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Baker v. Seaworld Entertainment, Inc.

United States District Court, S.D. California

November 6, 2019

LOU BAKER, individually and on behalf of all others similarly situated, Plaintiff,
v.
SEAWORLD ENTERTAINMENT, INC., et al., Defendants.

          REDACTED ORDER AFFIRMING TENTATIVE RULINGS RE: DAUBERT MOTIONS AND DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [DOC. NOS. 344, 347, 351, 355, 358, 359]

          HON. MICHAEL M. ANELLO, UNITED STATES DISTRICT JUDGE.

         Lead Plaintiffs Arkansas Public Employees Retirement System (“APERS”) and Pensionskassen for Børne-Og Ungdomspædagoger (“PBU”) (collectively, “Plaintiffs”) and Defendants SeaWorld Entertainment, Inc. (“SeaWorld”), The Blackstone Group L.P. (“Blackstone”), James Atchison, James M. Heaney, and Marc Swanson (collectively, “Defendants”) appeared before the Court on Friday, October 11, 2019 at 9:00 a.m. for a hearing on the parties' Daubert motions and Defendants' motion for summary judgment. In anticipation of the hearing, the Court issued tentative rulings on the pending motions. See Doc. No. 463. For the reasons set forth below, the Court AFFIRMS its tentative rulings.

         Background [1]

         Plaintiffs bring this securities fraud class action against Defendants asserting claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated under § 10(b). See Doc. No. 123 (“SAC”). Plaintiffs bring this action on behalf of all individuals and entities who purchased or acquired common stock of SeaWorld throughout the Class Period (August 29, 2013 to August 12, 2014).

         This case involves statements and omissions made by Defendants in the wake of the 2013 documentary Blackfish. Blackfish tells the story of Tilikum, a 12, 000-pound bull orca implicated in the deaths of three people, and chronicles the cruelty of killer whale capture methods, the dangers trainers face performing alongside killer whales during SeaWorld's popular shows, and the physical and psychological strains killer whales experience in captivity. Through interviews with former trainers, spectators, employees of regulatory agencies, and scientists, Blackfish makes the case that keeping killer whales in captivity for human entertainment is cruel, dangerous, and immoral. Blackfish premiered at the Sundance Film Festival on January 19, 2013.

         SeaWorld is a theme park and entertainment company. During the Class Period, SeaWorld owned and operated eleven theme parks in the United States: SeaWorld Orlando, SeaWorld San Diego, SeaWorld San Antonio, Aquatica Orlando, Aquatica San Diego, Discovery Cove, Busch Gardens Tampa, Busch Gardens Williamsburg, Adventure Island, Water Country USA, and Sesame Place. SeaWorld's brand and reputation are among the company's most important assets. SeaWorld has been subjected to criticism related to captivity issues, even prior to the release of the 2013 documentary Blackfish.

         Mr. Atchison served as SeaWorld's Chief Executive Officer (“CEO”), President, and Director from before the start of the Class Period until January 2015. Mr. Heaney has served as SeaWorld's Chief Financial Officer from before the start of the Class Period to present. Mr. Swanson has served as SeaWorld's Chief Accounting Officer from before the start of the Class Period to present. Defendants Atchison, Heaney, and Swanson are collectively referred to as the “Individual Defendants.”

         Blackstone is a multinational private equity, investment banking, alternative asset management, and financial services corporation based in New York, New York.

         On July 19, 2013, Blackfish was released in approximately ninety-nine (99) select theaters across the United States and the film's theatrical run lasted fourteen weeks. On October 24, 2013, CNN aired Blackfish for the first time, where it was broadcast to tens of millions more people than during the film's theatrical run. “The social media generated by Blackfish reached a fever pitch following the CNN premiere of the film.” SAC ¶ 136. Blackfish was also made available for viewing on Netflix and iTunes in late 2013. At this time, Netflix maintained approximately thirty-one (31) million U.S. domestic subscribers. See Id. ¶¶ 84, 220(c).

         In 2013 and throughout the Class Period, social media reaction to Blackfish remained elevated. Consumers contacted SeaWorld and vowed to never visit its parks because of Blackfish. See, e.g., PX 399, PX 385, PX 399. Additionally, Blackfish publicity led partners and sponsors to end or table partnerships and promotions with SeaWorld.

         Company-wide attendance declined in 2013 and 2014. Specifically, as compared to the prior year, attendance was down 9.5% in 2Q13, 3.6% in 3Q13, and 1.4% in 4Q13. This resulted in a 4.1% decline in overall attendance for 2013. SeaWorld further reported a 14% decline in attendance in 1Q14. SeaWorld's attendance was up 0.3% for 2Q14, [XXXXX].

         Plaintiffs challenge several statements made by SeaWorld executives as false and/or misleading during the Class Period. On August 29, 2013, the Los Angeles Times published an article quoting SeaWorld's Vice President of Communications, Fred Jacobs, as stating, “Blackfish has had no attendance impact.” PX[2] 88. Bloomberg also published an article quoting Jacobs as stating that “[w]e can attribute no attendance impact at all to the movie[.]” Id.; see also PX 10 at 183. Jacobs testified at his deposition that he did not believe either statement was true when he made it. PX 10 at 183-84, 194.

         Beginning in July 2013, SeaWorld received survey results from the TNS omnibus survey (the “Omnibus survey”). The survey inquired about awareness of the movie Blackfish, whether respondents had seen, or intended to see the movie, and whether respondents identified SeaWorld as the company the movie was about. SeaWorld's Director of Budgeting and Forecasting, Joshua Powers, [XXXXX] Further, Powers testified that from August 29, 2013 through November 13, 2013, [XXXXX].

         Plaintiffs further challenge three statements made during 4Q13. First, SeaWorld's earnings release for 3Q13, published on November 13, 2013, attributed a 3.6% attendance decline in 3Q13 to only “adverse weather” and “planned strategies that increased revenue but reduced low yielding and free attendance.” SAC ¶ 213. Second, on November 14, 2013, SeaWorld's Chief Executive Officer, James Atchison, was quoted by the Wall Street Journal as stating, “I scratch my head if there's any notable impact from this film at all, and I can't attribute one to it. . . . Ironically, our attendance has improved since the movie came out.” PX 100. Third, on December 20, 2013, Atchison was quoted by the Orlando Sentinel as stating, “As much data as we have and as much as we look, I can't connect anything really between the attention that the film has gotten and any effect on our business.” PX 106. From November 14, 2013 through December 20, 2013, [XXXXX].

         On March 13, 2014, SeaWorld issued its earnings release for 4Q13 and fiscal year 2013. Defendants attributed SeaWorld's attendance decline for 4Q13 and FY13 to factors other than Blackfish, including weather and yield management strategies. Additionally, during the earnings call, Atchison made the following statements: (a) “As much as we're asked it, we can see no noticeable impact on our business;” (b) “But our surveys don't reflect any shift in sentiment about intent to visit our parks;” (c) “A matter of fact, the movie in some ways has actually made perhaps more interest in marine mammal parks, and actually even about us;” and (d) “But we have seen no impact on the business.” PX 115. From December 21, 2013 through March 13, 2014, [XXXXX].

         Lastly, in SeaWorld's May 14, 2014 earnings release for 1Q14, SeaWorld attributed its 13% attendance decline for the quarter to weather and the shift in the Easter holiday from 1Q14 to 2Q14. [XXXXX] PX 122 at 141.

