Disparaging the lawsuit filed by 23XI Racing and Michael Jordan-owned Front Row Motorsports as a “misguided attempt to disguise the frustrations of private companies under an antitrust suit,” NASCAR this week asked a federal judge to dismiss the case altogether . NASCAR CEO Jim France, a co-defendant, separately filed a motion to dismiss, arguing that its inclusion is a “meritless” and “inappropriate” attempt to add antitrust allegations that require multiple defendants.
Although it only lasted two months, the dispute between billionaire Jordan and the multi-billion dollar company that is NASCAR generated many court files, ranging from aborted Jordanian group’s appeal to the U.S. Court of Appeals for the Fourth Circuit for flaming beards on the impact of the Thanksgiving holiday on filing deadlines. Both sides have retained prominent lawyers and appear prepared to spend whatever money is necessary to prevail.
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The heart of the matter is quite simple. 23XI Racing and Front Row Motorsports mainly object to NASCAR’s use of a particular style of charter system. By signing a charter, a team is guaranteed a starting position in NASCAR-sanctioned races. In exchange, the team agrees to refrain from competing at other tracks and waives any potential legal claims it may have against NASCAR. Both plaintiffs argue that the charters are anti-competitive and reflect NASCAR’s excessive control of the premium stock racing market.
NASCAR’s motion to dismiss, which U.S. District Judge Frank D. Whitney will review, lays out the counterarguments.
First, NASCAR contends that the plaintiffs are “confessing” that the charters are in fact fair, even preferential, to these two teams. As NASCAR says, the distribution of charter broadcast revenue is “undeniably fair and beneficial” to 23XI Racing and Front Row Motorsports.
Second, NASCAR urges Whitney to conclude that although the plaintiffs describe their case as involving far-reaching principles based on justice and fairness, when “stripped of its bluster,” the complaint “reflects nothing of other than dissatisfaction with unsuccessful trade negotiations.” in their own way. »
To that end, NASCAR says 23XI Racing and Front Row Motorsports are asking the court to “renegotiate” only “two terms” of NASCAR’s charter offer: a waiver of claims and a provision referring to non-compete covenants. And NASCAR says those terms don’t impact the plaintiffs because they didn’t sign a charter.
Third, NASCAR claims that the Jordanian group neglects to consider that non-competition clauses are standard operational instruments in the modern sports industry.
NASCAR cites court rulings arguing that non-compete clauses “make the product more attractive to broadcasters, fans and sponsors because they encourage investment in athletes and infrastructure.” These clauses guarantee television networks that star artists will participate. In other litigation, the PGA Tour and UFC have emphasized that their ability to negotiate lucrative television and sponsorship deals (which in turn provide money that golfers and fighters receive, respectively) relies on the guaranteed participation of the stars.
Here, non-competition clauses benefit teams by giving them “exclusive rights to participate in all races.” At the same time, the clauses ensure “that teams race with NASCAR” so that media partners, sponsors and fans “know where to find their favorite stock car drivers and teams.”
NASCAR also emphasizes that these clauses are made through “arm’s length negotiations” between NASCAR and the teams, and that such a transactional approach “is common” in the sports industry and in the business world in general.
To reinforce this argument, NASCAR discusses a case won by the NBA in 1994, a year when Jordan had retired from the NBA to pursue a baseball career in the Chicago White Sox organization. In Independent Entertainment Group vs. NBAthe NBA refused to let players join a professional summer league promoted by another organization. The matches of this league would have been broadcast on pay-per-view. The rival organization sued the NBA, arguing that the league and its teams illegally conspired to restrict players’ ability to play in another league during a portion of the year when players were not playing NBA games.
U.S. District Judge A. Andrew Hauk rejected the lawsuit and sided with the NBA, noting (among other points) that the collective bargaining agreement required player exclusivity and that exclusive employment obligations are generally legal under antitrust law. Hauk pointed out that the rival league was trying to “profit from the NBA’s investment in its star players” and that, as antitrust litigation involving the USFL and NFL over player signings shows, “employment contracts exclusive rights legally prevent such parasitism as such.” question of law. »
NASCAR argues that the same principle should apply to charters, which protect NASCAR’s investment in star teams.
Finally, NASCAR argues that at least some, if not all, aspects of antitrust suits are barred by antitrust law’s four-year statute of limitations. Some complaints refer to commercial developments before 2020 and are therefore arguably excluded.
As for France’s request for dismissal, it raises essentially the same substantive points but adds the argument that it should not be a defendant.
Part of Jordan’s case involves claims under Section 1 of the Sherman Act. Section 1 refers to competing entities that combine to unlawfully restrict competition. NASCAR obviously cannot conspire with itself, but the inclusion of France creates the possibility of a conspiracy. France argues that its inclusion is absurd because there is “no allegation that Mr. France conspired with a third party – and Mr. France is incapable of conspiring with NASCAR.”
France cites precedent for the principle that when the presumed liability of a corporate officer is “based solely on his position within a company”, legal actions “against this director must fail if the actions against the entity also fails.”
The briefs were written by Tricia Wilson Magee and other attorneys from Shumaker, Loop & Kendrick and Latham & Watkins. Jeffrey Kessler and other Jordan Group attorneys will have an opportunity to respond in their own court filings.
