The Honest Company, Inc. Securities Litigation

You received a Notice because the Court has certified a Class in this lawsuit and you were identified as a potential Class Member whose rights may be affected. This Notice explains that the Court has allowed, or “certified,” this action to proceed as a class-action lawsuit that may affect you.

A class action is a type of lawsuit in which one or several individuals or entities prosecute claims on behalf of all members of a group of similarly situated persons and entities (i.e., a class) to obtain monetary or other relief for the entire group. Class actions avoid the necessity of each member of a class having to file his, her, or its own separate lawsuit to obtain relief.

Judge Mark C. Scarsi of the United States District Court Central District of California is overseeing this class action. The lawsuit is titled In Re The Honest Company, Inc. Securities Litigation, Case No. 21-cv-07405-MCS-PLA.

A class action is a type of lawsuit in which one or several individuals or entities prosecute claims on behalf of all members of a group of similarly situated persons and entities (i.e., the class) to obtain monetary or other relief for the entire group. Class actions avoid the necessity of each member of a class having to file his, her, or its own separate lawsuit to obtain relief.

The Class Representative alleges that the Defendants violated Section 11 of the Securities Act of 1933 by issuing, or participating in issuing, materially false and misleading statements in the Offering Documents regarding (i) Honest’s business model and growth strategy, and (ii) the impact of the COVID-19 pandemic on the demand for Honest’s products. The Class Representative also alleges that the Individual Defendants violated Section 15 of the Securities Act of 1933, because they were able to, and did, control the Offering Documents that contained the materially false and misleading statements.

The Class Representative alleges that, as a result of the materially false and misleading Offering Documents, Class Members suffered damages when the price of Honest common stock declined after the Company’s IPO.

Defendants deny all of the Class Representative’s allegations and further deny that they did anything wrong. Defendants also deny that the Class Representative or the Class suffered damages.

The Class, certified by the Court, consists of:

All persons and entities that purchased or otherwise acquired Honest’s publicly traded common stock pursuant and traceable to the Offering Documents for Honest’s IPO prior to August 19, 2021, as well as all persons and entities that acquired ownership of a trading account, retirement account, or any other similar investment account or portfolio containing Honest’s publicly traded common stock that was purchased or otherwise acquired pursuant and traceable to the Offering Documents for Honest’s IPO prior to August 19, 2021, and were damaged thereby.

There are some individuals and entities that are excluded from the Class by definition.

Excluded from the Class are:

• Defendants and the Individual Defendants’ immediate family members;
• The officers, directors, affiliates, and subsidiaries of Honest and the Underwriter Defendants, at all relevant times;
• Honest’s affiliates and employee retirement and/or benefit plan(s) and their participants and/or beneficiaries to the extent they purchased or acquired Honest’s common stock pursuant or traceable to the Offering Documents through any such plan(s);
• Any person who had or has a controlling interest in Honest, at all relevant times;
• Any entity in which any of the Defendants have or had a controlling interest, provided, however, that any “Investment Vehicle” shall not be excluded from the Class; and
• The legal representatives, heirs, successors, or assigns of any such excluded person or entity, in their capacity as such.

Additionally, any person or entity that timely and validly requests exclusion, as explained in the Notice, will be excluded from the Class.

The Class definition is subject to change by Court order, pursuant to Rule 23 of the Federal Rules of Civil Procedure.

If you are still not sure whether you are included, you can call 888-670-8722 for more information.

No. The claims have not been decided and there has been no monetary recovery.

If a settlement of the lawsuit is reached, it will be subject to approval by the Court. Class Members will be sent additional notice of any proposed settlement, and members of the Class who have not excluded themselves may have an opportunity to do so at that time, in the Court’s discretion, and will have an opportunity to object to the proposed settlement and to submit a Proof of Claim form to demonstrate their entitlement to any payment. Similarly, the Court may also direct further notice to the Class following any judgment that may be entered after a trial of this case, or for any other reason that the Court may determine.

No. No money or any other benefits are available now because the claims have not been decided and the Parties have not settled the case. There is no guarantee that money or any other benefit ever will be obtained. If there is a recovery, you will be notified about how to ask for your share.

