UNITED STATES DISTRICT COURT 

FOR THE SOUTHERN DISTRICT OF FLORIDA 

IN RE CARNIVAL CORP. 

SECURITIES LITIGATION 

Case No. 1:20-cv-22202-KMM 

DEFENDANTS’ MOTION TO DISMISS THE 

AMENDED COMPLAINT AND 

INCORPORATED MEMORANDUM OF LAW 

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i 

TABLE OF CONTENTS 

TABLE OF AUTHORITIES ......................................................................................................... iii

PRELIMINARY STATEMENT .....................................................................................................1

BACKGROUND .............................................................................................................................3

A. Carnival’s Business ..................................................................................................3

B. Carnival’s Public Statements Regarding COVID-19 ..............................................4

1. The Origins of COVID-19 and Carnival’s Public Statements in 

January 2020 ................................................................................................4

2. The Diamond Princess and Carnival’s Public Statements in 

February 2020 ..............................................................................................5

3. The Grand Princess and Carnival’s Public Statements in March 

2020..............................................................................................................6

4. Carnival Continues to Disclose the Financial Impact of the 

Pandemic ......................................................................................................7

ARGUMENT ...................................................................................................................................8

I. The Complaint Fails to Allege Any Actionable Misrepresentations or Omissions .............9

A. The Complaint Fails to Allege that Defendants Failed to Warn of the Risks 

to Carnival’s Business and Passengers of COVID-19 .............................................9

1. Defendants’ Statements in January 2020 .....................................................9

2. Defendants’ Statements in February 2020 .................................................13

3. Defendants’ Statements in March 2020 .....................................................14

B. The Complaint Fails to Allege that Defendants’ Statements Affirming 

Carnival’s Compliance with Regulatory Requirements Were False or 

Misleading..............................................................................................................15

C. The Complaint Fails to Allege that Defendants’ Statements Concerning 

Carnival’s Commitment to Passenger Safety and Health Were False or 

Misleading..............................................................................................................20

D. Carnival Cruise Line’s Statement that it “Had Not Had a Diagnosed Case 

Linked to Our Operation” is Not Alleged to Have Been False at the Time 

It was Made ............................................................................................................26

II. The Complaint Fails to Allege Scienter .............................................................................27

A. The Complaint Fails to Allege Severe Recklessness with Respect to 

Defendants’ Statements about the Risks of COVID-19 ........................................27

B. The Complaint Fails to Allege Severe Recklessness with Respect to 

Defendants’ Statements About Carnival’s Commitment to Regulatory 

Compliance and Passenger Health and Safety .......................................................30

1. Regulatory Compliance .............................................................................30

2. Commitment to Health and Safety .............................................................32

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C. Carnival’s Actions Throughout the Class Period Are Inconsistent with 

Scienter ..................................................................................................................34

III. The Complaint Fails to Allege Loss Causation .................................................................37

IV. If Plaintiffs’ Claims Are Not Dismissed, the Class Period Should be Shortened..............39

CONCLUSION ..............................................................................................................................40

 

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iii 

TABLE OF AUTHORITIES 

 Page(s) 

CASES

Abecassis v. Eugene M. Cummings, P.C., 

2010 WL 9452252 (S.D. Fla. June 3, 2010) ..............................................................................9 

In re Altisource Portfolio Sols., S.A. Sec. Litig., 

2015 WL 12001262 (S.D. Fla. Sept. 4, 2015) .........................................................................36 

Barrett v. PJT Partners Inc., 

2017 WL 3995606 (S.D.N.Y. Sept. 8, 2017) ...........................................................................24 

In re Boston Tech., Inc. Sec. Litig., 

8 F. Supp. 2d 43 (D. Mass. 1998) ............................................................................................30 

In re Braskem S.A. Sec. Litig., 

246 F. Supp. 3d 731 (S.D.N.Y. 2017)......................................................................................24 

Brophy v. Jiangbo Pharms., Inc., 

781 F.3d 1296 (11th Cir. 2015) ...............................................................................................27 

Bryant v. Avado Brands, Inc., 

187 F.3d 1271 (11th Cir. 1999) .................................................................................................4 

Carvelli v. Ocwen Fin. Corp., 

934 F.3d 1307 (11th Cir. 2019) ...............................................................................8, 10, 14, 20 

Chiarenza v. IBSG Int’l., Inc., 

2010 WL 3463304 (S.D. Fla. Sept. 2, 2010) ...........................................................................29 

City of Pontiac Policemen’s & Firemen’s Ret. Sys., v. UBS AG, 

752 F.3d 173 (2d Cir. 2014).....................................................................................................26 

Cutsforth v. Renschler, 

235 F. Supp. 2d 1216 (M.D. Fla. 2002) ...................................................................................35 

DeSouza v. Fed. Home Mortg. Corp., 

572 F. App’x 719 (11th Cir. 2014) ............................................................................................4 

Diehl v. Omega Protein Corp., 

339 F. Supp. 3d 153 (S.D.N.Y. 2018)......................................................................................20 

Durham v. Whitney Info. Network, Inc., 

2009 WL 3783375 (M.D. Fla. Nov. 10, 2009) ........................................................................32 

Fidel v. Rampell, 

2005 WL 5587454 (S.D. Fla. Mar. 29, 2005) ..............................................................30, 31, 33 

Case 1:20-cv-22202-KMM Document 61 Entered on FLSD Docket 01/18/2021 Page 4 of 50
iv 

FindWhat Inv. Grp. v. FindWhat.com, 

658 F.3d 1282 (11th Cir. 2011) .........................................................................................33, 34 

In re Ford Motor Co. Sec. Litig., 

381 F.3d 563 (6th Cir. 2004) ...................................................................................................10 

Franklin v. Curry, 

738 F.3d 1246 (11th Cir. 2013) .................................................................................................3 

S.E.C. v. Gane, 

2005 WL 90154 (S.D. Fla. Jan. 4, 2005) .................................................................................15 

Garfield v. NDC Health Corp., 

466 F.3d 1255 (11th Cir. 2006) ...............................................................................................28 

Godinez v. Alere Inc., 

272 F. Supp. 3d 201 (D. Mass. 2017) ......................................................................................31 

In re Heartland Payment Sys., Inc. Sec. Litig., 

2009 WL 4798148 (D.N.J. Dec. 7, 2009) ................................................................................34 

Henningsen v. ADT Corp., 

161 F. Supp. 3d 1161 (S.D. Fla. 2015) ............................................................................ passim 

In re HomeBanc Corp. Sec. Litig., 

2010 WL 1524836 (N.D. Ga. Apr. 13, 2010) ..........................................................................38 

Howard v. Arconic Inc., 

395 F. Supp. 3d 516 (W.D. Pa. 2019) ......................................................................................26 

Hubbard v. BankAtlantic Bancorp, Inc., 

688 F.3d 713 (11th Cir. 2012) ...........................................................................................10, 14 

Instituto de Prevision Militar v. Merrill Lynch & Co., Inc., 

2007 WL 2900318 (S.D. Fla. Sept. 28, 2007) .........................................................................37 

In re John Alden Fin. Corp. Sec. Litig., 

249 F. Supp. 2d 1273 (S.D. Fla. 2003) ....................................................................................10 

In re KLX, Inc. Sec. Litig., 

232 F. Supp. 3d 1269 (S.D. Fla. 2017) ........................................................................29, 35, 36 

Luczak v. Nat’l Beverage Corp., 

812 F. App’x 915 (11th Cir. 2020) ..........................................................................................39 

Luo v. Sogou, Inc., 

465 F. Supp. 3d 393 (S.D.N.Y. 2020)......................................................................................19 

Case 1:20-cv-22202-KMM Document 61 Entered on FLSD Docket 01/18/2021 Page 5 of 50
v 

McClain v. Iradimed Corp., 

111 F. Supp. 3d 1293 (S.D. Fla. 2015) ..............................................................................25, 40 

Menaldi v. Och-Ziff Cap. Mgmt. Grp LLC, 

277 F. Supp. 3d 500 (S.D.N.Y. 2017)................................................................................19, 24 

In re Merrill Lynch & Co. Rsch. Reps. Sec Litig., 

568 F. Supp. 2d 349 (S.D.N.Y. 2008)......................................................................................38 

Metro. Transp. Auth. Defined Benefit Pension Plan Master Tr. v. Welbilt, Inc., 

2020 WL 905591 (M.D. Fla. Feb. 6, 2020) .............................................................................32 

Meyer v. Greene, 

710 F.3d 1189 (11th Cir. 2013) ...................................................................................37, 38, 39 

In re Miva, Inc. Sec. Litig., 

2008 WL 681755 (M.D. Fla. Mar. 12, 2008) ..........................................................................40 

Mizzaro v. Home Depot, Inc., 

544 F.3d 1230, 1239-40 (11th Cir. 2008) ........................................................................ passim 

Mogensen v. Body Cent. Corp., 

15 F. Supp. 3d 1191 (M.D. Fla. 2014) ...................................................................30, 31, 33, 34 

Nardy v. Chipotle Mex. Grill, Inc., 

2019 WL 3297467 (D. Colo. Mar 29, 2019) ...........................................................................16 

In re NDCHealth Corp., Inc., Sec. Litig., 

2005 WL 6074918 (N.D. Ga. July 27, 2005)...........................................................................35 

Nguyen v. Endologix, Inc., 

962 F.3d 405 (9th Cir. 2020) ...................................................................................................36 

In re Ocwen Fin. Corp. Sec. Litig., 

2015 WL 12780960 (S.D. Fla. Sept. 4, 2015) .........................................................................36 

Ong v. Chipotle Mex. Grill, Inc., 

294 F. Supp. 3d 199 (S.D.N.Y. 2018)................................................................................23, 26 

Plumbers & Steamfitters Local 773 Pension Fund v. Danske Bank, 

2020 WL 4937461 (S.D.N.Y. Aug. 24, 2020) ...................................................................20, 34 

In re PXRE Grp. Sec. Litig., 

600 F. Supp. 2d 510 (S.D.N.Y. 2009)......................................................................................29 

Monroe Cnty. Emps.’ Ret. System v. YPF Sociedad Anonima, 

15 F. Supp. 3d 336 (S.D.N.Y. 2014)........................................................................................26 

Case 1:20-cv-22202-KMM Document 61 Entered on FLSD Docket 01/18/2021 Page 6 of 50
vi 

Retail Wholesale & Dept. Store Union Local 338 Ret. Fund v. Hewlett-Packard 

Co., 

845 F.3d 1268 (9th Cir. 2017) .................................................................................................24 

Rombach v. Chang, 

355 F.3d 164 (2d Cir. 2004).....................................................................................................35 

In re Royal Caribbean Cruises Ltd. Sec. Litig., 

2013 WL 3295951 (S.D. Fla. Apr. 19, 2013) ..........................................................................12 

Singh v. Cigna Corporation, 

918 F.3d 57 (2d Cir. 2019).................................................................................................19, 20 

In re Sunterra Corp. Sec. Litig., 

199 F. Supp. 2d 1308 (M.D. Fla. 2002) ...................................................................................36 

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 

551 U.S. 308 (2007) ...........................................................................................................27, 28 

Waterford Twp. Gen. Emps. Ret. Sys. v. SunTrust Banks Inc., 

2010 WL 3368922 (N.D. Ga. Aug. 19, 2010) .........................................................................38 

Ziemba v. Cascade Int’l, Inc., 

256 F.3d 1194 (11th Cir. 2001) ...............................................................................................27 

STATUTES

15 U.S.C. § 78u-4(b) ..............................................................................................................1, 9, 37 

Securities Exchange Act Section 10(b)................................................................................8, 26, 40 

Securities Exchange Act Section 20(a) ......................................................................................8, 40 

OTHER AUTHORITIES

Fed. R. Civ. P. 9(b) ................................................................................................................1, 8, 30 

Fed. R. Civ. P. 12(b)(6)....................................................................................................................1 

SEC Rule 10b-5 ...............................................................................................................................8 

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Pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6) and the Private Securities 

Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u-4(b), upon the incorporated 

memorandum of law, the accompanying Declaration of Daniel S. Sinnreich dated January 18, 

2021 and its exhibits, and all other papers herein, Defendants Carnival Corp., Carnival plc 

(collectively, “Carnival” or the “Company”), and Arnold Donald (together with Carnival, the 

“Defendants”) hereby move this Court to dismiss the Consolidated Class Action Complaint (the 

“Complaint”) filed on December 17, 2020 in its entirety and with prejudice. 