         SeaWorld reported its 2Q14 results in a Form 8-K filed with the SEC on August 13, 2014. While attendance was up 0.3% versus the prior year, SeaWorld explained that this was “offset by lower attendance at its destination parks due to a combination of factors.” Doc. No. 359-2 (hereinafter “Youngwood Decl.”), Ex. 29 at 2. Specifically, attendance in the second quarter was impacted by factors including, “a late start to summer for some schools in the Company's key source markets, new attraction offerings at competitor destination parks, and a delay in the opening of one of the Company's new attractions[.]” Id. Moreover, “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.” Id. SeaWorld revised its earnings estimates downward: “For the full year of 2014, the Company now expects full years 2014 revenue and Adjusted EBITDA to be down in the range of 6-7% and 14-16%, respectively, compared to the prior year.” Id. SeaWorld's common stock price dropped by 33%, or $9.25 per share, following the announcement. Plaintiffs commenced the instant action on September 9, 2014. See Doc. No. 1.

         Daubert Motions

         Defendants move to exclude the testimony of three of Plaintiffs' experts: Dr. Steven Feinstein (Doc. No. 346[3]), Chad Coffman, CFA (Doc. No. 349), and Dr. James Gibson (Doc. No. 353). Plaintiffs move to exclude the testimony of two of Defendants' experts: Dr. Craig Lewis (Doc. No. 354) and Dr. Randolph Bucklin (Doc. No. 357).

         1. Legal Standard

         Rule 702 of the Federal Rules of Evidence provides that expert opinion evidence is admissible if: “(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.” Fed.R.Evid. 702. As the Ninth Circuit explained:

Under Daubert and its progeny, including Daubert II, a district court's inquiry into admissibility is a flexible one. Alaska Rent-A-Car, Inc. v. Avis Budget Grp., Inc., 738 F.3d 960, 969 (9th Cir. 2013). In evaluating proffered expert testimony, the trial court is “a gatekeeper, not a fact finder.” Primiano v. Cook, 598 F.3d 558, 565 (9th Cir. 2010) (citation and quotation marks omitted).
“[T]he trial court must assure that the expert testimony ‘both rests on a reliable foundation and is relevant to the task at hand.'” Id. at 564 (quoting Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 597 (1993)). “Expert opinion testimony is relevant if the knowledge underlying it has a valid connection to the pertinent inquiry. And it is reliable if the knowledge underlying it has a reliable basis in the knowledge and experience of the relevant discipline.” Id. at 565 (citation and internal quotation marks omitted). “Shaky but admissible evidence is to be attacked by cross examination, contrary evidence, and attention to the burden of proof, not exclusion.” Id. at 564 (citation omitted). The judge is “supposed to screen the jury from unreliable nonsense opinions, but not exclude opinions merely because they are impeachable.” Alaska Rent-A-Car, 738 F.3d at 969. Simply put, “[t]he district court is not tasked with deciding whether the expert is right or wrong, just whether his testimony has substance such that it would be helpful to a jury.” Id. at 969-70.

City of Pomona v. SQM N. Am. Corp., 750 F.3d 1036, 1043-44 (9th Cir. 2014). “Challenges that go to the weight of the evidence are within the province of a fact finder, not a trial court judge. A district court should not make credibility determinations that are reserved for the jury.” Id. at 1044.

         2. Motion to Exclude Expert Opinion and Testimony of Dr. Steven Feinstein

         Defendants seek to exclude the testimony of Dr. Steven Feinstein, who was retained by Plaintiffs to evaluate the conclusions in the Expert Report of Martin Dirks, dated January 22, 2019, and Section III of the Expert Report of Dr. Craig M. Lewis, dated January 22, 2019. See Doc. No. 346. Feinstein is an Associate Professor of Finance at Babson College, and the founder and President of Crowninshield Financial Research, Inc., a financial economics consulting firm. Doc. No. 346-1 (hereinafter “Feinstein Reb. Rpt.”) ¶ 11. Feinstein has his Ph.D. in Economics from Yale University, a Master of Philosophy degree in Economics from Yale University, a Master of Arts in Economics from Yale University, and a Bachelor of Arts degree in Economics from Pomona College. See Id. ¶ 12. Additionally, Feinstein holds the Chartered Financial Analyst (“CFA”) designation. See Id. Defendants contend that Feinstein's testimony is inadmissible because Feinstein's rebuttal report: (a) does not rebut anything in Defendants' experts' initial reports; and (b) rests on an erroneous legal standard. See Doc. No. 346 at 5-6.

         a. Feinstein's Rebuttal Opinions

         Defendants contend that Feinstein has not submitted a rebuttal report because he “talks past Mr. Dirks rather than rebutting his methodologies and conclusions[.]” Doc. No. 346 at 6 (emphasis in original). Thus, Feinstein's report “is simply an untimely affirmative report not submitted by the deadlines set in the Case Management Order.”[4]Id. In response, Plaintiffs point out that Defendants “do not address or even mention Professor Feinstein's testimony concerning the flawed conclusions in the Lewis Report.” Doc. No. 378 at 7.[5] Additionally, Plaintiffs maintain that Feinstein's criticisms of Dirks' opinions render his report admissible. See id.

         Pursuant to the Scheduling Order entered in this case, January 15, 2019 was the deadline for the parties to designate affirmative experts, and January 22, 2019 was the deadline to serve expert reports. See Doc. No. 333. On March 1, 2019, Plaintiffs served Feinstein's rebuttal report.

         “Rebuttal disclosures of expert testimony are ‘intended solely to contradict or rebut evidence on the same subject matter identified by another party' in its expert disclosures.” In re High-Tech Emp. Antitrust Litig., No. 11-cv-2509-LHK, 2014 WL 1351040, at *3 (N.D. Cal. Apr. 4, 2014) (quoting Fed.R.Civ.P. 26(a)(2)(D)(ii)). Rebuttal expert reports may respond to “new unforeseen facts brought out in the other side's case.” Matthew Enter., Inc. v. Chrysler Grp. LLC, No. 13-cv-4236-BLF, 2016 WL 4272430, at *3 (N.D. Cal. Aug. 15, 2016) (citing Columbia Grain, Inc. v. Hinrichs Trading, LLC, No. 14-cv-115-BLW, 2015 WL 6675538, at *2 (D. Idaho Oct. 30, 2015)). However, “[r]ebuttal testimony cannot be used to advance new arguments or new evidence.” Id. at *2 (internal quotation marks omitted). A rebuttal report “is not the time to change methodologies to account for noted deficiencies; instead, it is to respond to criticisms of such methodologies.” Id. (internal quotation marks omitted). “[O]ffering a different, purportedly better methodology is a proper way to rebut the methodology of someone else.” TCL Commc'ns Tech. Holdings Ltd. v. Telefonaktenbologet LM Ericsson, No. 14-cv-341-JVS, 2016 WL 7042085, at *4 (C.D. Cal. Aug. 17, 2016). “Rebuttal testimony is proper as long as it addresses the same subject matter that the initial experts address.” Perez v. State Farm Mut. Auto Ins. Co., No. 6-cv-1962-JW, 2011 WL 8601203, at *8 (N.D. Cal. Dec. 7, 2011). Courts “have permitted additional data to be used in a rebuttal report so long as it is of the same subject matter.” Kirola v. City & Cty. of S.F., No. 7-cv-3685-SBA (EMC), 2010 WL 373817, at *2 (N.D. Cal. Jan. 29, 2010).[6]

