Monday April 21, 2003
By Mark H. Anderson
WASHINGTON -- Time Warner Entertainment
Co. L.P., an AOL Time Warner Inc. (NYSE:AOL - News) partnership,
Monday lost a final appeal of $257 million in punitive damages
awarded to limited partnerships that provided initial investments
for Six Flags Over Georgia.
The U.S. Supreme Court turned away the appeal, dashing the company's
hope that a recent punitive-damages decision involving State Farm
would prompt a review of its case.
The State Farm case outlined new constraints on punitive-damages awards that are grossly out of line with compensatory damages. The high court's rejection of AOL Time Warner's appeal means the court doesn't believe the punitive damages awarded in this case are out of line with the compensatory damages.
The high court decision in the AOL Time Warner case came after the company lodged a final appeal in a lawsuit brought by limited partners who alleged Time Warner mismanaged the amusement park, reducing the partnership profit.
Six Flags was sold in 1998 to Six Flags Inc. (NYSE:PKS - News) of Oklahoma City, spurring the lawsuit by the limited partnerships. Six Flags is a party in the lawsuit, but bears no financial responsibility for punitive damages.
AOL Time Warner controls Time Warner Entertainment Co. L.P. Comcast Corp. ( CMCSA) owns an indirect stake.
The case began when the partnership investors sued, claiming Time Warner -- now AOL Time Warner -- drove down the value of the amusement park by not adding new rides or making improvements to boost profit. A Georgia jury in 1998 awarded the partnership investors $197 million in compensatory damages and $257 million in punitive damages.
AOL Time Warner has previously reserved funds to cover awards in the case and any final-awards judgments won't affect operating earnings, said spokeswoman Mia Carbonell.
In court briefs, attorneys for AOL Time Warner said the verdict was excessive and unconstitutional and should be struck down. "This court should summarily reverse," the companies told the Supreme Court in the appeal. The companies added the business conduct at issue was "simply not the kind of conduct that could justify a $257 million fine."
The partnership lawsuit has been to the Supreme Court before. It was first petitioned to the high court in 2001, when the justices set aside the verdict in light of an earlier punitive-damages decision.
That 2001 high-court opinion, Cooper Industries v. Leatherman Tool Group, said appellate courts should conduct independent reviews of punitive damages awards issued by lower courts.
On remand, the Georgia Court of Appeals reaffirmed the verdict in March 2002 and the Georgia Supreme Court subsequently declined to review the case.
The Six Flags partnership investors, who made their initial investments in the 1960s, said the Georgia courts did conduct a proper review of the case after the initial Supreme Court remand and concluded the punitive damages award didn't violate high-court precedent.
"Given that the punitive damages award in this intentional tort case was only 1.3 times the amount of the actual damages, the court of appeals' holding is not remotely remarkable," the partnerships said.
The current case is Time Warner Entertainment v. Six Flags Over Georgia LLC, 02-978.
-By Mark H. Anderson, Dow Jones Newswires; 202 862-9254; mark.anderson@dowjones.com
4/21/03 10:56am
By Mark H. Anderson Dow Jones Newswires
WASHINGTON -- Time Warner Entertainment Co. L.P., an AOL Time
Warner Inc. ( AOL) partnership, Monday lost a final appeal of
$257 million in punitive damages awarded to limited partnerships
that provided initial investments for Six Flags Over Georgia.
The U.S. Supreme Court turned away the appeal, dashing the company's hope that a recent punitive-damages decision involving State Farm would prompt a review of its case.
The State Farm case outlined new constraints on punitive-damages awards that are grossly out of line with compensatory damages. The high court's rejection of AOL Time Warner's appeal means the court doesn't believe the punitive damages awarded in this case are out of line with the compensatory damages.
The high court decision in the AOL Time Warner case came after the company lodged a final appeal in a lawsuit brought by limited partners who alleged Time Warner mismanaged the amusement park, reducing the partnership profit.
Six Flags was sold in 1998 to Six Flags Inc. (PKS) of Oklahoma City, spurring the lawsuit by the limited partnerships. Six Flags is a party in the lawsuit, but bears no financial responsibility for punitive damages.
AOL Time Warner controls Time Warner Entertainment Co. L.P. Comcast Corp. ( CMCSA) owns an indirect stake.
The case began when the partnership investors sued, claiming Time Warner -- now AOL Time Warner -- drove down the value of the amusement park by not adding new rides or making improvements to boost profit. A Georgia jury in 1998 awarded the partnership investors $197 million in compensatory damages and $257 million in punitive damages.
AOL Time Warner has previously reserved funds to cover awards in the case and any final-awards judgments won't affect operating earnings, said spokeswoman Mia Carbonell.
In court briefs, attorneys for AOL Time Warner said the verdict was excessive and unconstitutional and should be struck down. "This court should summarily reverse," the companies told the Supreme Court in the appeal. The companies added the business conduct at issue was "simply not the kind of conduct that could justify a $257 million fine."
