Law360 (June 12, 2020, 8:28 PM EDT) -- A Florida federal judge on Friday appointed Robbins Geller Rudman & Dowd LLP as lead counsel for a consolidated proposed securities class action accusing Norwegian Cruise Line of downplaying the seriousness of the COVID-19 pandemic to prospective customers.
U.S. District Judge Robert N. Scola Jr. named Employer-Teamsters Local 175 & 505 Pension Trust Fund lead plaintiff and tapped its attorneys at Robbins Geller to lead the class in the suit alleging that Norwegian's stock fell more than 50% two days after a newspaper leaked internal memos instructing Norwegian sales staff to lie to prospective customers about the impact of the coronavirus outbreak.
Labaton Sucharow LLP and Bernstein Liebhard LLP, who together represent investors William C. Perry and Brian Mark Eddy, and Stull Stull & Brody, which represents investor Abraham Atachbarian, had also jockeyed for the lead counsel spot. But on Thursday, one day before a planned hearing on the issue, the Teamsters pension fund filed a notice informing the court that the other investors had withdrawn their bids for lead plaintiff.
Perry and Eddy, who lost more than $267,000 combined in the stock drop, had the largest claimed loss, but they came under attack by the other potential lead plaintiffs, who said Perry's investment losses came before the March revelations. The Teamsters fund also said Perry and Eddy are unrelated and were "cobbled together" by their attorneys to create a large combined loss and take control of the case.
The Teamster fund had the second-highest losses at about $136,000, while Atachbarian told the court he lost $71,250 in the stock drop.
The consolidated lawsuit — combining the first suit filed on March 12 by investor Eric Douglas with the second filed by Atachbarian on March 31 and adding a third on May 12— claim that Norwegian was giving concerned customers false reassurances about the threat of COVID-19 and driving up the price of the stock.
A March 11 Miami New Times article reported on leaked emails that appeared to show a senior sales manager giving scripted responses to sales agents to use on concerned customers to prevent them from canceling their bookings.
One message said that coronavirus isn't a concern in warm Caribbean climates, and that health experts said the disease would end in warmer spring weather.
The next day, the Washington Post reported on a leaked internal memo headed "The coronavirus will not affect you," which stated as fact that the coronavirus is an "overhyped pandemic scare."
Norwegian's stock fell $5.47 on March 11 and $5.38 on March 12 to end at $9.65, investors say.
On March 13, Sens. Richard Blumenthal, D-Conn., and Edward J. Markey, D-Mass., sent a letter to the cruise line's CEO demanding the company stop spreading false information and "suspend all operations until sufficient measures are in place to protect the health and safety of passengers and crew members." The company suspended all its cruises through April 11 in response.
On March 23, Florida Attorney General Ashley Moody announced an investigation into reports that Norwegian gave its sales staff "inaccurate one-liners" to downplay the danger posed by the coronavirus outbreak.
The securities suit is one of the first filed in direct connection to COVID-19, lining up Norwegian to possibly serve as a test case for asserting claims over a company's risk disclosures during the pandemic.
Norwegian President and CEO Frank Del Rio and Executive Vice President and Chief Financial Officer Mark A. Kempa are also named in the suit.
The Teamsters fund is represented by Jack Reise, Sabrina E. Tirabassi, Danielle S. Myers and Juan Carlos Sanchez of Robbins Geller Rudman & Dowd LLP.
Norwegian is represented by Tracy Ann Nichols of Holland & Knight LLP.
The case is Douglas et al. v. Norwegian Cruise Lines et al., case number 1:20-cv-21107, in the U.S. District Court for the Southern District of Florida.
--Additional reporting by Rachel O'Brien. Editing by Adam LoBelia.
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