PRELIMINARY STATEMENT 

On March 12 and 13, 2020, as the scope and severity of the global COVID-19 pandemic 

came into focus, Carnival took the unprecedented step of voluntarily and indefinitely suspending 

the Company’s global cruising operations. On March 14, 2020, the Centers for Disease Control 

and Prevention (the “CDC”) issued a No Sail Order suspending all future voyages subject to U.S. 

jurisdiction. In the wake of these announcements, and as the financial impact of the pandemic on 

the cruise industry became clear, Carnival’s share price predictably declined. 

Plaintiffs, investors in Carnival securities, seek to recover investment losses they suffered 

in March 2020. They argue that Carnival’s share price decline was driven not by the COVID-19 

pandemic, nor the cessation of Carnival’s global business, but instead by the Company’s 

supposed “securities fraud.” Plaintiffs’ theory is that Defendants somehow knew more than 

leading health experts and world governments about the scope and future course of COVID-19 

and maliciously concealed this information between January and March 2020—all without any 

discernable motive. These claims are plainly illogical, are not supported by a single wellpleaded fact in the 282-paragraph Complaint, and they should be dismissed with prejudice. 

Plaintiffs’ claims fail at the outset because, according to the very documents cited in the 

Complaint, Carnival consistently disclosed that COVID-19 was causing the Company to suspend 

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cruises and could have a material negative impact on the Company’s business and financials. 

Carnival disclosed this risk and estimated the per-share impact of COVID-19 as early as January 

28, 2020—at a time when there were fewer than 100 reported cases of COVID-19 outside of 

China. Carnival again voluntarily disclosed this risk on February 12, 2020—at a time when the 

WHO did not recommend cancellation of mass gatherings in part because “[n]ot enough is 

known about . . . the intensity of human-to-human transmission.” Plaintiffs do not identify any 

known risks that Carnival failed to disclose in early 2020. 

Faced with these robust disclosures, Plaintiffs are forced to argue that Defendants misled 

investors when they affirmed their commitment to regulatory compliance and the health and 

safety of passengers and crew. But these statements are not actionable, and in any event 

Plaintiffs plead no facts demonstrating that they were false. There are no well-pleaded facts 

demonstrating that any Carnival ship failed to comply with a single government mandate, much 

less that Carnival engaged in wanton fleet-wide noncompliance. Plaintiffs also point to COVID19 outbreaks that occurred aboard certain Carnival ships as evidence of the Company’s lack of 

commitment to health and safety. But Plaintiffs’ own allegations demonstrate that Carnival 

worked closely with leading health authorities to quickly respond to reported cases of the novel 

virus, including by testing passengers, canceling on-ship activities, and imposing ship-wide 

quarantines—all before such measures were required by any government agency. And, as 

numerous courts have recognized, the fact that a risk materializes does not mean that a company 

is not committed to combating that risk. 

Plaintiffs also fail to plead scienter. To the extent the Complaint identifies isolated 

incidents of ships failing to follow CDC guidelines or implement adequate safety protocols, there 

are no allegations—not even conclusory ones—that any of this information was reported to 

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Carnival’s senior management. Carnival’s actions throughout the class period—during which it 

repeatedly disclosed the risks COVID-19 posed to its financial performance, promptly disclosed 

confirmed COVID-19 cases aboard specific ships, and voluntarily suspended its global cruising 

operations prior to the CDC’s No Sail Order—reflect transparency and good corporate 

governance and are fundamentally inconsistent with Plaintiffs’ theory of fraudulent intent. 

Finally, Plaintiffs fail to show that Carnival’s allegedly fraudulent conduct caused their 

losses. Even if Carnival had implemented more stringent safety protocols and done a better job 

responding to the pandemic, Plaintiffs still would have suffered losses when the global cruise 

industry ground to a halt in March 2020. 

At most, Plaintiffs’ allegations amount to a claim that Carnival, like the rest of the world, 

may have misjudged the risks and eventual impact of COVID-19 in early 2020. But Defendants 

cannot be held to the impossibly high standard of failing to predict the unprecedented scope of 

this pandemic and disclose risks that were not known to leading world health experts, 

government authorities, or Defendants during that time. It is all too easy to look back at the 

devastation caused by the pandemic over the past year and posit, in retrospect, that more could 

have been done to prevent its spread. While such criticisms may have a role in debates over 

public policy, they are not the basis for a claim of federal securities fraud. Accordingly, 

Plaintiffs’ claims should be dismissed. 

BACKGROUND1

A. Carnival’s Business 

Carnival operates a portfolio of global, regional, and national cruise brands around the 

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

1

 Plaintiffs’ well-pleaded allegations are treated as true for the purposes of this motion. However, no 

presumption of truth is afforded to the Complaint’s legal conclusions. See Franklin v. Curry, 738 F.3d 1246, 

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(Australia), P&O Cruises (UK), Seabourn Cruise Line, Costa Cruises, AIDA Cruises, and 

Cunard Cruise Line. During the class period, Carnival operated over 100 ships docking at over 

700 ports around the world. Ex. 1 at 11, 13-18.2 Carnival operates as a dual-listed company, 

made up of two public companies, Carnival Corporation and Carnival plc. Carnival Corp. is 

incorporated in Panama and its shares are traded on the New York Stock Exchange. Ex. 1 at 7, 

28. Carnival plc is incorporated in England and Wales and its shares are traded on the London 

Stock Exchange and its American Depository Shares are traded on the New York Stock 

Exchange. Id. 

B. Carnival’s Public Statements Regarding COVID-19 

This case arises out of public statements Defendants allegedly made regarding the risks 

of, and Carnival’s response to, COVID-19 between January and March 2020. Plaintiffs allege 

that these statements were materially misleading and intended to defraud investors. 

1. The Origins of COVID-19 and Carnival’s Public Statements in 

January 2020 

Carnival filed its 2019 annual report on Form 10-K with the SEC on January 28, 2020 

(the “10-K”). Compl. ¶ 46. The 10-K specifically disclosed that the coronavirus had caused 

Carnival to “suspend[] cruise operations from Chinese ports between January 25th and February 

4th, canceling nine cruises,” estimated the per-share impact of the virus at the time, and warned 

that if travel restrictions continued in China it could “have a material impact on our financial 

performance.” Ex. 1 at 26. The 10-K similarly warned investors that “guest and crew illnesses,” 

1248 & n.1 (11th Cir. 2013). Further, the Court may consider documents referenced in the Complaint and 

central to the Plaintiffs’ claims. See DeSouza v. Fed. Home Mortg. Corp., 572 F. App’x 719, 721 (11th Cir. 

2014). The Court may also consider relevant documents filed with the SEC and other matters of public record. 

See Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1280 (11th Cir. 1999). 

2

 References to “Ex. __” refer to exhibits to the attached Declaration of Daniel S. Sinnreich. Page citations refer 

to the PDF pagination of exhibits, inclusive of exhibit cover page. 

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and the public’s “concerns regarding the health, safety and security of travel, including 

government travel advisories and travel restrictions,” could adversely affect its business. Ex. 1 at 

21. On January 28, 2020, Carnival told members of the press that, “[a]lthough the risk to our 

guests, crew and business around the world [from COVID-19] is very low, we are closely 

monitoring the situation.” Compl. ¶ 78. 

These disclosures were consistent with the limited information available in January. On 

January 17, 2020, Dr. Nancy Messonnier, director of the CDC’s National Center for 

Immunization and Respiratory Diseases, advised that while not much was known about the virus, 

“we believe the current risk from this virus to the general public is low.” Ex. 2 at 2. On January 

24, 2020, the U.S. Coast Guard explained that person-to-person spread was occurring but “it is 

unclear how easily the virus spreads between people.” Ex. 3 at 2; Compl. ¶ 94. On January 30, 

2020, the CDC explained that “no additional precautions are recommended at this time beyond 

the simple daily precautions that everyone should always take.” Ex. 4 at 3. By that date, the 

WHO had confirmed only 83 total cases of COVID-19 outside China. Compl. ¶ 83. 

2. The Diamond Princess and Carnival’s Public Statements in February 

2020 

On February 1, 2020, Carnival allegedly learned that a former passenger who had 

disembarked the Diamond Princess on January 25 had tested positive for COVID-19. Compl. 

¶¶ 98-99. According to Plaintiffs, Carnival informed local authorities and everyone aboard the 

vessel about the diagnosis within 24 hours. Compl. ¶¶ 100-01. Over the next three days, in 

consultation with global medical authorities and the Japanese government, Carnival invited local 

health officials aboard to screen passengers for coronavirus, canceled several scheduled 

activities, advised passengers “to avoid close contact with anyone who was experiencing 

symptoms of respiratory illness, to wash their hands regularly for twenty seconds, and to seek 

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treatment from the ship’s nurses if they experience a fever, chills, or cough,” and imposed a full, 

ship-wide quarantine. Id. ¶¶ 100-03. 

On February 12, 2020, Carnival disclosed in a press release that the Company believed 

that COVID-19 would have a “material impact on its financial results.” Ex. 5 at 2. In the same 

press release, Carnival stated that it was working with the CDC and the WHO to implement 

enhanced screening, prevention and control measures, and that it remained committed to the 

health and safety of its employees and guests. Id.; Compl. ¶ 119. On the same day as the press 

release, the CDC issued Interim Guidance for Ships on Managing 2019 Novel Coronavirus (the 

“Interim Guidance”), which provided “recommend[ations]” for handing COVID-19 cases but did 

not recommend that cruise ship operators cancel voyages, even if a current passenger tested 

positive for COVID-19. Ex. 6. Also on February 12, 2020, the WHO reiterated that it “did not 

recommend any specific health measures for travelers.” Ex. 7 at 8. In guidance published on 

February 14, 2020, the WHO did not recommend cancellation of mass gatherings in part because 

“[n]ot enough is known about . . . the intensity of human-to-human transmission.” Ex. 8 at 3. 

The U.S. Department of State would not warn of the danger of COVID-19 on cruise ships until 

March 8, 2020. Ex. 9 at 2. 

3. The Grand Princess and Carnival’s Public Statements in March 2020 

On March 4, 2020, Carnival learned that certain passengers who had traveled on a prior 

voyage of the Grand Princess and disembarked in San Francisco more than a week earlier had 

tested positive for COVID-19. Compl. ¶ 134. According to Plaintiffs, on the same day Carnival 

learned this information, it ordered the Grand Princess to cancel its current trip to Hawaii and 

return to San Francisco, and instructed all 62 passengers and crew who had also traveled on the 

prior voyage to isolate in their cabins. Id. ¶¶ 134-36. Pursuant to orders from state and local 

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authorities, as well as President Trump, passengers were not allowed to disembark until the 

following week. Ex. 10 at 3, 10; Ex. 11 at 4-5; Ex. 12 at 2-3. 

On March 12 and 13, 2020, Carnival’s brands announced voluntary and temporary pauses 

of their cruising operations. Exs. 13-15; Compl. ¶ 142. On March 14, 2020, the CDC issued a 

No Sail Order, identifying the particular danger COVID-19 posed on cruise ships and suspending 

all future voyages subject to U.S. jurisdiction. Ex. 16. 

The No Sail Order noted the limited magnitude and geographic scope of the pandemic in 

mid-March 2020, as there had been only 132,000 cases globally, 1,620 cases in the United 

States, and 41 known deaths in the United States at that point. Id. at 3. 

