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Law360 (October 27, 2020, 9:26 PM EDT ) Royal Caribbean Cruises Ltd. was hit with another suit in the wake of the coronavirus pandemic Tuesday, as a proposed class of investors alleged the company deceived them with a series of false or misleading statements about its bookings and safety protocols, causing stock drops.
Thomas Altomare said he purchased Royal Caribbean securities at artificially inflated prices earlier this year. He claimed that hundreds of COVID-19 cases were reported on at least 13 of the company's ships in the first quarter of 2020 — leading to multiple deaths and wrongful death lawsuits against the company — while Royal Caribbean assured the investing public that its "aggressive" safety protocols would ultimately contain the virus.
"Despite these assurances, the company's policies and procedures were grossly inadequate to control the spread of the virus and failed to protect the health of its passengers and crews," Altomare said. "The company's disregard of reasonable safety measures exacerbated the spread of COVID-19 throughout the world."
Altomare alleged that Royal Caribbean experienced a slowdown in customer bookings in early February, as vacationers worried about the global spread of the virus. But the company assured investors at that time that it was only experiencing a slowdown from bookings in China, according to the complaint.
He said several developments in February and March caused Royal Caribbean's stock price to drop, including when the company filed its 2019 Form 10-K, which stated that the outbreak was impacting its bookings more than the company had previously represented, sending the stock price down more than 14% over the following two trading sessions, to close at $77 on Feb. 27.
Then in March, competitor Carnival Corp. announced a 60-day suspension of all operations, prompting concern that Royal Caribbean would follow suit. Royal Caribbean cancelled two cruises, "beginning a series of cancellations and suspensions to follow," sending the company's stock price down almost 32%, according to the suit.
Altomare said the "full impact of Royal Caribbean's false and misleading statements and/or omissions" was later revealed when analysts downgraded the company's stock and slashed their price targets from $161 to $40, sending the stock price down another 19.2% to close at $22.33 per share on March 18.
The proposed class includes those who purchased Royal Caribbean securities from Feb. 4, 2020, through March 17, 2020, and were damaged, according to the complaint. The complaint includes counts of violating the Exchange Act, and Altomare and the proposed class are seeking compensatory damages plus interest and the costs and expenses of bringing the suit.
Altomare said that after the class period, the inadequacy of Royal Caribbean's safety procedures was revealed in part by a series of lawsuits filed against the company. In one proposed class action that has since been dropped, crew members alleged the company allowed parties, mandated participation in drills, and failed to timely quarantine crew members while not providing masks or observing social distancing.
Counsel for the plaintiffs in that case told Law360 in July that the crew members decided to pursue their claims individually.
The investor suit also names CEO Richard Fain, Executive Vice President and CFO Jason Liberty, and Royal Caribbean International President and CEO Michael Bayley as defendants.
Counsel for Altomare and a representative of Royal Caribbean did not immediately respond to requests for comment Tuesday.
Altomare and the proposed class are represented by Jayne A. Goldstein of Shepherd Finkelman Miller & Shah LLP, James M. LoPiano of Pomerantz LLP and Peretz Bronstein of Bronstein Gewirtz & Grossman LLC.
Counsel information for Royal Caribbean and its executives was not immediately available Tuesday.
The case is Thomas Altomare v. Royal Caribbean Cruises Ltd. et al., case number 1:20-cv-24407, in the U.S. District Court for the Southern District of Florida.
--Additional reporting by Lauren Berg. Editing by Emily Kokoll.
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