UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF FLORIDA

)

SERVICE LAMP CORPORATION PROFIT ) Case No.

SHARING PLAN, individually, and on behalf )

of all other persons and entities similarly situated, ) COMPLAINT FOR VIOLATION

) OF THE FEDERAL SECURITIES LAWS

Plaintiff, )

) JURY TRIAL DEMANDED

v. )

) CLASS ACTION

CARNIVAL CORPORATION, ARNOLD W. )

DONALD, AND DAVID BERNSTEIN, )

)

Defendants. )

)

 

Plaintiff Service Lamp Corporation Profit Sharing Plan (“Plaintiff”), makes the following 

allegations based upon the investigation of Plaintiff’s counsel, which included a review of U.S. 

Securities and Exchange Commission (“SEC”) filings by Carnival Corporation (“Carnival” or the 

“Company”), reports and advisories issued by securities analysts, press releases, investor 

presentations and other public statements by the Company as well as news and media reports about 

the Company. Plaintiff believes that substantial additional evidentiary support will exist for the 

allegations set forth herein after a reasonable opportunity for discovery.

NATURE OF THE ACTION

1. This is a securities class action brought on behalf of all those who purchased or 

otherwise acquired Carnival common stock and securities between January 28, 2020 and May 1, 

2020, inclusive (“the “Class Period”), seeking to pursue remedies against Carnival and certain of 

its officers under the Securities Exchange Act of 1934 (the “Exchange Act”). 

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2. Carnival bills itself as the world’s largest leisure travel company and the largest 

cruise company, carrying nearly 45 percent of global cruise guests. The Company has operations 

in North America, Australia, Europe and Asia, operating a portfolio of global, regional and 

national cruise brands that sell tailored cruise products, services and vacation experiences on 104 

cruise ships to destinations around the world.

3. This action alleges that Carnival and several officers of the Company made a series 

of false and misleading statements and concealed material information relating to the Company’s 

adherence to its health and safety protocols in the wake of the COVID-19 pandemic, Carnival’s 

role in facilitating the transmission of the virus, and the Company’s violations of port-of-call 

regulations. 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.

4. On January 28, 2020, the first day of the Class Period, Carnival filed with the SEC 

its annual report on Form 10-K for the fiscal year ending November 30, 2019 (“2019 10-K”). That 

same day, the Company announced in a press release the resignation of Debra Kelly-Ennis, who 

resigned from her position as a director of the Company and Carnival plc, including her role as a 

member of their Health, Environmental, Safety and Security (“HESS”) committees, effective 

January 27, 2020, which resignation enabled Kelly-Ennis to step out from under her obligation as 

a director to sign the 2019 Form 10-K. 

5. The following week, by February 5, 3,700 passengers and crew were quarantined 

about the Diamond Princess, a Gem-class ship operated by Princess Cruises, a cruise line owned 

by Carnival. Then on February 20, the Grand Princess, the first of the Grand-class cruise ships,

docked in San Francisco and at least one known COVID infected person disembarked. That 

COVID infected individual had reportedly been seen by the ship doctor, exhibiting symptoms for 

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at least six days while on board the Grand Princess. By March 4, 2020 there was a COVID related 

fatality on board the Grand Princess, and seven (7) Company ships accounted for 49 of the 70 

cruise ship fatalities. 

6. On April 16, 2020, when the Company still had at sea two (2) of its cruise ships, 

Bloomberg Businessweek published an article titled “Carnival Executives Knew They Had a Virus 

Problem, But Kept the Party Going,” which revealed that Carnival may have failed to adequately 

protect passengers from COVID-19 on a series of cruise voyages and indeed continued to operate 

new cruise departures despite knowledge of the proliferation of COVID-19. On this news, the 

Company’s share price fell $0.53 per share from a prior close of $12.38 per share to close at $11.85 

per share on April 16, 2020.

7. Then, on May 1, 2020, The Wall Street Journal published an article titled “Cruise 

Ships Set Sail Knowing the Deadly Risk to Passengers and Crew,” which detailed how cruise 

ships, including Carnival ships, facilitated the spread of COVID-19 and provided new facts about 

early warning signs Carnival and its cruise lines possessed and the Company’s related COVID-19 

disclosure failures. The article also noted that testimony from an investigation in Australia 

revealed that Carnival and its cruise lines may have misled shore officials by concealing those 

exhibiting COVID-19 symptoms before docking. On the same day, it was revealed that the Chair 

of the House Committee on Transportation and Infrastructure and Chair of the House 

Subcommittee on Coast Guard and Maritime Transportation had initiated a records request 

regarding the response of Carnival to Covid-19 or other infectious disease outbreaks aboard cruise 

ships. On this news, the Company’s share price fell $1.97 per share from a prior close of $15.90 

per share to close at $13.93 per share on May 1, 2020, further damaging Carnival investors.

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8. Throughout the Class Period, Defendants made materially false and/or misleading

statements, and/or failed to disclose material adverse facts about the Company’s business, 

operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) the 

Company’s medics were reporting increasing events of COVID-19 illness on the Company’s 

ships; (2) Carnival was violating port of call regulations by concealing the amount and severity of 

COVID-19 infections on board its ships; (3) in responding to the outbreak of COVID-19, Carnival 

failed to follow the Company’s own health and safety protocols developed in the wake of other 

communicable disease outbreaks; (4) by continuing to operate, Carnival ships were responsible 

for continuing to spread COVID-19 at various ports throughout the world; and (5) as a result of 

the foregoing, Defendants’ positive statements about the Company’s business, operations, and 

prospects, were materially misleading and/or lacked a reasonable basis.