         Here, upon review, Feinstein's rebuttal report clearly responds to the Dirks and Lewis reports. For example, Feinstein summarizes that “[t]he crux of both the Dirks Report and the Lewis Report is that the alleged misstatements and omissions were immaterial to investors.” Feinstein Rpt. ¶ 3. Additionally, contrary to Defendants' contention, nearly every paragraph in the rebuttal report challenges the findings of Dirks and Lewis. See Id. ¶¶ 33-46. Feinstein determines that “[t]he conclusions of both Mr. Dirks and Dr. Lewis on the question of materiality are at odds with the facts of the case and generally accepted financial economic principles and published empirical research.” Id. ¶ 4. “The misstatements and omissions alleged by Plaintiffs were clearly material to investors from an economic perspective.” Id. ¶ 9. Feinstein's criticisms contradict Dirks' opinion on the same subject matter-i.e., whether Defendants' misstatements and omissions were material.

         Accordingly, Feinstein properly rebuts the findings of Dirks and Lewis. See In re REMEC Inc. Sec. Litig., 702 F.Supp.2d 1202, 1220 (S.D. Cal. 2010) (overruling objection to expert's rebuttal report because “Regan's analysis contradicts Holder's opinion on the same subject matter, specifically, whether REMEC used assumptions, estimates, and forecasts to evaluate goodwill that complied with GAAP.”).

         b. Feinstein's Materiality Standard

         Defendants next argue that Feinstein's testimony is irrelevant and inadmissible because his opinion concerning the materiality of Defendants' misstatements and omissions “rests on an erroneous legal standard[.]” Doc. No. 346 at 2. In opposition, Plaintiffs assert that Feinstein “does not, under any fair reading of his testimony, adopt, apply, reject or attempt to analyze any legal definition of ‘materiality.'” Doc. No. 378 at 11. Specifically, Feinstein “is not offering a ‘legal' opinion and does not offer an opinion on the application of the legal definition of materiality.” Id. at 12. Essentially, the parties' dispute centers on whether Feinstein's materiality standard is “distinct from” and “entirely conflict[s]” with the materiality standard set forth by the Supreme Court and applied by Dirks and Plaintiffs' expert, Chad Coffman. Doc. No. 346 at 5.

         In his rebuttal report, Feinstein defines economic materiality as “the importance of information, announcements, and/or events to investors and the market, such that these items would affect the valuation of a security.” Feinstein Reb. Rpt. ¶ 7. As defined by the Supreme Court, “the materiality requirement is satisfied when there is ‘a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix' of information made available.'” Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 38 (2011).

         Defendants claim that Feinstein's economic materiality standard “differs considerably” from the materiality standard adopted by the Supreme Court because Feinstein disregards the concepts of “the reasonable investor” and the “total mix of information.” Doc. No. 346 at 7.

         At his deposition, Feinstein testified that his “definition is better” than the one used by Dirks (and Coffman), but explained that his definition does not contradict, undermine, or reject the definition of legal materiality. Doc. Nos. 346-2, 378-3 (hereinafter “Feinstein Dep.”) at 107. Feinstein testified that the legal definition and economic definition are “consistent.” Id. at 112. “If there's an understanding that significantly altering the total mix of information means such that there's a valuation effect, then they're the same thing.” Id. at 113-14. Thus, if the phrase “such that value is affected” was added to the legal definition, the economic and legal definitions are “synonymous.” Id. at 119. Further, when asked whether he considered Dirks' definition of materiality in drafting his report, Feinstein admitted that he “didn't think there was any significant difference between the two [definitions] that merited more discussion than I put in my report[.]” Id. at 122.

         Moreover, Feinstein testified that the concept of the reasonable investor is “implicit in the term ‘valuation.'” Id. at 114. “Value - - value is what a reasonable buyer would pay to a reasonable seller, both provided with necessary information and neither under any compunction to transact.” Id. Feinstein also explained that the “definition of valuation would include mix of information and reasonableness of the parties involved.” Id. at 104. Thus, according to Feinstein, the concepts of “the reasonable investor” and the “total mix of information” are subsumed within his analysis.

         When asked why Feinstein simply did not accept Dirks' definition of materiality, Feinstein responded, “[b]ecause I'm an economist and so I use the economic definition.” Id. at 116. “I think that there is some vulnerability for an economist to use the legal definition” and according to Feinstein, “an economist shouldn't be making - - shouldn't be drawing legal conclusions. The economist can draw economic conclusions.” Id. 116-17.[7] Thus, consistent with Ninth Circuit authority, Feinstein is not offering a legal conclusion. See Aguilar v. Int'l Longshoremen's Union Local No. 10, 966 F.2d 443, 447 (9th Cir. 1992) (explaining that it is well-known that matters of law are generally “inappropriate subjects for expert testimony.”). Defendants rely on In re Novatel Wireless Sec. Litig., 846 F.Supp.2d 1104, 1108 (S.D. Cal. 2012) to support their contention that Feinstein's opinions rest on an erroneous legal standard. There, the district court excluded the testimony of an expert economist who opined that with respect to loss causation, “corrective disclosures have to be made ‘in such a way that a reasonable investor can reasonably infer that a fraud has occurred.'” Id. at 1107. However, the court noted that there is no requirement that a reasonable investor infer that a fraud has occurred. See Id. at 1108. The court concluded that the expert's analysis “is based on a loss causation standard that is incompatible with that set forth by the Ninth Circuit.” Id.

         Here, unlike In re Novatel Wireless Sec. Litig., Feinstein does not attempt to add any requirements to the definition of materiality. Rather, Feinstein appropriately opines on the concept of materiality in the field of economics. See S.E.C. v. Leslie, No.7-cv-3444, 2010 WL 2991038, at *8, 9 (N.D. Cal. July 29, 2010) (finding expert's materiality opinions on whether the information was sufficiently important from an “accounting perspective” permissible but noting his “opinion with respect to legal concepts and conclusions of law are excludable.”). Indeed, a change in stock price (or valuation) is one factor the trier of fact may consider with respect to materiality. See Id. at *8.

         As such, the Court finds that Feinstein's materiality opinions do not rest on an erroneous legal standard. Feinstein discusses the concept of economic materiality with support from economic authorities that Defendants do not challenge. Thus, exclusion on this basis is improper.

         c. Summary

         In sum, the Court finds that Feinstein responds to and criticizes the materiality opinions of Dirks and Lewis in his rebuttal report. Additionally, although Feinstein's materiality opinions stem from an economic perspective, his opinions do not rest on an erroneous legal standard. Accordingly, the Court DENIES Defendants' motion to exclude the opinions and testimony of Dr. Steven Feinstein.