4. Carnival Continues to Disclose the Financial Impact of the Pandemic 

As the COVID-19 pandemic continued to evolve, Carnival issued additional disclosures 

updating investors about the impact that COVID-19 and related travel restrictions were having 

on its finances and operations. In a March 16, 2020 SEC filing, Carnival disclosed its belief that 

COVID-19 “will have a material negative impact on its financial results and liquidity” and that 

the Company expected a net loss for the fiscal year. Compl. ¶ 150; Ex. 17 at 4. On March 19, 

2020, Carnival issued a press release previewing its financial results for the first quarter of 2020, 

which included a net loss of $781 million for the quarter, and reiterating that Company’s belief 

that “the ongoing effects of COVID-19 on its operations and global bookings will have a 

material negative impact on its financial results and liquidity.” Ex. 18 at 4. In two SEC filings 

on March 31, 2020, Carnival disclosed substantially similar information in connection with 

Carnival’s public and private offering of new shares; Carnival also added new COVID-19-

specific information to its risk disclosures. Compl. ¶¶ 167-71. 

As discussed in more detail below, the disclosures seized on by Plaintiffs were made in a 

fast-changing environment, in which regulators and experts, including the WHO, the CDC, and 

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the U.S. Executive Branch were disseminating inconsistent recommendations and instructions 

about the threat posed by the virus and the best preventative measures. By April it became clear 

that the impact of the pandemic on both U.S. and international tourism would be far more severe 

and far longer-lasting than any expert or government had predicted. As a result, the lives and 

health of international travelers exposed to COVID-19, including cruise passengers, have been 

tragically impacted. And Carnival’s business and common stock price have been severely 

adversely affected. 

* * * 

The Complaint asserts claims against all Defendants under Section 10(b) of the Exchange 

Act and Rule 10b-5 based on the alleged misrepresentations described below, and a control 

person claim against Donald under Section 20(a) of the Exchange Act. Compl. ¶¶ 266-76. 

ARGUMENT 

To state a claim under Section 10(b) and Rule 10b-5, Plaintiffs must allege, with respect 

to each Defendant: (1) a material misstatement or omission; (2) scienter; (3) a connection 

between the misrepresentation or omission and the purchase or sale of a security; (4) reliance; (5) 

economic loss; and (6) loss causation. Carvelli v. Ocwen Fin. Corp., 934 F.3d 1307, 1317 (11th 

Cir. 2019). Plaintiffs are also subject to a “triple-layered pleading standard,” consisting of not 

only the “federal notice-pleading requirements, . . . but also the heightened pleading standards 

found in Federal Rule of Civil Procedure 9(b) and the special fraud pleading requirements 

imposed by the Private Securities Litigation Reform Act.” Id. at 1317-18. 

To comply with Rule 9(b), Plaintiffs must “allege specifically (1) which statements or 

omissions were made in which documents or oral representations; (2) when, where, and by 

whom the statements were made (or in the case of omissions, not made); (3) the content of the 

statements or omissions and how they were misleading; and (4) what the defendant received as a 

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result of the fraud.” Id. at 1318. Under the PSLRA, falsity allegations must not only “specify 

each statement alleged to have been misleading” but also “the reason or reasons why the 

statement is misleading.” 15 U.S.C. §78u-4(b)(1). The PSLRA also requires, with respect to 

each act or omission alleged, that the complaint “state with particularity facts giving rise to a 

strong inference that the defendant acted with the required state of mind.” 15 U.S.C. §78u4(b)(2). The Complaint fails to satisfy these stringent requirements. 

I. The Complaint Fails to Allege Any Actionable Misrepresentations or Omissions 

The Complaint relies on the fundamentally flawed theory of fraud by hindsight, 

criticizing Carnival for failing to anticipate the course and impact of a novel pandemic on its 

ships. See Abecassis v. Eugene M. Cummings, P.C., 2010 WL 9452252, at *7 (S.D. Fla. June 3, 

2010) (“[s]peculation and fraud by hindsight is no basis for a fraud claim”). The Complaint 

lacks any particularized facts showing that Defendants concealed known risks, or misled 

investors about its commitments to compliance and health and safety, during the class period. 

A. The Complaint Fails to Allege that Defendants Failed to Warn of the Risks to 

Carnival’s Business and Passengers of COVID-19 

1. Defendants’ Statements in January 2020 

Plaintiffs allege that Carnival’s annual report for the fiscal year ending November 30, 

2019, issued on January 28, 2020, was misleading because it failed to disclose the likely impact 

of COVID-19 on the Company’s business and passengers. Compl. ¶ 231. Plaintiffs also allege 

that Carnival misled investors about the severity of COVID-19 and the threat it posed to cruise 

ships when the Company purportedly told the press on January 28 and 31, 2020, that the risks of 

COVID-19 to its guests, crew, and global business were “low.” Id. ¶¶ 78, 85, 218, 219, 232. 

Neither allegation withstands scrutiny. 

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10 

Plaintiffs’ claims about the 10-K fail because, as Plaintiffs themselves acknowledge, the 

10-K specifically warned that the coronavirus had forced the Company to suspend cruise 

operations in China and that “[i]f these travel restrictions continue for an extended period of 

time, they could have a material impact on our financial performance.” Ex. 1 at 26; Compl. 

¶ 132.3 Plaintiffs do not identify any additional information that Defendants should have 

included in this risk disclosure; nor could they, given how little was known about the virus at that 

time. See infra at 13, 25. Plaintiffs also ignore warnings in the 10-K that Carnival’s business 

could be adversely affected by guest and crew illness and by the public’s concerns regarding the 

health, safety, and security of travel, and that Carnival had experienced health and safety 

incidents in the past and “may experience similar or other incidents in the future.” Ex. 1 at 21. 

Despite Plaintiffs’ argument that the 10-K “omitted any mention” of the risks COVID-19 posed 

to the Company’s “financial health,” Compl. ¶ 79, the 10-K clearly disclosed the very risk that 

Plaintiffs allege materialized, extinguishing their claim. See Hubbard v. BankAtlantic Bancorp, 

Inc., 688 F.3d 713, 729-30 (11th Cir. 2012) (finding there could be no claim when plaintiffs’ 

alleged loses were due to “market forces that [defendant] had warned of”). 

Plaintiffs also plead no facts to suggest that Carnival did not reasonably believe that the 

risk to Carnival’s guests and crew “around the world” was “low” in late January 2020. 

Predictions made in good faith based on what is knowable at the time cannot be the basis of 

securities fraud just because they are later proven to be inaccurate. In re John Alden Fin. Corp. 

Sec. Litig., 249 F. Supp. 2d 1273, 1277 (S.D. Fla. 2003) (“The fact that in hindsight the 

projection turned out to be wrong does not mean that it lacked a reasonable basis when made.”).4 

3

 Plaintiffs allege that this language appeared in Carnival’s annual report filed on February 27, 2020. See Compl. 

¶ 132. Plaintiffs are wrong. Carnival filed its annual report on January 28, 2020. Ex. 1; see Compl. ¶ 227. 

4

 See also Carvelli, 934 F.3d at 1323 (affirming dismissal of claims where plaintiffs failed to allege that the 

defendant did not believe its statements of opinion about its competitive strengths or improved results); In re 

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11 

Moreover, the assessment that the global risk of COVID-19 was “low” at the time was 

consistent with contemporaneous public statements from leading health authorities. On January 

17, 2020, the director of the CDC’s National Center for Immunization and Respiratory Diseases 

advised that “the current risk from this virus to the general public is low.” Ex. 2 at 2. On 

January 30, 2020, the CDC described the “risk to the American public” as “low.” Ex. 4 at 2. 

Even in late February, the WHO still reported that the “risk of infection is low” for individuals 

who had not come in close contact with an infected person or recently traveled to an area where 

COVID-19 was spreading. Ex. 19 at 8; see also infra at 13, 25. 

The pandemic was also believed to be geographically contained at the time these 

statements were made. As of January 30, 2020, there were only 83 confirmed cases of the virus 

and no confirmed deaths outside of mainland China. See Compl. ¶ 83. The very statements 

referenced in the Complaint confirm this point. In his January 31, 2020 proclamation, President 

Trump noted that only around “200 people have died from the virus, all in China,” and only 

restricted travel of non-citizens coming from mainland China. Ex. 20 at 2; Compl. ¶ 84. 

Likewise, both the U.S. Coast Guard and Department of Transportation bulletins cited by 

Plaintiffs identified COVID-19 as being geographically limited to specific regions of China and 

noted that it was a “rapidly changing situation” and “unclear how easily th[e] virus spreads 

between people.” Exs. 3 & 21; Compl. ¶¶ 94-95; see also Ex. 23 at 7 (cited in Compl. ¶ 96) 

(January 27, 2020 guidance from the European Union describing the “current absence of 

adequate evidence for the novel Coronavirus transmission and communicability”). Plaintiffs do 

Ford Motor Co. Sec. Litig., 381 F.3d 563, 571-72 (6th Cir. 2004) (statement that the “Ford Explorer is an 

extremely safe and thoroughly-engineered vehicle” not rendered misleading by later recall because Plaintiffs 

offered no basis to believe defendant did not believe the statements when made). 

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not identify a single known case of COVID-19 aboard any cruise ship, let alone a Carnival ship, 

in January 2020. 

Notwithstanding the uncertainty and lack of consensus about the risks of COVID-19 in 

January 2020, Plaintiffs allege that Carnival “was in a unique position to understand the gravity 

of COVID-19 even before the WHO and United States government sounded the alarm.” Compl. 

¶ 80. The basis for this incredible allegation is a vague quotation taken from an April 16, 2020 

Bloomberg Businessweek article, in which John Padgett, Carnival’s Chief Experience and 

Innovation Officer, recalled gaining “insight” into the “global situation” on January 25, 2020, 

after discussing coronavirus with an unnamed battery manufacturer in Wuhan, China. Ex. 10 at 

11-12. But Plaintiffs provide no details about what “insight” Padgett supposedly learned in 

January that leading health and government experts lacked. To the extent Padgett learned about 

the scale of the outbreak in Wuhan, Plaintiffs ignore the fact that Carnival canceled all cruising 

operations in China on the same date Padgett allegedly spoke to the battery manufacturer. Ex. 1 

at 26; see also infra Section II.A. 

Plaintiffs also reference a former Carnival employee—who began working after January 

2020—who recalls the unremarkable fact that as manufacturing plants in China were affected by 

the virus, he was forced to look for other suppliers for Carnival’s wristbands. Compl. ¶ 81. But 

this employee does not suggest that he was unable to secure any product, or that he shared his 

concerns with any supervisor, much less a senior executive. See In re Royal Caribbean Cruises 

Ltd. Sec. Litig., 2013 WL 3295951, at *18 (S.D. Fla. Apr. 19, 2013) (rejecting confidential 

witness accounts where complaint failed to allege that they communicated their observations to 

senior management). 

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2. Defendants’ Statements in February 2020 

As the situation evolved, Carnival promptly and accurately disclosed to the public 

information regarding the danger COVID-19 posed to its passengers and business. On February 

12, 2020, Carnival issued a press release which warned that the virus was “now resulting in the 

cancellation of voyages” from China and “other parts of Asia,” and that “as a result of 

Coronavirus, the company believes the impact on its global bookings and cancelled voyages will 

have a material impact on its financial results.” Ex. 5 at 2; Compl. ¶ 119. The Company also 

provided investors with its best per-share estimate of the negative impact of COVID-19. Ex. 5. 

Plaintiffs plead no facts showing that Carnival somehow knew that COVID-19 posed a 

greater risk than the Company disclosed on February 12, 2020 and fail to identify any additional 

risk disclosures that Carnival should have included in this press release. Carnival could not have 

known at the time that it would later have to cancel its global cruising operations. The 

contemporaneously released CDC Interim Guidance did not recommend that ship operators 

cancel voyages, even if a current passenger tested positive for COVID-19. See Ex. 6. And the 

CDC did not order the cancelation of future voyages until it issued a No Sail Order more than 

one month later, on March 14, 2020. Ex. 16. Similarly, the U.S. Department of State did not 

recommend that U.S. citizens even reconsider cruise ship travel to or within Asia until February 

20, 2020, Ex. 22 at 2, and did not warn travelers of the dangers associated with COVID-19 on 

cruise ships generally until March 8, 2020. Ex. 9 at 2. And the WHO did not issue guidance for 

handling COVID-19 on cruise ships until February 24, 2020—and even then, the WHO did not 

recommend that operators cancel cruises. See Ex. 24. The Complaint does not plausibly allege 

that Carnival’s management had better insight than these public health experts regarding the 

geographic extent and rapidity of the pandemic’s spread. 

