Baker v. Seaworld Entm't, Inc.
| Decision Date | 06 November 2019 |
| Docket Number | Case No.: 14cv2129-MMA (AGS) |
| Parties | Lou BAKER, Individually and on Behalf of All Others Similarly Situated, Plaintiff, v. SEAWORLD ENTERTAINMENT, INC., et al., Defendants. |
| Court | U.S. District Court — Southern District of California |
Ethan Thomas Boyer, Noonan Lance Boyer & Banach LLP, San Diego, CA, Gregory M. Castaldo, Pro Hac Vice, Joshua E. D'Ancona, Pro Hac Vice, Joshua A. Materese, Pro Hac Vice, Megan Koneski, Pro Hac Vice, Michael K. Yarnoff, Pro Hac Vice, Samuel C. Feldman, Pro Hac Vice, Kessler Topaz Meltzer & Check LLP, Radnor, PA, John Clinton Goodson, Pro Hac Vice, Keil & Goodson P.A., Texarkana, AR, Laurence M. Rosen, The Rosen Law Firm, P.A., Los Angeles, CA, Bradley E. Beckworth, Pro Hac Vice, Jeffrey J. Angelovich, Nathan Hall, Pro Hac Vice, Lloyd Nolan Duck, III, Pro Hac Vice, Cody L. Hill, Pro Hac Vice, Brooke A. Churchman, Pro Hac Vice, Nix Patterson, LLP, Austin, TX, David J. Noonan, Noonan Lance Boyer & Banach LLP, San Diego, CA, Eli R. Greenstein, Stacey Marie Kaplan, Kessler Topaz Meltzer & Check, LLP, San Francisco, CA, Susan Whatley, Pro Hac Vice, Nix Patterson & Roach, LLP, Daingerfield, TX, for Plaintiff.
Brooke Elizabeth Cucinella, Pro Hac Vice, Dean Michael McGee, Pro Hac Vice, Isaac Rethy, Pro Hac Vice, Janet Gochman, Pro Hac Vice, Jonathan K. Youngwood, Pro Hac Vice, Meredith Karp, Pro Hac Vice, Simpson Thacher & Bartlett LLP, New York, NY, Chet A. Kronenberg, Simpson Thacher and Bartlett LLP, Los Angeles, CA, Carrie Melissa Stickel, Pro Hac Vice, Elliott Morris Bacon, Pro Hac Vice, Michael Joseph Diver, Pro Hac Vice, Michael J. Lohnes, Pro Hac Vice, Richard H. Zelichov, Gil M. Soffer, Jason Yuegin Kelly, Katten Muchin Rosenman LLP, Chicago, IL, for Defendants.
Lead Plaintiffs Arkansas Public Employees Retirement System ("APERS") and Pensionskassen for Børne-Og Ungdomspædagoger ("PBU") (collectively, "Plaintiffs") and Defendants SeaWorld Entertainment, Inc. ("SeaWorld"), The Blackstone Group L.P. ("Blackstone"), James Atchison, James M. Heaney, and Marc Swanson (collectively, "Defendants") appeared before the Court on Friday, October 11, 2019 at 9:00 a.m. for a hearing on the parties' Daubert motions and Defendants' motion for summary judgment. In anticipation of the hearing, the Court issued tentative rulings on the pending motions. See Doc. No. 463. For the reasons set forth below, the Court AFFIRMS its tentative rulings.
Plaintiffs bring this securities fraud class action against Defendants asserting claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated under § 10(b). See Doc. No. 123 ("SAC"). Plaintiffs bring this action on behalf of all individuals and entities who purchased or acquired common stock of SeaWorld throughout the Class Period (August 29, 2013 to August 12, 2014).
This case involves statements and omissions made by Defendants in the wake of the 2013 documentary Blackfish . Blackfish tells the story of Tilikum, a 12,000-pound bull orca implicated in the deaths of three people, and chronicles the cruelty of killer whale capture methods, the dangers trainers face performing alongside killer whales during SeaWorld's popular shows, and the physical and psychological strains killer whales experience in captivity. Through interviews with former trainers, spectators, employees of regulatory agencies, and scientists, Blackfish makes the case that keeping killer whales in captivity for human entertainment is cruel, dangerous, and immoral. Blackfish premiered at the Sundance Film Festival on January 19, 2013.
SeaWorld is a theme park and entertainment company. During the Class Period, SeaWorld owned and operated eleven theme parks in the United States: SeaWorld Orlando, SeaWorld San Diego, SeaWorld San Antonio, Aquatica Orlando, Aquatica San Diego, Discovery Cove, Busch Gardens Tampa, Busch Gardens Williamsburg, Adventure Island, Water Country USA, and Sesame Place. SeaWorld's brand and reputation are among the company's most important assets. SeaWorld has been subjected to criticism related to captivity issues, even prior to the release of the 2013 documentary Blackfish .
