CHARLOTTE, N.C. (AP) — NASCAR went before a federal judge Wednesday and asked to dismiss the antitrust lawsuit filed against the stock car series. If it were to move forward, NASCAR requested that both suing teams be ordered to post bond to cover costs they would not be legally owed if they lost the case.
NASCAR also asked U.S. Judge Kenneth Bell of the Western District of North Carolina to dismiss President Jim France as a defendant in the lawsuit filed by 23XI Racing, a team co-owned by NBA Hall of Famer Michael Jordan, and Front Row Motorsports, which is owned by entrepreneur Bob Jenkins.
Bell promised a quick decision but indicated he was unlikely to dismiss the complaint when he closed the 90-minute hearing by saying “this case is going to trial this year and deserves to be tried This year”. The timeline he set when he received the case last month calls for a December trial.
Bell replaced Justice Frank Whitney after Whitney heard the first round of arguments in early November. The teams preceded Whitney and applied to be recognized as approved teams this year as the trial progressed. Whitney denied the request.
The teams appealed and the case was transferred to Bell, who overturned Whitney and granted an injunction that will allow 23XI and Front Row to compete for charter recognition through the 2025 season. This led NASCAR to require teams to post a bond to cover any payments they will receive as licensed collateral teams if the teams lose the lawsuit.
NASCAR and the teams that compete in the top Cup Series operate with a franchise system implemented in 2016 in which 36 cars benefit from “charters” that guarantee them a place in the field at each race and financial incentives. There are four “open” spots reserved on the field each week.
The teams banded together in negotiations over an improved charter system in an often contentious battle with NASCAR for nearly two years. NASCAR finally had enough in September and presented the teams with a take-it-or-leave-it offer that had to be signed that same day, just 48 hours before the start of the playoffs.
23XI and Front Row were the only two teams out of 15 who refused to sign the new charter agreement. They then teamed up to sue NASCAR and France, arguing that as the only stock car entity in the United States, NASCAR has a monopoly and the teams are not getting their fair share of the pie.
Both organizations claimed they would continue to compete as open cars, but convinced Bell last month to grant them charter status by arguing they would suffer irreparable harm as open cars. Among the claims were that 23XI driver Tyler Reddick, last year’s regular-season champion, would contractually become an immediate free agent if the team did not have him on a guaranteed rental car.
Bell quickly showed he had a much firmer grasp of the case than Whitney did during the first hearing, and Bell peppered both sides with questions regarding payment structures, the harm NASCAR would suffer if the teams were open cars and other problems.
“Why give someone a charter? he asked NASCAR at one point.
NASCAR attorney Christopher Yates of Latham & Watkins responded: “NASCAR would be perfectly fine to return to that (pre-charter) model.” »
Bell admitted he doesn’t normally hear motions to dismiss, but he did so Wednesday because “we need to move this case forward.” He later said he felt the hearing was beneficial because he was able to “evaluate” the lawyers and that they could do the same with him.
He said he also “disdains” discovery requests but said he would handle them personally, but warned both sides to work together to avoid disputes and promised the losing side would pay the costs for the discovery part of the case.
While all indications are that Bell is not going to dismiss the suit, it appears the only suspense will be whether he orders the teams to post bail before the season starts next month. NASCAR argued Wednesday that it needed the money because it would be redistributed to licensed teams if 23XI and Front Row lost.
Jeffery Kessler, considered the nation’s top antitrust lawyer, argued that NASCAR made no such promise to redistribute the funds to other teams. Kessler said NASCAR told teams it was up to NASCAR’s discretion how it would use the money and did not rule out spending some of it on its own legal fees.
Jordan and Jenkins attended the first hearing but were not present Wednesday. Only Denny Hamlin, co-owner of 23XI, was present, alongside his fiancée and her mother. Front Row general manager Jerry Freeze was also in attendance.
France and Vice President Mike Helton were in the gallery with NASCAR’s in-house legal counsel and members of the communications team.
There were some comical moments in court — largely because of Bell’s involvement — and the judge at one point challenged Yates on what NASCAR had to lose in the case. When Yates said that NASCAR was focused on growing the sport and “wants to work with teams that don’t disparage NASCAR,” Bell quickly responded “you mean teams that don’t sue NASCAR?”
Kessler said at one point that NASCAR was making one of its weakest points in the motion to dismiss, so Bell asked Kessler what stronger arguments NASCAR should make.
“I have to think about it,” Kessler said.
Yates alleged that all the teams “acted like a cartel” when they banded together to form the Race Team Alliance to fight as one entity for better terms. NASCAR negotiated with RTA representatives for a while, but stopped midway through last season and tried to talk to teams individually until finally reaching a charter agreement in September.
Yates also said Jordan teamed up with Hamlin, a three-time Daytona 500 winner, to launch 23XI as a new investment after selling the Charlotte Hornets, even though Jordan “thought the conditions were bad and bought anyway , eyes wide open. He could have invested in IndyCar or F1. He invested in NASCAR.
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