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3. Defendants’ Statements in March 2020 

Plaintiffs allege that statements made by Donald and other Carnival employees in March 

2020 were misleading because they misstated and concealed the risks COVID-19 posed to cruise 

ships. Compl. ¶¶ 154-57; 251-53. For example, Donald expressed his opinion in television 

interviews on March 18 and 22 that “a cruise ship is not a riskier environment” than other 

activities because it provides guests with “space and social distancing” and access to clinics. 

Donald’s opinions could not have misled investors because the cited interviews occurred 

after the market knew that Carnival had voluntarily suspended its global operations and the CDC 

had prohibited all further cruising operations. See infra at 22. Both interviews also aired after

Carnival issued an SEC filing on March 16, 2020, which, according to Plaintiffs, “began to 

reveal to investors” the pandemic’s impact on the Company’s business operations and financials. 

Compl. ¶ 151. Given the extensive public information about the risks of COVID-19 aboard 

cruise ships, including Defendants’ own disclosures, Donald’s statements could not have misled 

investors. See Hubbard, 688 F.3d at 729-30. The Complaint also contains no facts 

demonstrating that Donald did not believe his statements of opinion at the time they were made. 

See Carvelli, 934 F.3d at 1323. 

Plaintiffs also argue that Defendants’ statements in March were belied by “the extent of 

COVID-19 cases linked to the Company’s ships.” Compl. ¶ 253. But the Complaint identifies 

only six Carnival ships that had COVID-19 cases in March 2020, which is entirely consistent 

with Donald’s statement that among Carnival’s cruise ships, “very few had cases on them.” 

Compl. ¶ 252.5 

5

 Plaintiffs also allege that by March 13, health officials at the CDC had “linked cruise passengers to 17% of the 

country’s COVID-19 case load,” but provide no source for that allegation. Compl. ¶ 185. The only CDC 

release from the time period that Plaintiffs do cite is the March 14, 2020 CDC No Sail Order, which does not 

support Plaintiffs’ allegation about cruise passengers. 

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Plaintiffs also claim that Donald’s statements in March were misleading because an 

unidentified member of the CDC’s cruise ship task force “later explained” that the virus spreads 

more rapidly on a cruise ship than a supermarket or subway. Compl. ¶ 158. But neither this 

information, for which Plaintiffs cite no authority, nor later reporting between April and October 

2020, Compl. ¶¶ 185-86, can render Defendants’ statements about the risks of COVID-19 in 

March misleading. See S.E.C. v. Gane, 2005 WL 90154, at *11 (S.D. Fla. Jan. 4, 2005) (an 

“inability to foresee the future does not constitute fraud”) (quotation marks omitted). 

B. The Complaint Fails to Allege that Defendants’ Statements Affirming 

Carnival’s Compliance with Regulatory Requirements Were False or 

Misleading 

Plaintiffs allege that Defendants’ routine statements throughout the class period affirming 

Carnival’s commitment to complying with regulatory requirements were materially misleading 

because Carnival allegedly failed to adhere to certain regulatory guidelines in the early days of 

the pandemic. See, e.g., Compl. ¶¶ 51, 61-63, 154-55, 218-25, 240-41. These allegations fail 

because Plaintiffs plead no specific facts demonstrating isolated incidents of regulatory 

noncompliance, much less the kind of systemic, fleet-wide noncompliance that could render 

Defendants’ statements misleading. 

As a threshold point, although the Complaint purports to identify several examples of 

regulations and guidelines, it fails to explain what, precisely, Carnival did to allegedly run afoul 

of most of these regulations and guidelines. There are, for example, no allegations that Carnival 

actually failed to comply with the WHO “Handbook for management of public health events on 

board ships” (Compl. ¶ 48), the January 24, 2020 U.S. Coast Guard Bulletin (Compl. ¶ 94), the 

January 24, 2020 Department of Transportation Release (Compl. ¶ 95), the EU COVID-19 

Guidance (Compl. ¶ 96), the January 31, 2020 proclamation by President Trump (Compl. ¶ 84), 

or the March 14 CDC No Sail Order (Compl. ¶ 147). 

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Several of Plaintiffs’ other allegations of regulatory noncompliance are simply too vague 

or conclusory to support a fraud claim under the PSLRA. For example, Plaintiffs allege that 

Carnival “ignored the direction of Hong Kong officials to ‘cleanse and disinfect’” the Diamond 

Princess after learning that a former passenger had tested positive for COVID-19. Compl. 

¶¶ 108, 225. But they fail to explain what Carnival allegedly had been ordered to do, and how 

Carnival failed to comply; Plaintiffs simply state without any explanation or elaboration that 

Carnival’s cleaning procedures were “low-level and minimal at best.” Compl. ¶ 108; see also 

Compl. ¶ 155 (alleging that a Carnival ship ignored an unspecified Argentine “order” to remain 

in port “indefinitely”). Because “the Complaint does not identify the regulations or standards 

that [defendants] allegedly failed to comply with,” Plaintiffs cannot allege that Carnival’s 

statements regarding its commitment to compliance were misleading. See Nardy v. Chipotle 

Mex. Grill, Inc., 2019 WL 3297467, at *11 (D. Colo. Mar 29, 2019). 

Plaintiffs allege that Defendants’ handling of the COVID-19 outbreak aboard the 

Diamond Princess in early February 2020 “flout[ed]” the CDC’s Guidance for Cruise Ships on 

Influenza-Like Illness Management (the “ILI Guidance”), which had been issued in 2016. 

Compl. ¶ 225. But the ILI Guidance, by its plain terms, was simply “guidance” that contained 

the CDC’s “recommendations” and “requests” to help cruise ships prevent, diagnose, and treat 

ILI. Ex. 25. It applied only to cruise ships “originating from, or stopping in, the United States,” 

id. at 2, and therefore did not apply to the Diamond Princess. 

In any event, Plaintiffs’ do not identify any recommendations in the ILI Guidance that 

Carnival failed to follow. Plaintiffs fault Carnival for taking too long to inform passengers that a 

former passenger—who disembarked a week earlier—had tested positive for coronavirus. 

Compl. ¶¶ 98-99. But the ILI Guidance does not recommend that operators inform customers 

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that a prior passenger was infected, see Ex. 25, and the Diamond Princess captain informed all 

passengers within one day of learning about the diagnosis, Compl. ¶ 101. Plaintiffs allege that 

the fact that “passengers were not given masks or other PPE when Carnival learned of the 

confirmed coronavirus case” was “a clear failure of protocol.” Compl. ¶ 103. But nowhere does 

the ILI Guidance recommend masks for passengers; it even states that face masks are “not 

generally recommended for cruise ship crew members for general work activities.” Ex. 25 at 5. 

Even as late as March 2020, both the WHO and the U.S. Surgeon General recommended against

the use of masks except when caring for someone suspected of having COVID-19. Exs. 26-27. 

Plaintiffs also argue that Carnival failed to isolate passengers and crew who may have come into 

contact with the infected passenger, failed to impose adequate distancing measures, and failed to 

impose enhanced sanitization measures. Compl. ¶ 106. But none of these measures are 

recommended for general use in the ILI Guidance. See Ex. 25. Although implementing these 

measures might seem sensible given what is known today, they were not obvious—much less 

mandated—during the first week of February 2020, when the CDC was recommending “no 

additional precautions . . . beyond the simple daily precautions that everyone should always 

take.” See Ex. 4 at 3.6

Plaintiffs also allege that Carnival’s handling of an outbreak aboard the Grand Princess 

in early March 2020 reflected “Carnival’s non-compliance with applicable CDC guidelines,” but 

fail to specify any particular CDC guideline or offending conduct. See Compl. ¶ 136. Plaintiffs 

appear to fault Carnival for failing to “examine” certain passengers who traveled on the Grand 

Princess’ prior voyage from Mexico to San Francisco, and then “re-embarked” for a subsequent 

6

 To the extent Plaintiffs fault Carnival for continuing to sell cruise tickets after the events aboard the Diamond 

Princess, Compl. ¶¶ 114-17, they do not suggest that this practice violated any rule or agency guidance. 

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trip from San Francisco to Hawaii. See Compl. ¶¶ 134, 238. But Plaintiffs provide no 

explanation for why Carnival should have examined those passengers when they “re-embarked” 

on February 11, 2020—at a time when no known cases of COVID-19 were linked to the 

vessel—and Plaintiffs cite no regulation that would have mandated such an examination. 

Plaintiffs also allege that Carnival’s “decision” to keep passengers aboard the ship on March 7, 

2020, after confirming cases on board, was “reckless.” Compl. ¶ 137. This accusation is 

disingenuous; according to contemporaneous reporting and articles cited in the Complaint, the 

decision to require passengers to quarantine aboard the Grand Princess rather than on land was 

made by state and local authorities, as well as President Trump. E.g., Exs. 10-12.7 

Finally, Plaintiffs allege that two vessels that launched in March 2020—the Coral 

Princess and the Ecstasy—failed to conduct pre-boarding “verbal or written screening” to assess 

passengers for potential COVID-19 exposure, a precaution purportedly recommended in the 

CDC’s Interim Guidance. Compl. ¶¶ 123, 138, 140-41. Plaintiffs have their facts wrong; this 

recommendation did not appear in the Interim Guidance. See Ex. 6. Plaintiffs quote language 

from a version of the CDC’s Guidance issued in July 2020, long after these voyages were 

concluded. See Ex. 28 at 3-4; Compl. ¶ 123. Defendants cannot be faulted for failing to abide 

by regulatory guidance that did not exist.8 

7

 Plaintiffs’ allegation is particularly puzzling given that Plaintiffs elsewhere fault Carnival for allowing

passengers to disembark ships with confirmed or suspected COVID-19 cases. Compl. ¶¶ 118, 144, 159. 

8

 The allegation that the Ecstasy and Coral Princess did not comply with the Interim Guidance because they 

sailed with “no modifications imposed to accommodate social distancing guidelines, and no adequate 

sanitization of the ship,” Compl. ¶ 141, lacks any support in the Complaint and should be afforded no weight. 

The Complaint’s similar allegations about the Zaandam should be afforded no weight because they appear to be 

based on the recollection of a handful of anonymous passengers on that ship who would have no knowledge of 

the ship’s cleaning measures and PPE protocols. Compl. ¶ 162; infra Section II.B. In any event, because the 

Zaandam did not originate or stop in a U.S. port, it was not subject to the recommendations in the ILI or Interim 

Guidance. 

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Even assuming this conduct ran afoul of a regulatory requirement (or even a 

recommendation), it would not render Carnival’s statements about commitment to regulatory 

compliance actionable. In addition to its own health and safety policies, Carnival operated in 

over 700 ports around the world and is “subject to numerous international, national, state and 

local laws, regulations, treaties and other legal requirements” that “change regularly, sometimes 

on a daily basis.” See Ex. 1 at 21. Both the ILI and the Interim Guidance recognize this tangled 

web of regulations and guidance, noting that “[a]s ships travel worldwide, ship management and 

medical staff need to be aware and respond to local jurisdictional requirements.” Exs. 6 & 25. 

