Carnival Hit With First Shareholder Class Action Over COVID-19 Outbreaks
The suit, filed Wednesday, is the first shareholder class action against Carnival Corp., which faces lawsuits over emotional distress, medical expenses and deaths relating to COVID-19 outbreaks on board its cruise ships.
May 27, 2020 at 04:17 PM
3 minute read
A class action filed Wednesday alleges Carnival Corp.'s top executives misled investors about its safety protocols relating to COVID-19 on board its cruise ships, its role in spreading the virus and its violations of port-of-call regulations.
The suit, filed in Florida federal court by Service Lamp Corp. Profit Sharing Plan, is the first shareholder case against Carnival, which faces dozens of other lawsuits brought by passengers and their families, alleging emotional distress, medical expenses and wrongful death caused by COVID-19 exposure on several of its cruise voyages.
"This action alleges that Carnival and several officers of the company made a series of false and misleading statements and concealed material information relating to the company's adherence to its health and safety protocols in the wake of the COVID-19 pandemic, Carnival's role in facilitating the transmission of the virus, and the company's violations of port-of-call regulations," according to the suit. "As a result of these false and misleading statements and omissions made throughout the class period, Carnival common stock and securities traded at inflated prices."
Shepherd, Finkelman, Miller & Shah in Fort Lauderdale; Barrack, Rodos & Bacine in Philadelphia; and New York's Pomerantz filed the suit.
Carnival's stock has dropped from $46.50 a share on Jan. 28 to about $13.93 on May 1, the alleged class period in the lawsuit, which also named CEO Arnold Donald and CFO David Bernstein.
Carnival, based in Miami, said in a statement that it did not comment on litigation.
"Princess Cruises has been sensitive to the difficulties the COVID-19 outbreak has caused to our guests and crew," the company said in an email. "Our response throughout this process has focused on the well-being of our guests and crew within the parameters dictated to us by the government agencies involved and the evolving medical understanding of this new illness."
Carnival suspended its cruise voyages March 13.
On Jan. 28, according to the lawsuit, Carnival disclosed in its annual report with the U.S. Securities and Exchange Commission that Debra Kelly-Ennis, a director who served on the Health, Environmental, Safety and Security Committees, had resigned. By Feb. 5, about 3,700 passengers and crew remained quarantined off the coast of Japan on the Diamond Princess, one of its ships, while a passenger infected with COVID-19 on the Grand Princess, another of its ships, disembarked on Feb. 20 in San Francisco and later died. By March 4, 49 of the 70 deaths from COVID-19 on a cruise came from Carnival's ships, the suit says.
News articles from Bloomberg Businessweek on April 16 and The Wall Street Journal on May 1 indicated that Carnival's senior executives knew about coronavirus on its ships but kept voyages operating. The articles also said Carnival representatives misled officials from the U.S. Coast Guard and Australia about COVID-19 symptoms on board its ships.
The news articles sent shares tumbling.
The suit also cites a May 1 letter from House Committee on Transportation and Infrastructure asking Carnival for records related to communications and emails about COVID-19 on its cruise ships. Shares tumbled on news of that records request, according to the lawsuit.
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