The partnership lawsuit has been to the Supreme Court before. It was first petitioned to the high court in 2001, when the justices set aside the verdict in light of an earlier punitive-damages decision.
That 2001 high-court opinion, Cooper Industries v. Leatherman Tool Group, said appellate courts should conduct independent reviews of punitive damages awards issued by lower courts.
On remand, the Georgia Court of Appeals reaffirmed the verdict in March 2002 and the Georgia Supreme Court subsequently declined to review the case.
The Six Flags partnership investors, who made their initial investments in the 1960s, said the Georgia courts did conduct a proper review of the case after the initial Supreme Court remand and concluded the punitive damages award didn't violate high-court precedent.
"Given that the punitive damages award in this intentional tort case was only 1.3 times the amount of the actual damages, the court of appeals' holding is not remotely remarkable," the partnerships said.
The current case is Time Warner Entertainment v. Six Flags Over Georgia LLC, 02-978.
The case was upheld and returned to the lower Superior Court in Gwinnett County, Georgia, for further action. Click here for details from the court docket.
By BILL RANKIN
Atlanta Journal-Constitution Staff Writer
4/2/2002: THE ATLANTA JOURNAL-CONSITUTION The Georgia Court of Appeals has again upheld a massive punitive damages verdict against the former management of Six Flags Over Georgia.
Ten judges on the 12-member court unanimously upheld the $257 million award issued against Time Warner Entertainment Co. Two of the court's members had recused themselves from the case, which was appealed by AOL Time Warner Inc.
The media giant is expected to appeal again, probably to the Georgia Supreme Court.
The appeals court ruling, handed down late Friday, is the latest in a lengthy battle. It began with a Gwinnett County jury concluding in 1998 that Time Warner Entertainment and affiliated companies underinvested in Six Flags Over Georgia to depress the park's value so they could renew their partnership agreement at a discount in 1997. The Gwinnett jury awarded the Six Flags partnership $197.3 million in compensatory damages and $257 million in punitive damages.
In July 2000, the Court of Appeals upheld the Six Flags verdicts, but Time Warner appealed to the U.S. Supreme Court. Last October, the high court sent the case back, telling the state appeals court to reconsider its approval of the punitive damages award in light of prior rulings by the U.S. Supreme Court.
But the appeals court saw no reason to overturn the award because the defendants' actions were premeditated as well as "deceitful, self-serving and financially damaging" to the plaintiffs.
"Given the amount of intentional economic damage inflicted by [the Time Warner defendants], corporate entities with collective assets measured in billions of dollars, we believe that the award of punitive damages was reasonably calculated to punish them and to deter such conduct in the future," the appeals court stated.
"This is an important decision both to the clients and to all businesses in Georgia and the country," said Jim Butler of Columbus, the plaintffs' lead attorney in the case. "It proves that predatory misconduct will not be tolerated by the courts, no matter how powerful the culprit may be."
Jack Dalton, an attorney who represents AOL Time Warner in the case, said the next step is under consideration.
"We'll be seeking a further review of this decision," Dalton said, adding that the state Supreme Court is a likely next venue.
Time Warner Entertainment sold the Six Flags chain in 1998 to Premier Parks Inc., now Six Flags Inc., as part of a $1.86 billion transaction.
-- Staff writer Scott Leith contributed to this article
2 April 2002, 02:45, Associated Press Newswires; Copyright 2002. The Associated Press. All Rights Reserved.
ATLANTA (AP) - The Georgia Court of Appeals has again upheld a $257 million punitive damage award against Time Warner Entertainment, which was accused by investors of Six Flags over Georgia of mismanaging the amusement park.
Ten judges on the 12-member court upheld the award.
"Given the amount of intentional economic damage inflicted by corporate entities with collective assets measured in billions of dollars, we believe that the award of punitive damages was reasonably calculated to punish them and to deter such conduct in the future," the court said.
The Court of Appeals had upheld a Gwinnett County jury's December 1998 award of the punitive damages and $197 in compensatory damages, the largest civil award ever in Georgia. The state Supreme Court refused to hear an appeal.
AOL Time Warner took the case to the U.S.
Supreme Court. In October, the high court told the Court of Appeals
to review the punitive-damage
award in light of an earlier ruling that appeals courts should
use a broad standard to decide if awards of punitive damages are
so large as
to be unconstitutional.
Time Warner and its partners sold the Six
Flags chain of theme parks in February 1998 to Premier Parks,
an Oklahoma City-based amusement
park operator, for $1.9 billion. Premier has since changed its
name to Six Flags, Inc.
The investors claimed in their lawsuit that Time Warner had mismanaged the suburban Atlanta park in an effort to depress its value.
"This is an important decision both
to the clients and all businesses in Georgia and the country,"
said Jim Bulter, the plaintiffs' lead
attorney. "It proves that predatory misconduct will not be
tolerated by the courts, no matter how powerful the culprit might
be."
Jack Dalton, an attorney for AOL Time Warner, said an appeal to the Georgia Supreme Court was a likely next step.
