By Lori Weisberg / The San Diego Union-Tribune / September 19, 2024
A little more than a year after suing SeaWorld for $12 million in back rent and fees dating back to the pandemic, the city seems no closer to recouping its money despite multiple efforts to settle the litigation.
In a legal brief filed last week seeking more time to meet a number of pre-trial deadlines, the San Diego City Attorney’s Office indicated that efforts to settle the case have so far not been successful. On top of that, lawyers for the city said that it has had trouble getting adequate responses from SeaWorld for documents it had requested as part of the discovery process.
This all comes as the park’s parent company recently suffered a major legal defeat in a remarkably similar case that could potentially bring San Diego’s case to a more rapid conclusion. A U.S. District Court judge in Florida has confirmed an earlier arbitration ruling that SeaWorld pay Sesame Workshop $9.7 million in licensing fees that went unpaid during the pandemic when its Sesame Place parks, including one in Chula Vista, were closed during the pandemic. Including interest and other fees, the total judgment comes to more than $11 million.
At issue in San Diego’s litigation is a long-running dispute dating to September 2021 when the city first notified the San Diego marine park, which sits on city-owned land, that it was in default on lease payments it owed during the height of the pandemic. Multiple demands were made over the past few years, with the city issuing a final notice of default in August 2023 when it warned that the publicly traded company would face litigation if the past-due sum wasn’t paid in full by the following month.
The city made good on its threat and sued last September.
Since then there have been various efforts to reach a settlement, including a mediation session in early August, as described by the City Attorney’s Office in its filing last week.
“Because the August 8, 2024 mediation was unsuccessful, as were the follow-up settlement discussions during the subsequent week, the City again requested, on or about August 19, 2024, that SeaWorld supplement its responses and document production,” attorneys for the city wrote in a motion filed in U.S. District Court.
There still remain opportunities to settle the rent dispute before a scheduled trial next year. A mandatory settlement has been set for Oct. 30.
A spokesperson for SeaWorld’s parent company, now operating as United Parks and Resorts, could not provide a comment by press time. The San Diego City Attorney’s Office on Thursday declined to comment on the litigation.
Given what the city says were incomplete responses from SeaWorld to its requests for documents, it filed a joint motion with the theme park company for a two-month extension for several upcoming deadlines. U.S. Magistrate Judge Daniel Butcher granted the motion this week.
Attorneys for the city said the time extension was needed, in part, to gather evidence in anticipation of summary judgment motions that it expects both sides will be making. A summary judgment, which avoids going to a full trial, is made by a judge when it’s believed that the facts are not in dispute and a decision can be rendered as a matter of law.
SeaWorld’s arguments for why it is not contractually bound to pay the back rent it owes the city are not that different from what it has said in the Sesame Workshop case. SeaWorld last year filed a countersuit against San Diego, contending that the city’s forced closure of the theme park during the height of the pandemic was a violation of its lease and it, therefore, owes nothing to the city.
Not only is it not responsible for any back rent and related fees and penalties, SeaWorld argued, but it has also suffered financial consequences from the city’s emergency order three years ago to shut down its business. SeaWorld was forced to close its San Diego park to the public in response to county and state mandates during the height of the pandemic.
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The $12 million in back rent and fees that SeaWorld owes is not just a simple financial dispute; it reflects a broader disregard for contractual responsibility and the fiscal health of the community it operates in.
The pandemic posed unprecedented challenges for businesses, and SeaWorld was not alone in facing financial difficulties. However, the city’s decision to close the park was a necessary public health measure, one that should not exempt SeaWorld from its contractual duties. The company’s countersuit, claiming that the city’s actions absolve it of its lease obligations, feels less like a legitimate legal argument and more like a tactic to evade responsibility. By framing the city’s closure as a breach of contract, SeaWorld is effectively shifting the burden of its own financial mismanagement onto taxpayers and the local government.
The situation is exacerbated by SeaWorld’s lack of transparency and cooperation during the litigation process. Reports of incomplete document responses suggest a reluctance to engage in good faith negotiations, further delaying a resolution. This behavior not only prolongs the city’s financial strain but also undermines the public trust that is essential for any business operating on publicly owned land.
SeaWorld ought to fulfill its commitments to San Diego. The city should not have to fight so hard to collect debts that are rightfully owed, especially from a corporation that profits from public resources.
In light of these developments, it is imperative for SeaWorld to reassess its approach and take responsibility for its obligations. The ongoing litigation is not just about money; it’s about the relationship between a corporation and the community it serves. A swift resolution to this dispute is in everyone’s best interest, and it would reflect a more ethical and community-oriented approach from SeaWorld. It’s time for the company to step up and make amends for the financial strain it has imposed on San Diego.
This idea has been floated before but bears repeating. Sea World, unlike most businesses affected by the 2020 shutdown, did have obligations requiring it to maintain a certain level of services. They were principally the care and feeding of their animals, and maintaining the animal rescue services. An independent auditor should determine the true out of pocket cost of those efforts, and the city could deduct that amount from the $12 million in back rent.
Sounds like a good compromise, Chuck. Some of the back millions is interest.