SAN DIEGO (Legal Newsline) - A stockholder is suing SeaWorld Entertainment Inc. after he claims it denied its decline was due to the documentary "Blackfish."
The securities class action lawsuit is on behalf of all persons or entities who purchased SEAS stock pursuant to and/or traceable to the company’s registration statement and prospectus issued in connection with the company’s initial public offering commenced on or after April 18, 2013.
On April 18, 2013, SeaWorld filed with the SEC an amended Registration Statement on Form S-1/A in connection with the an initial public offering,, according to a complaint filed Sept. 9 in the U.S. District Court for the Southern District of California.
Lou Baker claims the registration statement also contained a prospectus and both documents contained, among other things, the company’s financial results for the fiscal years ended Dec. 31, 2012.
The registration statement was declared effective on April 18, 2013, and the company filed the final prospectus with the SEC on April 19, 2013. The IPO was for 10 million shares of the company’s common stock at a price of $27 per share, according to the suit.
"Throughout the class period, the defendants made false and/or misleading statements, and failed to disclose material adverse facts about the company’s business, operations, prospects and performance, and internal controls," the complaint states.
Baker claims when a corrective disclosure was filed by the company on Aug. 13, SEAS's stock price dropped $9.25 per share or 32.9 percent.
On Jan. 19, 2013, Gabriela Cowperthwaite’s documentary, "Blackfish," premiered at the Sundance Film Festival, and on Jan. 22, 2013, CNN Films and Magnolia Pictures acquired the rights to Blackfish, according to the suit.
"Blackfish follows the 39 year tumultuous history of Tilikum, a SeaWorld Orca Whale, who has been involved in the death or serious injury of several SeaWorld trainers," the complaint states. "Blackfish is comprised of interviews of former SeaWorld trainers, SeaWorld spectators and other experts such as Occupational Safety and Health Administration employees and scientists."
Baker claims the film revealed for the first time that SeaWorld had improperly cared for and mistreated its Orca population causing mental distress to the company’s Orca population affecting trainer and audience safety; continued to feature an Orca that had killed and injured numerous trainers; and consequently exposed the company to material and uncertainties that could adversely impact attendance at its family oriented parks.
On July 19, 2013, "Blackfish" was released in theaters in New York, Los Angeles and Toronto. On Aug. 13, 2013, the company filed a press release on Form 8-K reporting the financial results for the first half of 2013 reporting a nine percent drop in attendance.
"SEAS falsely claimed that the drop in attendance was a product of the timing of Easter, when in reality, the bad publicity from the Blackfish film caused families to stay away from SEAS parks," the complaint states.
CNN aired "Blackfish" on its network on Oct. 24. Nearly 21 million people watched "Blackfish" on CNN during that broadcast – an unusually large audience for CNN programming, according to the suit. "Blackfish" was released on DVD in the United States on Nov. 12.
Baker claims the dissemination of "Blackfish" sparked a nationwide debate about whales in captivity and the ethics of SeaWorld.
On March 13, the company "filed a press release on Form 8-K reporting the financial results for the fourth quarter and full year of 2013," the complaint states. "To explain a 4.1% decline in attendance in 2013...Atchison falsely stated that 'contributing to the decline in full year attendance was unexpected adverse weather conditions in the company's second quarter and July as well as the impact of an early Easter in 2013.'"
Baker claims, in reality, the decline in attendance was the result of the mounting backlash from the "Blackfish" film.
"In the August 13... press release [SeaWorld] finally came clean that the decline in attendance was the results from the negative publicity from the Blackfish film," the complaint states. "The press release states in relevant part: In addition, the company believes attendance in the quarter was impacted by demand pressures related to recent media attention surrounding proposed legislation in the state of California."
Baker claims the proposed California legislation referenced in the press release, the Orca Welfare and Safety Act, would outlaw keeping Orca Whales in captivity for the purpose of entertainment.
If violated, the law could impose a $100,000 fine, six months in jail or both. The legislation arose out of the public conversation that was ignited by the documentary "Blackfish."
"The August 13, 2014 announcement caused the price of SEAS stock to plummet by $9.25 per share, or 32.9%," the complaint states.
Baker claims the defendants violated the Securities Exchange Act of 1934 and caused him and class members damages due to their wrongful conduct.
Baker is seeking class certification and compensatory damages. He is being represented by Laurence Rosen of the Rosen Law Firm PA.
The case is assigned to District Judge Michael M. Anello.
U.S. District Court for the Southern District of California case number: 3:14-cv-02129
From Legal Newsline: Kyla Asbury can be reached at firstname.lastname@example.org.