No reasonable investor would have interpreted Carnival’s comments as a guarantee that the 

Company would always comply with every one of the myriad of potentially applicable rules and 

regulations. In any event, the securities laws do not require companies to disclose isolated acts 

of mismanagement. See Menaldi v. Och-Ziff Cap. Mgmt. Grp LLC, 277 F. Supp. 3d 500, 512-13 

(S.D.N.Y. 2017) (holding that company’s disclosure about anti-corruption compliance programs 

was not rendered misleading by failure to disclosed bribes allegedly paid by employees).9 

The Second Circuit’s decision in Singh v. Cigna Corporation, 918 F.3d 57 (2d Cir. 2019) 

is instructive. In Singh, plaintiffs alleged that defendants’ statements regarding their 

commitment to compliance with all “applicable regulations” were materially misleading because 

a regulator later found that the company had committed several violations. Id. at 630-61. The 

appellate court affirmed dismissal of these claims because a reasonable investor would not have 

relied on general statements regarding regulatory compliance in making an investment decision. 

9

 Henningsen v. ADT Corp., 161 F. Supp. 3d 1161, 1197 (S.D. Fla. 2015) (“[T]he law does not impose a duty to 

disclose every slip-up and misstep, however immaterial, within a touted sales program.”), aff’d sub nom., 660 F. 

App’x 850 (11th Cir. 2016); Luo v. Sogou, Inc., 465 F. Supp. 3d 393, 413 (S.D.N.Y. 2020) (“[T]here is no freestanding obligation under United States law to disclose even criminal conduct that is uncharged—let alone 

insufficient regulatory compliance.”). 

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Id. at 63. The court emphasized that defendants’ statements about compliance with applicable 

regulations were, much like Carnival’s disclosure, “framed by acknowledgements of the 

complexity and numerosity of applicable regulations,” which “suggests caution (rather than 

confidence) regarding the extent of [defendant’s] compliance.” Id. at 64. The court rejected 

plaintiffs’ “creative attempt to recast” the regulatory violations at issue as securities fraud and 

explained that “such generic statements [regarding compliance] do not invite reasonable reliance 

. . . and so cannot form the basis of a fraud case.” Id. at 59-60. Recently, the Eleventh Circuit 

found similar statements concerning a company’s commitment to “devote substantial resources 

to . . . regulatory compliance and risk management efforts” were inactionable. Carvelli, 934 

F.3d at 1320-22.10 The Court should reach the same conclusion here.11 

C. The Complaint Fails to Allege that Defendants’ Statements Concerning 

Carnival’s Commitment to Passenger Safety and Health Were False or 

Misleading 

Plaintiffs allege that Carnival’s statements affirming the Company’s “commitment to the 

safety of our guests and crew” were materially misleading because Carnival allegedly failed to 

establish appropriate health and safety protocols, which in turn contributed to COVID-19 

infections aboard certain ships. See, e.g., Compl. ¶¶ 46, 74, 128, 214-17, 221-22, 234-47. The 

Complaint does not identify what health and safety protocols Carnival had in place, nor explain 

10

 See also Plumbers & Steamfitters Local 773 Pension Fund v. Danske Bank, 2020 WL 4937461, at *7 (S.D.N.Y. 

Aug. 24, 2020) (finding defendant’s statement that the company “conduct[s] business in accordance with the 

laws and regulations of the countries where we operate” was inactionable) (citing TAC ¶ 245); Diehl v. Omega 

Protein Corp., 339 F. Supp. 3d 153, 162 (S.D.N.Y. 2018) (finding statement that defendant had “implemented a 

comprehensive compliance program” was not actionable “[r]egardless of whether [defendant] had properly 

implemented the compliance program” or whether that program was effective). 

11 The allegations that two vessels failed to inform passengers that certain individuals had begun to experience flulike symptoms, and that passengers without symptoms were permitted to disembark from those vessels, fail for 

the same reasons. See Compl. ¶¶ 143-46, 159-60. Plaintiffs do not identify what rule, if any, this alleged 

conduct violated; and even if they did, isolated acts of regulatory noncompliance do not amount to securities 

fraud. See Singh, 918 F.3d at 63. 

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why they were inadequate or how Carnival failed to follow them. Instead, Plaintiffs argue that 

Carnival simply “lacked health and safety policies” and “never had proper health and safety 

protocols in place to protect its passengers and crew.” Compl. ¶ 211 (emphasis added). These 

vague allegations are insufficient for several reasons. 

The very documents cited in the Complaint demonstrate that Carnival did not “lack” 

health and safety policies. The Complaint admits that Carnival’s Board of Directors maintains a 

committee that oversees the Company’s health, environment, safety, and security (“HESS”) 

protocols, subject to a publicly available HESS Policy. Compl. ¶¶ 56-57. The HESS Policy 

tasks Carnival’s management with taking certain actions to improve the Company’s HESS 

practices, such as performing “annual HESS audits,” providing “HESS and sustainability 

support, training, advice, and information” to “passengers, guests, [and] employees,” and 

maintaining “an Ethics & Compliance reporting hotline.” Ex. 29; Compl. ¶¶ 59-61. Plaintiffs do 

not allege that the HESS Committee failed to meet or follow through on its commitments. The 

Complaint also admits that the Company hired a former federal prosecutor in August 2019 to fill 

the newly-created position of Chief Ethics and Compliance Officer, Compl. ¶ 62, and created an 

Incident Analysis Group (“IAG”) in September 2019 to review and recommend enhancements to 

the Company’s HESS Policies, Compl. ¶ 64. 

The Complaint is also replete with examples of Carnival’s conduct that reflect its 

commitment to health and safety—often at the expense of its bottom line. Plaintiffs allege that 

as early as January 25, 2020, Carnival suspended its cruise operations in China, the only known 

region with a significant number of COVID-19 cases at the time. Compl. ¶ 227. When the 

Diamond Princess experienced an outbreak in early February 2020, Carnival’s CEO “dial[ed] 

into” the response and traveled to California and Washington to participate in crisis-response 

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meetings. Compl. ¶ 197. According to several disclosures cited by the Complaint, Carnival was 

“coordinating closely” with the CDC and WHO as early as January 2020 “to implement 

enhanced screening, prevention and control measures for [its] guests, crew and ships.” Compl. 

¶¶ 85, 119, 136, 154. Plaintiffs plead no facts showing that Carnival was not coordinating 

closely with these authorities. To the contrary, the Complaint admits that Carnival personnel 

collaborated with “the CDC and other government agencies that were coordinating the American 

response to the pandemic,” and cites an email exchange in which Carnival personnel and the 

CDC collaborated on a plan to disembark and repatriate passengers aboard certain Carnival 

ships. Compl. ¶¶ 100, 180-83, 198. And as the scope of the COVID-19 pandemic came into 

focus, Carnival voluntarily suspended its global operations to “mitigate the spread” of the 

virus—prior to the CDC’s No Sail Order. Compl. ¶ 142. The CDC praised CLIA members, 

which includes all Carnival lines, for proactively suspending cruise ship operations, an action 

that demonstrated “commitment . . . to protecting the health and safety of both cruise ship 

passengers and the public at large.” See Ex. 16 at 6. These allegations are simply inconsistent 

with the theory that Carnival lacked any health and safety protocols. 

Notwithstanding these concessions, Plaintiffs allege that Carnival’s lack of commitment 

to health and safety was evident from the widely-reported outbreaks that occurred aboard the 

Diamond Princess and Grand Princess. Despite characterizing Carnival’s response as sluggish, 

however, the Complaint makes clear that within a day of learning that a single former Diamond 

Princess passenger had tested positive for COVID-19, Carnival alerted the local authorities and 

the entire vessel of the diagnosis. Compl. ¶¶ 98-101. Over the next three days, in consultation 

with global health authorities, the vessel invited local health officials aboard to screen patients 

for coronavirus, counseled passengers to “to avoid close contact with anyone who was 

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experiencing symptoms of respiratory illness, to wash their hands regularly for twenty seconds, 

and to seek treatment from the ship’s nurses if they experience a fever, chills, or cough,” 

canceled several scheduled activities, and imposed a full, ship-wide quarantine. Id. ¶¶ 100-03. 

These actions were taken during the first week in February—at a time when the WHO did not 

recommend cancellation of mass gatherings in part because “[n]ot enough is known about . . . the 

intensity of human-to-human transmission.” Ex. 8 at 3. 

Plaintiffs’ allegations about the Grand Princess are similarly unavailing. According to 

the Complaint, on the same day that Carnival learned that passengers who had disembarked more 

than a week earlier had tested positive for COVID-19, it returned the vessel to its originating port 

and instructed all passengers and crew who had traveled on the prior voyage with the infected 

passengers to isolate in their cabins. Compl. ¶¶ 134-36. Each of those individuals were then 

tested for coronavirus the following day. Id. These affirmative steps to limit the spread of 

COVID-19 were not even contemplated by the ILI or the Interim Guidance, and Plaintiffs fail to 

identify any additional precautions that public health authorities recommended at the time. 

Plaintiffs also allege that certain other Carnival ships experienced COVID-19 cases and 

failed to implement better cleaning, distancing, and isolation protocols in February and March 

2020. See Compl. ¶ 73. As discussed above, however, Plaintiffs do not allege that Carnival’s 

conduct on any ship ran afoul of health- or safety-related government recommendations, much 

less regulations. See supra Section I.B. And the fact that certain ships experienced cases does 

not demonstrate Carnival’s lack of commitment to health and safety because the mere fact that a 

risk materializes is not evidence that a company was not committed to preventing or combating 

that risk. See Ong v. Chipotle Mex. Grill, Inc., 294 F. Supp. 3d 199, 232 (S.D.N.Y. 2018) 

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(finding that statements of “commit[ment]” to safety programs were not actionable simply 

because the company “failed to live up to its . . . safety standards”).12 

Carnival did not claim that its health and safety policies were guaranteed to be effective. 

To the contrary, Carnival disclosed that despite its commitment to safety, “our ships have been 

involved in accidents and other incidents in the past and we may experience similar or other 

incidents in the future.” Ex. 1 at 21. Courts have recognized that no compliance or safety 

program is guaranteed to be foolproof. See Retail Wholesale & Dept. Store Union Local 338 

Ret. Fund v. Hewlett-Packard Co., 845 F.3d 1268, 1278 (9th Cir. 2017) (finding that the 

“promotion of ethical conduct . . . did not reasonably suggest that there would be no violations”); 

Barrett v. PJT Partners Inc., 2017 WL 3995606, at *6 n.6 (S.D.N.Y. Sept. 8, 2017) (a statement 

that the company “prohibits certain conduct by employees is not a factual representation that 

those policies will always be followed by all employees or that they are 100% effective”). 

Plaintiffs would require that any company making this “type of milquetoast corporate-speak” 

disclosure regarding its safety or compliance program also disclose any failure of those plans. 

Menaldi, 277 F. Supp. 3d at 513. That is plainly not the law. See In re Braskem S.A. Sec. Litig., 

246 F. Supp. 3d 731, 755-56 (S.D.N.Y. 2017) ( “[I]t simply cannot be that every time a violation 

of [a company’s] code occurs, a company is liable under federal law for having chosen to adopt 

the code at all.”) (quotation marks omitted). 

12 These allegations are also inadequate because they are based on anonymous accounts of former passengers that 

were published in post-class period news reports, Compl. ¶¶ 97, 191, and Plaintiffs provide no explanation for 

how a handful of former customers on a few vessels would have insight into Carnival’s fleet-wide health and 

safety practices. See Mizzaro v. Home Depot, Inc., 544 F.3d 1230, 1239-40 (11th Cir. 2008). At most, these 

customers may have witnessed certain crew members on certain Carnival ships failing to implement what 

Plaintiffs now believe—with the basis of hindsight—would have been better safety procedures. That is 

insufficient to allege that Carnival lacked health and safety policies entirely, that Carnival’s policies were 

inadequate, or that Carnival failed to implement its policies. See Henningsen, 161 F. Supp. 3d at 1195-96 

(finding that an allegation from an internal confidential witness that defendants in isolated circumstances did 

not require background checks was insufficient to show that there was a company-wide policy to that effect). 

