Doe 8 v. Varsity Brands, LLC

• Docket Number: C. A. 6:22-3508-HMH
• Decision Date: 21 June 2023
• Parties: Jane Doe 8, Plaintiff, v. Varsity Brands, LLC; Varsity Spirit, LLC; Varsity Brands Holding Company, Inc.; U.S. All Star Federation, Inc. d/b/a U.S. All Star Federation; USA Federation for Sport Cheering d/b/a USA Cheer; Charlesbank Capital Partners, LP; Bain Capital, LP; Jeff Webb, individually; Rockstar Cheer & Dance, Inc.; Katherine Anne Foster, as the personal representative of the Estate of Scott Foster; Kathy Foster, individually; Josh Guyton; Christopher Hinton; Traevon Black a/k/a Trey Black n/k/a Tracey Black; and other unknown defendants, Defendants.
• Court: U.S. District Court — District of South Carolina

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Jane Doe 8, Plaintiff, v. Varsity Brands, LLC; Varsity Spirit, LLC; Varsity Brands Holding Company, Inc.; U.S. All Star Federation, Inc. d/b/a U.S. All Star Federation; USA Federation for Sport Cheering d/b/a USA Cheer; Charlesbank Capital Partners, LP; Bain Capital, LP; Jeff Webb, individually; Rockstar Cheer & Dance, Inc.; Katherine Anne Foster, as the personal representative of the Estate of Scott Foster; Kathy Foster, individually; Josh Guyton; Christopher Hinton; Traevon Black a/k/a Trey Black n/k/a Tracey Black; and other unknown defendants, Defendants.

C. A. No. 6:22-3508-HMH

United States District Court, D. South Carolina, Greenville Division

June 21, 2023

OPINION & ORDER

Henry M. Herlong, Jr., Senior United States District Judge.

Before the court is Defendant U.S. All Star Federation's (“USASF”) motion to dismiss Plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6). For the reasons below, the court grants in part and denies in part USASF's motion.

I. BACKGROUND

Plaintiff is a former youth cheerleader who alleges that she was sexually abused by coaches employed by Defendant Rockstar Cheer & Dance, Inc. (“Rockstar Cheer”), a cheerleading gym affiliated with the Varsity Defendants.^[1] In addition to pursuing claims against the individual coaches and Rockstar Cheer, Plaintiff seeks to hold Varsity, Jeff Webb (“Webb”) Bain Capital, LP (“Bain”), Charlesbank Capital Partners, LP (“Charlesbank”), and competitive cheerleading's governing bodies - USA Federation for Sport Cheering (“USA Cheer”) and USASF - liable for misrepresenting the safety of Varsity gyms and competitions and failing to adopt and enforce adequate athlete-safety policies and procedures. The facts below are taken from Plaintiff's complaint and are accepted as true for purposes of the present motion. Ashcroft v Iqbal, 556 U.S. 662, 678 (2009).^[2]

A. Overview of All Star Cheerleading

Unlike traditional sideline cheerleading, All Star cheerleading is a competition-based sport unto itself. (Compl. ¶¶ 32-33, ECF No. 1.) All Star cheer teams compete by performing two-and-a-half minute routines set to music, which incorporate elements of tumbling, stunting, cheer, and dance. (Id. ¶ 32, ECF No. 1.) According to Plaintiff, over four million athletes across the United States participate in All Star cheerleading at some level, with many training and competing year-round. (Id. ¶¶ 34, 36, ECF No. 1.) This level of commitment is expensive: a single season costs anywhere from $3,000 to $7,000 per athlete, while some families spend more than $20,000 a year for transportation, lodging, membership fees, merchandise, and uniforms. (Id. ¶ 35, ECF No. 1.)

The beginnings of the competitive cheerleading industry can be traced to Webb's founding of the predecessor to Varsity Spirit in 1974. (Id. ¶ 42, ECF No. 1.) Varsity Spirit began as a provider of educational training camps for cheerleaders and has since expanded into selling uniforms and apparel and organizing cheer competitions. (Compl. ¶¶ 42-44, ECF No. 1.) It now controls an estimated 80-90% of the All Star cheer market. (Id. ¶ 46, ECF No. 1.) From 2014 to 2018, Varsity was wholly owned by Charlesbank, a Boston-based company. (Id. ¶¶ 28, 106, ECF No. 1.) Today, Varsity is owned by another Boston-based company - Bain - which purchased Varsity in 2018 for $2.8 billion.^[3] (Id. ¶¶ 29, 108, ECF No. 1.)

Two governing bodies oversee competitive cheerleading in the United States: USASF and USA Cheer. (Id. ¶¶ 81, 85, ECF No. 1.) Plaintiff maintains that Varsity was heavily involved in creating and operating both organizations. For example, Varsity allegedly advanced a $1.8 million interest-free loan to help launch USASF, submitted USASF's trademark application, and for at least fifteen years, housed USASF's offices at its corporate address and paid USASF's employees directly. (Compl. ¶¶ 80, 89-91, ECF No. 1.) Varsity also continues to control a majority of the seats on USASF's board of directors, including all seats with voting rights. (Id. ¶ 92, ECF No. 1.) Similar to USASF, USA Cheer was purportedly created in 2007 with the help of an interest-free loan from Varsity, listed “Varsity's Tennessee headquarters as its own,” and at one time had six Varsity employees on its board. (Id. ¶¶ 85-86, 95, ECF No. 1.)

As a result of Webb's and Varsity's ties to cheerleading's governing bodies, Plaintiff contends, Webb and Varsity “were entirely self-regulated” and could control “all aspects of AllStar cheer.” (Id. ¶¶ 78, 100, ECF No. 1.) As examples, Plaintiff points out that:

• All Star athletes must buy a USASF membership to compete at Varsity events. (Id. ¶ 49, ECF No. 1.)