         3. Motion to Exclude Expert Opinion and Testimony of Mr. Chad Coffman

         Defendants move to exclude the testimony of Chad Coffman, CFA, who has been retained by Plaintiffs to offer expert testimony as evidence of loss causation, materiality, and economic damages. See Doc. No. 349. Coffman is the President of Global Economics Group, a Chicago-based consulting firm. See Doc. No. 349-1 (hereinafter “Coffman Rpt.”) ¶ 1. Coffman conducted a full event study regression analysis as the foundation for his loss causation and damages opinions.[8]

         Defendants do not challenge Coffman's qualifications or the relevance of his opinions. Nor do Defendants challenge Coffman's event study methodology. Rather, Defendants move to exclude three of Coffman's opinions as unreliable: (a) that certain information disclosed on August 13, 2014 was “corrective”; (b) that $7.52 of SeaWorld's stock decline is attributable to the corrective information; and (c) that damages should be measured using a constant dollar inflation (“CDI”) methodology. See Doc. No. 349. In opposition, Plaintiffs assert that Defendants' arguments do not warrant exclusion of his testimony under Daubert. See Doc. No. 375 at 2. Plaintiffs concede that “[i]f the Court excludes Coffman's testimony, Plaintiffs cannot prove loss causation and damages at trial, thereby ending the case.” Id. at 9. The Court proceeds by reviewing Coffman's event study before addressing Defendants' arguments for exclusion.

         a. Coffman's Event Study

         Coffman performed an event study as the foundation for his opinions in this case. “The use of an event study is often necessary to provide an evidentiary basis for a reasonable jury to determine the existence of loss causation and damages.” Mauss v. NuVasive, Inc., No. 13cv2005-JM (JLB), 2018 WL 656036, at *5 (S.D. Cal. Feb. 1, 2018).

         “An event study is conducted by specifying a model of expected price movements conditioned on outside market factors and then testing whether the deviation from expected price movements is sufficiently large such that simple random movement can be rejected as the cause.” Coffman Rpt. ¶ 59. Coffman explains that a well-accepted method for performing an event study is to estimate a regression model over a period of time (referred to as an “estimation window”) to observe the typical relationship between the market price of the security at issue and broad market factors. See Id. ¶ 60. In this case, Coffman used an estimation window of 120 trading days prior to the event of interest to evaluate the relationship between SeaWorld and market factors. See Id. Coffman controlled for market factors by using a broad market index (the S&P 500 Total Return Index, or “Market Index”) and an equal weighted peer index (“Peer Index”). See id.

         By including the Market Index in his regression, Coffman factored out the influence of any news that impacted stock values generally on the date of interest, which in this case is August 13, 2014, the date on which Coffman believes Defendants disclosed certain information that was corrective of previous statements regarding Blackfish. See Id. ¶ 61. “This is how the regression distinguishes, and explicitly removes, the impact of general market and industry news from observed stock price and allows the ‘abnormal return' to be interpreted as a company-specific price movement.” Id.

         SeaWorld's Common Stock declined by 32.86% on August 13, 2014, “the largest single-day price drop in SeaWorld's roughly 16-month trading history.” Id. ¶ 63. Coffman opines that the “abnormal return of 33.30% (the observed -32.86% return minus the expected return of positive 0.44%) is statistically significant at well beyond the 95% confidence level, even after controlling for all factors that may have influenced the broader market or the industry on August 13, 2014.” Id. (emphasis in original). Coffman concludes that “firm-specific information (including the corrective information) caused SeaWorld's stock price to decline. This provides further evidence that investors saw the information regarding whether Blackfish and related publicity was affecting SeaWorld's business as important.” Id. ¶ 62. “[T]he sheer size of this abnormal return strongly supports the conclusion that the stock price was reacting to a more permanent shift in demand as opposed to short term factors.” Id. ¶ 64.

         b. August 13, 2014 Disclosure

         On August 13, 2014, SeaWorld issued a press release that announced, among other things, SeaWorld's results for the second quarter of 2014 and SeaWorld's revised guidance for the year moving forward. See Doc. No. 347, Ex. 4. Specifically, SeaWorld announced its lower attendance at its destination parks was due to a combination of factors including:

a late start to summer for some schools in the Company's key source markets, new attraction offerings at competitor destination parks, and a delay in the opening of one of the Company's new attractions. 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.

Id. at 2 (emphasis added).

         Coffman opines that the reference to proposed legislation in California was “understood to reference a negative impact on SeaWorld's business caused by publicity related to Blackfish.” Coffman Rpt. ¶ 108. Coffman explains that “[a]nalyst and media reaction indicate[] that the market understood the August 13 Corrective Disclosure to relate to Blackfish and to be a reversal of Defendants' earlier statements that the film had not caused any impact to the Company's business.” Id. ¶ 7. Coffman concludes that the statement regarding proposed legislation in California constitutes a corrective disclosure. See id.

         Defendants argue that Coffman's opinions regarding the alleged corrective disclosure should be excluded for three reasons. See Doc. No. 349. First, the alleged corrective disclosure relates back only to the second quarter 2014. See Id. at 7-8. Second, Defendants contend Coffman improperly bases his opinion on a selective compilation of analyst and media reports. See Id. at 9. Third, Defendants assert that Coffman impermissibly fails to consider the impact of SeaWorld lowering its annual guidance. See Id. at 11.

         i. Language of the Alleged Corrective Disclosure

         As a preliminary matter, Defendants argue that the alleged corrective disclosure relates back only to the second quarter 2014 and cannot disclose an impact that occurred in 2013 or the first quarter of 2014. See Id. at 8.

         Plaintiffs “can satisfy loss causation by showing that the defendant misrepresented or omitted the very facts that were a substantial factor in causing the plaintiff's economic loss.” Nuveen Mun. High Income Opportunity Fund v. City of Alameda, 730 F.3d 1111, 1120 (9th Cir. 2013) (emphasis in original) (internal quotation marks omitted). The fact that the language of the alleged corrective disclosure refers to the second quarter 2014 does not render Coffman's opinions unreliable. Coffman opines that investors viewed SeaWorld's disclosure as an admission that Blackfish was negatively impacting its business and would continue to do so going forward. See Coffman Rpt. ¶¶ 7-9. Defendants assert that Coffman admitted that the corrective information was limited to the second quarter of 2014. See Doc. Nos. 349-6, 375-2 (hereinafter “Coffman Dep.”) at 81 (“Within that section, it appears that all the references to ‘the quarter,' I would interpret as being the second quarter of 2014.”). Coffman also testified, however, that the corrective information “goes beyond that” and encompasses all of the information described in paragraphs 73-78 of his report. Id. at 78.

         Accordingly, Coffman's testimony regarding the alleged corrective disclosure will be helpful to a jury and exclusion of his testimony on this basis is improper. See Alaska Rent-A-Car, Inc., 738 F.3d at 969-70 (“The district court is not tasked with deciding whether the expert is right or wrong, just whether his testimony has substance such that it would be helpful to a jury.”).

         ii. Analyst Reports and News Articles

         Next, Defendants contend that Coffman improperly bases his opinion on a selective compilation of analyst and media reports. See Doc. No. 349 at 9 (“Mr. Coffman's ‘analysis' is simply a summary of cherry picked quotes out of a small sample of analyst and media reports issued on August 13, 2014 and August 14, 2014.”). However, upon his review of hundreds of reports and articles, Coffman formed the opinion that even though Defendants did not mention Blackfish by name, “the market immediately understood the August 13, 2014 disclosure as an admission that Blackfish had impacted the Company.” Doc. No. 375 at 13; see also Coffman Rpt. ¶ 7.[9] Contrary to Defendants' assertion that Coffman simply lists and summarizes these reports and articles, Coffman's opinion of how the market interpreted SeaWorld's statements from the August 13, 2014 press release will assist the trier of fact in determining loss causation. See In re Novatel Wireless Sec. Litig., No. 8cv1689-AJB (RBB), 2013 WL 12144150, at *7 (S.D. Cal. Oct. 25, 2013) (denying Daubert motion where the expert's review of press releases and analyst reports established “the requisite link between those disclosures and earlier alleged misrepresentations”); cf. In re Nuveen Funds/City of Alameda Sec. Litig., Nos. C 08-4575 SI, C 09-1437 SI, 2011 WL 1842819, at *8 (N.D. Cal. May 16, 2011) (excluding expert's opinion on loss causation “because he did not perform any investigation or analysis to support his conclusion that plaintiffs' losses were caused by defendants' fraud.”).