JURISDICTION AND VENUE

9. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of 

the Exchange Act, 15 U.S.C. §§ 78j(b) and 78t(a), and Rule 10b-5 promulgated thereunder by the 

SEC, 17 C.F.R. § 240.10b-5.

10. This Court has jurisdiction over the subject matter of this action pursuant to 28 

U.S.C. §§ 1331 and Section 27 of the Exchange Act, 15 U.S.C. § 78aa.

11. Venue is proper in this District pursuant to Section 27 of the Exchange Act, 15 

U.S.C. § 78aa, and 28 U.S.C. § 1391(b), because many of the acts, practices and transactions that 

constitute the violations of law complained of herein, including the dissemination to the public of 

untrue statements of material fact, occurred in whole or in substantial part in this District.

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12. In connection with the acts and conduct alleged in this complaint, 

Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, 

including, but not limited to, the mails and interstate wire and telephone communications

PARTIES

13. Plaintiff Service Lamp Corporation Profit Sharing Plan purchased the publiclytraded common stock of Carnival during the Class Period, as set forth in the accompanying 

Certification, incorporated by reference herein, and was damaged thereby.

14. Defendant Carnival is incorporated in the Republic of Panama with its headquarters 

in Miami, Florida. The Company’s stock is listed on the New York Stock Exchange (the “NYSE”) 

under the ticker symbol “CCL.”

15. Defendant Arnold W. Donald was, at all times relevant, the president and chief 

executive officer (“CEO”) of Carnival.

16. Defendant David Bernstein was, at all times relevant, chief financial officer 

(“CFO”) of Carnival.

17. Defendants Donald and Bernstein are referred to as the “Individual Defendants.” 

The Individual Defendants and Carnival are referred to collectively as the “Defendants.”

18. During the Class Period, the Individual Defendants, as senior executive officers of 

Carnival, were privy to confidential and proprietary information concerning Carnival, its 

operations, finances, financial condition, and present and future business prospects.

The Individual Defendants also had access to material-adverse, non-public information 

concerning Carnival, as discussed herein.

19. The Individual Defendants are liable as direct participants in the 

wrongs complained of herein. In addition, the Individual Defendants, by reason of their status as 

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senior executive officers and/or directors, were “controlling persons” within the meaning of 

Section 20(a) of the Exchange Act, and had the power and influence to cause the Company to 

engage in the unlawful conduct complained of herein. Because of their positions of control, the 

Individual Defendants were able to, and did, directly or indirectly, control the conduct of 

Carnival’s business and public statements.

20. The Individual Defendants, because of their positions with the Company, possessed 

the power and authority to control the contents of Carnival’s SEC filings, press releases, and 

presentations to securities analysts, money and portfolio managers, and institutional investors, i.e., 

the market. Because of their positions with the Company, and their access to material non-public 

information available to them but not to the public, the Individual Defendants knew that the 

adverse facts specified herein had not been disclosed to and were being concealed from the public 

and that the positive representations being made were then materially false and misleading. The 

Individual Defendants are liable for the false statements pleaded herein.

21. As senior executive officers and as controlling persons of a publicly-traded 

company whose common stock is registered with the SEC, traded on the NYSE, and governed by 

the federal securities laws, the Individual Defendants had a duty to promptly disseminate accurate 

and truthful information with respect to Carnival’s financial condition and performance, growth, 

operations, financial statements, business, products, markets, management, earnings, and present 

and future business prospects, and to correct any previously issued statements that had become 

materially misleading or untrue and accurate information. The Individual Defendants’

misrepresentations and omissions during the Class Period violated these specific requirements and 

obligations.

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FRAUDULENT SCHEME AND COURSE OF CONDUCT

22. Defendants are liable for: (a) making false and misleading statements; or (b) failing 

to disclose and concealing adverse facts known to them about Carnival. Defendants’ fraudulent 

scheme and course of business that operated as a fraud or deceit on purchasers of Carnival common 

stock was a success, as it: (a) deceived the investing public regarding Carnival’s prospects and 

business; (b) artificially inflated the prices of Carnival common stock; and (c) caused Plaintiff and 

other members of the Class to purchase Carnival common stock at inflated prices.

SUBSTANTIVE ALLEGATIONS

Background

23. Carnival describes itself as “the world’s largest leisure travel company and among 

the most profitable and financially strong in the cruise and vacation industries.” Carnival touts 

that it is the “largest cruise company, carrying nearly 45 percent of global cruise guests, and a 

leading provider of vacations to all major cruise destinations throughout the world.” The Company 

operates all over the world, with operations in North America, Australia, Europe and Asia.

24. Carnival operates a “portfolio of leading global, regional and national cruise brands 

that sell tailored cruise products, services and vacation experiences on 104 cruise ships to the 

world’s most desirable destinations.” These cruise brands include Carnival Cruise Line, Princess 

Cruises, Holland America Line, Seabourn, Costa and Cunard, among others.

25. Carnival has recognized that safety and comfort of its guests and crew and 

protecting the environment are paramount to the success of its business. To that end, the 

Company’s board has a Health, Environment, Safety, Security and Sustainability (“HESS”)

Committee, which is tasked with assisting the board in fulfilling its responsibility to supervise and 

monitor Carnival’s health, environment, safety, security and sustainability related policies, 

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programs and initiatives at sea and ashore and compliance with related legal and regulatory 

requirements.

26. On December 31, 2019, the Wuhan Municipal Health Commission, China, reported 

a cluster of pneumonia cases in Wuhan, Hubei Province, and a novel coronavirus was eventually 

identified (“COVID-19”). Since it was first identified, COVID-19 has spread throughout the 

world, resulting in an ongoing pandemic. As of May 17, 2020, over 4.71 million cases have been 

reported across 188 countries and territories, resulting in over 315,000 deaths.

