In a contentious hearing on May 9th, the United States Court of Appeals (in Richmond, Va.) heard arguments from the lead attorney for both NASCAR and the race teams as the sanctioning body aimed to overturn the preliminary injunction granted to 23XI Racing and Front Row Motorsports in December of last year.

The injunction allowed the two teams to race with charters without being held to the release (ability to sue NASCAR) that exists in the 2025 Charter Agreement. They called out the agreement for including these conditions, claiming they qualify as antitrust violations when grouped in with other factors.

On Thursday, the U.S. Court of Appeals ruled in favor of NASCAR, revoking the injunction. This won’t take effect for at least two weeks as the teams can request another hearing, but if it holds, then both 23XI and FRM will be forced to race as open teams without charters for the remainder of the year. If the teams do not ask for a rehearing, then the final judgement takes effect on June 26 (three weeks from now).

How this may hurt the teams

During last month’s hearing, team attorney Jeffrey Kessler tried to make a case for irreparable harm, stating that “it is not economically viable to have to qualify each week.” According to him, to run as open teams (forced to qualify on speed each week) would be a massive financial hit, and may put their sponsor relationships and driver contracts in jeopardy. Ultimately, it could hurt their on-track performance while also losing out on the positive aspects of the Charter Agreement while their championship rivals still benefit from it.

Of note, only one Cup race this year has sent cars home due to field size and that was the Daytona 500. The Coca-Cola 600 also reached a full field, but there were no cars sent home in that case.

Why it was revoked

Both 23XI and FRM own three charters each. Things also get complicated when you realize that they used the courts and the now vacated injunction to purchase a charter each from the now defunct Stewart-Haas Racing team, adding a third entry for 2025.

During the hearing, the judges heavily questioned Kessler about the merits of the injunction, believing there was no reason they should get the benefits of the 2025 Charter Agreement while suing NASCAR over the particulars of it, noting how this case is without precedence. This was cited in Thursday’s ruling as a reason for the final decision, stating that Kessler’s antitrust theory “is not supported by any case of which we are aware.”

The U.S. Court of Appeals also said that the teams failed to make a “clear showing that they were likely to succeed” in their case, and without that element, the injunction was revoked. The trial date for the lawsuit is set for December of this year. 

Statement from Jeffrey Kessler, attorney for 23XI and FRM

“We are disappointed by today’s ruling by the Fourth Circuit Court of Appeals and are reviewing the decision to determine our next steps. This ruling is based on a very narrow consideration of whether a release of claims in the charter agreements is anti-competitive and does not impact our chances of winning at trial scheduled for December 1.  We remain confident in our case and committed to racing for the entirety of this season as we continue our fight to create a fair and just economic system for stock car racing that is free of anticompetitive, monopolistic conduct.”