         Defendants further contend that Coffman's report lacks any reliable principles and methods because it disregards reports, or portions of reports, that contradict his position. See Doc. No. 349 at 10. For example, Defendants submit as exhibits three reports issued after the August 13, 2014 press release that either do not attribute declining attendance to Blackfish or limit the impact of the film to only attendance in the second quarter. See id., Exs. 7, 8, 9.

         In Appendix A to his report, Coffman lists more than one hundred analyst reports and news articles he considered in forming his opinions in this case. See Coffman Rpt., Ex. A at 11, 16. Specifically, Coffman considered “SEAS analyst reports supplied by Investext via Thomson Reuters for the period August 13, 2013 to December 30, 2014, and “[o]ther analyst reports, including but not limited to” the more than one hundred analyst reports and news articles he identifies by name. See Coffman Rpt., Ex. A at 11. Coffman also testified at his deposition that he did not recall any analyst reports that did not mention “what I refer to as the Blackfish Effect in one way or another.” Coffman Dep. at 155.

         Defendants assert that “[c]ourts have expressly rejected expert analyses, like Mr. Coffman's, that highlight favorable studies while ignoring contradictory evidence.” Doc. No. 349 at 10. Defendants further cite In re Bextra and Celebrex Mktg. Sales Practices and Prod. Liab. Litig., a Multi-District Litigation proceeding, where more than 3, 000 plaintiffs alleged that they or their loved ones suffered a heart attack, stroke, or other adverse cardiovascular event as a result of taking a medication called Celebrex. 524 F.Supp.2d 1166, 1169 (N.D. Cal. 2007). The district court excluded the testimony of Dr. Neil Doherty, the plaintiffs' cardiology expert, because he “reject[ed] or ignor[ed] the great weight of the evidence that contradicts his conclusion.” Id. at 1176. The court further noted that Dr. Doherty “lack[ed] . . . relevant experience and training” and his opinion that rejected the weight of authority on the topic “is not a scientifically valid methodology.” Id.

         Here, unlike In re Bextra and Celebrex Sales Practices and Prod. Liab. Litig., Defendants do not challenge Coffman's experience and training. Nor do Defendants submit any evidence that Coffman rejected or ignored the “great weight of evidence that contradicts his conclusion.” Id. Rather, Defendants point to a handful of analyst reports that Coffman did not explicitly identify in his non-exhaustive list of reports he considered.[10] Coffman's analysis of the market's reaction to the August 13, 2014 statements is not subject to exclusion under Daubert on this basis. See In re REMEC Inc. Sec. Litig., 702 F.Supp.2d at 1219 (S.D. Cal. 2010) (noting that the determination of weight and sufficiency of expert evidence is the sole province of the jury); Odyssey Wireless, Inc. v. Apple Inc., Nos. 15-cv-1735-H-RBB, 15-cv-1738-H-RBB, 15-cv-1743-H-RBB, 2016 WL 7644790, at *15 (S.D. Cal. Sept. 14, 2016) (declining to exclude expert's testimony because the defendant's “disagreement with the facts underlying that opinion go to the weight to be afforded the testimony and not its admissibility.”).

         iii. Lowered Annual Guidance

         Third, Defendants assert that Coffman fails to consider the impact of SeaWorld lowering its annual guidance. “[A]ll that supports Mr. Coffman's opinion that the August 13 Statement constituted a corrective disclosure is his claim (first raised on rebuttal) that the stock drop was too large to be explained solely by the second quarter results.”[11] Doc. No. 349 at 11. Defendants maintain that Coffman's opinion excludes without analysis the most likely explanation, i.e., the market's reaction to the announcement of lowered revenue and guidance for the year, and simply assumes that the market interpreted these disclosures as backward-looking and corrective, rather than forward-looking. See Id. Thus, because Coffman “omitted a critical factor from his analysis, [his] opinion is per se unreliable.” Id. at 12.

         Defendants' arguments are unpersuasive, as Coffman considered SeaWorld's lowered earnings guidance and determined that it was part of the corrective information. In his report, Coffman describes that on the date of the corrective disclosure:

SeaWorld issued a press release which, in effect, acknowledged for the first time the adverse impact that Blackfish-related public reaction was having on SeaWorld's business. The press release summarized financial results for 2nd Quarter 2014 and the first half of 2014 that were well below consensus expectations, lowered guidance for future financial performance, and clearly stated that Blackfish-related public reaction was contributing to such underperformance.

Coffman Rpt. ¶ 7. Coffman further explains that “[i]n addition to announcing worse than expected performance for 2Q 2014, the Company also lowered its revenue and EBITDA guidance for the full year, thus signaling one or more negative impacts were not temporary.” Id. ¶ 75. Coffman observes that the market viewed the disclosure as involving two potential structural issues that would lower expectations and guidance going forward: (1) Blackfish; and (2) competition. See Id. ¶¶ 88-100. As Plaintiffs point out, to the extent that the lowered annual guidance reflected both corrective information and competition, Coffman disaggregated the price-impact of confounding information related to competition. See Id. ¶¶ 108-09.

         Thus, Coffman did not omit from consideration SeaWorld's lowered annual guidance and exclusion of Coffman's testimony on this basis is improper. See In re REMEC Inc. Sec. Litig., 702 F.Supp.2d at 1273 (“When a study accounts for the ‘major factors' but not ‘all measurable variables,' it is admissible.”) (quoting Bazemore v. Friday, 478 U.S. 385, 400 (1986)); cf. In re DVI, Inc. Sec. Litig., No. 3-cv-5336, 2010 WL 3522090, at *11 (E.D. Pa. Sept. 3, 2010) (rejecting Coffman's “insolvency theory” because it “does not require any form of corrective disclosure and does not exclude non-fraud factors”).

         c. Disaggregation

         Defendants next argue that Coffman's opinion apportioning the stock drop should be excluded as unreliable and flawed because Coffman improperly relies on non-public data to apportion the market's reaction to public information and that his apportionment methodology is inherently arbitrary. See Doc. No. 349 at 13, 15.

         i. Coffman's Disaggregation Opinion

         Coffman opines that based upon his event study analysis, “there was a statistically significant abnormal decline in the market price of SEAS Common Stock on August 13, 2014 of $9.37 per share after controlling for market and industry effects on that day.” Coffman Rpt. ¶ 10. Experts must also “separate the loss caused by the disclosure of corrective information . . . from loss caused by the disclosure of other company-specific information.” In re REMEC Inc. Sec. Litig., 702 F.Supp.2d at 1273-74. In his report, Coffman explains the steps he took to disaggregate other company-specific information (which he refers to as transitory factors) that was included in the August 13, 2014 alleged corrective disclosure. See Coffman Rpt. ¶¶ 100-29. These transitory factors include, among other things, weather patterns and school schedules. See id., Ex. 2. Coffman determined that “the most that the transitory items could reasonably contribute to the abnormal stock price decline on August 13, 2014 was $0.25 per share (the full EBITDA miss in the current quarter).” Id. ¶ 107. “Notably, neither the Company nor analysts cited any of these items as substantially contributing to the lowered earnings guidance going forward.” Id. “[N]o less than $9.12 per share of the stock price decline on August 13, 2014 is due to the more permanent information disclosed that day.” Id.

