Shareholders Sue Carnival for Its Incompetence During the COVID-19 Outbreak

Shareholders Sue Carnival for Its Incompetence During the COVID-19 Outbreak

The Diamond Princess

Everyone remembers that harrowing trauma that was to befall the Diamond Princess on February 8, 2020. The coronavirus epidemic was in full effect in Wuhan, China, and Southeast Asia.

The crestfallen ship was not allowed to disembark its passengers while it was harboring off the coast of Japan. It was supposed to be a two-week cruise where passengers enjoyed the sights and sounds of Southeast Asia.

Everything went well for two days, until a holidaymaker, who was in his eighties, became infected with COVID-19 out of 3,700 passengers. Immediately, the ship went into quarantine. People felt like they were festering in a floating prison with only one hour of fresh air and sunshine available on the outside deck. Then, several passengers became sick with COVID-19.

The doomed cruise ship was the perfect atmosphere for the coronavirus to incubate and spread; it is believed that some of the crew were infected with the coronavirus, and then unknowingly, the crew spread the disease to the guest passengers.

The Grand Princess

Meanwhile, the Grand Princess was floating off the coast of California. A passenger, who had been seen by an onboard doctor, was infecting passengers with the coronavirus.

Eventually, 21 passengers onboard became infected with the coronavirus by February 20, 2020. Finally, authorities allowed the Grand Princess to dock in San Francisco, California.

By the time the pandemic was in full swing, 49 cruise ship passengers from seven different cruise lines had died from the coronavirus. Carnival Cruise Lines owns the Grand Princess cruise ships among several others.

Cruise Lines Lawsuits

Martin Davies, the Director of Maritime Law at Tulane University Law school, said that “These claims are enormous — nothing the industry’s seen before with so many passengers fallen sick and bringing suit.”

So far, passengers have filed more than 22 lawsuits against Carnival Cruise Lines. Royal Caribbean Cruises, which owns Celebrity Cruises, is facing an onslaught of multiple proposed class-action lawsuits from its crew members who said they were exposed to the coronavirus while performing their duties on the cruise ship.

Many of the cruise lines are not registered in the USA. They are sometimes registered in foreign countries like the Bahamas and the Dominican Republic. Because of this, luxury cruise lines enjoy bountiful tax benefits. However, when the pandemic came, some cruise lines were not eligible for federal assistance and had to raise funds through the credit markets.

The Defense

Cruise ship authorities said that they followed safety precautions and health regulations proposed by the WHO (World Health Organization) and other health governing bodies. Bari Golin-Blaugrund, who works for the Cruise Lines International Association, said that the cruise lines “took immediate and aggressive action based on the information that was available when it was available every step of the way.”

Passenger tickets have built-in legal protections for cruise ship operators, which should offer some safeguards against the multiple litigation lawsuits. However, the true outcomes from these litigated cases must be interpreted and administered in a court of law.

Carnival Cruise Lines Shareholder Lawsuit

Carnival Cruise Lines received its first shareholder lawsuit on May 27, 2020. Participants allege:

  • Carnival officers made false statements that concealed material information relating to the adherence of health and safety protocols.

  • Carnival concealed its role in the transmission of the coronavirus.

  • Carnival violated international port-of-call regulations.

Three different law firms are representing the plaintiffs: Rodos & Bacine for Philadelphia; Pomerantz for New York; and Shepherd, Finkelman, Miller & Shaw for Fort Lauderdale, Florida.

The case was filed in the United States District Court for the Southern District of Florida with the leading plaintiffs listed as Service Lamp Corporation Profit Sharing Plan and the defendants as Carnival Corporation, David Bernstein, and Arnold Donald. They are the chief executive officers for the company.

The shareholders, who are represented in this class action lawsuit, are individuals who bought stock in Carnival Cruise Lines between January 28, 2020, to May 1, 2020.

Outside Allegations

Bloomberg Businessweek published an article on April 16, 2020, called “Carnival Executives Knew They Had a Virus Problem, But Kept the Party Going.” The article revealed that the corporate executives knew they had a coronavirus infestation but chose to keep the ships in operation. Thereby, they adequately failed to protect passengers.

Afterward, the Wall Street Journal published an article named “Cruise Ships Set Sail Knowing the Deadly Risk to Passengers and Crew” on May 1, 2020. In this article, Australian officials stated that Carnival failed to notify them that they had infected passengers onboard the cruise line. So, the Australian officials allowed Carnival to disembark infected passengers.

Once the allegations were made public, Carnival's stock price declined precipitously. Stock prices were trading at $44.66 six months ago. After the first-rate news stories posted commentary, Carnival stock was trading at $13.93 per share. The stock has rebounded somewhat at around $15 per share for May.

Shareholders are seeking monetary damages for the economic losses from declining stock prices, medical expenses, emotional disturbances and stress, and COVID-19 wrongful deaths.

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