Technical Foul: Jordan’s Injunction Against NASCAR is Blocked by U.S. District Court

The Facts

On October 2, 2024, 23XI Racing LLC (“23XI”), a professional auto racing company owned in part by basketball legend Michael Jordan, as well as another company – Front Row Motorsports, Inc. (“Front Row”) – filed a complaint in the Western District of North Carolina accusing “NASCAR of being a monopoly in a joint antitrust lawsuit . . . .[1] 23XI is also co-owned by Denny Hamlin, current Joe Gibbs Racing driver and three-time Daytona 500 winner.’”[2] Specifically, 23XI and Front Row alleged that NASCAR and its CEO Jim France “used ‘anticompetitive and exclusionary practices’ to ‘enrich themselves at the expense of the premier stock car racing teams.’”[3]

These “anticompetitive and exclusionary practices” that the Plaintiffs alleged (i.e., violations of both Section 1 and Section 2 of the Sherman Antitrust Act of 1890) relate to “NASCAR’s so-called ‘charter system,’ which is similar to franchises for race teams. Holding a charter guarantees a starting spot in all 36 NASCAR Cup Series points races, and charter teams earn a share of the $1.1 billion per year in television money NASCAR will collect from a new TV deal starting next year.”[4]

Procedural History

After the October 2, 2024, complaint was filed, on October 9, 2024, the Plaintiffs filed a request for a preliminary injunction seeking an order allowing their entities to race as NASCAR chartered teams in 2025.[5] Subsequently, NASCAR then “indicated in a[] . . . court filing . . . why it oppose[d] the motion. [Specifically,] NASCAR sa[id] the case is more a[kin] [to a] contract case and not an antitrust case and the teams’ motion doesn’t meet the criteria for a preliminary injunction.”[6]

On November 8, 2024, the District Court rejected Jordan and company’s request for a preliminary injunction against NASCAR and its CEO Jim France.[7] Thus, because the preliminary injunction was denied, “23XI Racing and Front Row Motorsports are [unable] . . . to compete as de facto [NASCAR] chartered teams [because they have not] . . . signed the charter [agreement] . . . .[8]

The Law

Before getting into the specifics of why Jordan’s preliminary injunction was denied, Presiding Judge Frank D. Whitney, set forth  the  standard when considering a request for a preliminary injunction:

‘A preliminary injunction is an extraordinary remedy intended to protect the status quo and prevent irreparable harm during the pendency of a lawsuit.’ Di Biase v. SPX Corp., 872 F.3d 224, 230 (4th Cir. 2017). To obtain a preliminary injunction, a plaintiff must show: (1) a likelihood of success on the merits; (2) a strong prospect of irreparable harm if the injunction is not granted; (3) the balance of equities favors the movant; and (4) an injunction is in the public’s interest. Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). A party’s failure on any element precludes injunctive relief from issuing. See Cantley v. W. Va. Reg’l Jail & Corr. Facility Auth., 771 F.3d 201, 207 (4th Cir. 2014). (emphasis added).[9]

Here, the District Court focused on the second factor of the above four-factor test regarding a preliminary injunction (i.e., “a strong prospect of irreparable harm”).[10] Because the District Court found no irreparable harm under this factor (which will be discussed in the following section), and the fact that a Plaintiff must satisfy all four factors of the test to be successful, the injunction was denied. Specifically, the District Court stated the following regarding irreparable harm:

A plaintiff seeking a preliminary injunction must ‘demonstrate that irreparable injury is likely in the absence of an injunction.’ Winter, 555 U.S. at 22. A showing of the “possibility of irreparable harm” is not sufficient. Id. (emphasis added). Instead, a plaintiff ‘must make a clear showing of irreparable harm . . . .’ Talleywhacker, Inc. v. Cooper, 465 F. Supp. 3d 523, 542 (E.D.N.C. 2020) (quoting Scotts Co. v. United Indus. Corp., 315 F.3d 264, 283 (4th Cir. 2002)). Furthermore, ‘the required irreparable harm must be neither remote nor speculative, but actual and imminent.’ Id. (quoting Scotts Co., 315 F.3d at 283). A preliminary injunction is improper where the alleged harm is ‘not present or immediate but merely problematic, conditioned on possible future events . . . .’ Direx Israel, Ltd. v. Breakthrough Med. Corp. et al, 952 F.2d 802, 816 (4^th Cir. 1991).[11]

Thus, because irreparable harm was not found (i.e., a necessary factor in granting a preliminary injunction), the District Court did not find it necessary to do an analysis regarding the other three factors of the four-factor test.

Applying the Law to the Case at Hand

When applying the above four-factor preliminary injunction test to the situation involving 23XI and Front Row, the District Court stated:

[A]lthough Plaintiffs have alleged that they will face a risk of irreparable harm, they have not sufficiently alleged present, immediate, urgent irreparable harm, but rather only speculative, possible harm. That is, although Plaintiffs allege they are on the brink of irreparable harm, the 2025 racing season is months away—the stock cars remain in the garage.[12] (emphasis added).