Defendants’ False and Misleading Statements Issued During the Class Period

27. On January 28, 2020, Carnival filed with the SEC its Annual Report on Form 10-

K for its fiscal year ended November 30, 2019. In its Form 10-K, the Company represented to 

investors that it was committed to ensuring a safe experience for the Company’s guests and that 

Carnival was fully complying with all legal and statutory requirements related to health and 

safety throughout its business. For example, the 10-K provided:

Our commitments to the safety and comfort of our guests and crew and protecting 

the environment are paramount to the success of our business. We are committed 

to operating a safe and reliable fleet and protecting the health, safety and security 

of our guests, employees and all others working on our behalf. We continue to 

focus on further enhancing the safety measures onboard all of our ships. We are 

dedicated to fully complying with, or exceeding, all legal and statutory 

requirements related to health, environment, safety, security and sustainability 

throughout our business.

* * *

As members of the Cruise Lines International Association (“CLIA”), we helped to 

develop and have implemented policies that are intended to enhance shipboard 

safety and environmental protection throughout the cruise industry.

28. Carnival also stated, among other things, that it provides “regular health, 

environmental, safety and security support, training, guidance and information to guests, 

employees and others working on our behalf,” that it had developed and implemented “effective 

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and verifiable management systems to fulfill our health, environmental, safety, security and 

sustainability commitments,” and that it reports and investigates “health, environmental, safety and 

security incidents and take[s] appropriate action to prevent recurrence.”

29. In the Form 10-K, Carnival also touted its ethics and compliance culture, noting 

that in August 2019 the Company had enhanced its compliance framework and significantly 

increased the resources it devoted to its compliance function “by creating an ethics and compliance 

program, as well as an ethics and compliance program strategic plan.” Led by a chief ethics and

compliance officer, Carnival stated that its program involves compliance risk management, 

improved compliance training programs for its employees, thorough investigations and remedial 

actions relating to health, environmental and safety incidents and efforts to strengthen its corporate 

culture.

30. Further, Carnival stated that, in 2015, it developed a set of “2020 sustainability 

goals reinforcing our commitment to the environment, our guests, our employees and the 

communities in which we operate.” One of the goals, aimed at “enhancing the health, safety and 

security of [Carnival’s] guests and crew members,” was Carnival’s intention to “[c]ontinue to build 

on [its] commitment to protect the health, safety and security of guests, employees and all others 

working on [its] behalf and ensuring sustainable business practices across [its] brands and business 

partners.”

31. On January 28, 2020, Carnival also issued a press release titled “Resignation Of 

Director And New Board Committee Appointments,” which stated in relevant part:

Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) announce that on 

January 27, 2020, Debra Kelly-Ennis resigned from her position as a Director of 

Carnival Corporation and Carnival plc, including her role as a member of their 

Health, Environmental, Safety and Security (“HESS”) Committees, effective that 

same day. The Boards thank Debra for her years of dedication and service.

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32. On January 30, 2020, the Company issued a press release titled “Carnival 

Corporation & plc Statement on Costa Cruises Ship in Italy,” which stated in relevant part:

Carnival Corporation & plc and the company's Italian brand Costa Cruises have 

confirmed that Italian health officials diagnosed a passenger on board a ship docked 

in Civitavecchia, north of Rome, Italy with the common flu. The ship will resume 

its Mediterranean program on Friday.

Guests who should have disembarked today can either disembark or remain on 

board overnight, at their discretion. All guests scheduled to embark today will be 

accommodated in hotels near the port and embark on Friday.

33. On February 12, 2020, the Company issued a press release titled “Carnival 

Corporation & plc Update On Financial Impact Of Coronavirus,” which stated in relevant 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. (Emphasis added.)

34. On March 12, 2020 the Company announced "a voluntary and temporary pause" of 

the Global Ship Operations for Princess Cruises. 

35. On March 13, the Company announced a pause in operations of Carnival Cruise 

Line, stating in a press release: 

we have implemented higher and higher levels of screening, monitoring and 

sanitation protocols to protect the health and safety of our guests, crew and the 

communities we serve. While Carnival has not had a diagnosed case linked to our 

operation we realize this situation is bigger than the cruise industry and we will 

continue to do our part to support public officials to manage and contain this 

unprecedented public health challenge.

36. That same day, the Company announced a pause in the operations of Seabourn, 

billed as the world's finest ultra-luxury travel experience, in a press release quoting Seaborn 

President Rick Meadows, as follows: "[W]e have the health and safety of all who travel with us as 

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a top priority. Our pause should also reassure the hundreds of destinations we visit each year that 

we want to be responsible in our operations as we bring travelers into their communities each time 

we visit."

37. Also on March 13, the Company issued a press release announcing a pause in its 

other operations, in which Defendant Donald is quoted as saying: “Through serving our many 

guests who still wanted to travel, we've 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. And today 

we stand with the nation as we together seek to mitigate the spread.” (Emphasis added.) Defendant 

Arnold repeated this statement in a press release issued by the Company on March 16, 2020, 

disclosing additional paused operations. 

38. On March 19, 2020, the Company issued a press release titled “Carnival 

Corporation Extends Offer to Governments and Health Authorities to Consider Cruise Ships as 

Temporary Hospitals,” which stated in relevant part:

Carnival Corporation & plc, the world's largest leisure travel company, today 

announced that select cruise ships from the company's global cruise line brands, 

including Carnival Cruise Line, Holland America Line, Princess Cruises and P&O 

Cruises Australia, will be made available to communities for use as temporary 

hospitals to help address the escalating impacts of the COVID-19 pandemic on 

healthcare systems around the world.

