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Carnival, pharmaceutical firm face virus-related suits

Posted On: May. 28, 2020 2:41 PM CST


Pandemic-related putative securities class-action lawsuits were filed this week by shareholders against Carnival Corp. and a biopharmaceutical company that allegedly falsely promised a vaccine.

Miami-based cruise ship operator Carnival Corp. and company officials are accused of making false and misleading statements and concealing material information concerning passengers on two of its cruise ships who became infected with COVID-19, according to the lawsuit filed Wednesday in U.S. District Court in Miami in Service Lamp Corp. Profit Sharing Plan v. Carnival Corp., Arnold W. Donald and David Bernstein.

San Diego-based Sorrento Therapeutics Inc. and its officials are accused of making misleading comments about a COVID-19 vaccine, according to the lawsuit filed Tuesday in U.S. District Court in San Diego in WASA Medical Holdings v. Sorrento Therapeutics Inc., Henry Ji and Mark R. Brunswick.

The lawsuits were first reported by the D&O Diary blog.

The Carnival lawsuit describes how the company’s stock price dropped in response to news reports about passengers becoming ill on its Diamond Princess and Grand Princess cruise ships, and a Congressional investigation was initiated.

A couple who were passengers on the Grand Princess have filed suit against Carnival.

A securities fraud class-action suit was filed against Norwegian Cruise Line Holdings Ltd., its chief executive officer and chief financial officer on March 18, claiming the company made misleading statements about the virus to encourage customers to book cruises. 

Sorrento had announced on May 14 that it had discovered an antibody that “demonstrated 100% inhibition” of the virus, and the same day founder and CEO Henry Ji referred to its breakthrough as a “cure” although he later denied this, according to the Sorrento lawsuit. 

The lawsuit describes how subsequent reports questioned the company’s claims, and its stock price declined. It also charges defendants with making materially false and misleading statements and failing to disclose material adverse facts.

In March, a putative securities class-action lawsuit was filed against Plymouth Meeting, Pennsylvania-based Inovio Pharmaceuticals Inc., which allegedly falsely promised a quick coronavirus vaccine, and whose stock plunged once it failed to deliver.

Company spokesmen for Carnival and Sorrento did not respond to requests for comment.

Experts say businesses should brace themselves for a likely flood of shareholder suits related to the new coronavirus outbreak, but the success of any litigation may depend on companies’ willingness to fully disclose directors and officers liability-related risks now.