Bain Capital and its cheerleading giant Varsity Brands have agreed to an $82.5 million settlement to resolve a class action antitrust lawsuit. The suit, brought forward by cheerleading consumers, accused the defendants of monopolizing the cheer competition, camps, and apparel markets. According to court filings, plaintiffs’ attorneys will receive $27.5 million of the settlement, plus an additional $9.2 million to cover litigation costs.
The proposed settlement was presented to a federal judge on Monday, marking nearly a year since Varsity settled a separate antitrust case for $43.5 million. The earlier case, Fusion Elite All Stars, et al. v. Varsity Brands, LLC et al., was resolved in October and involved a class of rival all-star cheerleading gyms.
The current case, Jessica Jones, et al., v. Varsity Brands, LLC, et al., was initially filed in 2020. The settlement comes after extensive mediation efforts and coincides with reports that Bain is exploring options to offload Varsity Brands, potentially through a public offering. Bain acquired Varsity Brands in 2018 for $2.5 billion. The settlement also involves Varsity’s previous owners, Charlesbank Capital Partners and company founder Jeff Webb, as well as the U.S. All-Star Federation (USASF), which was originally founded by Varsity.
In an official statement, a Varsity spokesperson expressed satisfaction with the agreement, emphasizing that it was not an admission of wrongdoing. “This agreement is not an admission of any wrongdoing or liability, and we are confident that Varsity Spirit acted appropriately and in the best interest of our sport,” the spokesperson said.
The monetary relief will be paid in two installments to two classes still seeking certification: a state law damages class and an injunctive relief class. The injunctive relief class includes any indirect purchaser who paid Varsity for cheer competition or camp registration, or bought cheer apparel, from December 10, 2016, through March 31, 2024. The first installment is capped at $2.5 million, with the remaining amount due 30 days after the court’s final approval of the settlement is no longer subject to appeal.
Class representatives Jessica Jones, Christina Lorenzen, and Amy Coulson will receive $50,000, $25,000, and $25,000 respectively from the settlement fund. Remaining settlement class members will receive payments after attorneys’ fees are deducted.
In addition to the financial terms, Varsity Spirit has agreed to eliminate certain programs that plaintiffs claimed harmed market competition. Previously, cheerleaders had to attend Varsity-run cheer camps to qualify for Varsity’s year-end national championships. This will no longer be required under the settlement.
The settlement also addresses Varsity’s “Stay Smart” policy, which required cheer teams to stay at specific hotels, allegedly allowing Varsity to receive kickbacks. Varsity agreed that at least 35% of its cheer competitions will not mandate participants to stay at Varsity-approved accommodations.
Moreover, the settlement aims to prevent collusion between Varsity and the USASF. The USASF has agreed not to share confidential information, such as cheer competition schedules or attendance records, with Varsity. This builds on the Fusion case settlement, which limited Varsity’s influence on the USASF board and sanctioning committees.
Lead plaintiffs’ lawyer Joseph Saveri confirmed the settlement but declined further comment. In an affidavit, Saveri noted that while he was confident in winning at trial, the settlement avoids the delays and uncertainties of prolonged litigation against highly skilled defense teams. The trial was initially scheduled for July 8.
This settlement marks a significant moment in the cheerleading industry, potentially reshaping the landscape for competitions, camps, and apparel markets. Cheerleading consumers and indirect purchasers stand to benefit from these changes, ensuring a more competitive and fair marketplace.
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