SAN DIEGO _ Six years after SeaWorld Entertainment was sued for allegedly deceiving stockholders about the damaging impact the "Blackfish" documentary was having on theme park attendance, a federal judge on Friday OK'd a $65 million payout to aggrieved investors.
Although a settlement of the 2014 class-action lawsuit was reached in February, it could not go into effect until it was formally approved by U.S. District Judge Michael Anello, who issued his written opinion on Friday.
Concluding that the settlement is "fair, reasonable and adequate," Anello pointed out that the "plaintiffs correctly identify the $65,000,000 settlement amount as 'significant by any measure' and note that it 'represents a meaningful percentage of the Class's maximum potentially recoverable aggregate damages.'"
As part of the settlement, SeaWorld does not admit any wrongdoing.
Throughout the litigation, SeaWorld consistently insisted that there was no evidence that the company failed to disclose internal information showing that "Blackfish" and the anti-animal captivity sentiment surrounding it were negatively influencing attendance.
In his written brief supporting approval of the settlement, Anello notes that in 2013 and throughout the class period, "social media reaction to Blackfish remained elevated. Consumers contacted SeaWorld and vowed never to visit its parks because of 'Blackfish'" Additionally, "Blackfish" publicity led partners and sponsors to end or table partnerships and promotions with SeaWorld.
Investors in the long-running litigation claimed that by the time SeaWorld executives finally acknowledged on Aug. 13, 2014, that park attendance had been influenced by "demand pressures related to recent media attention surrounding proposed legislation (banning captive breeding of killer whales) in the state of California," shareholders lost nearly 33% of the value of their SeaWorld stock in a single day.
SeaWorld last year had tried to have the class-action case thrown out, but Anello ruled against SeaWorld and concluded that a trial should move forward, stating that "a rational jury could conclude that there has been a primary violation of federal securities law."
Attorneys representing the class of SeaWorld investors earlier this year said their decision to settle was guided, in part, by the potential risks of winning little or nothing at the end of a jury trial.
According to the settlement, the potential payout per share of SeaWorld stock is estimated to be $1.05, although it could be even lower after taking into account attorney fees.
As part of Judge Anello's Friday ruling, he also approved requested attorney fees of $14.3 million, which amounts to 22% of the settlement fund, and litigation expenses of $2.1 million.
Eligible for a share of the settlement are those shareholders who purchased SeaWorld stock sometime between Aug. 29, 2013, and Aug. 12, 2014, and held onto the investment until at least Aug. 13, 2014, the date when SeaWorld eventually disclosed some effect.
In order to begin the process of calculating distribution of the settlement, the claims administrator has so far sent out more than 20,000 notices to prospective class members. Once a final determination has been made for distributing the funds, attorneys for the plaintiffs will file a motion for approval.
SeaWorld has previously said it will fund the total settlement with $45.5 million in insurance proceeds, plus $19.5 million in company cash. The settlement comes at a time when some of its parks are only starting to reopen amid the pandemic while others, like SeaWorld San Diego, have remained shut down since mid-March. SeaWorld Entertainment is scheduled to report its latest earnings for the second quarter next month.