"We'll be seeking a further review of this decision," Dalton said. .
10/1/2001: WASHINGTON (Reuters) - The U.S. Supreme Court said on Monday it granted an appeal by AOL Time Warner Inc. (AOL) and set aside a ruling that upheld a $257 million punitive damages award for alleged mismanagement of the Six Flags Over Georgia amusement park.
The entertainment giant argued in its high court appeal that the award was unconstitutionally excessive and that a Georgia appeals court had been wrong in upholding the verdict.
The Supreme Court sent the case back to the Georgia Court of Appeals for further consideration in view of the high court's ruling in May that appellate judges should use a more demanding test in reviewing awards of punitive damages.
A jury in Georgia found in 1998 that affiliates of Time Warner -- now AOL Time Warner -- acted to hurt a group of investors in the suburban Atlanta theme park. The jury awarded the group $197 million in compensatory damages and $257 million in punitive damages, the largest verdict in Georgia history.
The investors claimed that Time Warner, the park's former owner, mismanaged it in an attempt to drive down its value.
Time Warner and its partners sold the Six
Flags chain of theme parks in 1998 to Premier Parks, an Oklahoma
City-based amusement park operator that has since changed its
name to Six Flags Inc.
(page 68) "In December 1998, a final judgement of $197,300,000 in compensatory damages were entered against SFEC [Six Flags Entertainment Corporation], SFTP [Six Flags Theme Parks], Six Flags Over Georgia, Inc. and Time Warter Entertainment Company, L.P. (TWE), and a final judgement of $245,000,000 in punitive damages was entered against TWE and $12,000,000 in punitive damages was entered against the Six Flags entities. The compensatory damanges judgment has been paid and the Company has been advised that TWE is considering an appeal to the United States Supreme Court of the punitive dmages judgment. The judgments arose out of a case entitled Six Flags Over Georgia, LLC et al v. Time Warner Entertainment Company, LP et al based on certain disputed partnership affairs prior to the Six Flags Acquisition at Six Flags Over Georgia, including alledged breaches of fiduciary duty. The sellers in the Six Flags Acquisition, including Time Warner, Inc., have agreed to indemnify the Company from any and all liabilities arising out of this litigation."
03/01/2001, Dow Jones News Service (Copyright (c) 2001, Dow Jones & Company, Inc.)
WASHINGTON -(Dow Jones)- A U.S. Supreme Court justice granted a request from AOL Time Warner Inc. (AOL) to freeze a $257 million punitive damages award involving alleged mismanagement of the Six Flags Over Georgia amusement park.
In a brief order Thursday, Justice Anthony M. Kennedy agreed to stay the award while AOL Time Warner prepares a Supreme Court appeal. The New York entertainment giant said it will argue that the award was unconstitutionally excessive.
Kennedy, who oversees judicial matters arising from Georgia, said the stay will automatically end if the high court declines to hear the company's appeal. Otherwise, the stay will remain in place until the court resolves the fight.
A Georgia jury in 1998 found that Time Warner Inc. - now AOL Time Warner - acted in a way to hurt a group of investors in the Atlanta theme park.
The jury awarded the group $197 million in compensatory damages and $257 million in punitive damages, a verdict that remains the state's largest ever.
The investor group claimed Time Warner mismanaged the park, driving down its value by not adding new rides or making other improvements that would have boosted profits.
Time Warner and its partners sold Six Flags for about $1.9 billion in 1998 to Premier Parks Inc. of Oklahoma, which changed its name to Six Flags Inc. (PKS).
If upheld, AOL Time Warner would be liable for almost all of the punitive damages awarded by the Georgia jury, the company said.
In a court filing, AOL Time Warner and Six Flags said they'll argue that a Georgia appellate court made mistakes when it reviewed the punitive award and found it constitutional. The Georgia Supreme Court refused to review that ruling last month.
Attorneys for the investor group, Six Flags Fund Ltd., said the award was "reasonable" and didn't merit Supreme Court review. They urged Kennedy to reject the stay request.
AOL Time Warner's appeal isn't guaranteed
Supreme Court review; four of the court's nine justices must agree
to hear the case.
Dow Jones News Service; Friday, February 23, 2001
AOL Time Warner asked the U.S. Supreme Court to freeze a $257 million punitive damages award involving alleged mismanagement of the Six Flags Over Georgia amusement park.
The New York entertainment giant said it plans to appeal the award to the nation's high court, where it will argue that the punishment was unconstitutionally excessive.
AOL Time Warner hasn't yet paid the damages but could be forced to by a lower court before the Supreme Court decides whether to hear its appeal. A stay would make it possible to recoup money in the event the award is subsequently overturned or reduced on appeal, the company told Justice Anthony M. Kennedy in a court filing this week. Kennedy oversees judicial matters arising from Georgia.
A Gwinnett county jury in 1998 found that Time Warner --- now part of AOL Time Warner --- acted in a way to hurt a group of investors in the Atlanta theme park. A unit of Time Warner Inc. previously managed Six Flags Over Georgia.
