SAN JOSE, Calif., May 26, 2020 – Berger Montague, Cuneo Gilbert & LaDuca, and Justice Catalyst Law filed an antitrust class action lawsuit today on behalf of Fusion Elite All Stars and a proposed class of All-Star cheerleading gyms against Varsity Brands and the U.S. All Star Federation (USASF). The lawsuit, Fusion Elite All Stars v. Varsity Brands, et al., was filed in the U.S. District Court for the Northern District of California, San Jose Division, where plaintiff Fusion Elite is located. Fusion Elite alleges that Varsity and USASF engaged in a scheme to monopolize the markets for competitive All-Star cheerleading and apparel. All-Star cheerleading is a notoriously expensive sport, often costing $3,000-$6,000 per year per athlete, organized through local and regional All-Star gyms like Fusion Elite who train athletes and field All-Star cheerleading teams that showcase their immense talents at competitions across the United States. Varsity has grown to a multi-billion-dollar business that, with USASF, tightly controls these All-Star gyms and the hundreds of thousands of athletes who compete in Varsity’s events each year.
Fusion Elite alleges that Varsity has violated the Sherman Antitrust Act by gobbling up and shutting down its rivals in the All-Star cheer business to gain market dominance, and then using that market dominance in producing events and selling specialized apparel to erect a moat that protects its lucrative businesses from free and fair competition. According to the complaint, Varsity used its market power to impose predatory contracts on All-Star gyms, requiring near exclusive patronage of Varsity’s products and services. The suit alleges further that Varsity used its control over the sport’s governing bodies, including the USASF, to impose rules that disadvantaged its rivals, relegating potential event producing competitors to “B League” status. The suit claims that, as a result of Varsity’s monopolistic scheme, Varsity has gained control over approximately 90% of the All-Star Competition Market and 80% of the All-Star Apparel Market.
According to the complaint, Varsity has used its predatory scheme to impose substantially inflated prices on All-Star gyms for its All-Star competitions and specialized All-Star apparel. The alleged scheme, according to the suit, has also reduced the number of competitors and events, and undermined freedom of choice in the industry.
The suit is being brought on behalf of a proposed class of all persons and entities in the United States that directly paid Varsity or its subsidiaries from May 26, 2016, to the present for (1) registration, entrance, or other costs associated with participation in All-Star competitions and, (2) All-Star apparel. The suit seeks recovery of money damages from Varsity and USASF for anyone who overpaid Varsity for participation in All-Star cheerleading, as well as injunctive relief to halt the alleged anticompetitive scheme.
“This lawsuit seeks to restore free and fair competition to an industry that, we allege, has been intentionally captured and controlled by one dominant player through an illegal predatory scheme,” explained Eric Cramer, Chairman of Berger Montague, a leading complex litigation firm.
According to Katherine Van Dyck, an attorney at Cuneo Gilbert & LaDuca, “Our lawsuit alleges that Varsity has abused its position in All-Star cheerleading to make billions off small businesses like Fusion Elite, harassing those who don’t fall in line and driving many of them to closure.”
“What makes this case so egregious is the way, according to the complaint, Varsity takes advantage of those who just want to promote this sport and help their kids do what they love,” said Brian Shearer, Legal Director for Justice Catalyst Law.