NASCAR Wins Court Ruling Against 23XI and Front Row Over Injunction

In a significant legal win for NASCAR, the U.S. Court of Appeals for the Fourth Circuit on Thursday vacated a preliminary injunction issued last December by a trial court judge that allowed 23XI Racing, owned by Michael Jordan and Denny Hamlin, and Front Row Motorsports to race with the benefits of charters without having to release claims.

Judge Paul V. Niemeyer, writing on behalf of himself and Judges Steven Agee and Stephanie Thacker, reasoned that the “theory of antitrust law” asserted by 23XI and Front Row “is not supported by any case of which we are aware.” 

The ruling does not necessarily bar 23XI and Front Row from competing, as they could race as open (non-chartered) teams. Per an agreement with NASCAR, the two teams competed as open teams last fall after they sued NASCAR, but their charters are no longer protected by a district court’s injunction.

Thursday’s ruling is not a surprise. As Sportico detailed following an oral argument at the Fourth Circuit last month, the three judges expressed substantial skepticism toward the case and sharply questioned why U.S. District Judge Kenneth D. Bell granted the injunction. 

Thacker went so far as to say “this is the first time . . . in all the history of contract law” that an injunction effectively creates a new contract. By that, Thacker meant NASCAR was compelled to provide 23XI and Front Row the benefits of a charter—which guarantee teams a starting position in NASCAR-sanctioned races—without those two teams, unlike other NASCAR teams, having to release claims. The judges repeatedly opined that there’s an absence of case precedent supporting this legal theory and suggested it provided an unauthorized windfall to 23XI and Front Row.

Thursday’s ruling captures that same spirit of hostility toward the case. 

“While [23XI and Front Row allege] years of conduct and contract provisions that they claimed were anticompetitive, thus attacking NASCAR’s entire business model,” Niemeyer wrote, the two nonetheless want to compete in NASCAR Cup Series events “under the terms of the 2025 Charter Agreement” except without having to sign a release. Niemeyer questioned why 23XI Racing and Front Row want to “participate in the very business” that they seek “to dismantle.” 

Niemeyer also criticized Bell for supplying an answer to a legal question that, the three-judge panel contends, isn’t based on any precedent.

Bell raised the question, “Can a monopolist require that a party agree to release the monopolist from all claims that it is violating the antitrust laws as a condition of doing business?”  He followed with, “The answer is no.”

Niemeyer suggested Bell’s answer isn’t based on case law. 

To that end, Niemeyer wrote, Bell “supplied no case law to support that theory. Indeed, we have found no case to support it, and the defendants claim that there is none.” Although there are cases involving parties signing agreements, those cases are “hardly relevant,” since with 23XI and Front Row, “there is no agreement.” Instead, “the plaintiffs refused to sign the 2025 Charter Agreement.” 

Niemeyer offered still other criticisms of the injunction’s issuance and the underlying case. He questioned how a release of claims could cause the type of legal injury remedied by antitrust law, which is used to combat anticompetitive practices in the marketplace. 

“Neither the plaintiffs nor [Bell],” Niemeyer wrote, “has shown how the release would have injured competition.” Quoting a U.S. Supreme Court decision from 2009, Niemeyer stressed that parties—including NASCAR and teams—are “free to choose the parties with whom they will deal, as well as the prices, terms, and conditions of that dealing.”

Thursday’s ruling is a victory for Christopher S. Yates of Latham & Watkins. Yates argued the case for NASCAR, while Jeffrey Kessler of Winston & Strawn argued for 23XI and Front Row.

In a statement, Kessler said his group is “disappointed” by the ruling but emphasized it was “based on a very narrow consideration of whether a release of claims in the charter agreements is anticompetitive.” 

Over the next two weeks, Kessler could petition the Fourth Circuit for a rehearing en banc, which, if granted, would mean other judges on the Fourth Circuit review the arguments. But such petitions are rarely granted, especially when there is no dissenting judge on a three-judge panel.

To be clear, the vacating of an injunction doesn’t end the case, which accuses NASCAR of engaging in “anticompetitive” and “monopolistic” conduct, and 23XI and Front Row could ultimately win. A trial is currently scheduled to start Dec. 1. 

Ultimately the case is about financial considerations, which means it’s also possible the parties could reach a settlement out of court. Don’t be surprised if that’s how the case ends.