2311 Racing LLC v. National Association for Stock Car Auto Racing

139 F.4th 404

• Court: Court of Appeals for the Fourth Circuit
• Decided: June 5, 2025
• Docket: 24-2245
• Status: Published

Opinion

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PUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 24-2245

2311 RACING LLC, d/b/a 23XI Racing; FRONT ROW MOTORSPORTS, INC.,

Plaintiffs - Appellees,

v.

NATIONAL ASSOCIATION FOR STOCK CAR AUTO RACING, LLC; JAMES FRANCE,

Defendants - Appellants.

Appeal from the United States District Court for the Western District of North Carolina, at Charlotte. Kenneth D. Bell, District Judge. (3:24-cv-00886-KDB-SCR)

Argued: May 9, 2025 Decided: June 5, 2025

Before NIEMEYER, AGEE, and THACKER, Circuit Judges.

Preliminary injunction vacated by published opinion. Judge Niemeyer wrote the opinion, in which Judge Agee and Judge Thacker joined.

ARGUED: Christopher S. Yates, LATHAM & WATKINS LLP, San Francisco, California, for Appellants. Jeffrey L. Kessler, WINSTON & STRAWN, LLP, New York, New York, for Appellees. ON BRIEF: Tricia Wilson Magee, SHUMAKER LOOP & KENDRICK, LLP, Charlotte, North Carolina; Gregory G. Garre, Anna M. Rathbun, Christopher J. Brown, Christina R. Gay, Washington, D.C., Lawrence E. Buterman, LATHAM & WATKINS LLP, New York, New York, for Appellants. Danielle T. Williams, Charlotte, North Carolina, Jeanifer Parsigian, San Francisco, California, Scott P. Glauberman, Kelly Mannion Ellis, WINSTON & STRAWN LLP, Chicago, Illinois, for Appellees. USCA4 Appeal: 24-2245 Doc: 45 Filed: 06/05/2025 Pg: 2 of 10

NIEMEYER, Circuit Judge:

In entering a preliminary injunction in this case, the district court held that the

plaintiffs were likely to succeed on the merits of their antitrust action against the National

Association for Stock Car Auto Racing, LLC (NASCAR), and its CEO, James France,

because NASCAR, as an alleged monopolist, required the plaintiffs, as a condition of doing

business with them, to enter into a release for past conduct. Because that theory of antitrust

law is not supported by any case of which we are aware, we conclude that it was not a

likely basis for success on the merits and vacate the injunction.

I

NASCAR organizes and stages stock-car racing, including the NASCAR Cup

Series, which includes several well-known races, such as the Daytona 500 and the

Coca-Cola 600. To be guaranteed participation in the entire Cup Series, a racing team must

sign a comprehensive “charter” agreement that establishes, among other things, the rights

and duties of the parties, the rules of competition, the fees, and the division of income. The

charter format originated as the result of negotiations between NASCAR and the Race

Team Alliance, an association of racing teams. Following agreement on the charter format,

19 teams, including the plaintiff Front Row Motorsports, Inc., signed charter agreements

in 2016, providing for the participation of 36 “chartered cars” in all Cup Series races.

Several years later, in 2020 and 2021, the other plaintiff — 2311 Racing, LLC, d/b/a 23XI

Racing — also signed charter agreements that it had purchased from other teams, entitling

it to race in the Cup Series.

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In anticipation of the expiration of the 2016 charters on December 31, 2024,

NASCAR and the Race Team Alliance negotiated a revised charter for the Cup Series

beginning in 2025. Like the 2016 Charter Agreement, the 2025 Charter Agreement

included mutual release provisions that released the parties from claims for past conduct.

Thirteen racing teams representing 32 chartered cars signed the 2025 Charter Agreement.

23XI Racing and Front Row Motorsports, however, refused to sign that charter, objecting

to several provisions in the agreement. They believed that the agreement furthered the

alleged monopoly that NASCAR had maintained over the years by its conduct and the

charter agreements.

Shortly after refusing to sign, 23XI Racing and Front Row Motorsports commenced

this action against NASCAR and its CEO for violations of Sections 1 and 2 of the Sherman

Act. In their complaint, they alleged that “[a]lthough the 2016 Charter Agreement was an

improvement over the prior economic conditions of the teams, it still was the

anticompetitive product of NASCAR’s unlawful monopoly over premier stock car racing

in the United States.” They alleged further that “[n]o stock car racing team can compete

at the top-tier level in the United States without accepting the anticompetitive terms that

NASCAR imposes.” They requested declaratory and injunctive relief, as well as treble

damages.

Within days of filing their complaint, 23XI Racing and Front Row Motorsports filed

a motion for a preliminary injunction, requesting that the district court order NASCAR and

its CEO to allow them to participate in the Cup Series races under the terms of the 2025

Charter Agreement but excising the release contained in the agreement, so as to allow them

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to continue their antitrust suit against NASCAR. Counsel for the plaintiffs explained to

the district court, “So what had happened is we had been negotiating, and we got to a point

where we could not accept the agreement . . . because we couldn’t accept releasing our

antitrust claims.”