The jury awarded the group $197 million in compensatory damages and $257 million in punitive damages, a verdict that remains Georgia's largest ever.
The investor group claimed that Time Warner mismanaged the park, driving down its value by not adding new rides or making other improvements that would have boosted profits.
Time Warner and its partners sold the Six Flags chain for about $1.9 billion in 1998 to Oklahoma City-based Premier Parks, which changed its name to Six Flags Inc.
AOL Time Warner remains liable for almost all of the punitive damages awarded by the Georgia jury, the company said.
In the court filing, AOL Time Warner and Six Flags said they'll argue that a Georgia appellate court made mistakes when it reviewed the punitive award and found it constitutional. The Georgia Supreme Court refused to review that ruling last Friday.
The companies said they were seeking to stay only the punitive damages part of the verdict, and were making arrangements to pay the compensatory award.
The appeal isn't guaranteed Supreme Court review. Four of the court's nine justices must agree to hear a case, and the majority of claims are turned away.
-Scott Ritter, Dow Jones Newswires; scott.ritter@dowjones.com
Atlanta Journal Constitution / ATLANTA
REAL ESTATE
Bill Rankin - Staff Friday, January 19, 2001
The Georgia Supreme Court Thursday unanimously declined to hear Time Warner's appeal of a $454 million verdict issued two years ago involving claims the company mismanaged Six Flags Over Georgia.
The Gwinnett County jury verdict --- $197 million in compensatory damages and $257 million in punitive damages --- stands as the largest in Georgia history. It was handed down against four companies owned or controlled by Time Warner. It must be paid to a group of partners who had invested in the Georgia amusement park.
"We are particularly gratified that the decision was unanimous," one of the partners' lawyers, Jim Butler of Columbus, said. "There were really just no legal reasons to review the case or to reverse the case."
"I hope those very few within business who might be tempted to engage in the kind of gross misbehavior committed by the Time Warner companies will take heed of this result," Butler added.
An AOL Time Warner spokesman declined to comment on the court's decision. The company's last legal recourse is an appeal to the U.S. Supreme Court.
The investors claimed the Time Warner companies intentionally mismanaged the park to drive down its value and make it less expensive for the Time Warner companies to acquire a bigger stake. In 1998, the Time Warner companies sold their interests in the Six Flags theme parks.
The company took a one-time charge of $50
million against profits last year when the Georgia Court of Appeals
upheld the verdict.
© The Associated Press, January 19, 2001
ATLANTA (AP) - The state's top court on Thursday refused to hear
Time Warner's appeal of a record $454 million verdict over alleged
mismanagement of Six Flags Over Georgia amusement park.
A Gwinnett County jury awarded investors of Six Flags Over Georgia the largest civil award in state history in December 1998 after finding that Time Warner Inc. sought to depress the park's value and withheld money and information from the partnership that owned it. Time Warner held the controlling stake in the group.
Investors alleged that Time Warner intentionally drove down the value of the park in order to try and acquire it at a reduced price. They said Time Warner tried to make the park unattractive to potential bidders by buying up land around the park so that it couldn't expand and by refusing to add new rides or make improvements.
The jury awarded plaintiffs $197 million in compensatory damages and $257 million in punitive damages after a six-week trial.
Last July, the Georgia Court of Appeals upheld the verdict.
After the verdict was upheld, Time Warner president Richard Parsons called it ``unfortunate'' and said the verdict was ``unfounded and the result of a profoundly unfair trial.''
Time Warner appealed to the state Supreme Court. A company spokesman on Thursday declined to comment on court's refusal to hear an appeal.
Time Warner and its partners sold the Six Flags chain of theme parks in February 1998 to Premier Parks, an Oklahoma City-based amusement park operator, for $1.9 billion. Premier has since changed its name to Six Flags Inc.
Copyright 2001 The Associated Press
Matt Kempner - Staff, Atlanta Journal-Constitution, Friday, July 14, 2000
Time Warner may be feeling a bit queasy after another drop in its roller-coaster ride tied to Six Flags Over Georgia. The Georgia Court of Appeals on Thursday upheld a 1998 jury verdict requiring Time Warner and partners to pay $454 million to a group of smaller partners who had invested in the Georgia amusement park. The smaller investors claimed companies controlled by Time Warner intentionally mismanaged the park to drive down its value and make it cheaper for the Time Warner companies to acquire a bigger stake. Among the biggest claims: The defendants delayed the installation of one of the park's most popular roller coasters, Batman the Ride, put off $7 million in repairs and took secret profits.
Officials at Time Warner, which no longer has an ownership interest in the park, called Thursday's decision "unfortunate" and announced they will appeal again. They contend the original Gwinnett County jury trial was unfair, that there was insufficient evidence for the verdict and that they were not allowed to present some evidence. The company also announced that because of the decision it will take a one-time charge of $50 million against second-quarter profits. The remainder of the company's potential liability in the case has already been put in reserves, Time Warner spokesman Ed Adler said.
