A federal judge has granted preliminary approval for SeaWorld Parks & Entertainment Inc.’s $1.25 million settlement to resolve a class action lawsuit concerning its employee retirement plan. The class action accused the company of burdening its $300 million 401(k) plan with high-fee and underperforming funds.
U.S. District Judge Robert S. Huie ruled on Thursday that the settlement can proceed, despite earlier questions about the workers’ damages calculations. The lawsuit, which was filed under the Employee Retirement Income Security Act (ERISA), claimed that SeaWorld’s plan lacked proper fiduciary oversight and offered costly investment options, leading to potential damages of $10.8 million.
“The settlement amount reflects a reasonable compromise, given the risk of plaintiffs recovering nothing,” Judge Huie stated. He acknowledged that while the settlement amount represents only 11.5% of the potential maximum recovery, this figure is consistent with other court-approved settlements in similar ERISA cases.
In response to the judge’s request for further details on the damages calculation, the plaintiffs provided additional information explaining how the $10.8 million figure was derived. With this clarification, Judge Huie gave his approval for the settlement.
The $1.25 million settlement will be distributed among approximately 10,000 current and former SeaWorld employees who participated in the 401(k) plan from August 2015 onward. After deductions for attorney fees, service awards, and administrative costs, approximately $483,000 will be available for distribution. Payments will be based on each participant’s account balance relative to the total class balances.
The lawsuit, initiated by five former employees in August 2021, accused SeaWorld of retaining expensive mutual fund share classes that underperformed compared to lower-cost alternatives. The workers alleged that these decisions violated federal benefits laws and resulted in excessive fees, including between $89 and $107 per participant for recordkeeping services, far higher than the industry standard of $40.
The settlement will bring an end to the ongoing legal dispute, which has already seen class certification granted in May 2024.
The plaintiffs are represented by Christina A. Humphrey of Christina Humphrey Law PC, James A. Clark and Renee P. Ortega of Tower Legal Group PC, and Paul J. Sharman of The Sharman Law Firm LLC. SeaWorld is represented by Lars C. Golumbic, William J. Delany, and Andrew D. Salek-Raham of Groom Law Group Chtd. and Natasha S. Fedder of Foundation Law Group LLP.
