NASCAR took several legal steps Thursday in hopes of preventing 23XI Racing and Michael Jordan-owned Front Row Motorsports from gaining traction in their high-profile antitrust dispute.
NASCAR filed an emergency motion for a partial stay of an injunction from U.S. District Judge Kenneth D. Bell issued Wednesday in favor of 23XI Racing and Front Row and asked him to grant an accelerated briefing schedule in the run-up to Christmas. Bell recently took the case back before U.S. District Judge Frank D. Whitney, and NASCAR has questioned his handling of the case. NASCAR also notified the federal district court in North Carolina of its upcoming appeal to the U.S. Court of Appeals for the Fourth Circuit.
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NASCAR wants Bell to issue a suspension pending appeal because it contends it erred in enforcing the law. NASCAR also claims it would suffer irreparable and substantial harm without a suspension.
Unless the injunction is stayed by Bell or vacated by the Fourth Circuit, NASCAR may not deny 23XI Racing and Front Row the same terms offered to charter teams and may not require 23XI Racing and Front Row to drop the claims legal. NASCAR opposes this arrangement because it would give 23XI Racing and Front Row a better deal than the charter teams receive. The injunction also prevents NASCAR from refusing to approve the teams’ purchase of two Stewart-Haas Racing (SHR) charters, which will allow 23XI Racing and Front Row to compete and guarantee them a starting position in races sanctioned by NASCAR.
As Sportico detailedBell was won over by 23XI Racing and Front Row because their drivers and sponsors made it known they might cut ties with them if they didn’t get charters for next season soon. Bell has also taken a significantly more critical view of NASCAR than Whitney, who last month denied 23XI Racing and Front Row were granted an injunction but were reassigned from the case last week.
NASCAR is asking Bell to suspend the injunction, except for Bell’s requirement that NASCAR guarantee the entry of two cars from both teams into each 2025 Cup Series race.
In a brief signed by attorney Christopher S. Yates of Latham & Watkins, NASCAR raises several arguments.
Above all, NASCAR believes it will likely succeed in appealing Bell’s order to the Fourth Circuit. While prefacing “respectfully,” NASCAR asserts that Bell made “a procedural and substantive error” in approving the purchase of SHR charters by 23XI Racing and Front Row.
NASCAR claims the court “never gave it an opportunity” to “take stock of the issues related to these” charter transfers, resulting in a flawed legal process. The association also insists Bell, who took over from Whitney last week, confused key transfer terms. NASCAR suspects Bell views the release provision with suspicion because of his alleged “misunderstanding” that the provision applies prospectively when it does not. NASCAR cites precedent to support its position that waivers under which only retroactive and continuing conduct with respect to antitrust scrutiny are lawful.
As a second argument, NASCAR asserts that it will suffer irreparable harm (i.e., harm that cannot be remedied by financial damages) unless a stay is granted.
To that end, NASCAR maintains that the injunction would “eliminate NASCAR’s rights” under the charter – a “binding contract that SHR has already executed” – to consider and reject the transfers. NASCAR’s “sanctity of contract” would also be threatened since the injunction would “destroy the arbitration provision of the SHR charter” and prevent parties from using fundamental contract law rights to modify an agreement. NASCAR also warns of irreparable harm caused by having to “provide plaintiffs with confidential and competitively sensitive information” as part of the injunction.
Additionally, NASCAR maintains that its stay would not significantly harm 23XI Racing and Front Row, since they would still be guaranteed entry of two cars each into each 2025 Cup Series race. NASCAR, would only ensure that it is not “forced”. . . to extend all the benefits of an agreement that the plaintiffs rejected and refused to sign.
NASCAR further requests that Bell promptly reconsider its motion for a stay, as 23XI Racing and Front Row intend to “imminently close their acquisitions” of SHR charters, with a closing date set for Friday. NASCAR fears it will be “difficult, if not impossible, to unwind” a deal after it is concluded. To address this concern, NASCAR is proposing that 23XI Racing and Front Row file a brief in response to the motion to stay next Monday.
There is some irony in NASCAR’s request that lawyers work in the run-up to a major holiday, Christmas. In November, NASCAR objected to the schedule proposed by 23XI Racing and Front Row which would have required working over the Thanksgiving holiday.
Expect Jeffrey Kessler and other attorneys from 23XI Racing and Front Row to fight back with legal briefs Friday, if not before the clock strikes midnight.
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