Specifically, the District Court gave five reasons why there was no immediate irreparable harm, ultimately causing the preliminary injunction to be rejected:

1. 23XI and Front Row failed to allege “a ‘present prospect’ that they will be harmed by the loss of sponsors. Direx Israel, Ltd., 952 F.2d at 816. Instead, they have [only] alleged a possibility that they will lose sponsorship agreements. (Doc. No. 21-2, pp. 10–11; Doc. No. 21-3, p. 10.) Such potential harm of loss of sponsorship is too speculative to give rise to a preliminary injunction.”[13] (emphasis added).
2. 23XI and Front Row failed to allege “a ‘present prospect’ of the loss of their drivers. Instead, they [have only] allege[d] that their drivers may leave if Plaintiffs compete as open teams. (Doc. No. 21-2, p. 11; Doc. No. 21-3, p. 10; Doc. No. 21-7, p. 11.) Presently, this harm is too speculative to merit a preliminary injunction.”[14] (emphasis added).
3. 23XI and Front Row failed to allege “that their business cannot survive without a preliminary injunction. Instead, they [have only] allege[d] that their businesses may not survive without a preliminary injunction. (Doc. No. 21-2, p. 12; Doc. No. 21-3, p. 11.) (Emphasis in original). This allegation does not indicate an ‘impending threat of [Plaintiffs’] operations not surviving the pendency of this matter.’” Eco Fiber Inc. v. Vance, No. 3:24-cv-465-FDW-DCK, 2024 WL 3092773, at *4 (W.D.N.C. June 21, 2024).[15]
4. 23XI and Front Row have only alleged “a potential loss of goodwill, contingent on a host of events occurring, including speculation about how third parties may or may not act.”[16] (emphasis added).
5. [T]he possibility that NASCAR may exclude open teams, (Doc. No. 21, p. 18), is merely speculative.”[17] Specifically, the District Court noted that 23XI and Front Row both still have the ability to sign “open contracts” and continue racing in 2025.[18] Yet, 23XI and Front Row have decided not to sign any “open contracts” because they have been unsuccessful in their negotiation efforts. Accordingly, such “speculative harm does not warrant the extraordinary relief of a preliminary injunction.”[19]

Looking Towards the Future

Because 23XI and Front Row were unable to carry their burden for obtaining a preliminary injunction, the District Court rejected their request for relief without prejudice. However, the District Court noted that “[s]hould circumstances change, Plaintiffs may file a renewed motion for [a] preliminary injunction.”[20]

When asked to comment on the denial of the preliminary injunction, Jeffery Kessler of Winston & Strawn LLP, who represents 23XI and Front Row, said the following:

Although we are disappointed that the preliminary injunction was denied without prejudice and as premature, which we intend to appeal, this denial has no bearing on the merits of our case . . . . My clients will move forward to race in 2025 and continue to fight for a more fair and equitable system in NASCAR that complies with antitrust law.[21]

Hence, even though 23XI and Front Row may have lost the initial battle, the war against NASCAR and CEO Jim France continues. In other words, while both entities will not be receiving the swift relief that they had originally hoped for, they instead will have to buckle down and “be prepared to wage the long fight of antitrust litigation, which can last many years.”[22]

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[1] Reinharz, David, Jordan v. NASCAR: Sporting Worlds Collide, UB Law Sports & Entertainment Forum (October 17, 2024) (quoting Gluck, Jeff and Bianchi, Jordan, 23XI Racing, Front Row Motorsports sue NASCAR alleging monopolistic practices, The Athletic (October 2, 2024) https://ublawsportsforum.com/2024/10/17/jordan-v-nascar-sporting-worlds-collide/.

[2] Id.

[3] Id.

[4] Id.

[5] Pockrass, Bob, What to know about NASCAR antitrust lawsuit: Preliminary injunction denied, FOX Sports (November 8, 2024) https://www.foxsports.com/stories/nascar/what-know-about-nascar-antitrust-lawsuit-preliminary-injunction-denied.

[6] Id.

[7] 2311 Racing LLC, Front Row Motorsports Inc., v. James France, National Association for Stock Car Auto Racing, LLC, Case No. 3:24-CV-00886-FDW-SCR (November 8, 2024) https://assets.law360news.com/2258000/2258906/https-ecf-ncwd-uscourts-gov-doc1-13515419053.pdf.

[8] McCann, Michael, Michael Jordan Blocked as Judge Rejects Injunction Against NASCAR, Sportico (November 8, 2024) https://www.sportico.com/law/analysis/2024/michael-jordan-blocked-nascar-1234804297/.

[9] Supra note 7.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Fowler, Hayley, Michael Jordan’s NASCAR Team Hits Roadblock In Antitrust Suit, Law360 (November 8, 2024) https://www.law360.com/sports-and-betting/articles/2258906?nl_pk=f2b0bc0b-6c51-4128-81c7-55aae9575c77&utm_source=newsletter&utm_medium=email&utm_campaign=sports-and-betting&utm_content=2258906&read_main=1&nlsidx=0&nlaidx=0&detected=1.

[22] Supra note 8.