Jim Butler, the lead attorney for the parties suing Time Warner entities, said he wasn't surprised by the appeals decision. The dollar amount of the verdict is believed to be one of the largest in Georgia history. "The size of the verdict was a function of the magnitude of Time Warner's misconduct toward its partners and the magnitude of actual, provable economic damages," Butler said.
In 1998, companies related to Time Warner sold their interests in Six Flags theme parks to Premier Parks, an Oklahoma City-based chain that recently changed its name to Six Flags Inc.
Updated 8:42 PM ET July 13, 2000
ATLANTA (AP) - The Georgia Court of Appeals on Thursday upheld a $454 million verdict against Time Warner Inc. over alleged mismanagement of Six Flags over Georgia. Time Warner said it will appeal the decision. A Gwinnett County jury awarded investors of Six Flags Over Georgia the largest civil award in state history in December 1998 after finding that Time Warner sought to depress the park's value and withheld money and information from the partnership that owned it. Time Warner held the controlling stake in the group.
The jury awarded plaintiffs $197 million in compensatory damages and $257 million in punitive damages after a six-week trial.
Time Warner president Richard Parsons called
the court's ruling Thursday "unfortunate" and said the
verdict was "unfounded and the result of a profoundly unfair
trial."
Updated 11:08 AM ET July 13, 2000
NEW YORK (Dow Jones)--Six Flags Inc. (PKS) said the Georgia Court of Appeals affirmed a jury award against Time Warner Inc.'s (TWX) entertainment unit and unspecified Six Flags units. In a press release Thursday, Six Flags, a theme park company said the award was in favor of Six Flags Fund Ltd., a limited partnership that owns the Six Flags Over Georgia theme park.
As reported earlier today, Time Warner said it plans to take a $50 million charge in its second quarter as a result of this court decision. Time Warner sold its interest in Six Flags to Premier Parks in 1998.
Six Flags said it and its units are fully indemnified by Time Warner Entertainment and other former owners of Six Flags Owners related to this suit.
BYLINE: Staff reports and news services
DATE: 04-24-1999
PUBLICATION: The Atlanta Journal-Constitution
EDITION: Home
SECTION: Business
PAGE: H3
A Gwinnett County judge denied a request for a new trial in a case that resulted in the largest damage award in Georgia history, ordering a Time Warner subsidiary to pay the $454 million judgment to investors in the Six Flags Over Georgia theme park. In an order filed Thursday, Superior Court Judge James Oxendine denied a request by Time Warner Entertainment and related companies for a new trial, finding that the jury's award was not excessive.
He ordered the defendants to put up a $550 million bond to cover the damages and two years' worth of interest while they appeal the verdict.
Investors in the amusement park sued Time Warner Entertainment, which had a contract to manage the park, accusing the company of withholding popular attractions like Batman the Ride and delaying repairs in order to lower the value of the facility. The company wanted to be able to bid for a new management contract at a lower rate, investors alleged.
In December, a Gwinnett County jury sided
with the investors, awarding them $197 million in actual damages
and $257 million in punitive damages. The award was more than
four times greater than Georgia's previous record, a $103 million
judgment against General Motors that was later reversed.
Time Warner Entertainment is appealing.
Atlanta Journal/Constitution, 12/26/98
Did Time Warner intentionally let Six Flags Over Georgia deteriorate under its management so it could buy control of the theme park for less?
Executives of the New York-based media conglomerate, which also owns Atlanta-based Turner Broadcasting System, deny the accusation. A civil jury in a Gwinnett state court, however, found otherwise.
It awarded a group of investors, represented by Columbus attorney Jim Butler, $454 million in compensatory and punitive damages --- the largest award in state history.
"They did it for profit because their goal was to get the Georgia park and to get it cheap," Butler told the jury.
While Butler and his clients won the first round, there's no guarantee they will ultimately prevail. Historically, many big civil judgments have been significantly reduced or reversed.
For example, Butler won a $105 million judgment against GM in 1993 that was reversed the next year.
The history of the case is complex and full of irony. Time Warner doesn't even own the Six Flags chain of amusement parks anymore. Last February it sold the parks, including the one in Cobb County, to an amusement park chain based in Oklahoma City called Premier Parks.
Much of the case turns on the complicated ownership history of Six Flags. Time Warner didn't own the chain directly.
It held the company through its stake in Time Warner Entertainment, or TWE. This partnership owns most of the company's other entertainment assets, including the Warner Bros. film and TV studio.
TWE's other partner is MediaOne, the cable TV company spun off from U S West. MediaOne owns the largest single cable TV system in Atlanta.
Several years ago, TWE sold a stake in the Six Flags chain to a group called Boston Investors. Then TWE and Boston Investors sold 51 percent of the chain to hundreds of smaller investors.
TWE did retain a contract to manage the Six Flag theme parks, so although Time Warner kept diluting its ownership of the chain, it kept control of it as a business.