With the continued spread of COVID-19 expected to exert added pressure on landbased healthcare facilities, including a possible shortage of hospital beds, Carnival 

Corporation and its brands are calling on governments and health authorities to 

consider using cruise ships as temporary healthcare facilities to treat nonCOVID-19 patients, freeing up additional space and expanding capacity in landbased hospitals to treat cases of COVID-19. As part of the offer, interested parties 

will be asked to cover only the essential costs of the ship's operations while in port.

Governments or health authorities with interest can contact Monica Puello by email 

at MPuello@Carnival.com or by phone at (305) 406-8656.

If needed, cruise ships are capable of being quickly provisioned to serve as hospitals 

with up to 1,000 hospital rooms that can treat patients suffering from less critical, 

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non-COVID-19 conditions. These temporary cruise ship hospital rooms can be 

quickly converted to install and connect remote patient monitoring devices over the 

ship's high-speed network – providing cardiac, respiratory, oxygen saturation and 

video monitoring capabilities. The rooms also have bathroom facilities, private 

balconies with access to sun and fresh air, as well as isolation capabilities, as 

needed.

Additionally, cruise ships being used as temporary hospital facilities to treat nonCOVID-19 patients would have the ability to provide up to seven intensive care 

units (ICUs) in the ship's medical center equipped with central cardiac monitoring, 

ventilators and other key medical devices and capabilities. Similar to land-based 

health facilities, cruise ships can also house multiple medical functions in disparate 

locations by using different decks on the ship to separate each required medical 

area.

The temporary hospital cruise ships would be berthed at a pier near the community 

in need and operated by the ship's crew, with all maritime operations, food and 

beverage, and cleaning services provided by crew members on the ship. Medical 

services would be provided by the government entity or hospital responsible for 

fighting the spread of COVID-19 within that community.

39. Throughout the Class Period, Defendants made materially false and/or misleading

statements, and/or failed to disclose material adverse facts about the Company’s business, 

operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) the 

Company’s medics had reported increasing events of COVID-19 illness on the Company’s ships; 

(2) Carnival had violated port of call regulations by concealing the amount and severity of COVID19 infections on board its ships; (3) in responding to the outbreak of COVID-19, Carnival failed 

to follow the Company’s own health and safety protocols developed in the wake of other 

communicable disease outbreaks; (4) by continuing to operate, Carnival ships were responsible 

for continuing to spread COVID-19 at various ports throughout the world; and (5) as a result of

the foregoing, Defendants’ positive statements about the Company’s business, operations, and 

prospects, were materially misleading and/or lacked a reasonable basis.

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The Truth Begins To Emerge

40. On April 16, 2020, when the Company still had at sea two (2) of its cruise ships,

Bloomberg Businessweek published an article titled “Carnival Executives Knew They Had a Virus 

Problem, But Kept the Party Going.” In that article, it was revealed that Carnival may have failed 

to adequately protect passengers from COVID-19 on a series of cruise voyages, and indeed 

continued to operate new cruise departures despite its knowledge that the threat posed by COVID19 had materialized on its ships and was likely to proliferate further. The article stated, in part:

Carnival’s ships have become a floating testament to the viciousness of the new 

coronavirus and raised questions about corporate negligence and fleet safety. 

President and Chief Executive Officer Arnold Donald says his company’s response 

was reasonable under the circumstances. “This is a generational global event—it’s 

unprecedented,” he says. “Nothing’s perfect, OK? They will say, ‘Wow, these 

things Carnival did great. These things, 20/20 hindsight, they could’ve done 

better.’”

Donald says that if his company failed to prepare for the pandemic, it failed in 

the same way that many national and local governments failed, and should be 

judged accordingly. “Each ship is a mini-city,” he says, and Carnival’s response 

shouldn’t be condemned before “analyzing what New York did to deal with the 

crisis, what the vice president’s task force did, what the Italians, Chinese, South 

Koreans, and Japanese did. We’re a small part of the real story. We’re being pulled 

along by it.”

In the view of the CDC, however, Carnival helped fuel the crisis. “Maybe that 

excuse flies after the Diamond Princess, or maybe after the Grand Princess,” says 

Cindy Friedman, the experienced epidemiologist who leads the CDC’s cruise ship 

task force. “I have a hard time believing they’re just a victim of happenstance.”

While it would have been tough to get everyone aboard the ships back to their home 

ports without infecting more people, Friedman says several of the plagued Carnival 

ships didn’t even begin their voyages until well after the company knew it was risky 

to do so. She says its actions created a “huge strain” on the country. “Nobody should 

be going on cruise ships during this pandemic, full stop,” she says.

Donald and his team say they’re making every effort to protect and treat their 

remaining passengers. The company has attempted to dock its fleet until the 

pandemic subsides. All but about 3,200 passengers and crew are back on shore.

Carnival’s future is less clear. Australian police have launched a criminal probe 

into whether the company’s Princess Cruises subsidiary misled authorities about an 

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outbreak aboard a ship docked in Sydney, and its Costa Cruises subsidiary is facing 

multiple passenger lawsuits regarding its Covid-19 response. 

41. The Bloomberg Businessweek article also detailed Carnival’s failure to take timely 

action after being apprised of COVID-19 threats to its fleet and passengers. Specifically, the article 

stated:

At 11:12 p.m. Japan Standard Time on Feb. 1, more than a month before the 

outbreak on the Grand Princess, the Diamond Princess was skimming around Asia 

on a multiweek cruise. One of its sanitation vendors, Wallem Group, emailed an 

alert to the vessel’s chief administrative officer and a guest services inbox. A 

Wallem representative said a passenger was being treated for Covid-19 in Hong 

Kong. “Would kindly inform the ship related parties and do the necessary 

disinfection,” the alert read. Unfortunately, and somewhat inexplicably, according 

to Roger Frizzell, Carnival’s chief communications officer, nobody was monitoring 

those inboxes. He first says the messages hadn’t been read for “at least days,” then 

later emails that, actually, an employee had read them much sooner.

