Carnival Faces Securities Fraud Class Over Covid-19 Handling

Carnival Corp. was hit with a securities fraud class action Wednesday alleging the company made false and misleading statements and concealed information about its adherence to its health and safety protocols in the wake of the Covid-19 pandemic.

The proposed class action, filed by Service Lamp Corp. Profit Sharing Plan, also asserts the company misrepresented its role in the transmission of the virus and violations of port-of-call regulations.

As a result of these false and misleading statements and omissions, the plaintiffs allege, Carnival common stock and securities traded at inflated prices.

The company’s stock tumbled when news of the scale of the outbreak aboard its ships hit, the plaintiffs allege.

The plaintiffs, citing an April 16 Bloomberg Businessweek article, allege the company knew about the scale of the outbreak before it filed its annual report to the SEC on Jan. 28, 2020.

By Feb. 5, 3,700 passengers and crew were quarantined about the Diamond Princess—a ship operated by Princess Cruises, owned by Carnival, the complaint alleges.

At least one known Covid- infected person disembarked from the Grand Princess docked in San Francisco Feb. 20, after being seen by the ship doctor and exhibiting symptoms for several days while on board the ship, according to the complaint.

By March 4, 2020 there was a Covid-related fatality on board the Grand Princess, and seven company ships accounted for 49 of the 70 cruise ship fatalities, the plaintiffs allege.

The complaint also names as individual defendants Arnold W. Donald, the president and chief executive officer of Carnival, and Chief Financial Officer David Bernstein.

Cause of Action: Securities and Exchange Act §10(b); §20(a) of Exchange Act against individual defendants.

Relief: Damages, attorneys’ fees and costs.

Potential Class Size: The complaint alleges that “thousands of persons” hold shares of the company’s common stock.

Response: Carnival didn’t immediately respond to a request for comment.

Attorneys: Shepherd, Finkelman, Miller & Shah LLP; Barrack, Rodos & Bacine; and Pomerantz LLP represent the plaintiffs.

The case is Service Lamp Corp. Profit Sharing Plan v. Carnival Corp., S.D. Fla., No. 20-cv-22202, 5/27/20.