ORLANDO, Fla. - A group of investors who claim SeaWorld executives misled them about the effect the documentary “Blackfish” was having on theme park attendance will be allowed to continue their revised lawsuit against the company, a federal judge has ruled.
“The Court tentatively finds Plaintiffs have sufficiently pleaded the element of falsity based upon allegations made by confidential witnesses, allegations regarding negative publicity targeting SeaWorld Entertainment, and attendance declines at SeaWorld Entertainment parks,” wrote U.S. District Judge Michael M. Anello.
SeaWorld attorneys attempted to get lawsuit thrown out, arguing that the investors had failed to present adequate evidence suggesting the company might have misled shareholders. Following a court hearing last month, the judge denied SeaWorld’s motion to dismiss the case, court records show.
“Plaintiffs’ allegations cannot be reconciled with various statements by Defendants that ‘Blackfish has had no attendance impact,’ and that SeaWorld Entertainment ‘can attribute no attendance impact at all to the movie’,” Anello said of the amended lawsuit.
In April, the judge dismissed the investors' original lawsuit against SeaWorld Entertainment Inc. According to the judge, that original complaint did not sufficiently show that theme park attendance was harmed by ‘Blackfish’, a 2013 documentary that criticized the practice of keeping killer whales in captivity.
However, the judge allowed the shareholders to amend the lawsuit and address its legal deficiencies.
In their amended complaint, the investors cited SeaWorld’s recent decision to end its killer whale breeding program as further evidence that the 2013 documentary had changed the marine park’s core business.
“The announcement was a tacit acknowledgement that SeaWorld could no longer afford to deny the profound impact ‘Blackfish’ has had on its business or continue to blatantly ignore the data showing a clear shift in public sentiment regarding its killer whale program,” the amended complaint stated.
The investors, which include the Arkansas Public Employees Retirement System and a teacher’s pension fund based in Denmark, presented additional data compiled by the Themed Entertainment Association, a nonprofit amusement industry organization that provides unofficial attendance figures for many theme parks.
“Historical attendance figures demonstrate that attendance at SeaWorld-branded parks, Disney parks, and Universal parks in the Florida and California areas ordinarily rise and fall together,” the complaint states.
In 2014, after “Blackfish” was released, SeaWorld Orlando suffered an 8 percent decline in attendance and SeaWorld San Diego lost 12 percent of visitors, while Disney and Universal parks saw comparable or increased attendance, according to the lawsuit.
At the time, SeaWorld executives blamed the attendance problems on bad weather, the timing of holidays, and ticket price increases, the complaint states. “Historical attendance figures demonstrate that the dramatic attendance declines SeaWorld-branded parks saw in 2013 and 2014 had to be the result of ‘Blackfish’ and not the other generic excuses SeaWorld offered,” according to the complaint.
SeaWorld has previously claimed in court filings its 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 original 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 original 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.
In their amended complaint, the investors suggested SeaWorld may have been worried about the impact of "Blackfish" as early as Thanksgiving 2013. That’s when People For the Ethical Treatment of Animals (PETA) claims their organization was infiltrated by SeaWorld employees posing as animal rights activists.
SeaWorld officials later acknowledged its employees had spied on the organization. It has since stopped the practice, according to SeaWorld CEO Joel Manby.
“SeaWorld’s chosen strategy was to ignore ‘Blackfish’ and deny its credibility – both to the public and investors,” the new complaint states.
SeaWorld attorneys must file a formal response to the shareholders’ lawsuit by October 28, the judge ordered.
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