In Carnival’s latest version of the timeline, which it revised repeatedly during 

various interviews over the past several weeks, Nancy Chung, a Hong Kong-based 

director for the Princess line, learned of the positive test a few hours later, after 

seeing a report from Now News TV about a hospitalized coronavirus patient who 

was understood to have traveled to Hong Kong on a cruise. Chung texted an 

executive in California, who requested she connect Hong Kong health officials with 

Tarling, the company’s chief medical officer, according to screenshots of the 

messages viewed by Bloomberg Businessweek. The company says these messages 

show it acted promptly. But Carnival didn’t tell passengers they might have been 

exposed to the virus until the evening of Feb. 3, about 43 hours after the initial alert 

from Wallem was sent.

There are other inconsistencies that suggest Carnival wasn’t entirely on the ball. 

The Hong Kong health department put out a press release announcing the Covid19 case late on Feb. 1, and at 11:33 a.m. on Feb. 2, Tarling sent an email to Hong 

Kong health authorities with the subject line “Confirmed Coronavirus Case” that 

included the passenger’s name, age, and ward location at Princess Margaret 

Hospital. But Carnival says this was a mistake. “The subject line should’ve had 

‘question mark, question mark, question mark,’ because he was asking if it’s 

confirmed,” says Frizzell, the Carnival spokesman, adding that Tarling didn’t get 

official confirmation until 6:44 p.m. on Feb. 2. Tarling says he didn’t see the 

previous day’s press release. A spokesman for the Hong Kong health department 

notes that in addition to the press release, it immediately informed “the shipping 

agent in Hong Kong of the cruise concerned.”

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Another 24 hours elapsed before Captain Gennaro Arma informed passengers 

and crew on the Diamond Princess of the Covid-19 case. In his announcement, at 

6:33 p.m. on Feb. 3, he tried to project calm as the ship cruised toward Yokohama, 

Japan. The guest hadn’t reported feeling ill during his time on board, Arma said 

over the loudspeaker, but passengers should avoid close contact with anyone 

suffering respiratory illness, wash their hands for 20 seconds, and seek treatment 

from the ship’s nurses if they had fever, chills, or a cough. “Rest assured, there will 

be no charge for this service,” he said. Upon arrival in Yokohama that evening, 

Japanese health officials started medical screenings. Arma added: “The situation is 

under control, and therefore there are no reasons for concerns.”

* * *

Even after Carnival became aware of the potential coronavirus case, passengers 

say staff tried to keep the fun going. Guests continued eating and drinking at buffets 

and bars, hanging out in saunas, and attending shows, including an operatic 

performance called Bravo. Carnival distributed itineraries (known as “Princess 

Patter”) guiding guests to trivia contests and other group activities on Feb. 3. “They 

were encouraging us to mingle,” says Gay Courter, who, after getting her 

temperature taken by a Japanese official the next day, went for a walk on deck and 

saw tables of as many as 30 people playing mahjong. A Carnival spokesman says 

the staff discontinued “most” scheduled activities on Feb. 4, though Japanese 

officials didn’t institute a shipwide quarantine requiring passengers to stay in their 

cabins until Feb. 5.

42. Notably, the April 16 Bloomberg Businessweek article also intimated that Carnival 

executives, including Defendant Donald, knew about the scale of the COVID-19 outbreak before 

the Company filed its Form 10-K on January 28, 2020, and indeed knew of the magnitude of the 

issue much earlier than most others: 

There were other early warnings: [John] Padgett, [Carnival’s chief experience and 

innovation officer], says that in January—after he’d communicated with a 

manufacturer in Wuhan, the origin of the pandemic, about making batteries for the 

digital badge system—the leadership, including Arnold Donald, all knew about the 

scale of the coronavirus outbreak. Padgett says he became aware of the problem’s 

magnitude on Jan. 25—he remembers the exact date because it was the day before 

Kobe Bryant died. “The biggest thing about that—it’s a learning I don’t think I’ll 

ever forget, and we shared it with Arnold when we were talking—is that we actually 

had insight into the global situation much earlier than most,” Padgett says. Carnival 

canceled cruises set to embark from mainland Chinese ports, but these measures 

don’t appear to have altered anything for ships making midcruise stops around 

Hong Kong or other parts of Asia.

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43. On this news, the Company’s share price fell $0.53 per share from a prior close of 

$12.38 per share to close at $11.85 per share on April 16, 2020.

44. Then, on May 1, 2020, The Wall Street Journal published an article titled “Cruise 

Ships Set Sail Knowing the Deadly Risk to Passengers and Crew.” That article detailed how cruise 

ships, particularly Carnival ships, facilitated the spread of COVID-19, and provided new facts on 

early warning signs Carnival and its affiliated cruise lines possessed and the Company’s disclosure 

failures. Further, the article also noted that The House Committee on Transportation and 

Infrastructure had requested documents from Carnival related “to Covid-19 or other infectious 

disease outbreaks aboard cruise ships” and that testimony from a separate investigation in Australia 

revealed that Carnival and its affiliated cruise lines may have misled shore officials by concealing 

those exhibiting COVID-19 symptoms before docking. The article stated, in pertinent part:

Early in March, the world’s cruise-ship operators had ample evidence to believe 

their fleet of luxury liners were incubators for the new coronavirus.

