The Miami-based company assured investors in February that “it was only experiencing a slowdown from bookings in China,” but a series of corrective disclosures and cruise cancellations revealed the true extent of the virus’s damage to Royal Caribbean’s business, investors say in the suit in the U.S. District Court for the Southern District of Florida.
The company also failed to disclose its “inadequate policies and procedures to prevent the spread of COVID-19 on its ships,” the complaint says.
Royal Caribbean’s share price fell 14% when it disclosed Feb. 25 that virus restrictions were having a material impact on financial performance, and another 14% March 10 when it withdrew its 2020 financial guidance, the investors say in the complaint filed Wednesday.
The company’s share price dropped almost 32% after it canceled two cruises March 11 and a competitor suspended operations for 60 days.
Causes of Action: Exchange Act §10(b)—Using a manipulative or deceptive device or contrivance for a securities transaction in violation of SEC rules (15 U.S.C. §78j); SEC Rule 10b-5—Employing a device, scheme, or artifice to defraud, making untrue statements or omitting facts, or engaging in any act, practice, or course of business which operates as a fraud or deceit (17 C.F.R. §240.10b-5).
Relief: Compensatory damages with interest; attorneys’ fees; court costs.
Potential Class Size: All who acquired Royal Caribbean securities from Feb. 4 through March 17.
Response: A Royal Caribbean spokesperson said the company couldn’t comment on the complaint Thursday.
Attorneys: Saxena White PA and Labaton Sucharow LLP represent the investors.
The case is City of Riviera Beach Gen. Emps. Ret. Sys. v. Royal Caribbean Cruises Ltd., S.D. Fla., No. 20-cv-24111, complaint filed 10/7/20.