Seven years ago, when the documentary Blackfish was released, many people predicted that it would lead to the end of SeaWorld. The 2013 film addressed SeaWorld’s treatment of its captive orcas and the impact that captivity had on their well-being — causing them to become neurotic and violent.
Not surprisingly, all of the negative publicity and widespread calls for boycotts had a drastic impact on the stock price of SeaWorld Entertainment. The stock value fell almost 33% in one day.
Investors sued the company in 2014, claiming that executives saw the impact the documentary had on attendance at its parks and failed to disclose that information. The action eventually became a class-action lawsuit.
Now, it finally seems to be nearing a resolution — a $65 million one. Just as the case was about to go before a jury, the company announced the settlement. In its filing with the Securities and Exchange Commission (SEC), the company stated that the settlement doesn’t mean that it is admitting any wrongdoing. Two years ago, the company settled fraud charges brought by the SEC with a payment of more than $5 million.
SeaWorld had initially claimed that there was no evidence that it kept any internal information about park attendance in the aftermath of the documentary secret. As recently as last year, it was still trying to get the case dismissed.
However, in depositions, former employees acknowledged that they knew about the problem. One former communications executive with the company admitted lying to the media at the instruction of the company’s chief executive officer.
A federal judge still needs to approve the settlement with the investors. Meanwhile, in the years since Blackfish, SeaWorld has touted a change in focus from spectacle to education.
Executives and spokespeople with publicly held companies have a responsibility to provide honest and complete information to investors and the public about any adverse impacts on their business. When they fail to do this, they can face not just sanctions from federal regulators but legal action from investors who lost money. If your company is facing these issues, it’s essential to have experienced legal guidance.