Yet they continued to fill cruise ships with passengers, endangering those aboard 

and helping spread Covid-19 to the U.S. and around the globe, a Wall Street Journal 

investigation found.

All told, the Journal found that the cruise industry launched voyages on more than 

100 ships on or after March 4-the day of the first confirmed Covid-19 death of a 

passenger from a cruise stopping in the U.S., a marker of the pandemic’s long reach.

The U.S. Centers for Disease Control and Prevention has so far determined that 17 

of the vessels, which were on international voyages and had entered at least one 

U.S. port, carried people who tested positive for Covid-19 within two weeks of 

disembarking.

The virus passed among ship crews and travelers, finding easy passage to ports of 

call as well as the hometowns of those aboard, according to interviews with 

passengers and relatives, epidemiologists, ship employees and port and health 

officials in more than 20 countries.

Cruise companies allowed passengers to travel home without telling them about 

fellow travelers who fell ill with symptoms of Covid-19 or tested positive for the 

coronavirus disease, or those who were sent to hospitals.

Government officials in Australia, New Zealand, Canada, Dominican Republic, 

Trinidad and Tobago, as well as communities in Iowa, Ohio, California, Minnesota, 

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Florida, Hawaii and Puerto Rico, traced either their first Covid-19 cases or an 

acceleration of local infections to cruise-ship travelers.

By March 13, the CDC had linked cruise passengers to 17% of reported Covid-19 

cases in the U.S. at the time.

The U.S. Coast Guard said it was investigating whether two cruise ships owned by 

Carnival Corp. violated federal law by failing to alert health authorities about sick 

travelers disembarking in San Francisco and Puerto Rico, the Journal found. A 

criminal investigation and a separate government-ordered probe are under way in 

Australia about similar suspicions regarding a third Carnival-owned cruise ship. 

The company said it didn’t believe it broke any laws.

* * *

The House Committee on Transportation and Infrastructure, signaling its intention 

to exercise its oversight role, sent letters Friday to Carnival, the CDC and the Coast 

Guard requesting copies of all memos, emails and other communications that 

pertained to Covid-19 or other infectious disease outbreaks aboard cruise ships.

Australia began a probe that could lead to criminal charges against Carnival or its 

staff regarding the March 8 voyage of the Ruby Princess around New Zealand. 

Authorities are trying to determine whether Carnival, or its Princess Cruises 

subsidiary, knew or should have known about potential Covid-19 cases before 

allowing some 2,700 passengers to disembark in Sydney.

In public hearings that began April 22, the ship’s senior physician, Ilse Von 

Watzdorf, was asked why she didn’t update the ship’s medical log books to show 

that some ill people aboard the ship had been swabbed for possible Covid-19. “I 

did not have enough hours, I think” to update records, she testified.

Dr. Von Watzdorf said she wasn’t sure why ship officers told shore officials it had 

no crew displaying possible Covid-19 symptoms before docking in Sydney. She 

also said the cruise company didn’t brief her on the Diamond Princess Covid-19 

outbreak, which she followed on social media.

Princess Cruises said in a written statement that “it would be inappropriate for us 

to comment” on matters under official inquiry.

* * *

Carnival learned on March 2 that a passenger aboard a Feb. 11 voyage from San 

Francisco to Mexico on the Grand Princess had tested positive for Covid-19 after 

returning home to Placer County, Calif.

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The man had disembarked on Feb. 21 in San Francisco, a day after visiting the 

ship’s medical center with what Carnival’s Chief Medical Officer Grant Tarling 

said at a March 7 news conference was a “six- to seven-day history of symptoms 

of an acute respiratory illness.”

The Coast Guard is now investigating whether Carnival violated a federal law that 

requires ships approaching U.S. ports to report outbreaks of illness to the Coast 

Guard and, in certain cases, to the CDC. The rules are specific, defining a fever as 

a temperature of 100.4 degrees Fahrenheit or higher, as well as anyone who reports 

feeling feverish.

Lt. Cmdr. Matthew Kroll said Coast Guard officials only “indirectly received 

information regarding ill passengers and crew” on the Grand Princess. Mr. Frizzell, 

the Carnival spokesman, said the company “fully disclosed all of our illnesses to 

officials, as required.”

On March 4, the man from Placer County died.

Twelve days after passengers disembarked, Carnival informed them they may have 

been exposed to the virus.

Vicki Eschelbach left the Grand Princess when it returned to San Francisco from 

Mexico on Feb. 21 and traveled home to Santa Rosa, Calif. She spent the next 

several days going to stores and attending church.

Ms. Eschelbach got the March 4 email from Princess Cruises saying she might have 

been exposed. “I was freaking out. Like, where am I spreading all these germs?”

she said. She had no symptoms and didn’t get tested.

That same day, Grand Princess passengers in the middle of the vessel’s subsequent 

cruise to Hawaii received a letter saying the CDC was investigating “a small cluster 

of Covid-19” cases in Northern California that were connected to the ship’s 

previous voyage to Mexico.

Some travelers and crew had stayed aboard the Grand Princess after the Mexico 

cruise for the Hawaii voyage, joining hundreds of new passengers who climbed 

aboard on Feb. 21. Among those on the Hawaii cruise, five people have died and 

131 have tested positive, the U.S. Department of Health and Human Services said. 

County officials in California have so far traced five Covid-19 cases to the Mexico 

cruise, including two deaths.

* * *

The Costa Luminosa, owned by Carnival’s Costa Cruises, set sail on March 5 from 

Fort Lauderdale to Puerto Rico and other stops in the Caribbean before heading 

back to Europe.

