Federal Judge In Miami Tosses Out Shareholder Lawsuit Against Norwegian Cruise Lines

According to a report from Reuters, a Miami, FL-based federal judge has dismissed a shareholder lawsuit against Norwegian Cruise Lines. A group of shareholders were pursuing a proposed class action claim against the South Florida headquartered company on the grounds that its top executives were intentionally and improperly downplaying the risks of the COVID-19 virus in the early stages of the global pandemic. Here, our Miami shareholder dispute attorneys explain the federal court’s decision to dismiss the claim against Norwegian Cruise Lines.

The Allegations: A Deceptive Marketing Campaign 

The coronavirus outbreak has disrupted businesses across the entire globe. While few industries were spared, perhaps no industry was hit harder by the COVID-19 pandemic than international cruise lines. Norwegian Cruise Line, one of the world’s largest commercial cruise lines, was forced to suspend virtually all of its operations.

It was also the subject of one of the first coronavirus related lawsuits from its shareholders. In March of 2020, a group of Norwegian Cruise Line initiated a class action claim against the company on the grounds that it used deceptive marketing practices. According to the claim filed by shareholders, the stock dropped dramatically after news leaked that the company was encouraging sales representatives to “downplay” the COVID-19 virus in the initial stages of the pandemic. 

Shareholder Lawsuit Dismissed: Insufficient Specific Allegations 

In this case, the group of shareholders were pursuing a legal claim on the grounds that they suffered financial harm, as a class, as a direct consequence of the deceptive marketing practices pursued by the company’s top executives. These allegations were significant. Indeed, in last March, the Florida Attorney General initiated an investigation into the COVID-related marketing practices used by Norwegian Cruise Line.

However, United States District Judge Robert Scola Jr. (Southern District of Florida) dismissed the shareholder lawsuit. The court determined that the shareholder failed to provide adequate evidence demonstrating specific misconduct by top executives at the company. In the opinion dismissing the shareholder lawsuit, Judge Scola emphasized the allegations raised against Norwegian Cruise Line, if true, would constitute a “troublesome” marketing scheme that “minimize the effects of COVID-19” in order to reduce cancellations. Nonetheless, plaintiffs were unable to provide adequate evidence showing that the corporation intended to deceive investors.

The Bottom Line: The federal court conceded that it is possible that some consumers (or regulators) may still take action against Norwegian Cruise Line for its marketing practices. However, there is not enough evidence to prove that the company mistreated its shareholders. 

Contact Our Miami Shareholder Lawsuit Attorneys for Immediate Legal Help

At Pike & Lustig, LLP, our Florida shareholder lawyers are committed to providing honest, reliable, and solutions-focused legal guidance to clients. If you have any questions about filing or defending a shareholder lawsuit, we are ready and willing to help. Call our firm right away for a completely private appointment with an attorney. We have law offices in Miami and West Palm Beach, from which we provide legal services to clients throughout Florida.

Resource:

reuters.com/article/securities-norwegian-covid/judge-jettisons-norwegian-shareholders-covid-19-lawsuit-idUSL1N2M52S7