In re Honest Company, Inc. Securities Litigation

Labaton Keller Sucharow was appointed lead counsel in a securities class action against the Honest Company, Inc. (Honest) and other defendants.  Honest develops, markets, and sells clean and sustainable household and personal care products.  Of Honest’s three business segments—Diapers and Wipes, Skin and Personal Care, and Household and Wellness—its Diapers and Wipes category accounts for the majority of Honest’s revenue.

Lead Plaintiff filed an amended complaint on February 21, 2022, which alleges that Honest made numerous false and misleading statements regarding the company’s financial prospectus in the offering materials for Honest’s IPO in violation of the Securities Act of 1933.  The amended complaint alleges that the offering materials failed to disclose Honest’s pre-IPO deceleration in sales, attributable to inter alia (i) customers were experiencing issues with Honest’s Clean Conscious Diaper; (ii) despite the surge in demand for Honest’s products amidst the COVID-19 pandemic, retailers were destocking COVID-19 products; and (iii) risks associated with Honest’s customer acquisition and retention and adverse economic conditions were already negatively impacting Honest’s operating results at the time of the IPO.

On July 18, 2022, Judge Scarsi denied Defendants’ motion to dismiss and credited Lead Plaintiff’s allegations regarding “customers’ efficacy and safety concerns with the Clean Conscious Diaper” and found that “contrary to what Defendants led potential investors to believe through the offering documents, COVID-19 related product demand was declining at the time [of the IPO].”

On February 13, 2023, Lead Plaintiff filed a motion for class certification and on May 1, 2023, the Court issued an Order granting the class certification motion, certifying the Class, appointing Lead Plaintiff as Class Representative, and appointing Labaton Keller Sucharow LLP as Class Counsel.

Shortly thereafter, the Court entered an order approving Class Notice and in June 2023, the Class Postcard was mailed to potential Class Members and a long-form notice was made available on the website created for the Action.  A summary notice was published in The Wall Street Journal and distributed on the internet using PR Newswire.  In addition to summarizing the Action, the notices collectively provided potential class members with the opportunity to request exclusion from the Class (i.e., to “opt-out”), explained that right, and set forth procedures for doing so, including the August 7, 2023 deadline.  Three untimely requests for exclusion were received.

Class Representative filed an Amended Consolidated Complaint in August 2023, adding the Catterton Defendants as well as allegations concerning the Catterton Defendants’ alleged control of Honest and their alleged liability under Section 15 of the Securities Act.

The Catterton Defendants moved to dismiss the Amended Consolidated Complaint (the “Second Motion to Dismiss”) and on January 31, 2024, the Court granted the Second Motion to Dismiss with leave to amend.  On February 14, 2024, Class Representative filed the Second Amended Consolidated Complaint adding additional allegations as to the Catterton Defendants’ alleged control of Honest.  On February 28, 2024, the Catterton Defendants moved to dismiss the Second Amended Consolidated Complaint (the “Third Motion to Dismiss”).  On April 22, 2024, after briefing, the Court denied the Third Motion to Dismiss in its entirety.

On June 20, 2023, Class Counsel and counsel for the Honest Defendants met with the Mediator to explore a potential resolution of the Action through an all-day mediation.  No settlement was reached at this time.  On December 16, 2024, another full-day session with the Mediator was held, in a second attempt to reach a settlement.  The Parties were unable to reach an agreement to settle but agreed to continue negotiations through the Mediator.  On December 23, 2024, Class Representative and the Honest Defendants accepted a Mediator’s proposal to resolve all claims against the Honest Defendants and the Underwriter Defendants, for $20 million in cash.  On January 6, 2025, after several discussions between Class Counsel and counsel for the Catterton Defendants, Class Representative and the Catterton Defendants accepted a Mediator’s proposal to resolve all claims against the Catterton Defendantsfor $7.5 million in cash.

The Parties memorialized their agreement to settle in a Term Sheet dated as of January 14, 2025, subject to the execution of a formal stipulation and related papers.  The Stipulation, which sets forth the terms and conditions of the Settlement and reflects the final and binding agreement between the Parties to settle the Action, was filed with the Court on March 12, 2025.

The case is In re Honest Company, Inc. Securities Litigation, No. 21-CV-074405 (C.D. Cal.) Labaton Keller Sucharow represents Lead Plaintiff Kathie Ng.  

Submit Claim Form

If you purchased or otherwise acquired Honest publicly traded common stock pursuant and traceable to the Offering Documents for Honest’s IPO prior to August 19, 2021, or acquired ownership of a trading account, retirement account, or any other similar investment account or portfolio containing such stock, you may be entitled to a payment from the Settlement.  To be eligible for a payment, you must submit a Claim Form to the Claims Administrator by July 14, 2025.

Settlement Hearing

A Settlement Hearing will be held on July 28, 2025 at 9:00 a.m. (Pacific), before the Honorable Mark C. Scarsi, United States District Court Judge for the Central District of California at the First Street Courthouse, 350 W. 1st Street, Courtroom 7C, 7th Floor, Los Angeles, California 90012.

If you have questions about the Settlement, please contact Labaton Keller Sucharow at settlementquestions@labaton.com; (888) 219-6877; or contact the Claims Administrator at (888) 670-8722, info@TheHonestCompanySecuritiesLitigation.com.  Additional information about the Settlement can also be found at  www.TheHonestCompanySecuritiesLitigation.com.

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