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Shortly after the ship docked in San Juan three days later, an Italian couple were 

taken to Ashford Presbyterian Community Hospital. The woman had flu-like 

symptoms and difficulty breathing, said Dr. Rafael Gonzalez, the hospital’s 

medical director.

While doctors treated the woman, hundreds of passengers left the ship to wander 

Old San Juan, swelled with people in town for a salsa festival.

“Everyone was allowed ashore. No problem,” said Fabian de la Fuente, a passenger 

from Victoria, British Columbia. He said his entire family of five later tested 

positive for Covid-19.

The Costa Luminosa should have disclosed any contagious illnesses before the 

couple were admitted to the hospital, Dr. Gonzalez said. The staff was led to believe 

the Italian woman had pneumonia, he said.

When emergency-room staff asked if anybody else was sick on the ship, the ship’s 

medical staff denied it, Dr. Gonzalez said. He later learned several crewmen were 

in quarantine for symptoms of Covid-19 at the time, he said.

“That’s not right,” the doctor said later in an interview. “That’s just not right.”

Any company that fails to properly notify the CDC of a serious outbreak of 

shipboard illness ahead of pulling into port can draw penalties as high as $200,000 

for each violation. If a death is involved, the potential penalty can reach $500,000 

for each case.

Ricardo Castrodad, a Coast Guard spokesman in San Juan, said maritime authorities 

weren’t told of illnesses aboard the Costa Luminosa, or that passengers had been 

hospitalized, until after the ship left San Juan harbor on March 8 for Antigua. The 

Coast Guard is investigating, he said.

Carnival said in a written statement to the Journal that a ship physician suggested 

testing the woman for Covid-19 after she arrived at the hospital. Notifying the Coast 

Guard after the fact “was completely acceptable,” the company said, because it was 

a medical emergency.

45. As noted in The Wall Street Journal article, also on May 1, 2020, the Chair of the 

House Committee on Transportation and Infrastructure Peter DeFazio and Chair of the House 

Subcommittee on Coast Guard and Maritime Transportation Sean Patrick Maloney initiated a 

records request regarding the response of Carnival, and its nine affiliated cruise lines, to the 

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coronavirus pandemic. In the letter to Defendant Donald, DeFazio and Maloney expressed 

concerns Carnival was failing to appropriately acknowledge public health concerns in its publicfacing materials, writing: 

While cruises are often viewed as a care-free escape from reality where passengers 

can dine, dance, relax, and mingle, we would hope that the reality of the COVID19 pandemic will place a renewed emphasis on public health and passenger safety, 

but frankly that has not been seen up to this point. In fact, it seems as though 

Carnival Corporation and its portfolio of nine cruise lines, which represents 109 

cruise ships, is still trying to sell this cruise line fantasy and ignoring the public 

health threat posed by coronavirus to potential future passengers and crew.

46. On this news, the Company’s share price fell $1.97 per share from a prior close of 

$15.90 per share to close at $13.93 per share on May 1, 2020.

SCIENTER

47. During the Class Period, the Defendants had both the motive and the opportunity 

to commit fraud. Defendants also had actual knowledge of the misleading nature of their 

statements, or acted with reckless disregard for the true information known to them at the time 

they made those statements. In so doing, Defendants engaged in a course of conduct that operated 

as a fraud on Class Period purchasers of Carnival common stock.

LOSS CAUSATION/ECONOMIC LOSS

48. During the Class Period, as detailed herein, Defendants made false and misleading 

statements and engaged in a scheme to deceive the market and a course of conduct that artificially 

inflated the prices of Carnival common stock. Later, when the market became aware of 

Defendants’ prior misrepresentations, the price of Carnival common stock fell sharply, as the prior 

artificial inflation came out of the trading price of Carnival. As a result of their purchases of 

Carnival common stock during the Class Period, Plaintiff and other members of the Class suffered 

economic loss, i.e., damages, under the federal securities laws.

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NO SAFE HARBOR

49. Carnival’s verbal “Safe Harbor” warnings accompanying its oral forward-looking 

statements (“FLS”) issued during the Class Period were ineffective to shield those statements 

from liability.

50. Defendants are also liable for any false or misleading FLS pleaded because, at the 

time each FLS was made, the speaker knew the FLS was false or misleading and the FLS was 

authorized and/or approved by an executive officer of Carnival who knew that the Carnival was 

false and was not accompanied by meaningfully cautionary language. None of the historic or 

present tense statements made by Defendants were assumptions underlying or relating to any 

plan, projection, or statement of future economic performance, as they were not stated to be such 

assumptions underlying or relating to any projection or statement of future economic performance 

when made, nor were any of the projections or forecasts made by Defendants expressly related 

to, or stated to be dependent on, those historic or present tense statements when made.

APPLICABILITY OF THE PRESUMPTION OF RELIANCE:

FRAUD ON THE MARKET

51. Plaintiff is entitled to a presumption of reliance under Affiliated Ute v. United 

States, 406 U.S. 128 (1972), because the claims asserted herein are primarily predicated upon 

omissions of material fact Defendants were under a duty to disclose or were required to disclose 

so as not to make their statements false and misleading.

52. Plaintiff is alternatively permitted to rely upon the presumption of reliance 

established by the fraud-on-the-market doctrine in that, among other things:

a. Defendants made public misrepresentations or failed to disclose material

facts during the Class Period;

b. the omissions and misrepresentations were material;

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c. the Company’s stock traded in an efficient market;

d. the misrepresentations and omissions alleged would tend to induce a 

reasonable investor to misjudge the value of the Company’s common stock; and

e. Plaintiff and other members of the Class purchased Carnival common stock 

between the time Defendants misrepresented or failed to disclose material facts and the 

time the true facts were disclosed, without knowledge of the misrepresented or omitted 

facts.

