Charlotte, N.C. (AP) – A federal appeals panel of three judges ruled on Thursday in favor of a NASCAR anti-trust lawsuit filed by two teams owned by Michael Jordan, 23XI, along with an injunction recognizing the front row as a chartered team while the cases proceed through the legal system.
Both race teams filed suit against NASCAR late last year after they declined to sign a new contract for charter renewals. The charter system is comparable to franchise models in other sports, yet NASCAR can cancel charters, which have expired. The 23XI team, co-owned by Jordan and three-time Daytona 500 winner Denny Hamlin, formed an alliance with the front row, which sued NASCAR after 13 organizations signed the renewal in September while these two did not.
“We are disappointed with today’s ruling from the Fourth Circuit Court of Appeals and are contemplating our next steps,” stated Jeffery Kessler, attorney for 23XI and front row. “The decision hinges on very narrow factors concerning whether the release of claims in the charter agreement is anti-competitive and will not influence the likelihood of prevailing in the trial scheduled for December 1st.
“We remain confident in our case and are dedicated to competing this season while continuing our fight for a fair economic system in stock car racing that isn’t anti-competitive or exclusive.”
The two teams sought a temporary restraining order to be acknowledged as chartered teams this season. The antitrust issue is set to be heard in December.
The teams asserted that an injunction was essential since the current charter contract prevents NASCAR from filing a lawsuit. Additionally, 23XI noted that without a guaranteed chartered car, they would be adversely affected, particularly since Tyler Reddick’s contract has made him a free agent.
A prior ruling indicated that NASCAR’s Charter Agreement could likely breach antitrust laws for granting an injunction. However, when the discussion occurred last month, three judges from the U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia, expressed skepticism towards this decision.
In Thursday’s ruling, the judges rejected the injunction as they were unaware of any cases supporting the lower antitrust courts’ theory. “In summary, by mandating future participants to release claims of past conduct as a condition to engage in business, the plaintiff cannot demonstrate a likelihood of success on the merits of that theory, as there is no backing for the assertion that a business entity or individual violates antitrust law,” the court stated. “Without sufficient grounds for potential success, the plaintiff is not entitled to a provisional injunction.”
The teams have 14 days to appeal to the full court. Notably, the injunction does not bear on the merits of the case. The earliest NASCAR could treat the teams as non-chartered is one week after the appeal deadline, meaning they would lose the guarantees for weekly starting spots and prize money.
NASCAR has not disclosed potential actions regarding the six charters held by the two organizations if they are returned to authorized status. With only 36 charter slots in a 40-car field, if the teams do not appeal, the six entries must compete as “open” cars, which necessitates qualifying weekly for races and earning a smaller payout.
It remains uncertain what will happen with Reddick’s contract. He is slated to race in Michigan this weekend, currently positioned sixth in the Cup Series standings. Both organizations are pursuing victories this season, with Hamlin having claimed three wins in his Joe Gibbs Racing car.
Reddick was the regular season champion last year and secured the Cup title last November.
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Source: apnews.com