Amusement parks conjure memories of childhood, family, summer, rides, games, and the sweetest, oiliest, most-fried foods. They do not usually connote lawsuits.
But a recent, proposed $8 billion merger between two giants, Six Flags and Cedar Fair, has caught the eye of the Department of Justice over potential antitrust concerns and for this author, raised questions about amusement parks’ legal exposure more generally.
Docket Alarm analytics reveal a number of interesting points about America’s theme parks, including a rather sharp uptick in lawsuits in the last decade, personal injury and premise liability suits’ dominance, and that cases were often filed in parks’ jurisdictional backyards.
Industry Overview
In 2021, there were about 475 parks on American soil, ranging from internationally renowned mega-parks to regional parks operated by publicly traded companies or even venture capital firms to a handful of still-family-owned attractions, according to Vox’s article, The story of amusement parks is the story of America.
However, attendance dropped dramatically during the COVID-19 pandemic as shown from Statista’s recap of North American parks between 2019 and 2022.
Though the industry has not totally recovered, forecasters still see growth.
Global Market Insights valued the market, including water parks and zoo parks, at $63.9B in 2022 and projected it to grow to $109.3B by 2032. The analyst also cited increasing disposable incomes, popularity of themed entertainment, adoption of augmented or virtual reality technology in rides, and global urbanization as reasons for continued growth while challenges posed were more traditional, including rising operating costs and seasonality/weather dependency.
Legal Matters
Docket Alarm Analytics1 show that the country’s top amusement parks have encountered a veritable increase in litigation.
In the last 20 years, the most sued theme park operators were Sea World, Disney, and Universal.
In the same time frame, the top case tags were civil, other, and tort. The generality of these terms stems from the difficulty of pooling cases from different state courts with varying classifications. Review of “civil” and “other” case tags reveal that they largely fall into the personal injury and premises liability categories with some falling into the commercial realm or under the Americans with Disabilities Act.
A separate Docket Alarm search for PACER nature of suit code 850 (securities) returns over 270 results since 2008.
One 2020-filed lawsuit by Six Flags shareholders accused the company and two former executives of making misleading statements about 11 Chinese parks’ construction progress. The overseas projects ultimately faltered, causing Six Flags to subtract $15 million from previously reported revenues, sending the stock plummeting 16%, and erasing $2.4 billion in shareholder value, the Northern District of Texas lawsuit said.
The case is on appeal for a second time after the Fifth Circuit ruled that the district judge applied too strict a dismissal standard. Now, the plaintiff-investors are seeking review of a second decision tossing the case for want of standing.
Top Courts
Comparing the court rankings with the map of major theme parks around the United States shows that lawsuits often end up in the venue housing the park itself.
One reason for the overlap is likely because operators require that disputes ranging from personal injury to intellectual property be brought in their home district, per terms like those of Six Flags America.
Additionally, one caveat when discussing forum selection provisions is the presence of arbitration clauses requiring that legal action be resolved in the para-judicial forum. For example, Disney World has a limited arbitration and class action waiver for COVID-19-related claims. Such clauses could decrease the number of filings, as Docket Alarm Analytics’ sweep does not include arbitration cases.
A Major Merger, Maybe
In November 2023, Six Flags and Cedar Fair announced their intended multi-billion dollar merger. The proposed deal would result in Six Flags shareholders owning 48.8% of the combined company and Cedar Fair shareholders owning 51.2%. As reported by Law Street Media’s Logan Beirne, the joint venture would mean significant cost savings for both companies, and a more secure toe-hold between domestic juggernauts Disney and Universal Studios.
However, the Department of Justice recently sent a second request for information as part of its review, according to SEC filings submitted on January 22. The parties said that they still expect the deal to close in the first half of the year.
- The search includes Cedar Fair, L.P., NBCUniversal Media, EPR Properties, Parks America, Inc., SeaWorld Entertainment, Inc., Six Flags Entertainment Co., Tivoli A/S, The Walt Disney Company, Palace Entertainment, Fun Spot America, the Arie Family, Koch Development Corporation, the Knoebel Family, Hershey Entertainment and Resorts Company, Dolly Parton, Herschend Family Enterprises. ↩︎