Cheer Incorporated Scandal: An Update

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Accountability comes in a lot of forms: There’s criminal accountability, civil accountability … and of course the ultimate accountability, the one to which all of us will be subjected one day. The one none of us can evade.

One of my favorite forms of accountability on this side of the mortal coil, though, is the accountability of the marketplace.

Courts get it wrong all the time … with the court of public opinion being no exception. The vox populi is not the vox dei. Far from it. But markets? They move based on numbers. On math. There is no emotion to the equation. It’s just solved.

That is where we are currently headed with the Cheer Incorporated scandal – a widespread institutional sex abuse scandal enabled by years of failed oversight within the American cheerleading industry.

According to reporter Daniel Libit of Sportico – one of the national reporters who has been covering this story from the very beginning – the corporation which dominates American cheer is facing potentially costly repercussions for its failure to safeguard underage athletes. That’s why a new front has opened up in this corporate showdown – one pitting cheer giant Varsity and its top insurer.

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Varsity – a named defendant in numerous Cheer Inc. lawsuits – recently saw Arch Insurance apply for a  “reformation action” in U.S. District Court seeking a modification of its 2018-2019 policy with the cheerleading giant.

From Libit’s story …

Arch, according to its lawsuit, has provided general liability insurance to Varsity Brands since 2017, with a per-occurrence limit of $1 million and a general aggregate limit of $5 million. Varsity’s 2017-18 policy included a three-page endorsement for instances of abuse and molestation, with limits of $1 million for each “sexual abuse occurrence” and $2 million for sexual abuse aggregate.

Crucially, the policy’s insurance certificate states that “all acts of ‘sexual abuse occurrence’ by an actual or alleged perpetrator … shall be deemed and construed as one ‘occurrence.’”

Daniel Libit, Sportico

This critical language appears to have been inadvertently left off of the company’s 2018-2019 policy – and Varsity is “refusing to remedy the matter,” according to Libit.

That omission could result in Varsity seeking coverage far exceeding what it would have been entitled to had Arch submitted the paperwork properly. Obviously, this has potentially far-reaching implications for mediation negotiations between the parties in the various civil cases Varsity is staring down. Libit also discovered Varsity “carved out the operation of its Tennessee-based cheerleading gym network” from its insurance coverage. As our audience is well aware, Varsity-affiliated gyms in Tennessee have been the focus of multiple sex abuse lawsuits.

Cheer Incorporated is shaping up as one of the biggest – and potentially costliest – sports scandals since the USA Gymnastics/ Larry Nassar debacle. Our media outlet drove this scandal in the Palmetto State and beyond in the aftermath of the August 2022 death by suicide of Scott Foster – founder and owner of the Greenville-based Rockstar Cheer franchise. Foster died of a “self-inflicted gunshot wound to the head” in his vehicle at Paris Mountain state park – sparking a scandal which has shaken competitive cheer to its very foundations.

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RELATED | FEDERAL JUDGE TURNS UP HEAT ON CHEER ATTORNEYS

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On the day after his death, FITSNews exclusively reported Foster was staring down “a multi-jurisdictional investigation into (among other things) allegations of sexual misconduct with underage girls.” Following that report, the floodgates opened with additional incriminating information about the 49-year-old Greenville, S.C. businessman.

As lawsuits began to be filed in civil court, we quickly learned it wasn’t just underage girls – and it wasn’t just Foster. Most importantly … it wasn’t just Rockstar. At the center of this nationwide scandal is Varsity a Memphis-based company that’s made billions of dollars selling cheerleading apparel and organizing cheerleading and dance camps/ competitions across the country. Varsity is one of several corporate defendants named in the Cheer, Inc. lawsuits – which span multiple states and include dozens of plaintiffs and defendants.

The first federal lawsuit was filed in U.S. District Court in Greenville, S.C. on behalf of four Jane Does and two John Does. Three additional federal lawsuits followed in South Carolina and the scope expanded quickly to different states – and more gyms and coaches.

Barring a successful mediation, the South Carolina cases are scheduled to go to trial in May of 2024. Senior U.S. district court judge Henry M. Herlong, Jr. set that date last month and has urged the parties to engage in substantive mediation discussions prior to October.

At a court hearing in late August, both sides signaled their intention to begin such negotiations in earnest “no later than early October.” It is not immediately clear whether those negotiations have begun, however.

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ABOUT THE AUTHOR …

Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina. He lives in the Midlands region of the state with his wife and seven (soon to be eight) children.

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