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To the extent Plaintiffs fault Defendants for not implementing more stringent health and 

safety protocols in early 2020—or for not canceling all Carnival cruises at that time—those 

allegations fail because the Complaint does not show that any of Carnival’s statements or 

protocols were inconsistent with the medical consensus about the risk of the virus and best 

preventative practices at the time. In early 2020, health officials largely advised travelers to 

follow standard safety precautions, but did not recommend mask usage, cancellation of 

international travel, cancellation of cruises, or cancellation of large gatherings.13 Even the 

Interim Guidance on which Plaintiffs rely notes that “routes of transmission have yet to be 

determined” and only advised isolating individuals with COVID-19 symptoms or those who had 

“high-risk exposures” to symptomatic individuals. Ex. 6 at 3-4. And the CDC did not 

recommend that people wear face coverings in public to slow the spread of COVID-19 until 

April 4, 2020—reversing its earlier position. See Exs. 32-33. The mere fact that health care 

experts and government officials later changed their advice concerning how to best protect 

people from COVID-19, or that, in hindsight, the risks were greater than Carnival, the WHO, and 

the CDC believed them to be is not a basis for a securities fraud claim. See McClain v. Iradimed 

Corp., 111 F. Supp. 3d 1293, 1303-04 (S.D. Fla. 2015) (Moore, J.) (finding that it was not a 

misleading omission to fail to disclose events that had not yet occurred). 

Finally, even if Plaintiffs could identify any supposed shortcomings in Carnival’s health 

and safety protocols (and they do not), Carnival’s statements regarding its commitment to health 

13

 E.g., Ex. 30 (January 29, 2020: WHO states that there is “no evidence” on masks’ “usefulness to protect nonsick persons”); Ex. 31 (February 4, 2020: WHO chief calls on countries not to impose restrictions “that 

unnecessarily interfere with international travel and trade”); Ex. 6 (February 12, 2020: CDC provides interim 

guidance to ships handling COVID-19 stating that the use of masks is “not generally recommended for cruise 

ship crew members for general work activities”); Ex. 7 (February 12, 2020: WHO does “not recommend any 

specific health measures for travelers); Ex. 27 (March 1, 2020: WHO states “If you are healthy, you only need 

to wear a mask if you are taking care of a person with suspected #coronavirus infection”); see supra at 13. 

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and safety are not actionable under the securities laws. Courts have repeatedly found that valuebased statements affirming commitments to “product safety” are not actionable. Howard v. 

Arconic Inc., 395 F. Supp. 3d 516, 549 (W.D. Pa. 2019).14 This is because these statements 

merely “present[] a declaration of goals and aspirations for the Company,” upon which no 

reasonable investor would rely. Howard, 395 F. Supp. 3d at 549. While Defendants take their 

commitments to passenger health and safety seriously, these statements cannot form the basis of 

a securities fraud suit. 

D. Carnival Cruise Line’s Statement that it “Had Not Had a Diagnosed Case 

Linked to Our Operation” is Not Alleged to Have Been False at the Time It 

was Made 

Plaintiffs allege that Carnival Cruise Line’s statement on March 13, 2020 that “Carnival 

[Cruise Lines] has not had a diagnosed case linked to our operation” was false because Carnival 

had previously reported COVID-19 outbreaks aboard certain vessels. Compl. ¶¶ 248-49. 

Plaintiffs conflate Carnival, the parent company, with Carnival Cruise Line, the brand. The 

statement quoted in the Complaint was issued by and about Carnival Cruise Line, which operates 

the “Carnival” branded ships. Exs. 13-14. The outbreaks identified in the Complaint occurred 

on ships operated by entirely different brands that did not issue the relevant statement. 

Additionally, given how widely reported the COVID-19 cases aboard other ships were, infra at 

39, no reasonable investor would have been misled by Carnival Cruise Line’s statement, even if 

it had applied to all Carnival vessels. See Monroe Cnty. Emps.’ Ret. System v. YPF Sociedad 

Anonima, 15 F. Supp. 3d 336, 355-56 (S.D.N.Y. 2014) (dismissing Section 10(b) claims where 

“[m]any of [the] alleged omissions were either fully disclosed or matters of public knowledge”). 

14

 See, e.g., City of Pontiac Policemen’s & Firemen’s Ret. Sys v. UBS AG, 752 F.3d 173, 185 n.53 (2d Cir. 2014) 

(finding that general statements regarding “reputation, integrity, . . . compliance with ethical norms” and “risk 

management” to be inactionable); Ong, 294 F. Supp. 3d at 231-33 (finding inactionable statements that “food 

safety programs are also designed to ensure that [the Company] compl[ies] with applicable . . . guidelines”). 

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II. The Complaint Fails to Allege Scienter 

Liability for securities fraud requires a “showing of either an intent to deceive, 

manipulate, or defraud or severe recklessness.” Brophy v. Jiangbo Pharms., Inc., 781 F.3d 1296, 

1302 (11th Cir. 2015) (internal quotation and citation omitted). “Severe recklessness is limited 

to those highly unreasonable omissions or misrepresentations that involve not merely simple or 

even inexcusable negligence, but an extreme departure from the standards of ordinary care [such 

that] . . . the defendant must have been aware of [the fraud].” Ziemba v. Cascade Int’l, Inc., 256 

F.3d 1194, 1202 (11th Cir. 2001). Plaintiffs must not only identify facts contradicting 

defendants’ public statements but must plead particular facts—such as “documentation, 

communication, or conversation”—showing that the contrary information was reported to or 

otherwise known by defendants. See Mizzaro, 544 F.3d at 1250-51. To survive dismissal, a 

complaint must allege facts sufficient to make the inference of scienter “more than merely 

plausible or reasonable—it must be cogent and at least as compelling as any opposing inference 

of non-fraudulent intent.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 314 

(2007). The Complaint makes no such showing. 

A. The Complaint Fails to Allege Severe Recklessness with Respect to 

Defendants’ Statements about the Risks of COVID-19 

The Complaint alleges no facts raising a strong inference that Defendants had actual, 

contemporaneous knowledge of material risks to the Company’s operations and finances in early 

2020 that they intentionally failed to disclose.15 As discussed supra Section I.A.1-2, 

announcements by public health authorities in January and February 2020 reflected their belief 

that the risks of COVID-19 at that time were limited. See, e.g., Exs. 2 & 4. To the extent there 

15 To evaluate whether the defendant corporations acted with scienter, the Court must “look to the state of mind of 

the individual corporate official or officials who made or issued the [challenged] statement.” Mizzaro, 544 F.3d 

at 1254 (quoting Southland Secs. Corp. v. INSpire Ins. Sols., Inc., 365 F.3d 353, 366 (5th Cir. 2004)). 

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was any consensus among medical experts at the time, it was not to enact broad restrictions on 

international travel or cancel mass gatherings. See Exs. 4, 7 & 31. And the medical community 

believed at the time that certain preventative measures we take for granted today—such as 

wearing masks—would not prevent the spread of the virus. See Exs. 26-27 & 30. 

Plaintiffs plead no specific facts demonstrating that, despite this record, Carnival 

somehow knew about the unprecedented scope and impact of the pandemic in early 2020. 

Instead, the Complaint repeatedly references a statement allegedly made by John Padgett, 

Carnival’s Chief Experience and Innovation Officer, suggesting that he learned from a Wuhanbased battery manufacturer about the “gravity,” “magnitude,” and “scale” of the COVID-19 

pandemic on January 25, 2020—“even before the WHO and the United States government 

sounded the alarm.” Compl. ¶¶ 80, 202. At most, these statements suggest that Padgett learned 

about the extent of the outbreak in Wuhan, China, on January 25. But there is no allegation that 

Defendants ignored this purported information; to the contrary, Carnival suspended all cruising 

operations in China on that same date. Compl. ¶ 82. To the extent Plaintiffs allege Defendants 

somehow learned about the full, global scale of the pandemic on January 25, 2020—when there 

were fewer than 83 reported cases and no reported deaths outside China, see Compl. ¶ 83—the 

allegation is implausible and should be rejected. See Tellabs, 551 U.S. at 314. 

The allegation should also be rejected because it comes nowhere near meeting the 

particularity requirements of the PSLRA. The Complaint provides no detail about what 

information or “insight” the battery manufacturer provided to Padgett, nor does it describe when 

the information was passed to Donald and what, exactly, Donald was told. These allegations 

cannot support a strong inference of fraudulent intent. See Garfield v. NDC Health Corp., 466 

F.3d 1255, 1265 (11th Cir. 2006) (concluding that allegations about a meeting involving senior 

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executives were insufficiently particularized where the complaint “failed to allege what was said 

at the meeting, to whom it was said, or in what context”). 

Plaintiffs also suggest that scienter can be inferred because Carnival “conducted 

extensive operations in Asia.” Compl. ¶¶ 205-06. But the wholly innocuous facts that Carnival 

launched a cruise ship “designed and built for the Chinese market” in 2017 and “described itself 

as the leading cruise operator in Asia” in 2018, id., do not raise a strong inference that the 

Company lied to investors about the risks of COVID-19 or its commitment to health and safety. 

If anything, the allegation that Carnival “cancelled nine cruises leaving from Chinese ports 

between January 25 and February 4,” id. ¶ 207, suggests that Carnival followed travel 

restrictions and took affirmative steps to protect its passengers and crew. 

Similarly, the fact that Carnival had previously experienced “outbreaks of infectious 

disease on board its cruise ships,” Compl. ¶¶ 203-04—information that Plaintiffs do not allege 

Carnival made any attempt to conceal—does not suggest that that Company concealed 

information about COVID-19 outbreaks from investors. See In re KLX, Inc. Sec. Litig., 232 F. 

Supp. 3d 1269, 1282-83 (S.D. Fla. 2017) (finding that prior disclosure of related negative 

information contradicts an inference of scienter); Chiarenza v. IBSG Int’l., Inc., 2010 WL 

3463304, at *5 (S.D. Fla. Sept. 2, 2010) (“Knowledge of this past problem, on its own . . . is not 

enough to establish scienter.”).16 Finally, the mere fact that Carnival’s early assessment of 

COVID-19 may have underestimated the ultimate impact of the virus does not support a strong 

inference of scienter.17 

16 Plaintiffs similarly allege that in 2019 “half of the CDC-identified viral outbreaks in the industry occurred on 

Carnival-owned ships.” Compl. ¶ 204. Not only does this allegation show nothing about Defendants’ intent to 

deceive investors, it is also commensurate with Plaintiffs’ allegation that Carnival carries “nearly half of the 

world’s cruise passengers.” Compl. ¶ 4. 

17

 See In re PXRE Grp. Sec. Litig., 600 F. Supp. 2d 510, 548 (S.D.N.Y. 2009) (statements issued in response to 

“unprecedented and uncertain situation” were not evidence of scienter even though they ultimately proved 

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B. The Complaint Fails to Allege Severe Recklessness with Respect to 

Defendants’ Statements About Carnival’s Commitment to Regulatory 

Compliance and Passenger Health and Safety 

1. Regulatory Compliance 

As explained above, there are no well-pleaded facts demonstrating that Carnival’s 

conduct during the class period failed to adhere any governing rule or regulation. See supra 

Section I.B. But even if Plaintiffs did allege that certain Carnival vessels failed to comply with 

certain regulatory requirements, the Complaint lacks any particularized facts showing that any 

such incidents were communicated to Carnival’s senior executives. The allegations concerning 

Carnival’s purported regulatory non-compliance are drawn from newspaper articles published 

after the class period, which primarily sourced their information from cruise ship passengers and 

other anonymous sources. E.g., Compl. ¶¶ 188, 191; Exs. 10 & 34. But there are no 

allegations—even conclusory ones—that any of these sources ever communicated any of their 

observations about Carnival’s purported failures to Carnival’s senior management. Plaintiffs’ 

scienter allegations fail for this reason alone. See Mizzaro, 544 F.3d at 1253 (finding scienter 

allegations inadequate where complaint lacked particularized allegations that facts contradicting 

public statements were reported to senior management during the class period).18 

Nor should the Court infer that Carnival’s senior management must have known about 

specific regulatory infractions. Carnival operated over 100 vessels that cruise all over the globe; 

incorrect); In re Boston Tech., Inc. Sec. Litig., 8 F. Supp. 2d 43, 58 (D. Mass. 1998) (dismissing claim that 

“rests on an assumption that defendants must have known of the severity of their problems earlier because 

conditions became so bad later on,” because “fraud by hindsight is insufficient under Rule 9(b)”) (internal 

quotations and citations omitted). 

