58ºF

Federal judge approves class-action status in SeaWorld lawsuit

Investors claim company misled them about 'Blackfish' effect

(Matt Stroshane/Getty Images)

ORLANDO, Fla. – A federal judge has granted class-action status to a lawsuit filed against SeaWorld Entertainment Inc. by a group of investors who claim the company intentionally misled them about the documentary "Blackfish."

WKMG, our sister station in Orlando, first broke the story.

"Potentially thousands" of shareholders who purchased SeaWorld stock between August 2013 and August 2014 may now be eligible members of the class-action suit, court records indicate, including 285 institutional investors.

The lead plaintiffs in the lawsuit, the Arkansas Public Employees Retirement System and a teachers pension fund based in Denmark, claim they suffered more than $4 million in losses as a result of SeaWorld's misrepresentations about "Blackfish," a film that criticizes the practice of keeping killer whales in captivity.

In early 2014, SeaWorld officials insisted the documentary was having "no impact on the business," instead blaming attendance declines on bad weather, the timing of school breaks, and ticket-pricing strategies.

At the same time, internal company emails suggest that SeaWorld executives had concerns about the film's impact on revenue, News 6 first reported.

In August 2014, company officials acknowledged that negative publicity surrounding a proposal to ban captive killer whales in California, known as the "Blackfish Bill," was hurting theme park attendance.

Immediately following that disclosure, SeaWorld's stock price plunged more than 33 percent.

Since then, the company's value has continued to drop, despite efforts by a new executive team to phase out its killer whale breeding program and build more traditional theme park attractions.  

In the lawsuit, which was filed in 2014, investors claim SeaWorld's misleading statements about "Blackfish" artificially inflated the company's stock price.   

The plaintiffs also accuse former Chief Executive Officer Jim Atchison of making "suspicious" sales of his own personal SeaWorld stock prior to the August 2013 disclosure.

SeaWorld officials have denied any wrongdoing and are aggressively defending themselves in the shareholder lawsuit. 

As News 6 first reported, the U.S. Department of Justice is conducting a criminal fraud investigation into SeaWorld over its officials' prior statements about "Blackfish."

SeaWorld officials tell News 6 they are cooperating with federal investigators.

At the DOJ's request, the judge presiding over the shareholder lawsuit agreed to halt depositions and discovery in the litigation until Nov. 30 so the government's fraud investigators could conduct their criminal probe.

At the time of publication, the DOJ has not requested an extension of that stay.

Under the newly certified class-action lawsuit, all persons and entities who purchased SeaWorld stock between Aug. 29, 2013 and Aug.13, 2014 are members of the class.

According to the lawsuit, the former date is when SeaWorld executives made their first public statements denying that "Blackfish" was harming the company. The later date is when the company disclosed that the film was impacting attendance.

Among those excluded from of the class are current and former SeaWorld executives and board members, their families, and any other entities that have had a controlling interest of SeaWorld.

Unless a settlement is reached or the case is dismissed, a jury trial in the class action lawsuit is scheduled to take place in Dec. 2018.


About the Author: