The Court has ruled in favor of 23XI Racing and Front Row Motorsports after a hearing on Jan. 8. Judge Kenneth D. Bell has denied NASCAR's motion to dismiss the lawsuit against it.
Videos by FanBuzz
Judge Bell issued the ruling on Jan. 10 and provided his reasoning for the decision. He noted that the Federal Rules of Civil Procedure set a high threshold for the Court to dismiss at the beginning of a lawsuit. The judge pointed to the fact that a plaintiff's complaint needs only to be a short and plain statement showing that it is "entitled to relief."
In this particular ruling, Judge Bell also highlighted how NASCAR and the two Cup Series teams bringing the lawsuit presented the dispute.
"According to Plaintiffs, NASCAR (led by the dynastic France family) is the iron-fisted monopolistic ruler of premier stock car racing that has imposed 'anticompetitive 'take it or leave it' terms' on Plaintiffs and other top-tier racing teams," the ruling stated.
"In Defendants' telling, NASCAR and the France family are the founders and guiding lights of a beloved and valuable racing series, who have fairly negotiated mutually beneficial 'Charter Agreements' that reflect reasonable commercial terms between NASCAR and the race teams.
"What is the actual evidence and how does it inform a correct legal conclusion," Judge Bell continued. "These questions cannot be determined on motions to dismiss in this action, where Plaintiffs have sufficiently alleged one or more plausible antitrust claims against Defendants within the applicable period of limitations."
The ruling noted that the answers "must be found" through discovery of relevant facts and then at trial when the jury can weigh the evidence. This means that the lawsuit will continue unless 23XI, Front Row, and NASCAR resolve the case through settlement. The Court can also dismiss the case in the future.
The motion to dismiss was not the only issue discussed during the Jan. 8 hearing. NASCAR also filed a Motion for Bond in which it asked 23XI Racing and Front Row Motorsports to post a bond in excess of $10 million for each car being allowed to race.
This would equal an excess of $30 million per organization after the Court made it possible for charter transfers to proceed.
NASCAR said in its Motion for Bond it would suffer harm in being forced to allow the teams to race under the charter terms. The two Cup teams then said that the bond requirement should be waived or set to a nominal amount. The reason was that 23XI Racing and Front Row Motorsports said NASCAR would not suffer harm in allowing them to race under the same terms as the other teams.
According to the Jan. 10 ruling, the Court can set the bond amount depending on the probability and "gravity of potential harm to the enjoined party." In this case, that party would be NASCAR. The Court can also waive the bond requirements if the likelihood of harm is remote.
Judge Bell wrote that NASCAR has failed to establish how it will be monetarily harmed by having to pay 23XI and Front Row as chartered teams. He pointed to the race purses and how the teams' share of the money would depend on how they finished.
Judge Bell also wrote that NASCAR had argued it might use money from the prize purses to encourage new teams to become involved with or promote the sport. He wrote that NASCAR "has not provided the Court with any specifics, saying only that the finalization of its plans is "forthcoming."
One interesting note in the documents is that attorneys for 23XI and Front Row told the Court during oral arguments that NASCAR had informed its chartered teams that it would retain a portion of the fixed pool money for legal costs associated with the lawsuit. NASCAR did not dispute this assertion.
According to Judge Bell, payments for legal expenses would not be "harm" due to previously granted preliminary injunction.