18

 See also Mogensen v. Body Cent. Corp., 15 F. Supp. 3d 1191, 1220 (M.D. Fla. 2014) (adequately pleading 

scienter requires particularized allegations such as “specific details of first-hand interactions with a defendant in 

which they advised him that existing facts contradicted his public disclosures”); Fidel v. Rampell, 2005 WL 

5587454, at *7 (S.D. Fla. Mar. 29, 2005) (refusing to infer scienter when complaint failed to allege that 

defendants were directly told specific information that contradicted their public disclosures). 

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there is simply no basis for imputing knowledge of every imprudent or improper action by the 

captain and crew of every ship in the fleet to senior management in Miami. See Godinez v. Alere 

Inc., 272 F. Supp. 3d 201, 220-21 (D. Mass. 2017) (finding that merely pointing to a “steady 

drumbeat of negative information” and alleged problems involving “far-flung operations all over 

the world and very different kinds of government regulatory problems facing different 

subsidiaries” was insufficient to demonstrate a strong inference of scienter). 

Plaintiffs attempt to remedy this pleading deficiency by alleging that “Defendant Donald 

has admitted that he was intimately involved in Carnival’s response to the coronavirus outbreak.” 

Compl. ¶ 197. Plaintiffs allege that Donald personally “took control” of the Diamond Princess

situation on February 5, 2020, id. ¶ 104, and that he participated in “crisis-response meetings” at 

the Princess brand headquarters in mid-February, id. ¶ 126. But Plaintiffs do not allege that 

Defendants failed to follow regulatory guidance or implement adequate safety measures aboard 

the Diamond Princess after February 5—to the contrary, Plaintiffs allege that the vessel 

implemented a full ship-wide quarantine on that date. Id. ¶ 103. Nor do Plaintiffs allege that 

Donald had contemporaneous knowledge of any specific regulatory failures or health and safety 

protocols. Similarly, Plaintiffs do not allege who was at the “crisis-response meetings” or what 

was said at those meetings, much less that Donald learned specific facts that contradicted 

Defendants’ public statements about the virus. See Mizzaro, 544 F.3d at 1253; Mogensen, 15 F. 

Supp. 3d at 1220; Fidel, 2005 WL 5587454, at *7. 

Moreover, despite Plaintiffs’ characterization of these statements as an “admission,” there 

is nothing nefarious about Carnival’s CEO “dialing into the situation updates” about an 

unprecedented outbreak of a novel infectious disease. Plaintiffs do not dispute that Defendants 

were coordinating with world health authorities to respond to the Diamond Princess outbreak; 

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Plaintiffs do not allege that Carnival failed to follow these authorities’ guidance in response to 

the outbreak; and Plaintiffs do not allege that Defendants tried to cover up the Diamond Princess

outbreak. To the contrary, both the Company and the press reported events aboard the Diamond 

Princess as they unfolded. E.g., Exs. 35-36. Plaintiffs’ allegations describe a CEO engaged in 

responsible corporate governance, not securities fraud. See Metro. Transp. Auth. Defined Benefit 

Pension Plan Master Tr. v. Welbilt, Inc., 2020 WL 905591, at *5 (M.D. Fla. Feb. 6, 2020) 

(repeated disclosure of accounting errors over time is evidence that defendant was “pursuing the 

truth—not attempting to deceive investors”). 

Similarly, the allegation that Donald was copied on an email from the CDC on April 4, 

2020, clarifying its request that Carnival submit a plan for repatriating passengers from certain 

vessels is not evidence that Donald acted with scienter. See Compl. ¶¶ 180, 198. The quoted 

email contains no suggestion of any wrongdoing by Carnival—to the contrary, it demonstrates 

that Carnival was coordinating with the CDC on its response to the pandemic. And, in any 

event, the cited email post-dates the class period and cannot show Donald’s knowledge of 

contrary facts during the class period. See Durham v. Whitney Info. Network, Inc., 2009 WL 

3783375, at *19 (M.D. Fla. Nov. 10, 2009) (absent a link to knowledge or theory of fraud during

the class period “any post class [period] developments are not relevant or indicative of scienter”). 

2. Commitment to Health and Safety 

As described above, Carnival’s statements regarding its commitment to health and safety 

protocols were entirely in line with contemporaneous guidance from public health officials, 

undercutting any inference of scienter. See supra Section I.C. Plaintiffs once again rely on 

anonymously-sourced statements from news reports that post-date the class period to suggest that 

certain ships could have taken additional steps to protect passenger health and safety. But as 

discussed above, Plaintiffs do not allege that any such incident was ever reported to Carnival’s 

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senior management. See Mizzaro, 544 F.3d at 1253; Mogensen, 15 F. Supp. 3d at 1220; Fidel, 

2005 WL 5587454, at *7.19 

Plaintiffs also allege that Defendants must have known about contrary facts alleged in the 

Complaint because Carnival’s Board maintains a HESS Committee, which reviews and 

recommends policies relating to health and safety and is “briefed by management” on the status 

of HESS-related matters. Compl. ¶¶ 199-201. But the Complaint contains no allegations 

describing any meeting of the HESS Committee or what was discussed, much less a particular 

meeting at which Donald or any senior executive was in attendance and briefed on any of the 

allegedly contrary facts identified in the Complaint. Plaintiffs’ failure to “flesh out at least some 

of the details of the conversations [and] meetings” referenced in the Complaint fatally 

undermines their theory of scienter. Henningsen, 161 F. Supp. 3d at 1200 (finding allegation 

that CEO would “always” attend meetings where attrition and competition were discussed 

insufficient to demonstrate scienter with respect to alleged misrepresentations regarding the 

effect of competition on customer attrition) (quotation omitted).20 Nor does the allegation that 

Carnival’s Board oversaw the Company’s health and safety protocols suggest that the Company 

and CEO must have acted with scienter. “To impute knowledge of or extremely reckless 

disregard for the truth from the mere existence of an internal reporting system, and the mere 

active engagement of management, would allow almost any securities fraud case to proceed into 

19 Plaintiffs also fail to provide any explanation for how the sources who provided these accounts to newspaper 

reporters—most of whom appear to have been passengers—could have known about Carnival’s ship-wide 

(much less fleet-wide) protocols for treating sick passengers or otherwise responding to COVID-19 outbreaks. 

See, e.g., Compl. ¶¶ 138, 140, 144, 145, 148, 162 (describing news reports attributed to passengers); Exs. 10 & 

34. The Court should afford these anonymous sources no weight because Plaintiffs fail to specify any bases for 

the sources’ information, much less “unambiguously provide[] in a cognizable and detailed way the basis of the 

[source’s] knowledge.” Mizzaro, 544 F.3d at 1239-40. 

20

 See also FindWhat Inv. Grp. v. FindWhat.com, 658 F.3d 1282, 1304 (11th Cir. 2011) (refusing to infer scienter 

from allegations that internal concern over fraud problem was discussed at a meeting one of the individual 

defendants attended). 

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34 

discovery. These are precisely the types of vague allegations that the PSLRA was meant to 

curtail.” Mogensen, 15 F. Supp. 3d at 1220-21 (citations omitted). 

Even if, with hindsight, Defendants might have done a better job of responding to the 

pandemic, that cannot support an inference of scienter. Plumbers & Steamfitters Local 773 

Pension Fund v. Danske Bank, 2020 WL 4937461, at *7 (S.D.N.Y. Aug. 24, 2020) (although 

“Plaintiffs allege that Defendants’ responses [to the developing scandal] were sluggish, 

sluggishness does not give rise to a strong inference of scienter”).21 

C. Carnival’s Actions Throughout the Class Period Are Inconsistent with 

Scienter 

Because the “scienter analysis is comparative,” courts must consider “alternative 

inferences that arise from the Complaint’s allegations (and apparent omissions).” FindWhat Inv. 

Grp., 658 F.3d at 1303. Here, the Complaint reflects Carnival’s transparency with investors and 

omits any theory of Defendants’ motive for committing the alleged fraud. These allegations are 

logically inconsistent with scienter and render Plaintiffs’ theory implausible. 

Carnival disclosed the risks of COVID-19 and its projected impact on the Company’s 

financial performance as early as January 28, 2020. Ex. 1 at 26; Compl. ¶ 132. Carnival again 

disclosed the risk that COVID-19 could have a material negative impact on the business in a 

press release issued on February 12, 2020—three weeks before the SEC’s first informal guidance 

on the subject. Exs. 5 & 37; Compl. ¶ 119. Carnival’s voluntary, affirmative disclosures of 

negative market developments strongly suggest that the Company did not intend to deceive the 

public about the impact of COVID-19. See Henningsen, 161 F. Supp. 3d at 1204 (“Defendants’ 

21

 See also In re Heartland Payment Sys., Inc. Sec. Litig., 2009 WL 4798148, at *7 (D.N.J. Dec. 7, 2009) (scienter 

not adequately pleaded where defendants not alleged to know that company’s “security systems were so 

deficient that it was false to say that [the company] ‘places significant emphasis on maintaining a high level of 

security’”). 

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35 

repeated public cautionary statements and disclosures would make little sense if Defendants had 

a plan to deceive the public on these very issues.”).22 

Similarly, although Plaintiffs allege that COVID-19 outbreaks aboard certain vessels 

revealed the falsity of Carnival’s statements regarding its commitment to health and safety, 

Plaintiffs do not allege that Carnival made any effort to conceal those outbreaks. Carnival 

provided regular updates regarding the situations aboard the Diamond Princess and the Grand 

Princess, which were also the subject of major news coverage. See Exs. 10 at 3; Ex. 11; Ex. 35-

36; Ex. 38. These contemporaneous disclosures also negate any inference that Defendants were 

trying to conceal contrary facts from investors. See In re KLX, 232 F. Supp. 3d at 1283-84 

(finding that “repeated disclosure of negative information” regarding the allegedly concealed 

information cuts against a finding of scienter). 

The Company’s decisions to cancel cruises during the class period also undermine any 

inference of scienter. Plaintiffs concede that Carnival cancelled nine cruises leaving from 

Chinese ports in late January and early February 2020. Compl. ¶ 207. And, as discussed above, 

Carnival voluntarily announced its decision to halt all cruises worldwide in advance of the 

CDC’s No Sail Order—a decision for which it was commended by the CDC. This voluntary 

decision, which had an immediate and substantial negative impact on the Company’s financials, 

weighs against a finding of scienter. In re NDCHealth Corp., Inc., Sec. Litig., 2005 WL 

6074918, at *9 (N.D. Ga. July 27, 2005) (finding that immediate disclosure of information that 

would have a negative impact on the company “weighs against a finding of scienter”). 

22

 See also Rombach v. Chang, 355 F.3d 164, 176-77 (2d Cir. 2004) (finding that defendant’s voluntarily 

disclosure of negative information in advance of its scheduled SEC filing undercut a finding of scienter); 

Cutsforth v. Renschler, 235 F. Supp. 2d 1216, 1260-61 (M.D. Fla. 2002) (finding that the prompt disclosure of 

negative information “is inconsistent with the contention that . . . the defendants were acting with scienter”). 

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Plaintiffs’ theory of scienter is also implausible because they fail to identify any motive 

for any Defendant to defraud investors in early 2020. See In re KLX, 232 F. Supp. 3d at 1282 

(finding that failure to allege “any personal motive” weighed against scienter).23 Plaintiffs have 

not alleged that any Carnival executives or directors sold any of their Carnival shares during the 

class period, “an omission that weighs against inferring scienter.” Mizzaro, 544 F.3d at 1253; 

accord In re Altisource Portfolio Sols., S.A. Sec. Litig., 2015 WL 12001262, at *14 (S.D. Fla. 

Sept. 4, 2015). To the contrary, Carnival plc actually repurchased more than 3 million of its 

own shares during the class period. See Ex. 39 at 7; Compl. ¶ 19 (alleging that Carnival did not 

suspend repurchases of Carnival stock until March 31, 2020—the last day of the class period). 

