed entry into every Cup Series event.

23XI and Front Row successfully received ‘injunctive relief’ from the court that provided the teams de facto membership into the agreement this season, despite not agreeing to those terms, as a means of preserving the status quo until the December 1 trial.

NASCAR’s argument in court is that the provision should be stricken from the charter agreement if it’s unlawful.

However, NASCAR also has said publicly through attorney Christopher Yates that it would like to maintain the agreement with the teams that signed it.

“NASCAR is happy to proceed with the charter system and work with any and all teams interested in collaborating to grow the sport,” Yates said earlier in the month. “By seeking a declaration that the 2025 charter agreement is illegal, violates the antitrust laws. 23XI and Front Row are claiming the charters are illegal agreements. This opens up Pandora’s box and calls into question whether the charter system will continue.

“In addition, by challenging specific provisions like the exclusivity agreement, which is a common agreement in most sports, if they’re successful, then the corresponding commitments by NASCAR of guaranteed entry into Cup Series races for charter holders necessarily will go away.

“Although NASCAR recognizes the value charters have brought to teams and is certainly willing to continue with the model with the terms mutually agreed upon by NASCAR and 32 charter holders, NASCAR now finds itself in the ironic position to defend a model that NASCAR never asked for in the first place.”

23XI, in response, dismissed this entire argument as having any merit on the case. In its filing, 23XI wrote:

“There are no allegations to explain how this relief request has any remedial connection to the counterclaim allegations of an agreement in restraint of trade with respect to the negotiations of the 2025 Charter Agreement.”

23XI Racing says that the only reason NASCAR asked for this specific relief in its countersuit was to discourage other teams from joining the lawsuit. It cited the language of the countersuit, below, and the italicized emphasis was denoted by the team:

23XI continues in its filing:

“This language reveals NASCAR’s true objective for seeking to invalidate Section 3.1(a) which is not to remedy the Section 1 violation alleged in the counterclaim, but to intimidate the non-party racing teams from joining in the challenge to NASCAR’s unlawful monopoly. This is the transparent explanation for why NASCAR counsel conducted a press conference with the filing of the counterclaim in which he delivered the warning that NASCAR will seek to eliminate the right of charter holders to have guaranteed racing spots if Plaintiffs prevail in their monopolization case.”

In review

Front Row says the specific countersuit against them should be dismissed because none of the allegations have anything to do with them.
23XI Racing says NASCAR failed to show that concerted negotiating efforts was a violation of the law.
23XI Racing says Section 1 of the Sherman Antitrust Law ‘does not condemn an attempt to conspire, nor a solicitation to conspire.’
23XI Racing says NASCAR did not show any anti-competitive injury