Amid the coronavirus-induced shock waves that have rocked the cruise industry, a group of investors has sued Norwegian Cruise Line after news articles exposed the company’s alleged practice of lying about the severity of the disease in order to keep bookings, which caused the cruise line’s stock to tumble.
The class action lawsuit, filed today in U.S. District Court for the Southern District of Florida, claimed that the class members took financial hits due to the exposure of Norwegian’s alleged false statements to passengers that coronavirus wouldn’t affect their trips.
The complaint highlighted reporting by the Miami New Times, which first broke the story, and a subsequent Washington Post article.
“Emails leaked to New Times show that a senior sales manager at NCL’s Miami office came up with canned responses for the sales team to use if potential customers expressed concerns about COVID-19,” the New Times article read.
The paper said one of the scripted lines told a customer that the company had canceled all of its Asian cruises, thus demand for other itineraries had hugely increased to pressure them into booking before prices increased. According to the paper, the company also assured potential customers that the virus’ danger was over-hyped.
“‘The only thing you need to worry about for your cruise is do you have enough sunscreen?’ one of the suggested talking points reads,” according to the New Times article.
“If you don’t hit quota, you will absolutely be fired,” a Norwegian employee told the New Times. “No exceptions for [the] current virus situation. You may be put on a personal improvement plan for 30 days, but [that] basically means you’re done.”
According to the article, the employee said management told employees to downplay the virus’ danger “at all costs.”
Upon publication of the March 11 article, Norwegian’s stock fell $5.47 per share, or approximately 26.7%, to close at $15.03 per share, the complaint said. After a subsequent Washington Post article was published the following day, shares fell a further $5.38 or approximately 35.8% to close at $9.65.
“As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities, plaintiff and other class members have suffered significant losses and damages,” the complaint said.
According to the complaint, the class members consist of “all persons other than defendants who purchased or otherwise acquired Norwegian securities publicly traded on NYSE during the class period and who were damaged thereby.”
Norwegian did not respond to a request for comment.
The class members are represented by Laurence Rosen and Phillip Kim of the Rosen Law Firm in New York City.
Kim said he expects Norwegian to follow the typical protocol for class action defendants.
“Ordinarily in these cases, after the appointment of leadership, an amended complaint will be filed. That will be the one subject to attack. … Typically the defense will file a motion to dismiss and the argument will be the complaint is not specific enough to draw a strong inference of fraudulent intent.”