The district court granted the motion and entered a mandatory preliminary

injunction on December 18, 2024, as follows:

Defendants and their agents, servants, employees, attorneys, and all persons in active concert or participation with Defendants, must allow Plaintiffs to each enter two race cars in all NASCAR Cup races under the 2025 Charter Agreement terms applicable to all charter teams, with the exception that the “release” language in Section 10.3 of the 2025 Charter Agreement shall not be enforceable to the extent that it would release or bar Plaintiffs’ claims in this action.

In support of its injunction, the court ruled that the plaintiffs were likely to succeed on their

Section 2 claim because NASCAR, as a monopolist, could not “require that a party agree

to release [it] from all claims that it is violating the antitrust laws as a condition of doing

business.” The court concluded that a “specific release of past conduct may be

enforceable,” but only if it did not involve a monopolist “condition[ing] entry into a market

— here the NASCAR Cup Series — on the prospective entrant’s agreement not to

challenge the monopolist’s conduct.”

Shortly after entering the preliminary injunction, the court amended it by orders

dated December 23 and December 26, 2024, making modifications that are not relevant to

this appeal. From the district court’s preliminary injunction, NASCAR and its CEO filed

this interlocutory appeal. See 28 U.S.C. § 1292(a)(1).

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II

Because a preliminary injunction grants relief, albeit temporarily, before trial on the

merits, it is an “extraordinary and drastic remedy,” Munaf v. Geren, 553 U.S. 674, 689

(2008) (citation omitted), “that may only be awarded upon a clear showing that the plaintiff

is entitled to such relief,” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008).

And it should be “granted only sparingly and in limited circumstances.” MicroStrategy

Inc. v. Motorola, Inc., 245 F.3d 335, 339 (4th Cir. 2001) (quoting Direx Israel, Ltd. v.

Breakthrough Med. Corp., 952 F.2d 802, 816 (4th Cir. 1991)). To grant such an injunction,

a court must conclude that the plaintiff made a clear showing that it “is likely to succeed

on the merits — along with the risk of irreparable harm, the balance of equities, and the

public interest.” Lackey v. Stinnie, 145 S. Ct. 659, 667 (2025); Winter, 555 U.S. at 22

(requiring that a preliminary injunction be awarded only “upon a clear showing” of

entitlement to relief).

While we review preliminary injunctions for abuse of discretion, we apply an

exacting standard that demands a clear showing that the necessary criteria have been met.

See In re Microsoft Corp. Antitrust Litig., 333 F.3d 517, 524–25 (4th Cir. 2003). And “this

exacting standard of review is even more searching when the preliminary injunctive relief

ordered by the district court is mandatory rather than prohibitory in nature.” Id. at 525.

Unlike prohibitory preliminary injunctions, mandatory preliminary injunctions alter, rather

than preserve, the status quo, see id. at 525–26, and therefore are “disfavored, and

warranted only in the most extraordinary circumstances,” Taylor v. Freeman, 34 F.3d 266,

270 n.2 (4th Cir. 1994).

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In this case, the district court ordered that the defendants “must allow plaintiffs to

each enter two race cars in all NASCAR Cup Races under the 2025 Charter Agreement,”

as modified by the district court. Without that order, the plaintiffs’ participation in the Cup

Series races would not have been guaranteed because they refused to sign the 2025 Charter

Agreement. The preliminary injunction was therefore mandatory rather than prohibitory,

and the plaintiffs’ showing of the requirements for relief must accordingly “be indisputably

clear.” In re Microsoft Corp., 333 F.3d at 525 (quoting Communist Party of Ind. v.

Whitcomb, 409 U.S. 1235, 1235 (1972) (Rehnquist, J., in chambers)).

Viewing the district court’s preliminary injunction under this demanding standard,

it is not clear, let alone indisputably so, that the antitrust theory advanced by the plaintiffs

and adopted by the district court is likely to succeed on the merits, as necessary for a

preliminary injunction. See Winter, 555 U.S. at 20.

While the plaintiffs’ complaint alleged years of conduct and contract provisions that

they claimed were anticompetitive, thus attacking NASCAR’s entire business model, they

requested at the same time that the district court order that they “be permitted to participate

in NASCAR Cup Series events under the terms of the 2025 Charter Agreement (with the

exception of the Release).” The plaintiffs therefore requested to participate in the very

business that they sought to dismantle. The district court accommodated the plaintiffs’

request, explaining that, while the plaintiffs alleged broader monopolistic conduct, it was

relying on only one basis to grant the preliminary injunction. It stated, “Plaintiffs have a

likelihood of success on their allegation that the Release is unlawful. The Court

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emphasizes that it does not reach and expresses no opinion as to Plaintiffs’ likelihood of

success on their other Sherman Act claims . . . .”

As to the single ground that the release violated the antitrust laws, the court found

that NASCAR had a 100% share of the relevant market, which it defined as “premier stock

car racing teams in the United States.” It then found that NASCAR’s requirement of a

release was, in and of itself, anticompetitive. As the district court summarized its theory,

“Can a monopolist require that a party agree to release the monopolist from all claims that

it is violating the antitrust laws as a condition of doing business? The answer is no.”