TWE's primary strategy for Six Flags was to lure visitors through the use of its library of popular characters, which include Batman, Bugs Bunny and Spiderman. At Six Flags Over Georgia, for example, plays featured actors dressed as Bugs Bunny and Daffy Duck. A roller coaster ride was based on TWE's Batman movie series.
Investors liked the strategy, but some began to feel TWE wasn't carrying it through. In their suit, these investors charged that TWE deliberately delayed bringing the Batman roller coaster to the park. TWE also let maintenance fall $7 million behind, the investors claimed.
TWE executives denied all these accusations during the six-week trial in Superior Court in Lawrenceville.
"We believe that we and Six Flags were wrongfully precluded from presenting certain important evidence relevant to our defense," said TWE President Richard D. Parsons. "We also believe that the jury would have reached a different result had it been able to see all the facts." The company will appeal the verdict.
Atlanta Journal/Constitution 12/22/1998
A Gwinnett County Superior Court jury awarded investors in Six Flags Over Georgia $257 million in punitive damages Monday, adding to what was already the largest civil award in state history.
Monday's award brings the total Time Warner Entertainment and three former theme park subsidiaries must pay to $454 million, including the $197 million in actual damages the jury awarded Friday in the lawsuit, which alleged mismanagement of the park. Time Warner Entertainment is three-quarters owned by Time Warner Inc.
"We made a statement today that the big companies can't use the little companies like that," jury foreman Judy Garner of Lilburn said after deliberations, which took about 90 minutes.
Time Warner Vice Chairman Ted Turner took the stand Monday, but apparently didn't sway the jury. "The whole thing surprises me and disappoints me, what happened here," Turner said on the stand. "If we've done anything wrong, I want to apologize for it." Turner said he flew in from New Mexico on Monday, which was his wedding anniversary and the birthday of his wife, Jane Fonda.
Time Warner Entertainment President Richard Parsons also testified.
Investors in the Cobb County theme park sued Time Warner Entertainment, whom they had contracted to manage the park, accusing the company of delaying renovations and refusing to add popular rides to the park. Time Warner has since sold its interest in the Six Flags chain to Premier Parks of Oklahoma City.
The partnerships said Time Warner deliberately kept the Batman roller coaster away from the facility and let maintenance fall $7 million behind in an effort to renew the management contract at a lower rate.
"They did it for profit because their goal was to get the Georgia park and to get it cheap," Columbus attorney Jim Butler, who represented the partnerships, said in his closing argument.
Butler was also the attorney in a 1993 case when a Fulton County jury handed down what was then the state's biggest award: $105 million to a Snellville couple who sued General Motors after their son died in a car crash. That verdict was reversed the next year.
Butler told the jury Ted Turner had little to do with the case --- Turner admitted he had been to the park only once or twice in his life --- and accused Time Warner lawyers of using his celebrity to try to sway the jury.
Time Warner attorney Evan Chesler said after the five-week trial that Turner's fame had nothing to do with his testimony.
"He's the vice chairman of the company," he said.
Chesler said he didn't know if Time Warner would appeal the verdict.
Atlanta Journal/Constitution 12/19/98
A state court jury in Gwinnett County issued the largest award in state history Friday, ordering Time Warner and other former owners of the Six Flags Theme Parks chain to pay $197 million in compensatory damages to investors in the chain's Atlanta park.
The award could go even higher on Monday, when the court is scheduled to begin considering punitive damages. The case involves a group of Six Flags Over Georgia investors that had sued Time Warner, accusing it of mismanaging the Atlanta park. The trial began Nov. 16.
Friday's verdict promises to be only the first round of a long running legal battle over the park, now owned by Premier Parks in Oklahoma City.
Time Warner said it would appeal the verdict, issued in Superior Court. Its president, Richard Parsons, said his company lost because "we were wrongfully precluded from presenting certain important evidence.
"We also believe that the jury would have reached a different result had it been able to see all the facts."
Jim Butler, the well-known Columbus-based attorney who filed the suit, declined comment on Friday. He was said to be awaiting the final verdict.
Butler has won a number of other big civil verdicts in Georgia.
Before Friday's verdict, the biggest in Georgia was a $101 million award in Fulton County Superior Court against General Motors in a product liability case. The verdict was reversed in 1994.
Time Warner, which owns Atlanta-based Turner Broadcasting System Inc., is liable for about $95 million of the $197 million verdict. It held a controlling interest in the partnership that had owned the Six Flag chain, which has other amusement parks nationwide.
Other owners included a Boston-based investor group and other investors. It is some of the other investors in Six Flags Over Georgia, scattered nationwide, who sued Time Warner over management of the park.
The suit, seeking $250 million in damages, charged Time Warner put off the installation of key rides that would have attracted park visitors. It also accused the company of reselling old rides at inflated prices to the Atlanta park.
For example, the suit said a ride called "The Viper" was "in poor condition and virtually obsolete" when installed, having seen service in another Six Flags park. It also charged the ride was overpriced, worth $760,000 new but sold to Six Flags Over Georgia for $1.3 million.
