NASCAR this month requested a federal prosecutor to dismiss the case completely, disparaging the lawsuit brought by Michael Jordan-owned 23XI Racing and Front Row Motorsports as a “misguided try to dress up personal business concerns in competitive garb.” NASCAR CEO Jim France, a co-defendant, individually filed a motion to ignore, arguing that his participation is a “baseless” and “improper” attempt to add competitive states that require numerous accused.
Although just two months old, the legal battle between businessman Jordan and the multi-billion-dollar company NASCAR has resulted in numerous court filings, ranging from an abandoned charm by Jordan’s party to flaming retorts over the effects of the Thanksgiving holiday on filing deadlines. Both sides appear to be willing to spend any funds to achieve success.
The core of the case is fairly simple. The use of a particular type of charter system by NASCAR is primarily opposed by 23XI Racing and Front Row Motorsports. By signing a charter, a team is guaranteed a starting position in NASCAR-sanctioned races. The team agrees to refrain from competing in other circuits and waives any potential legal claims it might have against NASCAR in exchange. The two plaintiffs contend that charters are unfair and show that NASCAR has a lot of control over the stock market.
NASCAR’s motion to dismiss, which U. S. District Judge Frank D. Whitney will review, lays out the counterarguments.
First, NASCAR contends that the plaintiffs” confess” the charters are in fact equitable, even preferential, to these two teams. As NASCAR tells it, the charters ‘ broadcast revenue split is “undeniably fair and advantageous” to the 23XI Racing and Front Row Motorsports.
Second, NASCAR urges Whitney to find that despite the plaintiffs ‘ claim that their case is about “far-reaching principles grounded in justice and equity,” the complaint “reflects nothing more than dissatisfaction with business negotiations that didn’t go their way” when” stripped of its bluster”
To that end, NASCAR asserts 23XI Racing and Front Row Motorsports seek for the court to effectively “renegotiate” only” two terms” from NASCAR’s charter offer: a release of claims and a provision referring to covenants not to compete. And because they didn’t sign charters, NASCAR claims that those conditions don’t have an impact on the plaintiffs.
Third, according to NASCAR, Jordan’s team ignores the fact that noncompete agreements are accepted operating rules in the contemporary sports industry.
NASCAR cites court decisions that support the idea that noncompete agreements “make the product more appealing for broadcasters, fans, and sponsors as they encourage investments in athletes and infrastructure.” Television networks can be certain that famous faces will appear in these clauses. In other litigations, the PGA Tour and UFC have noted their ability to negotiate lucrative TV and sponsorship deals ( which in turn provide money that golfers and fighters, respectively, receive ) is predicated on guaranteeing that stars will participate.
The teams gain from the noncompete clauses in this situation by granting them “exclusive rights to participate in all races.” At the same, the clauses ensure” that teams race with NASCAR” so media partners, sponsors and fans “know where to find their favorite stock-car drivers and teams”.
NASCAR also points out that these clauses are borne through “arm’s length negotiation” between NASCAR and teams, and that such a transactional approach “is common” in sports business and the business world in general.
In order to support this claim, NASCAR discusses a case that the NBA won in 1994, the same year Jordan left to pursue a baseball career with the Chicago White Sox. In Independent Entertainment Group v. NBA, the NBA forbade players from playing in a pro summer league that had been promoted by another organization. This league’s games would have been streamed via pay-per-view. The opposing organization brought legal action against the NBA, alleging that the league and its teams had unlawfully conspired to prevent players from playing in other leagues during a period of the year when they weren’t playing NBA games.
U.S. District Judge A. Andrew Hauk sided with the NBA and rejected the lawsuit, noting, among other things, that the collective bargaining agreement required the exclusive treatment of players and that exclusive employment obligations are generally permitted by antitrust laws. According to Hauk, the rival league attempted to “free-ride on the NBA’s investment in its star players” and that, as evidenced by antitrust lawsuits involving the USFL and NFL over signing players, “exclusive employment agreements lawfully prevent such free-riding as a matter of law.”
NASCAR contends that same principle ought to apply with charters, which protect NASCAR’s investment in star teams.
NASCAR contends that the four-year statute of limitations of antitrust law forbids at least some and possibly all of the antitrust claims. Some of the complaint refers to business developments from before 2020 and are thus, arguably, barred.
Regarding France’s motion to dismiss, it basically raises the same substantive issues but makes the case that he shouldn’t be a defendant.
Claims under Section 1 of the Sherman Act are a part of Jordan’s case. Competitors are referred to in Section 1 as collaborating to illegally halt competition. NASCAR obviously can’t conspire with itself, but France’s inclusion creates the possibility of a conspiracy. France contends that his inclusion is absurd because” there are no allegations that Mr. France conspired with any third party —and Mr. France is incapable of conspiring with NASCAR.”
France cites precedent as evidence for the rule that legal claims against a corporate officer must fail if the claims also fail against the entity when the claims are” solely based on his position within a company.”
The briefs were authored by Tricia Wilson Magee and other attorneys from Shumaker, Loop &, Kendrick and Latham &, Watkins. The attorneys for Jordan’s group, including Jeffrey Kessler, will have the opportunity to respond in their own court documents.