But the court supplied no case law to support that theory. Indeed, we have found

no case to support it, and the defendants claim that there is none. Rather, the court only

cited cases holding that it may violate public policy for an agreement to operate “as a

prospective waiver of a party’s right to pursue statutory remedies for antitrust violations.”

(Emphasis added) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473

U.S. 614, 637 n.19 (1985)). But that case and the others cited were hardly relevant to the

plaintiffs’ claims because here there is no agreement; the plaintiffs refused to sign the 2025

Charter Agreement. And unlike the releases in the cases cited by the district court, the

release in the 2025 Charter Agreement is not prospective. Finally, the fact that a release

may violate public policy by being prospective does not make it anticompetitive, as

required for a violation of the antitrust laws.

To prevail under Section 2 of the Sherman Act — the provision relied on by the

district court in issuing the preliminary injunction — a plaintiff must show (1) that the

defendant possessed monopoly power in the relevant market, and (2) that the defendant

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willfully acquired or maintained that power through anticompetitive conduct. See United

States v. Grinnell Corp., 384 U.S. 563, 570–71 (1966).

The district court found that NASCAR possessed monopoly power in a relevant

market, but it failed to properly find that NASCAR acquired or maintained that monopoly

power through anticompetitive conduct when it required a release to do business. The court

proposed that the release itself constituted anticompetitive conduct, but the release did not

address competition. Rather, it was a standard release provision that released all claims

based on all sorts of prior conduct, including, NASCAR maintains, claims that it violated

the antitrust laws. Specifically, the release provided for the “release and discharge” of

NASCAR and related persons from all claims “arising out of or relating to the criteria used

by [NASCAR] to determine whether or not to enter into, or to offer to enter into, a Charter

Member Agreement with the Team Owner.” And the agreement also included a reciprocal

release benefiting team owners, including the plaintiffs had they signed the agreement,

such that the agreement contained mutual releases. But even focusing on only the release

given by the racing teams, there is “no prohibition in the statutes or in the policy behind

the antitrust laws that prohibits the disclaimer of antitrust claims by a general release.” Va.

Impression Prods. Co. v. SCM Corp., 448 F.2d 262, 266 (4th Cir. 1971). The effect of

such a release is to eliminate antitrust suits and others between parties doing business with

each other, not to eliminate or injure competition.

Section 2 requires that the defendant have engaged in anticompetitive conduct —

i.e., conduct intended to “exclude rivals on some basis other than efficiency.” Aspen Skiing

Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 605 (1985) (quoting Robert H. Bork,

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The Antitrust Paradox 138 (1978)). Neither the plaintiffs nor the district court has shown

how the release would have injured competition. And absent anticompetitive conduct in

the service of monopoly power, the law recognizes that parties are “free to choose the

parties with whom they will deal, as well as the prices, terms, and conditions of that

dealing.” Pac. Bell Tel. Co. v. linkLine Commc’ns, Inc., 555 U.S. 438, 448 (2009). The

offer of a contract for joint participation in business that includes mutual releases

constitutes just what linkLine authorizes.

Nonetheless, the district court found that “[m]arket aspirants should not be forced

to choose between participation in a market and the later assertion of their ongoing/future

antitrust rights, nor should a monopolist be permitted to include in the market only those

who consent to the monopolist’s alleged wrongdoing.” That, however, is not an

appropriate inquiry or observation. Rather, the plaintiffs must demonstrate that they are

likely to succeed in showing that NASCAR used its monopoly power “to foreclose

competition, to gain a competitive advantage, or to destroy a competitor.” Eastman Kodak

Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 482–83 (1992) (quoting United States v.

Griffith, 334 U.S. 100, 107 (1948)). The district court did not so find.

In short, because we have found no support for the proposition that a business entity

or person violates the antitrust laws by requiring a prospective participant to give a release

for past conduct as a condition for doing business, we cannot conclude that the plaintiffs

made a clear showing that they were likely to succeed on the merits of that theory. And

without satisfaction of the likelihood-of-success element, the plaintiffs were not entitled to

a preliminary injunction. See Winter, 555 U.S. at 20. We therefore conclude that the

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district court abused its discretion in entering the preliminary injunction that it did. This is

all the more true in view of the heightened standard for issuing a mandatory preliminary

injunction and because the one here required two parties to engage in a business that one

party claims to be illegal. Cf. Omega World Travel, Inc. v. Trans World Airlines, 111 F.3d

14, 16 (4th Cir. 1997) (noting that “when the injury that the movant seeks to prevent

through a preliminary injunction is . . . directly contradictory to the injury for which it seeks

redress in the underlying complaint, then a preliminary injunction simply should not issue”

(cleaned up)). We express no view, however, on any aspect of the pending case beyond

those stated herein with respect to the preliminary injunction. Accordingly, the injunctions

of December 18, December 23, and December 26, 2024, are hereby vacated.

IT IS SO ORDERED.