• All Star athletes are required to pay annual or monthly dues to Varsity and their local Varsity-affiliated gym for “competition attendance, uniforms, accessories, and other related fees.” (Compl. ¶ 54, ECF No. 1.)

• “Gyms and coaches likewise pay monthly or annual fees to USASF, USA Cheer and the Varsity Defendants.” (Id. ¶ 55, ECF No. 1.)

• Affiliate gyms are required “to sign multi-year supply contracts whereby the gyms are paid cash rebates from Varsity Spirit, LLC for buying [its] merchandise and for sending athletes to Varsity events.” (Id. ¶ 52, ECF No. 1.)

• “[M]embership in USASF[] and with a Varsity-affiliated gym mandates competing in a specified number of annual [V]arsity events.” (Id. ¶ 59, ECF No. 1.)

• Athletes and their families must purchase rooms at Varsity-selected hotels while at Varsity competitions; the failure to do so “subjects the athlete to disqualification.” (Id. ¶ 61, ECF No. 1.)

B. Scott Foster and the Rockstar Cheer Gym

Defendant Scott Foster cheered collegiately at the University of Louisville, “a preeminent [sic] name in the world of competitive cheerleading,” and began coaching youth cheerleaders in Kentucky in 1996. (Compl. ¶¶ 175-76, ECF No. 1.) Shortly after moving to Greenville, South Carolina in 1999, Scott Foster opened an All Star cheer gym together with his wife, Defendant Kathy Foster. (Id. ¶ 178, ECF No. 1.) The couple at one point also operated World Spirit Federation, a competition cheerleading company, before selling the company to Varsity Brands in 2006. (Id. ¶ 179, ECF No. 1.) A year later, in 2007, Scott and Kathy Foster opened Rockstar Cheer in Greenville. (Id. ¶ 180, ECF No. 1.) Rockstar Cheer's stated mission was “[t]o provide a structured environment of competitive cheerleading while accomplishing our goals [and] to teach dedication, commitment, self-confidence, teamwork, discipline, responsibility, and leadership in a family-friendly, safe and fun environment.” (Id. ¶ 181, ECF No. 1.) To this end, USASF certified Rockstar Cheer “as meeting All-Star standards with respect to coach credentials, program quality, and athlete safety.” (Compl. ¶ 182, ECF No. 1.)

According to Plaintiff, this meant that USASF “warranted] that [Rockstar Cheer], its coaches, and its choreographers were safe[] and followed best practices . . . to prevent athlete abuse.” (Id. ¶ 51, ECF No. 1.)

In 2018, one of Rockstar Cheer's teams, Beatles, won Varsity's World Championship title. (Id. ¶ 185, ECF No. 1.) This accomplishment “further elevated Rockstar's status” and allowed Scott and Kathy Foster “to recruit athletes nationwide.” (Id. ¶¶ 184-85, ECF No. 1.)

C. Plaintiff's Allegations of Abuse

Jane Doe 8 began cheering for Rockstar Cheer in 2014 and was on the Queen and Beatles teams. (Id. ¶¶ 214-15, ECF No. 1.) In 2015, when she was 15 years old, Jane Doe 8 went with Defendant Josh Guyton (“Guyton”) to a party at Defendant Traevon Black a/k/a Trey Black n/k/a Tracey Black's (“Black”) residence, where she and other underage athletes were provided alcohol and marijuana and forced to participate in a game involving inappropriate touching. (Compl. ¶¶ 218-21, ECF No.1.) Following the game - during which “Guyton ran his hands up . . . Jane Doe 8's thighs and up towards her pelvic region” - Guyton took Jane Doe 8 to Black's bedroom and had sex with her. (Id. ¶¶ 222-23, ECF No. 1.) Jane Doe 8 alleges that Guyton had sex with her “on at least two or three occasions” when she was fifteen. (Id. ¶ 224, ECF No. 1.)

In 2016, another Rockstar Cheer coach, Defendant Christopher Hinton (“Hinton”), purportedly began sending Jane Doe 8 sexually explicit messages and photographs on social media applications and requesting that she send him nude photographs. (Id. ¶ 226, ECF No. 1.) Jane Doe 8 claims that Hinton forcibly kissed her at some point around this time and that he groped and touched her in sexually inappropriate ways “[o]n multiple occasions throughout 2016.” (Id. ¶ 227-28, ECF No. 1.) According to Jane Doe 8, Scott Foster knew that Guyton and Hinton had sexually assaulted her and would make comments to her about Guyton having sex with her. (Compl. ¶ 229, ECF No. 1.)

D. Procedural History

Plaintiff filed her complaint on October 11, 2022. Against USASF, she asserts statutory claims under the Child Abuse Victims' Rights Act of 1986 (“CAVRA”), 18 U.S.C. § 2255; the Racketeering Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962(c) and (d); and the South Carolina Unfair Trade Practices Act (“SCUTPA”), SC Code Ann. § 39-5-20, along with common-law claims for gross negligence, negligent supervision, breach of contract, fraud, and civil conspiracy. (Compl., ECF No. 1.) On January 30, 2023, USASF moved to dismiss all claims asserted against it for failure to state a claim under Rule 12(b)(6). (USASF Mot. Dismiss, ECF No. 76.) Plaintiff responded in opposition on February 13, 2023. (Resp. Opp'n USASF Mot. Dismiss, ECF No. 86.) USASF filed its reply on February 21, 2023.^[4] (USASF Reply, ECF No. 92.) This matter is now ripe for decision.^[5]

II. Legal Standard

“To survive a motion to dismiss, a...