U.S. District Judge Marvin Shoob in Atlanta issued a preliminary injunction barring NASCAR and any entity affiliated with it from interfering with AT&T's rights as primary sponsor of the car in Nextel Cup Series races.
NASCAR has tried to prevent the Cingular logo from being changed to the AT&T logo on Burton's car. AT&T is the sole owner of Cingular and is rebranding the cell phone company's name to AT&T.
Sprint Nextel Corp. sponsors NASCAR's premier series, the Nextel Cup, and has exclusive rights as the telecommunications company for the series. Attorneys argued the only exceptions are companies, including Cingular, that already sponsored cars when Nextel reached its agreement with NASCAR.
San Antonio-based AT&T became the full owner of Atlanta-based Cingular when it completed its purchase of Atlanta-based BellSouth Corp. in December.
Cingular argued that its rights included changing its brand name to AT&T.
AT&T wasted no time following the ruling. John Burbank, AT&T vice president of marketing, told reporters in a conference call that Burton's car will be repainted in time for tonight's Nextel All-Star Challenge at Lowe's Motor Speedway in Concord, N.C.
"We're not hurrying in any way, shape or form to in any way make a statement about our relationship with NASCAR or Sprint Nextel," Burbank said. "This really is the normal course of business."
But later Friday, NASCAR filed a notice of appeal and an emergency motion asking that Shoob's order be stayed pending the appeal to the 11th U.S. Circuit Court of Appeals in Atlanta. There was no immediate decision on the motion. Shoob's law clerk, Jessica Arnold, said NASCAR's motion to stay will be addressed this morning during a conference call between the parties.
In his ruling regarding Burton's car, Shoob said, "The court concludes that the continued appearance of the Cingular brand on the No. 31 car, unaccompanied by any indication that Cingular now does business as AT&T, is likely to confuse NASCAR fans."
Shoob also concluded that AT&T has shown it will suffer irreparable harm in the form of loss of goodwill and loss of exclusive rights to renew its sponsorship agreement unless the court issues the injunction.
NASCAR had argued that AT&T would be welcome to sponsor a car in NASCAR's Busch or truck series, but that Nextel was entitled to exclusivity through its 10-year, $700 million investment that began in 2004. It also said it could be sued by Sprint Nextel if the court granted the injunction in favor of AT&T. "Regardless of whether Sprint Nextel could or may bring suit against NASCAR, the court finds that the threat of such a suit does not outweigh the actual and imminent irreparable harm plaintiff will suffer if the court does not issue an injunction," Shoob said in his ruling. NASCAR said it was disappointed by the ruling. "NASCAR will continue to protect the industry from actions designed to interrupt a business model which has been beneficial to all," it said. NASCAR also said that Sprint Nextel is a cornerstone sponsor that benefits the entire industry by way of its contribution to the championship point's fund, technology bringing fans closer to the sport, and its marketing and advertising campaigns. "All of this was possible through the exclusivity granted to us as the series sponsor for the Nextel Cup, and that exclusivity from NASCAR also grants us protection from other telecommunications competitors infringing on our sponsorship rights," Sprint Nextel marketing director Dean Kessel said in a statement. "The merger that created the new AT&T means their brand now represents a much broader and more comprehensive company than the Cingular brand." In a statement, AT&T said it was pleased with the ruling. "We look forward to the debut of the new paint scheme and to directing our focus back to the action on the track and to Jeff Burton's fantastic start to the 2007 season," Burbank said in the statement. The No. 31 car has been sponsored by Cingular Wireless LLC since 2001. Cingular had been a joint venture of AT&T and BellSouth before AT&T purchased BellSouth.
According to AT&T, earlier this year NASCAR rejected a transitional plan to change the paint scheme and introduce the AT&T logo on Burton's car. AT&T later filed suit against NASCAR.