SeaWorld shareholder lawsuit dismissed
Judge: No evidence SeaWorld misled investors about 'Blackfish effect'
ORLANDO, Fla. – A federal judge has dismissed a lawsuit filed against SeaWorld Entertainment Inc. by a group of its investors who claimed the company misled them about the effect the documentary “Blackfish” had on theme park attendance and revenue.
[MORE: Read judge's decision ]
According to U.S. District Judge Michael M. Anello, the shareholders failed to present sufficient evidence that theme park attendance was harmed by the 2013 film, which criticized the practice of keeping killer whales in captivity.
“Plaintiffs make no direct allegations regarding surveys, market research, models, data, or other reports that show any of the negative publicity prevented people who would have otherwise visited a SeaWorld Entertainment park… from doing so,” wrote Anello.
The shareholders also failed to show SeaWorld executives misled investors in late 2013 when they publicly stated “Blackfish” was having no notable impact on attendance.
“To state this claim, (the lawsuit) requires an inference that ‘Blackfish’ must have been the cause of attendance declines because of the amount of negative attention SeaWorld Entertainment was receiving,” Anello wrote. “However… these allegations are insufficient to plausibly state a material misrepresentation or admission.”
The plaintiffs have 60 days to file an amended complaint that addresses deficiencies noted by the judge.
“As a matter of policy, we don’t comment on pending litigation but we are pleased with the Court’s decision to dismiss the case at this stage,” said SeaWorld spokeswoman Aimée Jeansonne Becka.
Attorneys representing the various plaintiffs have not responded to an email from News 6 seeking comment.
Two of those investors, the Arkansas Public Employees Retirement System and a teacher’s pension fund based in Denmark, previously said they suffered more than $4 million in losses as a result of SeaWorld’s declining stock price.
SeaWorld Entertainment Inc, which owns 11 theme parks nationwide, including Busch Gardens and Sesame Place, claimed in court filings their fluctuating attendance trends did not correlate with the airing of "Blackfish."
The company also suggested SeaWorld-branded marine parks, which were the subject of the documentary, outperformed their other amusement properties during that period.
"Although 'Blackfish' premiered on CNN early in the fourth quarter of 2013 (and was purportedly viewed by millions), it was this very quarter that the SeaWorld-named parks had record setting attendance," SeaWorld attorneys wrote in their motion to dismiss the lawsuit.
The following quarter, SeaWorld Entertainment Inc. reported a 13 percent drop in attendance companywide, which the company blamed on several factors except "Blackfish."
"Indeed, that attendance declines at SeaWorld were attributable to bad weather during certain peak times, the timing of the holidays and SeaWorld's intentional pricing strategies, which decreased attendance while increasing revenue, is a far more compelling and cogent inference than fraud," according to SeaWorld’s attorneys.
On Aug. 13, 2014, SeaWorld officials announced another 4.3 percent decline in attendance. In a filing with the U.S. Securities and Exchange Commission, SeaWorld acknowledged for the first time that attendance "was impacted by demand pressures related to recent media attention surrounding proposed legislation in the state of California."
The proposed California law would have banned the display of captive killer whales for entertainment purposes. The bill's sponsor, California Assemblyman Richard Bloom, said the proposed law was partially inspired by "Blackfish."
That same day, SeaWorld's stock price plunged 33 percent.
"The company had finally admitted that 'Blackfish' was hurting attendance at SeaWorld parks," the investors wrote in their lawsuit.
SeaWorld insisted the SEC disclosure was not about "Blackfish."
"Notably, this same disclosure also included guidance that SeaWorld had significantly lowered its full year revenue numbers, a more plausible cause for the subsequent stock price drop," wrote SeaWorld's lawyers.
Months before SeaWorld's stock price plummeted, between Dec. 2, 2013, and March 6, 2014, former SeaWorld CEO Jim Atchison sold 154,000 shares of his personal holdings in SeaWorld stock with proceeds of $4,662,235, according to the lawsuit, which the investors describe as "suspicious."
The investors claim SeaWorld executives artificially inflated the company's stock price "in order to benefit their own personal financial situation with the proceeds from insider stock sales," according to the lawsuit.
In dismissing the shareholder’s lawsuit, the judge indicated the plaintiffs had not provided enough evidence to show Atchison and other executives acted improperly.
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