A federal court judge ruled Tuesday that a dozen former youth cheerleaders who filed lawsuits alleging sexual abuse by their coaches at a South Carolina gym can pursue unjust-enrichment and negligence claims against the Bain Capital-owned cheer companies, Varsity Brands and Varsity Spirit.
At the same time, that judge dismissed seven other counts against the Varsity defendants, including those alleging racketeering activity, fraud and civil conspiracy.
Nevertheless, the plaintiffs’ attorney, Bakari Sellers, hailed U.S. District Court Judge Henry M. Herlong, Jr.’s ruling, saying his clients had overcome a “significant roadblock.”
“We are very, very proud of our plaintiffs for coming forward, and we look forward to continuing this process to get justice all around and am thankful for them speaking up,” Sellers told Sportico in a phone interview.
The Varsity defendants had filed motions to dismiss in December, which were addressed by Judge Herlong’s ruling this week.
At the center of the cases’ abuse allegations is Scott Foster, founder of Rockstar Cheer and Dance in Greenville County, S.C., who died by suicide in August 2022, reportedly while under criminal investigation. Foster’s gym franchise, which has since closed, was a member of Varsity’s top-tier “Family Plan” rebate program. Varsity had previously acquired another Foster company, World Spirit Federation, in 2006.
Foster’s estate and his widow, Kathy, are now defendants in the civil cases. Other defendants include Bain Capital; Varsity founder and former CEO Jeff Webb; private equity firm Charlesbank Capital Partners, which owned Varsity prior to Bain’s acquisition; and two Varsity-created governing bodies, USA Cheer and the U.S. All Star Federation (USASF). On Wednesday, Judge Herlong ruled similarly on USASF’s motion to dismiss as he did with Varsity’s, tossing most of the counts but allowing those relating to unjust enrichment, negligence and breach of contract. The judge’s orders on the other defendants’ motions to dismiss are expected in short order.
In allowing the plaintiffs’ unjust-enrichment claims to proceed against Varsity, the judge wrote that the plaintiffs had successfully stipulated that they “conferred benefits” on the company through their payments of gym and competition fees and other expenditures, and they “retained those benefits under inequitable circumstances.”
As for the counts of gross negligence and negligent security, Varsity had tried to argue that, according to legal precedents, it did not owe the plaintiffs an affirmative duty of care.
However, the judge ruled that the plaintiffs had sufficiently asserted facts that would make for an exception to the general rule, specifically when it came to Varsity’s creation and control over the USASF, which is responsible for certifying club cheer coaches and enforcing safety guidelines.
Some of the counts dismissed by Judge Herlong were arguably long shots from the start. The judge, for example, challenged the underlying premise of the plaintiff’s RICO count, which contended that the accused Rockstar Cheer coaches, with their alleged abuse, “shared a common purpose” with those defendants higher up the corporate food chain.
To the contrary, the judge wrote, the alleged facts suggested “divergent goals: the coaches sought to prey on minor athletes for their own sexual or personal gratification; the corporate entities sought to retain athletes and attract new ones to generate more money.”
The developments in the sex-abuse litigation follow Varsity’s recent successes in chipping away at a different cohort of plaintiffs who have accused the company of illegal monopolistic practices.
While denying wrongdoing, Varsity agreed in March to pay $43.5 million to settle an antitrust case brought on behalf of a class of all-star cheerleading gyms. A week prior, Varsity successfully had another antitrust case dismissed on procedural grounds.
While a third such case is still pending, Varsity’s most pressing legal concerns now appear to be related to the sex-abuse scandal that has riven the sport of cheerleading. In addition to the South Carolina plaintiffs, Sellers’ firm, Strom Law, has sued largely the same group of defendants in subsequent federal sex abuse cases on behalf of alleged victims in North Carolina, Ohio, Georgia, Tennessee, California and Florida.
(This article has been updated in the seventh paragraph with info on Judge Herlong’s Wednesday ruling.)
