The Fourth Circuit Court of Appeals heard NASCAR’s appeal over the preliminary injunction decision a lower district made in awarding charter status to 23XI Racing and Front Row Motorsports this season, as its federal antitrust lawsuit continues, despite the teams not agreeing to the terms of the document.
The court made that decision in December when 23XI and Front Row produced evidence that not having charters would trigger opt-out clauses in the contracts of both drivers and sponsors due to the teams not having charters. But the teams say they could not accept the terms of the charter agreement because of a release clause in the language of the document that denies participants in the Cup Series the ability to sue NASCAR.
The district judge determined the latter was a likely violation of federal antitrust law and awarded the two teams de facto charters for the rest of the season, in advance of a trial scheduled for December 1, effectively to maintain the status quo from before the lawsuit was filed in October.
NASCAR has appealed that decision, maintaining that the teams should not have access to charters, and that forcing the two parties into this binding agreement actually hurts the Sanctioning Body and the 13 teams (of 15 overall) that agreed to terms for the 2025-to-2031 charter agreement period.
A three judge panel in Richmond’s Fourth Circuit heard the arguments on Friday morning:
- Judge Paul V. Niemeyer (George H.W. Bush appointee)
- Judge G. Steven Agee (George W. Bush appointee)
- Judge Stephanie D. Thacker (Barack Obama appointee)
NASCAR’s attorney Chris Yates made his argument first.
“We have a situation where, the (teams) have been given the benefits of a contract that they rejected and so, in our view, they shouldn’t have gotten any of that,” said Yates in a 15 conversation with Niemeyer. “The District Court expressly said it would consider in the future, if its injunction were reversed, how it would address those kind of monetary flows.”
Yates said the other 13 teams would be receiving the money NASCAR is now having to pay out to 23XI and Front Row, teams that never even agreed to the charter extension terms.
“If you want to enter into an agreement to participate in NASCAR, there are various terms you have to agree to,” Yates said.
Yates also said, what he has said for six months, that 23XI and Front Row never brought up the release clause until they filed the lawsuit, despite that language appearing in the previous document that first governed the 2016-to-2024 Cup Series seasons.
“What’s really important here,” Yates said, “is that after over two and a half years of negotiating, the (teams) never once (brought up) the issue of the (lawsuit release clause.) They never said there was a problem with the Section 10.3 release.”
So when it was lead attorney Jeffrey Kessler’s time with Niemeyer, 23XI and Front Row Motorsports received a great deal of scrutiny for the positions they have taken.
“I had thought coming in and you can correct me, that the district court concluded that the (lawsuit release clause) was anticompetitive and therefore, to protect your antitrust claims, the court wanted you to be able to race but without a contract that included the release,” said Niemeyer, “and my concern and I’ll just lay it out there, I don’t understand the Section 2 analysis, what we need to have is the exercise of monopoly power to exclude competition.
“I can’t see why a release addresses competition in any sense. If you don’t want the contract, you don’t enter into it and you sue. But if you do want the contract, you enter into it, and you’ve given up past releases. But the Omega (a precedence case) is that you can’t have you cake and eat it too.”
Kessler said that without receiving charter status this season, his clients could have missed the Daytona 500, even if they didn’t and also would not have been allowed to acquire the two charters both organizations purchased from Stewart-Haas Racing – something the district court had to force NASCAR to do as part of the injunction decision.
But Judge Niemeyer seemingly rejected the lower court decision that 23XI and Front Row should have charters this season, because they never agreed to the terms.
“Let’s say it is (anticompetitive) then don’t enter into it,” Niemeyer said. “You don’t sit there and say ‘I want into that contract’ but also say ‘I want it modified to allow me to bring my antitrust claim.’ If you think the release excludes you from the opportunity, it’s a very difficult antitrust legal theory you have … in that you want to join the league but you don’t want to sign the mutual releases.
“The question is that the mutual releases would get rid pre-existing antitrust claims and if you have pre-existing antitrust claims, you should bring them and don’t expect to get the contract, but if you expect the contract, you should expect to get rid of the pre-existing antitrust claims.
“But I just don’t see how you can say ‘I want in but I want the contract modified, get rid of the mutual (lawsuit) release clauses.’”
Niemeyer said all of this while acknowledging that the merits of the antitrust suit and countersuit would need to be decided by the lower court, and that this is just pertaining to the injunction decision.
The three judges could decide at any point over the next couple of weeks and their ruling was not immediately expected.
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
Denny Hamlin responds to NASCAR countersuit
23XI, Front Row file for NASCAR counterclaim dismissal
NASCAR accuses district judge of faulty legal ruling