         Aside from these transitory factors, SeaWorld's disclosure identified two factors driving SeaWorld's underperformance: (1) demand pressures related to legislation; and (2) competitive issues relating to new attraction offerings at competitor destination parks. See Id. ¶¶ 108-09. Coffman attributes an additional $1.60 to competitive forces. See Id. ¶ 129. Coffman ultimately concludes that the remaining $7.52 of the drop is attributable to Blackfish. See id.

         ii. Reliance on Non-Public Data

         First, Defendants argue that “Coffman's apportionment analysis improperly relies on non-public information to which the market did not have access.” Doc. No. 349 at 13. Defendants contend that Coffman's use of non-public data contradicts opinions he rendered earlier in this case. In opposition, Plaintiffs maintain that Coffman properly considers internal documents as one factor in his disaggregation opinions, as Defendants “cite no economic or legal authority to support this bizarre contention.” Doc. No. 375 at 16-17.

         At the class certification stage, Coffman concluded that SeaWorld traded in a semi-strong efficient market, whereby “all widely available public information is . . . reflected in a security's current market price.” Coffman Dep. at 45. At his deposition, Coffman confirmed that he still believes this to be the case. In his expert report, Coffman determines, upon review of attendance data produced in discovery, that the impact of competition as a confounding factor is reasonably isolated to be a concern of SeaWorld Orlando. Coffman Rpt. ¶ 111.

As shown in Exhibit 3, [XXXXX] As a result, it is reasonable to assume that the remaining 64.9% of the attendance decline cannot be explained by some unidentified competitive pressure in those markets that is not acknowledged by the Company or analysts. For that reason, I find that, at a minimum, 64.9% of the remaining price decline of $9.12 (or $5.92 per share) is attributable to Blackfish and related publicity.

Id.

         Here, Coffman's consideration of non-public data as one factor in forming his loss causation opinions does not contradict opinions he previously rendered. Notably, Coffman does not opine that all privately available information is reflected in SeaWorld's stock price. Moreover, courts have approved loss causation analysis premised in part on internal company documents. See Smilovits v. First Solar Inc., 119 F.Supp.3d 978, 995 (D. Ariz. 2015), aff'd Mineworkers' Pension Scheme v. First Solar Inc., 881 F.3d 750, 754 (9th Cir. 2018); In re Xerox Corp. Sec. Litig., 746 F.Supp.2d 402, 413 (D. Conn. 2010) (finding the expert's disaggregation analysis proper where he also considered public statements and an internal document).[12]

         Defendants further contend that Coffman's use of non-public data is unsound “because he uses it to draw conclusions that are inconsistent with public information available to the market.” Doc. No. 349 at 14. Defendants rely on statements made by SeaWorld's then-CEO Jim Atchison in the earnings call. Specifically, Atchison explained that he thinks “the competitive stakes and a bit of the arms race in Southern California and Orlando, in particular, those two markets, is not going to wane.” Doc. No. 347, Ex. 10 at 7.[13] He further indicated, “[w]e've talked a little bit about the legislation in California that affected our San Diego park.” Id. Defendants claim that Coffman ignored these statements and arbitrarily allocated half of the attendance declines in Orlando and the entirety of attendance declines in the San Antonio and San Diego parks to Blackfish. See Doc. No. 349 at 15.

         In his report, Coffman cites to a several statements made by Atchison from the earnings call transcript. See Coffman Rpt. ¶¶ 109-10. Upon review of all statements made on August 13, 2014, Coffman observed:

I am not aware of a rationale for a sudden structural shift in competition in the California market in the 2nd Quarter 2014 and the first half of 2014. While the Company cited to competitive pressure from Disney's new Fantasyland in Orlando and Universal's opening of Harry Potter at its Orlando park, there was no mention of a fundamental change in competition in the San Diego market (or the San Antonio market where it has a third orca park). Analysts did not discuss specific competitive forces outside of Orlando in their post-release reports, either.

Id. ¶ 110.

         Thus, contrary to Defendants' contention, Coffman did not ignore Atchison's statements. Rather, Coffman observed that the market interpreted Atchison's statements in a different way than Defendants. “Whether [Coffman] chose the correct factors and gave them the correct weight is for the jury.” S.E.C. v. Moshayedi, No. SACV1201179JVSMLGX, 2013 WL 12129282, at *6 (C.D. Cal. Nov. 20, 2013).

         Accordingly, Coffman's use of internal information, as one factor in his analysis, does not justify exclusion of his testimony. See In re REMEC Inc. Sec. Litig., 702 F.Supp.2d at 1220 (finding that the defendants can test the weight of an expert's opinion by vigorous cross examination and presentation of contrary evidence at trial).

         iii. Apportionment Methodology

         Second, Defendants argue that Coffman's methodology apportioning only $1.60 of SeaWorld's August 13, 2014 stock price drop to competition is “impermissibly arbitrary.” Doc. No. 349 at 15. Defendants contend that Coffman assumes-without support-that attendance at three SeaWorld parks is the only factor that can explain SeaWorld's stock price decline on August 13, 2014. See id.

         In reaching his conclusion that $1.60 of the price drop is attributable to competition, Coffman notes that in the press release or earnings call transcript, SeaWorld “did not ascribe any specific measure of attendance impact to competitive pressures or identify a new competitive pressure that was not previously disclosed.” Id. ¶ 112. Coffman concludes that the impact of competition as a confounding factor is reasonably isolated to be a concern for SeaWorld Orlando. Id. ¶ 111. [XXXXX] See Id. “As a result, it is reasonable to assume that the remaining 64.9% of the attendance decline cannot be explained by some unidentified competitive pressure in those markets that is not acknowledged by the Company or analysts.” Id. “For that reason, I find that, at a minimum, 64.9% of the remaining price decline of $9.12 or ($5.92 per share) is attributable to Blackfish and related publicity.” Id.

         For the remaining 35.1% (or $3.20 per share of the $9.12 price decline), “there is the potential for the price movement to be confounded by competitive effects, ” but any confounding impact “is far from certain, and may not exist at all[.]” Id. ¶ 112. For example, Wells Fargo published a report after the August 13 statement indicating that “[w]hile competitive pressures appear modestly greater than thought (Orlando), media fallout from extreme animal rights activists in CA appear to have materially impacted June San Diego attendance/admission results.”). Coffman Rpt. ¶ 112 n.110. Moreover, internal records and deposition testimony revealed that demand pressures related to Blackfish were also observed as causing some measure of 2014 performance decline. See Id. ¶ 113.