This fact is wholly inconsistent with fraudulent intent because no Company would purchase its 

own shares at a price it knows to be inflated. See In re Ocwen Fin. Corp. Sec. Litig., 2015 WL 

12780960, at *10 (S.D. Fla. Sept. 4, 2015); Henningsen, 161 F. Supp. 3d at 1204. 

In essence, Plaintiffs are alleging that Carnival engaged in irrational and self-destructive 

behavior by continuing to operate cruises and make optimistic statements about its business, 

despite knowing that COVID-19 would inevitably cause passengers and crew to become sick or 

even die and its business to grind to a halt. The implausibility of Plaintiffs’ theory highlights the 

lack of any discernable motive and is fatal to their securities fraud claim. See Nguyen v. 

Endologix, Inc., 962 F.3d 405, 416-19 (9th Cir. 2020) (finding it more plausible that defendants 

modulated their public optimism over time regarding their clinical trials as more information 

became available than that they intentionally pursued a hopeless FDA approval process). 

23

 See In re Sunterra Corp. Sec. Litig., 199 F. Supp. 2d 1308, 1337 (M.D. Fla. 2002) (“It is also significant that the 

Amended Complaint contains no allegations as to [defendant’s] motive to commit or participate in fraud.”). 

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III. The Complaint Fails to Allege Loss Causation 

Under the PSLRA, “the plaintiff shall have the burden of proving that the act or omission 

of the defendant . . . caused the loss for which the plaintiff seeks to recover damages.” 15 U.S.C. 

§ 78u-4(b)(4). To establish loss causation, plaintiffs “must prove not only that a fraudulent 

misrepresentation artificially inflated the security’s value, but also that the fraud-induced 

inflation that was baked into the plaintiffs’ purchase price was subsequently removed from the 

stock’s price, thereby causing losses to the plaintiff.” Meyer v. Greene, 710 F.3d 1189, 1194-96 

(11th Cir. 2013) (internal citation and quotations omitted). “To establish loss causation, a 

plaintiff must show that the untruth was in some reasonably direct, or proximate, way 

responsible for his loss.” Instituto de Prevision Militar v. Merrill Lynch & Co., Inc., 2007 WL 

2900318, at *11 (S.D. Fla. Sept. 28, 2007) (Moore, J.). It is insufficient simply to allege a price 

decline following an announcement of negative information. Meyer, 710 F.3d at 1195-97. 

Plaintiffs point to three SEC filings as purported “corrective disclosures” that revealed 

the truth of Defendants’ fraud: (i) a filing on March 16, 2020, disclosing that Carnival believed 

COVID-19 “will have a material negative impact on its financial results and liquidity” and that 

the Company expected a net loss for the fiscal year, Compl. ¶ 150, and (ii) two filings on March 

31, 2020, that disclosed substantially similar information in connection with Carnival’s public 

and private offerings of new shares, id. ¶¶ 165-71. These filings do not satisfy Plaintiffs’ burden 

for pleading loss causation. 

First, Plaintiffs’ loss causation allegations indulge in a fiction that it was Carnival’s 

conduct aboard certain vessels that caused the Company’s stock to drop. But the obvious reason 

that the Company’s stock dropped in March 2020 was the suspension of Carnival’s global 

business. Indeed, the alleged corrective disclosures specifically cite the fact that “the 

Corporation implemented a temporary pause of its global fleet cruise operations across all 

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brands” as a reason for its negative financial outlook. Ex. 18 at 4; Ex. 40 at 10. Similarly, the 

financial analysts cited in the Complaint stated that the damage to Carnival’s business at the end 

of the class period was the “result of sailing suspensions due to the coronavirus outbreak.” 

Compl. ¶ 174. Even if Carnival had done a better job responding to the pandemic, the 

Company’s stock still would have plummeted after it was forced to abruptly cancel its worldwide 

business operations in March 2020. Plaintiffs’ failure to “allege facts sufficient to apportion the 

losses between the [factors] that ultimately destroyed [their] investment” renders their loss 

causation allegations inadequate. Waterford Twp. Gen. Emps. Ret. Sys. v. SunTrust Banks Inc., 

2010 WL 3368922, at *4 (N.D. Ga. Aug. 19, 2010) (quotation and citation omitted).24

Second, these filings simply did not reveal the alleged falsity of the statements identified 

in the Complaint. Plaintiffs’ theory is that “Carnival’s response to outbreaks of the coronavirus 

on its ships cannot be reconciled with its statements regarding the health and safety measures it 

had implemented and to which it was committed.” Compl. ¶ 74; see id. ¶¶ 211-55. But the 

alleged corrective disclosures revealed only that COVID-19—and the associated “pause of 

[Carnival’s] fleet operations across all brands”—would have a negative material impact on the 

Company’s financials. Ex. 18 at 4; Ex. 40 at 10. Neither disclosure “revealed” anything about 

Carnival’s actions aboard any vessel or commitment to health and safety, and thus neither caused 

the loss associated with the fraud alleged in the Complaint. See Meyer, 710 F.3d at 1200 

(finding that to constitute a corrective disclosure, a statement must reveal to the market the 

falsity of a prior misstatement). 

24

 See also In re HomeBanc Corp. Sec. Litig., 2010 WL 1524836, at *21 (N.D. Ga. Apr. 13, 2010) (loss causation 

not pleaded where complaint “fails to make any allegations that would allow the Court to distinguish between 

any losses caused by the Defendants’ alleged misrepresentations and the collapse of the [] industry as a 

whole”); In re Merrill Lynch & Co. Rsch. Reps. Sec Litig., 568 F. Supp. 2d 349, 364 (S.D.N.Y. 2008) (failure to 

“assert facts that distinguish between the alleged fraud and the market-wide collapse” was fatal to the claim). 

Case 1:20-cv-22202-KMM Document 61 Entered on FLSD Docket 01/18/2021 Page 45 of 50
39 

Third, even if the alleged corrective disclosures did reveal the falsity of Defendants’ 

statements, neither disclosure could have caused investors’ losses because the information 

“revealed” in the disclosures was already public. To the extent the disclosures revealed 

information about COVID-19 outbreaks and deaths aboard certain vessels, that information had 

already been disclosed by Carnival and reported by the press as the outbreaks were discovered. 

See, e.g., Exs. 10-12, 35-36 & 38. And to the extent Plaintiffs argue that these filings revealed 

that COVID-19 would have a material negative impact on the Company’s finances, that 

information was also already public. Carnival disclosed in its 10-K on January 28, 2020, and 

again in a press release on February 12, 2020, that disruptions from the coronavirus could have a 

material negative impact on the Company’s financials, and estimated the per-share negative 

impact of the virus. See Ex. 1 at 26; Ex. 5 at 2. Because the purported corrective disclosures 

merely confirmed negative information already known to the market, neither caused the loss 

alleged. See Luczak v. Nat’l Beverage Corp., 812 F. App’x 915, 926 (11th Cir. 2020) (“If a 

document discusses only information of which the market is already aware . . . it is simply 

insufficient to constitute a corrective disclosure.”) (quotation omitted); Meyer, 710 F.3d at 1199 

(stating that a report based on public information “standing alone, cannot reveal to the market the 

falsity of a company’s prior factual representations”) (quotation omitted). 

IV. If Plaintiffs’ Claims Are Not Dismissed, the Class Period Should be Shortened 

The alleged class period begins on September 16, 2019, the date on which Carnival 

announced the creation of the IAG, a team “focused on investigating and analyzing so-called 

‘HESS issues.’” Compl. ¶ 64. But the Complaint provides no explanation for why the class 

period should begin on that date. Plaintiffs do not allege that the IAG did or failed to do 

anything, or that the Company concealed anything from investors about the IAG. The Complaint 

does not allege that Defendants engaged in any wrongful or deceptive conduct until January 28, 

Case 1:20-cv-22202-KMM Document 61 Entered on FLSD Docket 01/18/2021 Page 46 of 50
40 

2020, when Carnival allegedly described the risk of coronavirus as “low” despite its supposed 

knowledge to the contrary. See Compl. ¶¶ 78-79. And the Complaint does not allege that 

Carnival deployed inadequate health and safety protocols until the Diamond Princess

experienced an outbreak in February 2020. See Compl. ¶ 86. 

Plaintiffs make the wholly conclusory argument that “[t]he failings associated with the 

coronavirus outbreaks on Carnival’s ships” reflected inadequate health and safety protocols “that 

existed at the beginning of the Class Period.” Compl. ¶ 74. But there are no well-pleaded facts 

that support this allegation. To the contrary, the section of the Complaint alleging supposed 

misstatements in 2019, id. ¶¶ 64-74, points exclusively to events occurring in 2020 for support, 

id. ¶¶ 72-73. The Class Period should begin no earlier than the date on which Defendants are 

actually alleged to have misled investors—January 28, 2020. See In re Miva, Inc. Sec. Litig., 

2008 WL 681755, at *2 (M.D. Fla. Mar. 12, 2008) (excising 17 months from the beginning of a 

class period because the alleged misstatements during that period “were not actionable”).25 

CONCLUSION 

The Court should dismiss the Complaint with prejudice. 

25 The Section 20(a) claim should be dismissed because Plaintiffs fail to plead a predicate violation of Section 

10(b). See McClain, 111 F. Supp. 3d at 1307. 

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41 

REQUEST FOR HEARING 

Pursuant to L. R. 7.1(b)(2), Defendants respectfully requests a hearing on the Motion. 

Defendants believe a hearing would be helpful given the complexity of the underlying issues, 

allegations, and factual timeline involved in this matter and will assist the Court in adjudicating 

the Motion. Defendants estimate that sixty (60) minutes will be sufficient. 

 

Case 1:20-cv-22202-KMM Document 61 Entered on FLSD Docket 01/18/2021 Page 48 of 50
42 

Dated: January 18, 2021 

 Miami, Florida 

 Respectfully submitted, 

NELSON MULLINS BROAD AND 

CASSEL 

/s/ Mark F. Raymond 

Mark F. Raymond 

Florida Bar No. 373397 

Erin K. Kolmansberger 

Florida Bar No. 94104

2 South Biscayne Blvd. 21st Floor 

Miami, FL 33131

Tel: 305-373-9425

Fax: 305-995-6384

Email: mark.raymond@nelsonmullins.com 

 erin.kolmansberger@nelsonmullins.com

PAUL, WEISS, RIFKIND, 

 WHARTON & GARRISON LLP 

Theodore V. Wells Jr. 

(admitted pro hac vice) 

Richard A. Rosen 

(admitted pro hac vice) 

Daniel S. Sinnreich 

(admitted pro hac vice) 

1285 Avenue of the Americas 

New York, New York 10019 

Tel: 212-373-3000 

Fax: 212-757-3990 

Email: twells@paulweiss.com 

 rrosen@paulweiss.com 

 dsinnreich@paulweiss.com 

Counsel for Defendants 

 

Case 1:20-cv-22202-KMM Document 61 Entered on FLSD Docket 01/18/2021 Page 49 of 50
43 

CERTIFICATE OF SERVICE 

I hereby certify that, on January 18, 2021, a copy of the foregoing Defendants’ Motion 

to Dismiss the Consolidated Class Action Complaint was filed electronically. Notice of this 

filing will be sent by e-mail to all parties by operation of the Court’s electronic filing system. 

Parties may access this filing through the Court’s CM/ECF System. 

/s/ Mark F. Raymond

Mark F. Raymond 

Florida Bar No. 373397 

Erin K. Kolmansberger 

Florida Bar No. 94104

2 South Biscayne Blvd. 21st Floor 

Miami, FL 33131

Tel: (305) 373-9425

Fax: (305) 995-6384

E-mail: mark.raymond@nelsonmullins.com 

 erin.kolmansberger@nelsonmullins.com

Attorney for Defendants 

Case 1:20-cv-22202-KMM Document 61 Entered on FLSD Docket 01/18/2021 Page 50 of 50