NASCAR and 23XI Racing Square Off in U.S. Court of Appeals
As NASCAR seeks to appeal an injunction awarded to 23XI Racing and Front Row Motorsports by a North Carolina District Court, the appeal proceedings took place on Friday in the U.S. Court of Appeals for the Fourth Circuit in Richmond, VA.
The full hearing is available via the United States Court of Appeals YouTube Channel.
While no ruling is expected on Friday, both NASCAR and 23XI Racing had their chance to have their voice heard in the Lewis F. Powell Jr. U.S. Courthouse in front of Judges Paul Victor Niemeyer, G. Steven Agee, and Stephanie Thacker. NASCAR's lead attorney, Christopher Yates, had the floor for 15 minutes and was followed by Jeffrey Kessler, the lead attorney for 23XI Racing, who spoke for 20 minutes. Yates then finished the hearing with a five-minute rebuttal.
In his opening 15 minutes on the floor, Yates claimed that the District Court misunderstood the case in awarding the injunction to 23XI Racing and Front Row Motorsports.
Early on, Judge Niemeyer cited precedent from Costco v. Omega in support of Yates' claim that teams can certainly bring forth antitrust litigation against NASCAR, but that he isn't sure why they should be allowed to have their cake and eat it too by continuing to compete as Chartered Teams with a modified Charter Agreement while also actively pursuing the litigation.
However, as Yates began to diminish the ruling by the District Court, which awarded the injunction for the teams, the Judge pointed back.
"That's a little besides the point because the District Court relied exclusively on the release to justify its preliminary injunction, and allowed them to participate in the contract but modified it by saying the release didn't apply," Judge Niemeyer said.
The Judge continued, "My point is that what's before us is an interlocutory appeal on a very narrow issue. A preliminary injunction. And I don't think we should be deciding what grounds would justify a preliminary injunction. I think we have to take the District Court where it is, and decide whether it was justified."
During his 20 minutes on the floor, Kessler warned the Appeals Court that reversing the decision on the injunction that has allowed 23XI Racing and Front Row Motorsports to continue to compete as Chartered teams during the 2025 season, despite not being held to the release in the Charter Agreement, which forbids teams from bringing forth antitrust litigation, would invoke havoc within the NASCAR Cup Series garage.
One of the biggest headaches, according to Kessler, would be the restoration of two Charters, which were purchased by 23XI Racing and Front Row Motorsports, back to the now-defunct Stewart-Haas Racing. SHR sold the Charters to 23XI Racing and Front Row Motorsports at the conclusion of the 2024 NASCAR Cup Series season.
"If your honor reverses this, [NASCAR is] going to take the position we should have to unwind these [Charter] purchases, which is also going to be a harm," Kessler said.
Kessler continued, "That is another example where by overturning this now, in the middle of the season, and the purchases is going to cause all of this undisputable irreparable harm to us, the third parties, Stewart-Haas, who sold to us. Stewart-Haas by the way no longer has any operation to run a team. So, if we gave him the teams back, he has no drivers, he has no pit crew, he has nothing in the middle of the NASCAR season. It will cause havoc to overturn this injunction in the middle of the season. While if it just stays into effect until November, we're done, and then we have a trial, and we either win or we lose."
While Kessler argued that changing the status quo would cause irreparable harm for the remainder of the 2025 NASCAR Cup Series season for 23XI Racing and Front Row Motorsports as the teams waited on the trial, which is scheduled for the offseason, Yates argued that each day the injunction remains in place, NASCAR, and the other teams bound to the terms of the 2025 Charter Agreement suffer harm.
NASCAR initially planned on running the 2025 season with just 32 Chartered teams due to 23XI Racing's, and Front Row Motorsports' refusal to sign the Charter Agreement, due to this, the other 32 Chartered teams would have made a larger portion of the purse in races during the current season had the injunction not been awarded.
"The reality here is that NASCAR and the other teams are being hurt every day," Yates said during his final rebuttal. "Every day this injunction stays in place, NASCAR and other teams are being hurt. NASCAR is being hurt because it is forced into a contractual relationship with a counterparty that it doesn't want to be in a long-term contractual relationship with. Other teams are being hurt because, but for the injunction, other teams would have gotten more money. Other Charter holders would have gotten more money. They would have gotten a bigger part of the pie, the Charter pie."
Yates continued, "Two-thirds of the season is left, we would urge this Court to act quickly, because NASCAR and other teams are being hurt."
Near the end of the proceedings, Judge Agee questioned whether the teams and NASCAR have pursued mediation. Following that, Judge Niemeyer indicated that the case between the teams and NASCAR was perfect for mediation.
"Don't you think this would be a wonderful case for mediation? Both sides have major issues, and if the parties recognize a little bit of give and take, it looks to me like it's something that could be worked out," One of the judges explained.
Kessler indicated that he was all for a settlement agreed upon between the sanctioning body and race teams.
"Your Honor, I'm in favor of a settlement. Anytime you can make a settlement for both sides, I'm in favor of it," Kessler stated.
Yates agreed that mediation will be taken seriously by NASCAR, but that there are some things that are off the table, including rewriting the Charter contract.
"Certainly, but we're not going to rewrite the Charter contract," Yates said in response to the question of mediation. "I mean, the Charter contract exists, and that's what they really want at the end of the day. They don't like the terms. They call all of the terms, they call them all below competitive. We are not going to rewrite the Charter contract, your Honor, but certainly we're going to participate in mediation."
Now we await the decision of the U.S. Court of Appeals on NASCAR's Appeal of the Injunction awarded to 23XI Racing and Front Row Motorsports from the District Court. This decision is a major one as it could drastically impact what we see on the track on a week-to-week basis in the NASCAR Cup Series.
Recommended Articles
feed
Toby Christie is the Editor-in-Chief of Racing America. He has 15 years of experience as a motorsports journalist and has been with Racing America since 2023.