         Coffman explains that “[b]ecause the Company recognized impact from negative publicity at Orlando in the first half of 2014, it is appropriate to apportion some of the negative Orlando performance to that factor, as opposed to apportioning it entirely to competition.” Id. at 114. However, “to ensure that I am not overstating the artificial inflation, I attribute 50% (or $1.60) of the stock price decline that is specifically attributable to Orlando ($3.20 per share) to the corrective information about Blackfish and the remainder to competitive forces.” Id. ¶ 127. Notably, Coffman acknowledges that “[t]he finder of fact, based on the totality of the evidence, could select an alternative percentage . . . and attribute the entire decline in Orlando to competitive pressures (which I believe is far too conservative and inconsistent with the facts)[.]” Id. ¶ 128. As a result, “the artificial inflation per share dissipated on August 13, 2014 would be $5.92 per share” as opposed to $7.52 per share. Id.

         Defendants point to several weaknesses in Coffman's analysis. [XXXXX] See Doc. No. 349 at 17-18. However, “Defendants may explore these perceived deficiencies through cross examination.” In re REMEC Inc. Sec. Litig., 702 F.Supp.2d at 1219; see also Primiano, 598 F.3d at 564 (“Shaky but admissible evidence is to be attacked by cross examination, contrary evidence, and attention to the burden of proof, not exclusion.”). Coffman supports his conclusions with facts from the Company's statements made on August 13, 2014, analyst reports, attendance data, and economic principles. As such, Coffman's disaggregation opinions are admissible. See In re REMEC Inc. Sec. Litig., 702 F.Supp.2d at 1218 (concluding that the expert “explains the steps of his analysis and justifies the numbers he used; consequently, his expert opinion is admissible.”).[14]

         d. Constant Dollar Inflation Methodology

         Lastly, Defendants assert that Coffman's Constant Dollar Inflation (“CDI”) methodology used to calculate Plaintiffs' damages is unreliable. See Doc. No. 349 at 19. Defendants challenge Coffman's decision to apply the CDI method and contend that application of the CDI method in this case is illogical because inflation of SeaWorld's stock could not have been constant during the Class Period. See Id. at 20-25.

         i. Coffman's Explanation of the CDI Methodology

         Coffman indicates that in his experience, “the most commonly used and accepted methodology for quantifying artificial inflation throughout a class period attributable to fraud is the Constant Dollar Inflation method.” Coffman Rpt. ¶ 130. The CDI method “assumes that the per share artificial inflation that is dissipated in response to a corrective disclosure should be carried back in time to the actionable misstatements and/or omissions.” Id. This methodology implies “that the artificial inflation per share was $7.52 throughout the Class Period.” Id.

         Coffman explains that “no method of back-casting inflation is perfect” but he carefully considered whether using the CDI method in this case is reasonable, compared to the “constant percentage” inflation approach. See Id. ¶ 130 n.120. Coffman selected the CDI method because “the general nature and substance of what Plaintiffs allege was misrepresented to the market did not change over the Class Period.” Id. ¶ 131. Plaintiffs allege that Blackfish and its related publicity negatively impacted SeaWorld's brand and reputation with the public and as a result, impacted SeaWorld's business. See Id. Plaintiffs claim that Defendants made statements to the market that such impacts were not occurring and were in fact, contradicted by information Defendants possessed. See id.

         “Assuming Plaintiffs' allegations as true, the most reliable method available to determine the impact this information would have on the stock price at any time during the Class Period is to observe the impact it actually had when it was ultimately disclosed-namely August 13, 2014.” Id. ¶ 132. “At any point in time during the Class period, the corrective information would have signaled to investors, as it did on August 13, 2014, an impairment to SeaWorld's brand and reputation and therefore a structural issue . . . in value and demand for the Company's premier parks and products.” Id. ¶ 135. “If the market came to understand that SeaWorld's business . . . was negatively impacted by Blackfish, it is a reasonable expectation that the Company's stock price would suffer significantly.” Id. ¶ 136. Coffman opines that the CDI method “may be overly conservative if the trier of fact accepts that SeaWorld's business was being impacted by Blackfish and related publicity at the start of the Class Period.” Id. ¶ 137. “An earlier acknowledgement by Defendants at a time when public awareness of Blackfish was relatively less than the date of the Corrective Disclosure may have caused a more significant decline in the Company's stock price.” Id.

         ii. Reliability of CDI

         Defendants first argue that “Coffman's use of constant dollar inflation to conclude that SeaWorld's stock was inflated by the same amount at all times during the Class Period is based on untenable assumptions and is the product of a flimsy, unsupported methodology.” Doc. No. 349 at 21. In opposition, Plaintiffs assert that Defendants misstate Coffman's testimony and have failed to demonstrate that Coffman's testimony is unreliable. See Doc. No. 375 at 21-23.

         Here, Coffman identifies facts to support his decision to utilize CDI in this case, notes that analysts were focused on whether Blackfish was impacting SeaWorld even prior to the first day of the Class Period, and explains why CDI would be more reliable under the facts of this case than constant percentage inflation, another commonly utilized theory in securities fraud cases. See Coffman Rpt. ¶¶ 130-136. Moreover, the constant dollar inflation method is commonly used to calculate 10b-5 damages. See In re Novatel Wireless Sec. Litig., 2013 WL 12247558, at *3 n.3. Additionally, the jury is ultimately responsible for deciding whether CDI, or another calculation, is a reasonable measurement of damages. See id.; cf. In re Nuveen Funds/City of Alameda Sec. Litig., 2011 WL 1842819, at *7 (excluding expert's loss causation opinion utilizing the constant dollar inflation method because expert conceded “he did not perform any computations or statistical analysis to determine whether there was a causal relationship between the corrective disclosure and the supposed decline in the value of the Notes.”). As such, Coffman's decision to use the CDI method in this case is sufficiently reliable for purposes of Daubert. See In re REMEC Inc. Sec. Litig., 702 F.Supp.2d at 1218 (finding that an expert's explanation of the steps of his analysis and justification for his conclusions render his testimony admissible under Daubert).

         iii. Inflation During Class Period

         Second, Defendants maintain that Coffman offers no explanation as to why a disclosure that Blackfish was impacting SeaWorld at any point during the Class would result in a $7.52 stock drop. See Doc. No. 349 at 19. Coffman, however, explains that “[i]nherent in any Company acknowledgement of a Blackfish impact would be that SeaWorld's corporate brand and corporate reputation had been harmed. Damage to a corporate brand or a company's reputation constitutes a structural change in value and demand for the company's products or services, rather than a one-time temporary setback.” Coffman Rpt. ¶ 136. In response to disclosure of harm to its reputation, “the market would understand that SeaWorld faced a structural change in demand and therefore reasonably anticipate that SeaWorld's financial results would be negatively impacted” for a longer period of time. Id.

         Defendants further assert that Coffman's CDI method fails to take into account that any impact from Blackfish on SeaWorld could not have affected SeaWorld's business in exactly the same magnitude each day of the Class Period. See Id. at 22. Plaintiffs, however, point out that this argument “confuses viewership with market reaction[.]” Doc. No. 375 at 23. There is no evidence in the record that SeaWorld's stock price reaction to an admission of Blackfish impact would track viewership levels by consumers. Additionally, Coffman explains that the market may have reacted more adversely to an admission of a Blackfish impact earlier in the Class Period when public awareness of Blackfish was relatively less than on August 13, 2014. See Coffman Rpt. ¶ 137.

