Carnival Corporation Concealed Info from Investors on Handling of COVID-19 Outbreak, Class Action Claims [UPDATE]
Last Updated on June 5, 2020
Service Lamp Corporation Profit Sharing Plan v. Carnival Corporation et al.
Filed: May 27, 2020 ◆§ 1:20-cv-22202
A class action claims Carnival Corporation and two top execs harmed investors by omitting or failing to disclose information on the company's handling of the COVID-19 outbreak.
Case Updates
June 5, 2020 – Another Lawsuit Links Carnival Stock Drops to False COVID-19 Safety Assurances
Another proposed class action case claims Carnival Corporation investors suffered substantial financial losses as a result of materially misleading statements and omissions from the cruise line operator regarding its handling of COVID-19 outbreaks on board its vessels.
According to the suit, at least 19 Carnival ships have been connected to nearly 2,000 reported COVID-19 cases and at least 58 deaths. The lawsuit alleges Carnival share prices sank on more than one occasion upon revelations that Carnival omitted from federal filings any reference to its “inability to adequately address the spread of infectious disease among passengers and crew members on its ships.”
The complaint notes Carnival made numerous assurances during the class period with regard to its commitment to the health and safety of guests and crew yet made no mention of “the threat of infectious disease or the susceptibility of its own ships,” much less its inability to control an outbreak. As a result of the myriad COVID-19 outbreaks aboard Carnival-run ships between March and May 2020, the U.S. House of Representatives opened an investigation, requesting records concerning the defendants’ apparent ignorance of the public health threat and failure to implement appropriate preventative measures.
The case, which looks to represent those who bought or otherwise acquired Carnival common stock between September 26, 2019 and April 30, 2020, can be found here.
A proposed class action claims Carnival Corporation stockholders were harmed after the company and its top brass made a series of false and misleading statements while concealing material information related to how it was handling the COVID-19 outbreak in relation to its operations.
Looking to represent those who bought or otherwise acquired Carnival stock and securities between January 28 and May 1, 2020 (the class period), the 26-page lawsuit cites reports from Bloomberg Businessweek and the Wall Street Journal as evidence that the defendants knew yet failed to disclose to investors that a number of COVID-19 illnesses were being reported on its ships and that Carnival had violated port of call regulations by hiding the “amount and severity” of infections.
Moreover, the case says Carnival failed to follow its own health and safety protocols in response to the COVID-19 outbreak and is responsible for the virus’s spread at various ports worldwide by continuing to operate as the pandemic gained steam.
The case alleges the foregoing renders positive statements pertaining to business, operations and prospects issued by Carnival throughout the class period “materially misleading” and/or lacking a reasonable basis.
“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,” the complaint adds.
According to the lawsuit, Carnival filed with the Securities and Exchange Commission (SEC) on January 28 a Form 10-K for the fiscal year that ended November 30, 2019. In the document, Carnival represented to investors its commitment to ensuring a safe experience for cruise ship guests and to complying fully with all legal and statutory requirements related to health and safety. Additionally, Carnival relayed that it provides “regular health, environmental, safety and security support,” as well as training, guidance and information to guests and employees, among other statements concerning the systems it had in place to fulfill health and safety obligations, the case says.
After the departure of its director in late January, Carnival issued a press release in which it advised that a passenger aboard a ship docked north of Rome was diagnosed with the common flu, the suit continues. Following that communication, Carnival issued a release titled “Carnival Corporation & plc Update on Financial Impact of Coronavirus,” in which the company stated, in part:
“Carnival Corporation & plc is closely monitoring the evolving situation with respect to Coronavirus. The safety of guests and employees, compliance and protecting the environment are top priorities for the company. The company's medical experts are coordinating closely with the U.S. Centers for Disease Control and Prevention and the World Health Organization to implement enhanced screening, prevention and control measures for its guests, crew and ships. The company's global team is working tirelessly to support guests impacted by voyage disruptions during this unprecedented time.”
Then, on March 13, Carnival sent out a press release concerning its “voluntary and temporary pause” of Princess Cruises operations that stated the company had implemented “higher and higher levels of screening, monitoring and sanitation protocols” and had not had a diagnosed case linked to its operation, according to the case. That same day, the suit says, the company announced a pause on its other operations, stating in a press release that it’s “stood with all the people in the port communities here in the U.S., and in the other places we sail, who are dependent on us for their livelihood.”
Despite issuing a number of press releases at the start of the global pandemic, Carnival made materially false and/or misleading statements—and/or failed to disclose—to investors that its medics had reported an uptick in COVID-19 illnesses aboard its ships, the lawsuit alleges. Moreover, Carnival was not forthcoming with regard to the amount and severity of COVID-19 infections on its vessels and failed to follow its own health and safety procedures, all of which, in addition to continuing to operate in the first place, furthered the spread of the coronavirus, the complaint claims.
As the lawsuit tells it, the truth began to emerge on April 16 when Bloomberg Businessweek revealed in a report that the defendants continued to operate new departures despite knowing that the threat posed by COVID-19 had materialized on its vessels. The report also outlined Carnival’s failure to take timely action after being apprised of the COVID-19 threat to its fleet, passengers and crew, the suit says, highlighting that the Bloomberg article “intimated” that Carnival execs knew of the scale and magnitude of the COVID-19 outbreak before the company’s January 29 Form 10-K filing.
Release of the Bloomberg article saw Carnival shares fall $0.53 per share to close at $11.85 on April 16, the case says.
On May 1, a Wall Street Journal report tacked on to Bloomberg’s revelations by detailing how cruise ships, and Carnival’s in particular, facilitated the spread of COVID-19, illuminating new facts on warning signs the cruise industry knew of yet failed to disclose, the lawsuit says. The article additionally noted the House Committee on Transportation and Infrastructure had sought documents from Carnival related to COVID-19 “or other infectious disease outbreaks aboard cruise ships” and that a separate investigation in Australia revealed the company “may have misled offshore officials” by concealing those exhibiting coronavirus symptoms prior to docking.
Release of this news saw Carnival shares fall $1.97 per share on May 1, the complaint states.
ClassAction.org’s coverage of COVID-19 litigation can be found here and over on our Newswire.
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