Time Warner and its partners sold the Six Flags chain in February for $1.9 billion in stock, cash and debt. The new owner, Premier Parks, already operates other amusement parks.
The Atlanta Journal-Constitution, Monday, June 29, 1998, page E8
Six Flags Over Georgia is proceeding with a development plan for about 63 more amuseing acres at the Cobb County park along the Chattahoochee River.County planners are poring over preliminary drawings for a new coaster that would be the center of a new section of the park. The development plan also calls for a lot more parking. Last year the park added "Gotham City," including "Batman The Ride," for the biggest expansion in its 30 years. About 2,500 workers are employed at the park when it begins daily operation in late spring.
Atlanta Business Chronicle, June 1, 1998
Mark Meltzer Staff Writer
The new owners of Six Flags Over Georgia are promising to add rides and attractions to keep the thrills coming at the Southeast's largest regional theme park.
But that goal is more than just marketing hype. For the first time, investors are requiring the owner and manager of Six Flags Over Georgia to spend 6 percent of the park's gross revenues for capital improvements, including new rides and new restaurants.
That's a big deal in the amusement business, said Dan Elkins, a former vice president of finance and administration for Six Flags Over Georgia and now corporate audit director for Premier Parks Inc., the new owner of the Georgia amusement park.
"It's a real high-capital industry," said Elkins. "You've got to put new rides in to keep people coming back."
The capital spending requirement is one of a number of inside details about the ownership and management of the Georgia amusement park revealed in documents filed with the Securities and Exchange Commission (SEC) by Premier Parks.
The filings were required as part of the company's financing of the $1.9 billion acquisition of the entire Six Flags chain, said James F. Dannhauser, chief financial officer of Premier Parks. Six Flags Over Georgia is valued at $250 million, according to filings.
Oklahoma-based Premier Parks bought part or all of 12 Six Flags parks on April 1 from Time Warner Entertainment and an investor group led by Boston Ventures. In the deal, Premier got a share of ownership in Six Flags Over Georgia, as well as management responsibilities for the Georgia park.
Six Flags Over Georgia, which opened in 1967, drew 2.8 million visitors in 1997. That number was up 27 percent from 1996, when attendance was hurt by the Olympic Games, according to the trade magazine Amusement Business.
Adding new attractions was the major issue in a lawsuit against Six Flags that is still pending. Avram Salkin, a Los Angeles investor in the Georgia park since 1968, sued management last year in Gwinnett County Superior Court, in essence claiming that management was not reinvesting enough money in new rides, which in turn reduced profits.
The suit asks for compensatory damages in excess of $250 million, plus punitive damages "for alleged breaches of fiduciary duty, conversion, fraud and conspiracy ... in connection with the management of the Six Flags Over Georgia," according to the SEC filings.
In the sale, Time Warner and Boston Ventures agreed to indemnify Premier from any liability arising from that lawsuit.
Six Flags is owned by a limited partnership that includes management and longtime investors. Salkin heads the investor group. Premier is now managing general partner.
The new management arrangement requires Premier to pay the limited partners at least $18.5 million a year, with increases tied to the cost of living. After that amount is paid and management spends the required minimum of 6 percent of the park's gross revenues on new rides and other capital expenses, Premier will get a management fee equal to 3 percent of gross revenues for the previous year.
Premier receives 95 percent of the remaining cash, and the limited partners get 5 percent.
Elkins said that provision gives management the option to spend more than the minimum on rides, restaurants or other capital needs, or take the funds in cash.
"That's one of the choices they would have to make every year," he said.
Premier said in a prospectus for its financing that it plans to expand the chain and improve profits by cutting corporate overhead and increasing the money visitors spend at its parks. The company said its strategy for the chain is to add marketable rides and attractions, enhance marketing and sponsorship programs, improve ticket-pricing strategies and reposition and enhance restaurants and merchandise and other revenue outlets.
Elkins said Six Flags Over Georgia tends to draw most of its visitors on Saturdays, whereas most amusement parks spread their crowds more evenly. New management might use discounts to encourage greater attendance on other days of the week, he said.
Drawing crowds each day is important, Elkins said, because an amusement park's expenses don't vary much during the season.
"It's your last few people that make all the money when you're an amusement park," he said.
Ownership stake
Dannhauser, the Premier CFO, said the company will make improvements
but gave few details.
"I think you will see us continue to add rides and attractions and continue to improve the product offering," he said.
The company's exclusive concentration on the theme park business should create operating efficiencies, and allow it to focus "more acutely" on entertaining and serving customers, Dannhauser said.
"You'll see us be able to deliver more entertainment product for our invested dollar," he said.
Under the management accords, Premier may be able to buy a larger ownership stake in Six Flags Over Georgia between now and 2026. During that time, Premier will offer to buy up to $50 million in shares from the limited partners.
In 2026, Premier may acquire all of Six Flags Over Georgia.