53. At all relevant times, the markets for Carnival common stock were efficient for the 

following reasons, among others:

a. as a regulated issuer, Carnival filed periodic public reports with the SEC;

b. Carnival regularly communicated with public investors via established 

market communication mechanisms, including through regular disseminations of press 

releases on the major news wire services and through other wide-ranging public 

disclosures, such as communications with the financial press, securities analysts, and other 

similar reporting services; and

c. Carnival common stock was actively traded in an efficient market, namely 

the NYSE, under the ticker symbol “CCL.”

CLASS ACTION ALLEGATIONS

54. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules 

of Civil Procedure on behalf of the Class. Excluded from the Class are Defendants, directors, and 

officers of the Company, and their families and affiliates.

55. The members of the Class are so numerous that joinder of all members is 

impracticable. The disposition of their claims in a class action will provide substantial benefits to 

Case 1:20-cv-22202-KMM Document 1 Entered on FLSD Docket 05/27/2020 Page 22 of 26
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the parties and the Court. As of January 16, 2020, Carnival had 527,679,851 shares of common 

stock outstanding, owned by thousands of persons.

56. There is a well-defined community of interest in the questions of law and fact 

involved in this case. Questions of law and fact common to the members of the Class that 

predominate over questions that may affect individual Class members include:

a. whether Defendants violated the Exchange Act;

b. whether Defendants omitted and/or misrepresented material facts;

c. whether Defendants’ statements omitted material facts necessary in order to 

make the statements made, in light of the circumstances under which they were made, not 

misleading;

d. whether Defendants knew or recklessly disregarded that their statements 

were false and misleading;

e. whether the prices of Carnival common stock were artificially inflated; and

f. the extent of damage sustained by Class members and the appropriate 

measure of damages.

57. Plaintiff’s claims are typical of those of the Class because Plaintiff and the Class 

sustained damages from Defendants’ wrongful conduct.

58. Plaintiff will adequately protect the interests of the Class and has retained counsel 

experienced in class action securities litigation. Plaintiff has no interests that conflict with those 

of the Class.

59. A class action is superior to other available methods for the fair and efficient 

adjudication of this controversy.

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COUNT I

For Violation of Section 10(b) of the Exchange

Act and Rule 10b-5 Against All Defendants

60. Plaintiff repeats and re-alleges each and every allegation contained above as if fully 

set forth herein.

61. During the Class Period, Defendants disseminated or approved the false statements 

specified above, which they knew, or recklessly disregarded, were misleading in that they 

contained misrepresentations and failed to disclose material facts necessary in order to make the 

statements made, in light of the circumstances under which they were made, not misleading. 

Defendants made the false or misleading statements alleged herein intentionally and/or recklessly.

62. Defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 in that they:

a. employed devices, schemes, and artifices to defraud;

b. made untrue statements of material facts or omitted to state material facts 

necessary in order to make the statements made, in light of the circumstances under which 

they were made, not misleading; 

c. engaged in acts, practices, and a course of business that operated as a fraud 

or deceit upon Plaintiff and others similarly situated in connection with their purchases of 

Carnival common stock during the Class Period.

63. Plaintiff and the Class have suffered damages in that, in reliance on the integrity of 

the market, they paid artificially inflated prices for Carnival common stock. Plaintiff and the Class 

would not have purchased Carnival common stock at the prices they paid, or at all, if they had 

been aware that the market prices had been artificially and falsely inflated by Defendants’

misleading statements.

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64. As a direct and proximate result of defendants’ wrongful conduct, Plaintiff and the 

other members of the Class suffered damages in connection with their purchases of Carnival

common stock during the Class Period.

COUNT II

For Violation of § 20(a) of the Exchange Act

Against the Individual Defendants

65. Plaintiff repeats and re-alleges each and every allegation contained above as if fully 

set forth herein.

66. The Individual Defendants acted as controlling persons of Carnival within the 

meaning of Section 20(a) of the Exchange Act. By virtue of their power to control public 

statements about Carnival, the Individual Defendants had the power and authority to control 

Carnival and its employees. By reason of such conduct, the Individual Defendants are liable 

pursuant to Section 20(a) of the Exchange Act.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff prays for judgment as follows:

A. Declaring this action to be a proper class action pursuant to Federal Rule of Civil 

Procedure 23;

B. Awarding Plaintiff and the members of the Class damages and interest;

C. Awarding Plaintiff reasonable costs, including attorneys’ and experts’ fees; and

D. Awarding such other relief as the Court may deem just and proper.

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JURY DEMAND

Plaintiff demands a trial by jury.

Dated: May 27, 2020 SHEPHERD, FINKELMAN, MILLER

& SHAH, LLP

By: /s/ Jayne A. Goldstein 

Jayne A. Goldstein

1625 N. Commerce Pkwy, Suite 320

Fort Lauderdale, FL 33326

(866) 849-7545

Fax: (866) 300-7367

jgoldstein@sfmslaw.com

Local Counsel for Plaintiff

BARRACK, RODOS & BACINE

Daniel E. Bacine

Jeffrey A. Barrack

3300 Two Commerce Square

2001 Market Street

Philadelphia, PA 19103

(215) 963-0600

Fax: (215) 963-0838

dbacine@barrack.com

jbarrack@barrack.com

 and

POMERANTZ LLP

James M. LoPiano

600 Third Avenue

New York, NY 10016

(212) 661-1100

Fax: (917) 463-1044

jlopiano@pomlaw.com

Counsel for Plaintiff and the

[Proposed] Class

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