If you are a Class Member and you do nothing, you will stay in the Class. This means you will be legally bound by all of the orders the Court issues and judgments the Court makes in this Action, whether favorable or unfavorable. If you stay in the Class and money is paid to the Class, either through a settlement with Defendants or a judgment of the Court after trial, you may be eligible to receive a share of that recovery. Keep in mind that if you do nothing now, regardless of whether Class Representatives win or lose the case, you will not be able to sue Defendants in any other lawsuit about the same claims that are the subject of this Action.

If you choose to remain a member of the Class, you do not have to do anything at this time other than retain your financial records reflecting all of your transactions (purchases, sales, and grants) in Honest common stock and any other documents relating to Honest. If there is a recovery in the future, members of the Class will be required to support their requests for payment by demonstrating their membership in the Class and documenting their receipt of Honest common stock purchased or acquired from May 5, 2021 through August 18, 2021, inclusive and any losses on that stock. Neither the Class Representative, the Company, nor the Notice Administrator has information about all of your transactions in Honest common stock. Your broker may not keep your records for as long as you need. For these reasons, please be sure to keep all records of your transactions in Honest common stock and any other documents relating to Honest.

If you want to pursue your own lawsuit or claims against Defendants about the matters alleged in this case, do not want to be bound by what the Court does in this case, or if you simply do not want to be part of the Class pursuing claims against Defendants, you must ask to be excluded from the Class. If you exclude yourself from the Class—which means to remove yourself from the Class and is sometimes called “opting-out” of the Class—you will not be legally bound by any past, present, or future Court orders or judgments in this Action, and will keep any right you may have to individually sue Defendants in the future with respect to the claims made in this suit. However, if you exclude yourself, you also will not get any money or any other benefits from this lawsuit, if there are any.

If you start your own lawsuit against Defendants after you exclude yourself, you will have to hire and pay your own lawyer for that lawsuit, and you will have to prove your claims.

Please note: If you decide to exclude yourself from the Class, you should consult with an attorney and discuss whether your individual claim would be time-barred by the applicable statutes of limitations or repose.

If you wish to be excluded from the Class (“opt-out”), you must submit a letter stating that you “request exclusion from the Class in In Re The Honest Company, Inc. Securities Litigation, (C.D. Cal.)”

Your request for exclusion must also:

1. state the name, address, and telephone number of the person or entity requesting exclusion;
2. state the number of shares of Honest common stock that the person or entity requesting exclusion purchased or acquired from May 5, 2021 through August 18, 2021, inclusive;
3. state how many of those shares the person or entity requesting exclusion sold;
4. state the dates, number of shares, and prices of each such purchase/acquisition and sale; and
5. be signed by the person or entity requesting exclusion or an authorized representative, accompanied by proof of authorization.

You must mail your exclusion request so that it is received by no later than August 7, 2023 to:

In re The Honest Company, Inc. Securities Litigation
c/o Epiq
P.O. Box 5619
Portland, OR 97228-5619

You cannot exclude yourself from the Class by telephone or email, and a request for exclusion will not be effective unless it contains all the information called for by this paragraph and is postmarked or submitted by the date stated above, or is otherwise accepted by the Court.

Only request exclusion if you do not wish to participate in the Action and do not wish to share in any potential recovery that the Class may obtain.

As a member of the Class, you will be represented by Class Counsel who are:

Alfred L. Fatale III, Esq.
LABATON SUCHAROW LLP
140 Broadway
New York, NY 10005
Telephone: 1-888-219-6877

Unless you hire your own personal lawyer, as a Class Member you will not have any direct obligations to pay the costs of this lawsuit. In the event there is a recovery by the Class, all costs and expenses, including Class Counsel’s attorneys’ fees, will be paid from that recovery in an amount that is approved by the Court. If there is no recovery, Class Counsel will not receive any attorneys’ fees or expenses.

The CUSIP for The Honest Company, Inc. Common Stock is 438333106. The ticker symbol for The Honest Company, Inc. Common Stock is HNST.