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Law360 (June 4, 2020, 7:23 PM EDT) -- Embattled cruise company Carnival Corp. was hit with yet another proposed securities class action on Wednesday accusing the company of hurting shareholders by mishandling its response to the novel coronavirus as the initial outbreak swelled into a pandemic.
The lawsuit, filed in federal court in southern Florida by plaintiff John P. Elmensdorp details a bleak timeline of grim revelations about the effect the virus was having aboard the company's ships. Elmensdorp claims that at the time the suit was filed, "at least 19 Carnival ships have been connected to nearly 2,000 reported cases of COVID-19 and at least 58 deaths."
"As a result of the revelation of the truth about Carnival's inability and unwillingness to deal with the spread of infectious diseases on its ships, investors who purchased shares on U.S. exchanges lost billions of dollars when the company's shares declined," Elmensdorp said Wednesday.
Elmensdorp claims the company violated the Securities Exchange Act of 1934 with its representations to shareholders that it "follows the highest safety standards to ensure passengers' health, safety, and comfort while aboard its ships," according to the suit.
The investor noted that those assurances came even after the Centers for Disease Control and Prevention discovered norovirus outbreaks on its ships in 2019.
"The CDC investigation and reported data clearly put Carnival on notice of the threat of infectious diseases on its ships," Elmensdorp said.
As a result, Elmensdorp said, Carnival's statements about health and safety were misleading and contained critical omissions because the company "made no mention of its actual inability to contain the threat of infectious illnesses on its ships and its need to downplay outbreaks to maintain bookings and reservations."
The proposed class would include investors who bought their Carnival shares between Sept. 26, 2019, when the company submitted a list of risks it faced without mentioning disease outbreaks in filings to the U.S. Securities and Exchange Commission, and April 30, 2020, the day before Congress launched an investigation into how Carnival handled the outbreak.
Alongside the company, the suit also names the company's top executive, Arnold Donald, the company's financial chief, David Bernstein, and the company's board chairman, Micky Arison.
Market records show that Carnival was trading at nearly $44 at the beginning of the proposed class period and Elmensdorp claims the company closed out the day after the class period at $12.43. On Wednesday, Carnival was trading at $18.48 when the markets closed, records show.
The company has faced a litany of grievances since COVID-19 spread across the globe and was deemed a pandemic, and the entire cruise industry has faced ample blame for downplaying the risk the virus posed to passengers aboard its ships.
Attorneys for Elmensdorp and representatives for Carnival did not immediately respond to requests for comment on Thursday.
Elmensdorp is represented by Zachary S. Bower and James E. Cecchi of Carella Byrne Cecchi Olstein Brody & Agnello PC and Naumon A. Amjed, Ryan T. Degnan, Geoffrey C. Jarvis and Mark C. Franek of Kessler Topaz Meltzer & Check LLP.
Counsel information for Carnival and the individual defendants could not be immediately determined Thursday.
The case is Elmensdorp v. Carnival Corporation et al., case number 1:20-cv-22319, in the U.S. District Court for the Southern District of Florida.
--Editing by Michael Watanabe.
For a reprint of this article, please contact reprints@law360.com.