         Thus, the Court finds that Defendants' challenges to Coffman's CDI method do not support exclusion under Daubert. These challenges can be addressed on cross examination. See In re REMEC Inc. Sec. Litig., 702 F.Supp.2d at 1220 (finding that the defendants can test the weight of an expert's opinion by vigorous cross examination and presentation of contrary evidence at trial). Additionally, whether CDI best approximates damages is a decision best left to the jury. See In re Novatel Wireless Sec. Litig., 2013 WL 12247558, at *7.

         e. Summary

         In sum, Coffman explains the steps of his analysis and applies accepted methodologies in reaching his conclusions. Accordingly, the Court DENIES Defendants' motion to exclude the opinions and testimony of Chad Coffman. See Alaska Rent-A-Car, Inc., 738 F.3d at 969-70 (“The district court is not tasked with deciding whether the expert is right or wrong, just whether his testimony has substance such that it would be helpful to a jury.”).

         4. Motion to Exclude Expert Opinion and Testimony of Dr. James Gibson

         Defendants move to exclude the testimony of Dr. James L. Gibson, who was retained by Plaintiffs to provide expert testimony on: (1) whether the empirical data possessed and analyses performed by SeaWorld support Defendants' public statements regarding Blackfish and its related publicity; and (2) whether the attendance variance analyses and goodwill-related analyses of operation impact conducted by SeaWorld were methodologically sound and support Defendants' public statements regarding Blackfish and its related publicity. See Doc. No. 353.

         Gibson is the President of Research Services International and a political science professor at Washington University in St. Louis. Doc. No. 353-2 (hereinafter “Gibson Rpt.”) ¶ 2. Gibson has forty (40) years of experience in analyzing empirical data. See Id. ¶ 3. Gibson received his Ph.D. in Political Science from the University of Iowa, a Master of Arts in Political Science from the University of Iowa, and a Bachelor of Arts degree in Political Science, with highest honors, from Emory University. See Gibson Rpt., Appx. B. Defendants do not challenge Gibson's qualifications.

         Gibson divides his report into two sections. In Section II.A, Gibson lists the alleged false or misleading statements made by Defendants, summarizes empirical data in SeaWorld's possession from January 2013 through May 2014, and then triangulates[15] this information with events at SeaWorld and its internal communications. See Gibson Rpt. ¶¶ 19-201. [XXXXX] See Id. ¶ 9. [XXXXX] See Id. ¶¶ 202-311. [XXXXX] See Id. ¶ 10.

         Gibson also submitted an Expert Rebuttal Report on March 1, 2019. See Doc. No. 353-3 (hereinafter “Gibson Reb. Rpt.”). In his rebuttal report, Gibson responds to the opinions set forth in Randolph Bucklin's expert report. See Id. ¶ 2. Gibson employs the same methodology as his affirmative report and concludes that the expert report of Randolph Bucklin, dated January 22, 2019, does not “lead [Gibson] to question or change” the analyses or conclusions in his affirmative report. Id. ¶ 2.

         Defendants contend that Gibson's opinions are inadmissible under Daubert because: (a) he did not conduct any quantitative or econometric analyses and his opinions are not based on a reliable objective method; (b) Gibson's report consists of improper summary testimony that requires no expertise to interpret; and (c) Gibson's opinions regarding attendance analyses fail Daubert's “fit” requirement because they answer a factually or legally irrelevant question. Doc. No. 353 at 2. The Court addresses Defendants' arguments in turn.

         a. Reliability

         Defendants first assert that Gibson's triangulation method “involves nothing more than assembling summary narratives based on materials selected for him by counsel” and is unreliable. Doc. No. 353 at 7. In opposition, Plaintiffs assert that Gibson's conclusions are “based on the methodology of empirical analysis.” Doc. No. 372 at 7. Plaintiffs further contend that after Gibson summarized his conclusions based on empirical analysis, he applied triangulation to support his conclusions. See Id. at 13. In reply, Defendants argue that Gibson's empirical analysis “does not describe a reliable methodology whose application would turn [his] opinions into something other than argumentative evidentiary summaries.” Doc. No. 413 at 4.

         As a preliminary matter, Plaintiffs assert that “Defendants do not challenge” Gibson's empirical analysis methodology. Doc. No. 372 at 7. Contrary to Plaintiffs' contention, Defendants challenge Gibson's alleged failure to employ any valid underlying methodology. That Defendants do not use the specific phrase “empirical analysis” in the underlying motion is not dispositive. Moreover, Gibson's report seldom uses the phrase “empirical analysis” or “empirical analyses.” Additionally, Gibson does not define this methodology in his report. Rather, in their opposition brief, Plaintiffs explain that “[e]mpirical analysis is the systematic and rigorous analysis of empirically observable information.” Doc. No. 372 at 7. As such, Defendants neither ignore nor have waived any objection to this methodology.

         Turning to the heart of Gibson's empirical analysis, Plaintiffs assert that “Gibson analyzed empirical evidence SeaWorld possessed during the Class Period and determined whether it did or could have supported Defendants' causal statements regarding Blackfish and its related publicity.” Doc. No. 372 at 12. Specifically, Gibson reviewed statements made during the Class Period, deposition transcripts, and documents produced in discovery in reaching his conclusions. See Gibson Rpt. ¶¶ 12-311. Defendants contend “[i]t cannot be that Dr. Gibson's review of the evidentiary record becomes reliable expert testimony simply because as a political scientist Dr. Gibson might conduct a similar qualitative review of a body of facts or data in the course of his academic research.” Doc. No. 413 at 5.

         Plaintiffs claim that the court in Hsingching Hsu v. Puma Biotechnology, Inc., No. SACV 15-00865 AG (JCGx), 2018 WL 4945703 (C.D. Cal. Oct. 5, 2018), relied on “precisely the [same] type of expert testimony” as that offered by Gibson. Id. at 12 n.17. In Hsingching Hsu, the court denied the defendants' motion to exclude the expert testimony of Dr. Lavin, a biostatistician, who opined on: (1) whether the “Kaplan-Meier curves-a graphical depiction of the effectiveness of a drug compared to a placebo”- were narrowing or separating; (2) whether there is a record that the defendants ever assessed the Kaplan-Meier curves beyond two years before the investor call; and (3) whether biostatisticians generally keep “audit trails” of reports they run. 2018 WL 4945703, at *7.

         Plaintiffs' reliance on Hsingching Hsu, however, is misplaced. Most importantly, unlike Gibson, Dr. Lavin did not apply an empirical analysis methodology. Rather, Dr. Lavin applied his own biostatistical analysis of the shape and movement of the Kaplan-Meier curves over a two-year period. See Hsingching Hsu v. Puma Biotechnology, Inc., No. SACV 15-00865 AG (JCGx) (Doc. No. 408-1, Ex. 1). While Dr. Lavin's opinion that the Kaplan-Meier curves were actually narrowing over time related to whether the defendants' statements were false or misleading, Dr. Lavin performed multiples analyses of the two-year Kaplan-Meier curves and then formed his conclusion. See Id. Gibson, however, performs no such technical analysis in reaching his conclusions. Unlike Dr. Lavin, whose testimony was necessary to assist the trier of ...


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