In addition to its stake in Six Flags Over Georgia, Premier acquired 100 percent of nine Six Flags parks in the April 1 deal. They are Six Flags Great Adventure and Wild Safari Animal Park (New York-Philadelphia), Six Flags Great America (Chicago-Milwaukee), Six Flags Magic Mountain and Six Flags Hurricane Harbor (Los Angeles), Six Flags AstroWorld and Six Flags Waterworld (Houston), Six Flags St. Louis (St. Louis) and Six Flags Hurricane Harbor (Dallas-Fort Worth). Premier also acquired part of Six Flags Over Texas and control of Six Flags Fiesta Texas in San Antonio.
Premier, which operates 31 regional theme parks, is the first owner in the chain's history devoted exclusively to the amusement park business. That should be a plus, said Spurgeon Richardson, who was president of Six Flags Over Georgia and now is president and CEO of the Atlanta Convention & Visitors Bureau.
"They know that business," said Richardson. "That's the only thing they do."
The chain has most recently been owned by Time Warner and Bally Corp., both entertainment companies. The new owners have a licensing agreement to use all of Warner Bros. and DC Comics' characters, including Bugs Bunny, Daffy Duck, Batman and Superman.
© 1998, Atlanta Business Chronicle
from : Atlanta Journal / Constitution, Don Plummer STAFF WRITER, 08-28-1997, pp C05
Thousands of thrill-seekers drawn to Six Flags Over Georgia this summer by the park's newest attraction, Batman The Ride, might have been less enthusiastic if they had known the rest of the story set to be aired in a Gwinnett County court Friday (August 22, 1997). The park's owners, who are suing park operator Time Warner, say the highly promoted Batman ride is nothing but a copy of versions operating for years at other Time Warner parks. Moreover, they say the park's other top ride, the Viper, was a 15-year-old discard from another park when it was installed here two years ago. By the time Batman debuted this spring, identical copies had been zipping through double vertical loops at 50 mph at other Six Flags locations for at least five years, the owners' lawsuit says. The less-than-flattering story about the rides is part of the $250 million lawsuit Six Flags Over Georgia investors filed this year against park operator Time Warner Entertainment Co., which manages 12 Six Flags parks.
The investors say Time Warner cheated them out of expected profits by putting off installing the rides and overcharged them for retread amusements purchased from other Time Warner companies. The park owners' lawsuit says the Viper was "in poor condition and virtually obsolete" when installed, having seen service in the chain's New Jersey park. They claim the ride also was overpriced. While it sold for $736,000 new, Six Flags Over Georgia paid $1.3 million for the ride, which was in storage at the Time Warner park in St. Louis, the suit says. The owners claim Batman The Ride, first ordered in 1992, was held hostage by Time Warner, which refused to install it until the owners agreed to extend the company's management contract, set to expire this year. When the contract was renewed, Batman opened. The ages and histories of the park's newest rides are just some of the big-money issues dividing the amusement park's 122 limited partners and the park managers.
The owners say more than $7 million in deferred maintenance diminished the park's potential earning value and reduced the bids of other potential managers, allowing Time Warner to retain the contract. Owners also say Time Warner charged them more than $1 million a year for overhead during the 19 years it has run the park, despite a contract prohibiting overhead charges.
When the owners notified Six Flags managers of these and other concerns, the management company filed a pre-emptive suit March 19, seeking to block possible claims. Six Flags theme parks lawyer Ira Belsky said the allegations in the owners' 36-page suit are "wholly without merit." Belsky said Six Flags management will "vigorously" oppose the park's owners in court. But with hundreds of millions in long-term profits at stake, the owners are not about to back down. They have created a $5 million litigation fund and hired widely known attorneys James E. Butler Jr. and H. Lamar Mixson to make their case.
Don Plummer STAFF WRITER, 05-02-1997, pp E10; E11.
There's something evil afoot in Gotham City. At least according to owners of Six Flags Over Georgia, who filed a $250 million lawsuit alleging the Cobb County theme park's managers intentionally delayed installing Batman, The Ride. The owners say delaying the Batman ride, set to open this weekend in the park's Gotham City section, ultimately will cost them an estimated $124 million from lost sales. But Batman is just the most visible of a number of big-money issues dividing the amusement's 122 limited partners and Six Flags Over Georgia Inc., the park's managers.
Among the sore points alleged:
When the owners notified Six Flags managers of these and other concerns, the management company filed a pre-emptive suit March 19, seeking to block possible claims. But with hundreds of millions at stake, the owners are not about to back down. They have created a $5 million litigation fund and hired well- known attorneys James E. Butler Jr. and H. Lamar Mixson to make their case. Butler, reached Thursday at his Columbus office, said owners "had no choice but to file suit" after their accountants found they were being overcharged.
From Six Flags headquarters
in Parsippany, N.J., general counsel Ira Belsky called allegations
in the owners' 36-page suit "wholly without merit."
While declining to comment further on the charges, Belsky said
Six Flags will "vigorously" oppose
the park's owners in court.
Copyright 1997, The Atlanta Journal and Constitution, All rights reserved.