Judge Kenneth D. Bell has responded to NASCAR's motion for a partial stay on the preliminary injunction. The judge denied this motion while also modifying the preliminary injunction granted to 23XI Racing and Front Row Motorsports.
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According to a Dec. 23 ruling, NASCAR must approve the charter transfer from Stewart-Haas Racing to Front Row Motorsports. However, NASCAR does not have to approve the charter transfer to 23XI Racing as "Plaintiffs did not request a preliminary injunction with respect to 23XI."
The ruling stated that 23XI Racing will have to file a separate motion for a preliminary injunction with respect to the purchase of the Stewart-Haas Racing charter. Once 23XI files this motion, the Court will "promptly consider" it.
Why did Front Row Motorsports receive this favorable ruling?
Judge Bell noted in Court documents that NASCAR President Steve Phelps told FRM multiple times in September that the charter transfer had been approved. The situation changed on Dec. 5 when NASCAR informed FRM that it would not approve the transfer.
"The only intervening event was Front Row filing this lawsuit," Judge Bell stated in the document. "Indeed, Defendants expressly informed Front Row that it would have to drop its lawsuit and release its antitrust rights before NASCAR would approve the transfer."
The expectation is that NASCAR will appeal this ruling to the United States Court of Appeals.
Judge Bell has denied NASCAR's motion for a partial stay of the preliminary injunction, obviously, pending an appeal.
One note is that NASCAR only has to approve the charter transfer to Front Row. 23XI's transfer was not in the original filing. They must ask for the same relief. pic.twitter.com/JYHY20NrL3— John Newby (@JohnNewby_) December 23, 2024
Let's recap — Judge Bell issued a ruling on Dec. 18 that granted the requested preliminary injunction to the two Cup Series organizations. Court documents stated that NASCAR must allow the two teams to race under the 2025 Charter Agreement for the 2025 season. This included the two charters that the two teams owned under the current agreement.
Additionally, the judge ruled that NASCAR could not refuse the transfer of charters from Stewart-Haas Racing to Front Row Motorsports and 23XI Racing.
NASCAR responded on Dec. 19 by filing a notice of appeal as well as a partial motion for a stay. The sanctioning body — known as Defendants in this case — agreed to have the two 23XI Racing and two FRM cars enter every race.
However, NASCAR said the transfer of charters would cause irreparable harm as they would be "forced" into a relationship with the two teams, one lasting seven to 14 years. NASCAR also said it would suffer irreparable harm by sharing "confidential information" with the two teams.
Judge Bell responded to these points from NASCAR's motion for a stay. In regard to the "confidential information," the judge stated that 23XI Racing and Front Row Motorsports will already have access to this information as part of the lawsuit's discovery process.
Judge Bell said that NASCAR would not be in a business relationship lasting the aforementioned seven to 14 years. The reason is that "the Court clearly retains the equitable power to in the future effectively 'unwind' the transaction." Essentially, the Court could force 23XI Racing and Front Row Motorsports to sell their charters back to NASCAR.
Along with addressing the motion for a partial stay on the preliminary injunction, Judge Bell addressed a detail from NASCAR's defense. Specifically, NASCAR said that the two teams "can't bring their claims because they didn't sign the 2025 Charter Agreements and thus aren't 'efficient enforcers' of the antitrust claims."
Judge Bell said that the two teams were in a "Catch-22" considering that they must either sign the Charter Agreement and accept the clause barring their antitrust claims or they must decline to sign. Choosing this second option removes their charters and their ability to bring antitrust claims.
"NASCAR's 'release to race' requirement simply doesn't pass muster and is likely to be found to violate antitrust law," Judge Bell wrote.
The Court has made this ruling, but the story will continue. A hearing will take place on Jan. 8, 2025. This will be the second time the legal teams of NASCAR, 23XI Racing, and Front Row Motorsports meet in court, but it will be the first time in front of Judge Bell.