Mr. Atchison served as SeaWorld's Chief Executive Officer ("CEO"), President, and Director from before the start of the Class Period until January 2015. Mr. Heaney has served as SeaWorld's Chief Financial Officer from before the start of the Class Period to present. Mr. Swanson has served as SeaWorld's Chief Accounting Officer from before the start of the Class Period to present. Defendants Atchison, Heaney, and Swanson are collectively referred to as the "Individual Defendants."
Blackstone is a multinational private equity, investment banking, alternative asset management, and financial services corporation based in New York, New York.
On July 19, 2013, Blackfish was released in approximately ninety-nine (99) select theaters across the United States and the film's theatrical run lasted fourteen weeks. On October 24, 2013, CNN aired Blackfish for the first time, where it was broadcast to tens of millions more people than during the film's theatrical run. "The social media generated by Blackfish reached a fever pitch following the CNN premiere of the film." SAC ¶ 136. Blackfish was also made available for viewing on Netflix and iTunes in late 2013. At this time, Netflix maintained approximately thirty-one (31) million U.S. domestic subscribers. See id. ¶¶ 84, 220(c).
In 2013 and throughout the Class Period, social media reaction to Blackfish remained elevated. Consumers contacted SeaWorld and vowed to never visit its parks because of Blackfish. See, e.g. , PX 399, PX 385, PX 399. Additionally, Blackfish publicity led partners and sponsors to end or table partnerships and promotions with SeaWorld.
Company-wide attendance declined in 2013 and 2014. Specifically, as compared to the prior year, attendance was down 9.5% in 2Q13, 3.6% in 3Q13, and 1.4% in 4Q13. This resulted in a 4.1% decline in overall attendance for 2013. SeaWorld further reported a 14% decline in attendance in 1Q14. SeaWorld's attendance was up 0.3% for 2Q14, [Redacted]
Plaintiffs challenge several statements made by SeaWorld executives as false and/or misleading during the Class Period. On August 29, 2013, the Los Angeles Times published an article quoting SeaWorld's Vice President of Communications, Fred Jacobs, as stating, "Blackfish has had no attendance impact." PX2 88. Bloomberg also published an article quoting Jacobs as stating that "[w]e can attribute no attendance impact at all to the movie[.]" Id. ; see also PX 10 at 183. Jacobs testified at his deposition that he did not believe either statement was true when he made it. PX 10 at 183-84, 194.
Beginning in July 2013, SeaWorld received survey results from the TNS omnibus survey (the "Omnibus survey"). The survey inquired about awareness of the movie Blackfish , whether respondents had seen, or intended to see the movie, and whether respondents identified SeaWorld as the company the movie was about. SeaWorld's Director of Budgeting and Forecasting, Joshua Powers, [Redacted] Further, Powers testified that from August 29, 2013 through November 13, 2013, [Redacted]
Plaintiffs further challenge three statements made during 4Q13. First, SeaWorld's earnings release for 3Q13, published on November 13, 2013, attributed a 3.6% attendance decline in 3Q13 to only "adverse weather" and "planned strategies that increased revenue but reduced low yielding and free attendance." SAC ¶ 213. Second, on November 14, 2013, SeaWorld's Chief Executive Officer, James Atchison, was quoted by the Wall Street Journal as stating, PX 100. Third, on December 20, 2013, Atchison was quoted by the Orlando Sentinel as stating, "As much data as we have and as much as we look, I can't connect anything really between the attention that the film has gotten and any effect on our business." PX 106. From November 14, 2013 through December 20, 2013, [Redacted]
On March 13, 2014, SeaWorld issued its earnings release for 4Q13 and fiscal year 2013. Defendants attributed SeaWorld's attendance decline for 4Q13 and FY13 to factors other than Blackfish , including weather and yield management strategies. Additionally, during the earnings call, Atchison made the following statements: (a) "As much as we're asked it, we can see no noticeable impact on our business;" (b) "But our surveys don't reflect any shift in sentiment about intent to visit our parks;" (c) "A matter of fact, the movie in some ways has actually made perhaps more interest in marine mammal parks, and actually even about us;" and (d) "But we have seen no impact on the business." PX 115. From December 21, 2013 through March 13, 2014, [Redacted]
Lastly, in SeaWorld's May 14, 2014 earnings release for 1Q14, SeaWorld attributed its 13% attendance decline for the quarter to weather and the shift in the Easter holiday from 1Q14 to 2Q14. [Redacted]
[Redacted] PX 122 at 141.
SeaWorld reported its 2Q14 results in a Form 8-K filed with the SEC on August 13, 2014. While attendance was up 0.3% versus the prior year, SeaWorld explained that this was "offset by lower attendance at its destination parks due to a combination of factors." Doc. No. 359-2 (hereinafter "Youngwood Decl."), Ex. 29 at 2. Specifically, attendance in the second quarter was impacted by factors including, "a late start to summer for some schools in the Company's key source markets, new attraction offerings at competitor destination parks, and a delay in the opening of one of the Company's new attractions[.]" Id. Moreover, "the Company believes attendance in the quarter...
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