A federal district judge on Friday denied NASCAR’s motion to dismiss the antitrust lawsuit filed by 23XI Racing, which is owned by Michael Jordan and Denny Hamlin, and Front Row Motorsports. The ruling sends the case to pretrial, where both sides will be forced to share emails, text messages and other evidence, as well as provide sworn testimony on controversial and sensitive topics.
Stressing that the bar is very high for a defendant to get the case dismissed, U.S. District Judge Kenneth D. Bell ruled that the two sides have offered such radically different representations of the legal issues that he cannot dismissing the case without seeing “what the actual evidence is” and how that evidence “informs a correct legal conclusion.”
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Bell suggested that the two parties, whose legal cases have sometimes veered into kingdom of hyperbole, over-dramatized their highly publicized feud.
“The parties to this action expressed their existential dispute in very different terms,” the judge said.
Bell wrote that while 23XI Racing and Front Row portray NASCAR as “the iron-fisted monopolistic ruler of premier stock car racing” that ruthlessly imposes onerous terms on teams, NASCAR positions itself and the France family “are the founders and beacons of a beloved. and valuable racing series” which negotiates charter agreements with “reasonable” terms that “mutually benefit” NASCAR and the teams.
The judge found that while the filing contains a lot of inflammatory rhetoric, it lacks the evidence and testimony needed to evaluate the legal arguments. He stressed that “answers must be found” only by giving both sides the opportunity to produce documents and affidavits indicating whether NASCAR’s charter system, which guarantees teams a starting position in races sanctioned by NASCAR while limiting their ability to compete in other circuits, overall, makes or hurts the competition.
The ruling is a setback for NASCAR in that the company obviously wanted the case tossed out, but Friday’s decision does not mean that NASCAR will lose the case. Through evidence and testimony – including from sports economists and other experts – NASCAR could establish that its charter system is essential to producing a highly marketable product that is popular with fans and broadcasters and that generated considerable revenue for the teams. Although 23XI Racing and Front Row maintain charters, and accompanying requirements to waive potential legal claims, that are anticompetitive, NASCAR may maintain that alternative arrangements that might on the surface appear more favorable to the teams would make the sport less attractive or less competitive.
Pre-trial discovery is also a double-edged sword. While 23XI Racing and Front Row can make invasive demands of NASCAR, NASCAR can do the same to both teams. For example, Jordan will be asked to provide sworn testimony and share correspondence, including with drivers. Documents that surface during discovery will likely also be made public.
NASCAR’s defense is also playing out before the U.S. Court of Appeals for the Fourth Circuit. Last month, NASCAR appeals Bell’s issuance of a preliminary injunction that prohibits NASCAR from denying 23XI Racing and Front Row the same terms offered to charter teams and prevents NASCAR from requiring 23XI Racing and Front Row to drop legal claims. The injunction also green-lighted the purchase of Stewart-Haas Racing charters. Unless vacated by the Fourth Circuit or terminated when the parties reach an amicable settlement, the injunction will remain in effect through the 2025 season.
The injunction also played a role in Bell’s order Friday. In addition to denying NASCAR’s motion to dismiss, the judge also denied the motion for bail of more than $10 million.
NASCAR wants 23XI Racing and Front Row to post a bond of more than $10 million for each car allowed to race. NASCAR’s logic is that it will suffer from the injunction, which arguably puts 23XI Racing and Front Row in a superior position since (unlike charter teams) they are not required to waive their legal claims. NASCAR claims it will suffer financial harm as a result of 23XI Racing and Front Row getting a share of the pool money that NASCAR is contractually committed to paying to licensed teams. Without an injunction, NASCAR argued, the portion of the pool money that would go to 23XI Racing and Front Row would go to the 30 licensed teams in the form of increased prize money. The plaintiffs disagree. They claim that NASCAR will not suffer any harm if they can compete since they will do so under the same conditions that govern the 30 approved teams.
Bell concluded that NASCAR has not yet established how or how much it would be harmed “by having to pay the plaintiffs as licensed teams.” He wrote that NASCAR should be distinguished from teams and other interested parties who may have an interest. Bell also noted that the shares of money to be paid to 23XI Racing and Front Row depend on how their cars finish races, which is no different than if they competed as open (non-sanctioned) teams. . The judge noted that NASCAR may later seek relief for damages if the Fourth Circuit vacates the injunction.
In a statement shared with media, the plaintiffs’ lead attorney, Jeffrey Kessler, said he was pleased with Friday’s rulings. Although the parties may settle at any time and the litigation schedule may be delayed for a multitude of reasons, the parties are currently scheduled to go to trial on December 1, 2025 in Charlotte, North Carolina.
Scott Soshnick contributed to this story.
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