Bain Capital, its cheerleading company Varsity Brands and Varsity’s previous owners have agreed to pay $82.5 million to settle a class action lawsuit brought on behalf of cheerleading consumers, or “indirect purchasers,” who accused the defendants of intentionally monopolizing or conspiring to monopolize the cheer competition, camps and apparel markets. Plaintiffs’ attorneys will receive a third of the settlement amount—$27.5 million—plus $9.2 million in litigation costs, according to court filings this week.
On Monday, the parties presented the federal judge overseeing the case a copy of the proposed settlement, which comes almost exactly a year after Varsity agreed to pay $43.5 million to settle another antitrust suit, Fusion Elite All Stars, et al. v. Varsity Brands, LLC et al., filed by a proposed class of rival all-star cheerleading gyms. That settlement was ratified by the court in October.
The settlement in Jessica Jones, et al., v. Varsity Brands, LLC, et al., was agreed to in principle last month, following a third round of mediation in the case, which was originally filed in 2020. It comes as Bain is reported to be actively seeking ways to offload Varsity Brands, which includes Varsity Spirit and BSN Sports, perhaps by taking the company public. Bain acquired Varsity Brands in 2018 for $2.5 billion. In addition to Bain, others defendants who are party to the proposed settlement are Varsity’s previous owners—Charlesbank Capital Partners and company founder Jeff Webb—as well as the U.S. All-Star Federation (USASF), the club cheer sanctioning body that was founded and seeded by Varsity.
In an email statement, a Varsity spokesperson said the company was “pleased” to have reached an agreement. The spokesperson added: “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.”
According to a plaintiffs’ memorandum filed in conjunction with the settlement agreement, the monetary relief would be paid in two installments to two classes still seeking certification: a state law damages class and an injunctive relief class. The latter includes any indirect purchaser who paid Varsity for registration in its cheer competitions or camps, or purchased cheer apparel, from Dec. 10, 2016, through March 31, 2024.
The first installment would be capped at $2.5 million, with the defendants having to remit the remaining amount 30 days from the date the court’s final approval of the settlement is no longer subject to appeal.
The class representatives in the case—Jessica Jones, Christina Lorenzen and Amy Coulson—would respectively be paid $50,000, $25,000 and $25,000 from the settlement fund. All remaining settlement class members would only be entitled to receive payment from the remaining settlement monies, minus the attorneys’ fees.
In addition to the financial terms, Varsity Spirit has agreed to do away with certain programs that the plaintiffs alleged harmed market competition. For example, cheerleaders have previously been required to attend Varsity-run cheer camps to be eligible to compete in Varsity’s year-end national championships. Per the settlement, Varsity would no longer make this a requirement.
Similarly, the settlement’s prospective relief would address Varsity’s “Stay Smart” policy that requires cheer teams participating in Varsity events to stay at certain area hotels, which the plaintiffs alleged Varsity received kickbacks from. According to the settlement, Varsity has agreed that it “will not require participants in 35% or more of its Cheer Competitions to stay at Varsity-approved accommodations.”
The settlement also addresses the alleged collusion between Varsity and the USASF. Accordingly, the USASF has agreed not to share any information its event producer members deem confidential, including cheer competition schedules or attendance records. This builds off prospective relief agreed to in the Fusion case settlement, which limited Varsity’s involvement in the USASF board of directors and sanctioning committees.
Joseph Saveri, the lead plaintiffs’ lawyer, declined to comment beyond confirming the settlement had been reached. However, in an affidavit filed Monday, Saveri wrote that while he was confident in prevailing at trial, which was slated for July 8, the settlement “avoids the delay and uncertainty of continued protracted litigation against defendants, represented by many of the most qualified law firms in the United States.”