A federal appeals court has overturned a preliminary injunction that allowed 23XI Racing and Front Row Motorsports (FRM) to compete as chartered teams in the NASCAR Cup Series. However, the core of the teams’ antitrust lawsuit against NASCAR remains intact and is scheduled to go to trial December 1.
On Thursday, a three-judge panel from the Fourth Circuit Court of Appeals unanimously vacated the December injunction, stating the district court had “abused its discretion” in granting it. The decision temporarily jeopardizes the charter status—and associated financial benefits—of both teams. But it does not dismiss the lawsuit itself, which accuses NASCAR of anti-competitive conduct related to its tightly controlled charter system.
“This ruling is based on a very narrow consideration of whether a release of claims in the charter agreements is anti-competitive and does not impact our chances of winning at trial,” said Jeffrey Kessler, attorney for the teams. “We remain confident in our case and committed to racing for the entirety of this season as we continue our fight to create a fair and just economic system for stock car racing that is free of anticompetitive, monopolistic conduct.”
The underlying lawsuit, filed last year, challenges a provision in NASCAR’s charter agreements that prohibits teams from suing the organization. 23XI and FRM argued the clause was anti-competitive and left them with no recourse while still requiring them to operate under NASCAR’s business model. They also cited concerns over potential sponsorship and driver losses if they were stripped of their chartered status.
U.S. District Court Judge Kenneth D. Bell initially sided with the teams, granting the preliminary injunction on Dec. 18, noting: “NASCAR fans (and members of the public who may become fans) have an interest in watching all the teams compete with their best drivers and most competitive teams.”
But the appeals court disagreed. In its written opinion, the panel concluded that the legal theory behind the injunction—focused on the charter release clause—lacked precedent in antitrust law. “Because that theory of antitrust law is not supported by any case of which we are aware, we conclude that it was not a likely basis for success on the merits and vacate the injunction.”
Still, the court made clear that its decision only applied to the narrow question of the release clause. The broader antitrust claims remain intact.
“Plaintiffs have a likelihood of success on their allegation that the Release is unlawful,” Judge Bell had originally ruled. But he emphasized that “the Court does not reach and expresses no opinion as to Plaintiffs’ likelihood of success on their other Sherman Act claims.”
The appeals panel also noted the irony that the teams sought to remain in the system they were challenging. As one judge remarked during a May 9 hearing: “If you want the contract, you enter into it and you’ve given up past releases. … But you can’t have your cake and eat it too.”
Despite the ruling, there is no immediate effect on either team. They are permitted to race this weekend at Michigan International Speedway. 23XI, co-owned by Michael Jordan and Denny Hamlin, and Front Row, owned by Bob Jenkins, have until June 19 to petition for a rehearing before the full Fourth Circuit. The court’s decision won’t take effect until June 26 unless such a petition is filed.