On November 8, 2024, United States District Judge Frank D. Whitney of the Western District of North Carolina denied without prejudice a motion for preliminary injunction sought by two stock car teams against the National Association for Stock Car Auto Racing (“NASCAR”). 2311 Racing LLC, et al. v. National Association for Stock Car Auto Racing, LLC, et al., No. 3:24-CV-00886-FDW-SCR, 2024 WL 4729485 (W.D.N.C. Nov. 8, 2024). The injunction would have prevented NASCAR from enforcing a legal release provision in its 2025 NASCAR Cup Series Charter Member Agreements (“Charter Agreement” or “Agreement”) and allowed plaintiffs to compete as de facto charter teams without abandoning antitrust claims that are pending before the district court. The Court denied the injunction, finding that plaintiffs failed to establish irreparable harm necessary to warrant relief.
Plaintiffs sued NASCAR and its CEO last month in the Western District of North Carolina, alleging that NASCAR holds an unlawful monopoly over premier stock car racing. The teams allege that NASCAR’s charter system limits competition by unlawfully binding teams to the series, implementing policies to restrict teams for racing for NASCAR rivals, and exploiting its control over premier racetracks.
Unlike other sports associations, which grant franchise status to individual teams, NASCAR teams are independently owned. As such, teams are not automatically entitled to participate in NASCAR events. Instead, teams can gain eligibility to compete by signing onto NASCAR’s Charter Agreements (“chartered teams”) or by qualifying for limited non-charter spots on a race-by-race basis (“open teams”). Signing onto NASCAR’s Charter Agreement guarantees inclusion in upcoming events for the duration of the Agreement in exchange for subjecting chartered teams to NASCAR’s various policies and restrictions. The Agreement also requires teams to waive certain legal claims against the organization. Plaintiffs claim, among other things, that NASCAR abuses its dominant position to compel parties to sign its Charter Agreement without giving teams sufficient time to review or negotiate the terms.
To obtain a preliminary injunction, plaintiffs had to show: (1) a likelihood of success on the merits; (2) a strong prospect of irreparable harm if the injunction is not granted; (3) that the balance of equities favors the teams; and (4) that an injunction would be in the public’s interest. Here plaintiffs asserted they would face significant financial, operational, and reputational risks if unable to compete as a chartered team, but that signing the Charter Agreement would force them to waive what they have alleged as important claims that serve the interests of all premier racing teams.
Plaintiffs’ alleged harms include a loss of sponsors or qualifying drivers, which they assert would in turn significantly harm revenues and render the teams insolvent, effectively removing them from the racing market altogether. While plaintiffs conceded that they could compete as open teams, they asserted that this too would endanger the teams’ viability, as it would allow NASCAR the ability to exclude plaintiffs from events in its discretion and potentially harm the teams’ goodwill with fans and sponsors.
In its Order, the Court focused on a lack of irreparable harm as the basis for denying plaintiffs’ request for an injunction. Specifically, the Court held that plaintiffs failed to plead facts sufficient to demonstrate that the alleged harms are present, immediate, and urgent. Rather, Judge Whitney characterized plaintiffs’ allegations of harm as merely speculative. According to the Court, “although Plaintiffs allege they are on the brink of irreparable harm, the 2025 season is months away—the stock cars remain in the garage,” and therefore, plaintiffs have not established an impending threat to their continued operation. By the same token, the Court concluded that allegations of lost fan or sponsor support was contingent on acts of third parties that could not be reliably predicted. Finally, the Court held that the risk that NASCAR would exclude plaintiffs from competition as open teams was purely speculative.
Declining to grant the injunction, Judge Whitney quipped that “the teams are no closer to irreparable harm than they are to the command, ‘Drivers, start your engines,’ at the first race of the 2025 season.” The Court stressed that preliminary injunctions are appropriate where the parties “cannot survive absent a preliminary injunction,” but that—should circumstances change—plaintiffs may file a renewed motion. In the meantime, plaintiffs have filed a notice of interlocutory appeal, seeking relief from the Fourth Circuit.
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