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What US Court of Appeals injuction ruling means for Cup Series teams

A major decision from the U.S. Court of Appeals today has changed the 23XI Racing, Front Row lawsuit against NASCAR. At least in the short term. This case is still set to go to trial on December 1, but what are the consequences for the teams now that the preliminary injunctions from the district court […]

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A major decision from the U.S. Court of Appeals today has changed the 23XI Racing, Front Row lawsuit against NASCAR. At least in the short term. This case is still set to go to trial on December 1, but what are the consequences for the teams now that the preliminary injunctions from the district court have been vacated?

Today’s ruling will not go into effect immediately. 23XI and FRM have the right to appeal to the entire court and must file that appeal in the next 14 days. If that appeal is not filed, the ruling will take effect seven (7) days after that. So, we are looking at a three-week timeline, at the earliest.

Jeffrey Kessler, attorney for 23XI Racing and Front Row in this case, released a statement. He does not believe this impacts the likelihood of winning the lawsuit at trial later this year.

On December 18, 2024, the district court entered a mandatory preliminary injunction. That injunction stated that NASCAR had to allow 23XI Racing and Front Row Motorsports to compete under the 2025 Charter Agreement with the teams’ two charters that they possessed under the previous agreement.

The injunctions from December 23 and 26, 2024, went further. The former prevented NASCAR from putting a stay on the original injunction, allowing it to go into effect as the Court of Appeals heard the case for itself. Then the latter injunction made it so NASCAR had to approve the sale of the Stewart-Haas charters to 23XI and FRM. All three injunctions have been vacated.

U.S. Court of Appeals ruling on 23XI, FRM vs. NASCAR

It appears that the U.S. Court of Appeals did not like the mandatory part of the injunctions. As it “alters” the status quo rather than maintaining the status quo, such as a prohibitory injunction. Perhaps even worse, the court found that the teams do not have a likelihood of success based on the merits of the case as it relates to their antitrust claims.

“In short, because we have found no support for the proposition that a business entity or person violates the antitrust laws by requiring a prospective participant to give a release for past conduct as a condition for doing business, we cannot conclude that the plaintiffs made a clear showing that they were likely to succeed on the merits of that theory. And without satisfaction of the likelihood-of-success element, the plaintiffs were not entitled to a preliminary injunction.

“We therefore conclude that the district court abused its discretion in entering the preliminary injunction that it did. This is all the more true in view of the heightened standard for issuing a mandatory preliminary injunction and because the one here required two parties to engage in business that one party claimsto be illegal. … We express no view, however, on any aspect of the pending case beyond those stated herein with respect to the preliminary injunction. Accordingly, the injunctions of December 18, December 23, and December 26, 2024, are hereby vacated.”

The U.S. Court of Appeals did not feel that previous cases were cited in the district court ruling. In the instances where case law was applied, the appeals court felt it was applied incorrectly. So, that will have to be addressed on the teams’ appeal.

Consequences of U.S. Court of Appeals ruling

Should the ruling go into effect, this will have massive ramifications on the 2025 season. Losing out on charter payments can be a major issue for 23XI and Front Row for the rest of the NASCAR season. They have employees to pay, sponsorship agreements to uphold, and race cars to build. That takes money.

This ruling would make 23XI Racing and Front Row Motorsports compete as Open teams. They will have the status of all six of their collective charters removed. That will impact the teams in terms of charter payments. It could also end up violating driver contracts that the teams have signed and sponsor deals.

I think the biggest question right now is, what about the Stewart-Haas charters? If the acquisition of those cars is reversed, what happens to them? Haas Factory Team has stated they do not want to and cannot take on two additional charters. They are a one-car operation now. So, would NASCAR repossess them? There is language that underperforming teams can have their charters forfeited based on the last three years of performance, and if NASCAR makes a decision to do so.

Long story short, HUGE financial hit, possible contract violations with drivers and sponsors, and a big question mark about the Stewart-Haas charters. We will see if an appeal will swing things back in favor of 23XI and FRM, but NASCAR has won a big victory today.

Moving forward, this changes things for the entire Cup Series. Other teams will now be given a bigger share of charter money. At least, in theory. It remains to be seen how NASCAR will respond to today’s ruling.



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