The lawsuit, captioned In re The Scotts Miracle-Gro Co. Sec. Litig., was filed in the Southern District of Ohio by lead plaintiffs Employees Retirement System of the City of St. Louis and the Detectives Endowment Association Annuity Fund. The class period runs from May 5, 2021 through August 1, 2023. Defendants include the company itself, CEO James Hagedorn, and several current and former executives including former CFO Cory Miller, former interim CFO David Evans, CFO Matthew Garth, former COO Michael Lukemire, and Hawthorne Division President Christopher Hagedorn.
The underlying dispute centers on whether Scotts and its executives fraudulently concealed that the pandemic-driven surge in demand for lawn, garden, and cannabis-growing products had reversed — and that the company was sitting on massive excess inventory — while publicly assuring investors that consumer engagement remained strong and inventory levels were manageable. Scotts had ridden a wave of COVID-era demand that pushed its stock from roughly $93 per share in March 2020 to over $242 per share at the start of the class period. By the time of the final corrective disclosure on August 2, 2023, the stock had fallen to $58 per share, wiping out $6.6 billion in market capitalization.
According to the complaint, Scotts received granular, daily point-of-sale data from major retail partners including Home Depot, Lowe's, and Walmart showing demand declines of 20% or more in the U.S. Consumer segment by March or April 2021, and 30 to 50% declines in Hawthorne's leading regions by mid-2021. Multiple former employees are alleged to have described internal data systems that gave senior management real-time visibility into those trends. According to the complaint, one former employee reported that the company's internal numbers did not reflect public statements, which were characterized as pie in the sky. Another former Hawthorne employee is alleged to have reported that directors and executives analyzed the numbers every 15 fucking minutes and knew that numbers were inflated. Despite those internal signals, the complaint alleges, defendants continued to attribute poor results to weather and retailer inventory management rather than a structural post-pandemic demand shift.
Judge Algenon L. Marbley, writing in an April 22, 2026 opinion and order, held that the complaint plausibly alleged actionable misstatements and omissions regarding consumer demand, inventory levels, and the condition and prospects of both the U.S. Consumer and Hawthorne segments. The court rejected defendants' arguments that the challenged statements were protected puffery, inactionable opinions, or shielded by the PSLRA's safe harbor for forward-looking statements. On the safe harbor question, the court held that statements about present or historical conditions are not forward-looking and thus fall outside the provision entirely. For statements that were genuinely forward-looking, the court held that plaintiffs had plausibly alleged they were made with actual knowledge of their falsity, rendering the safe harbor unavailable regardless of any accompanying cautionary language.
The court did grant the motion in part. It dismissed certain challenged statements for which CEO Hagedorn's post-class-period admissions — including his December 2023 concession that Hawthorne was worth zero, or less — served as the sole basis for inferring earlier falsity, holding that such allegations impermissibly pleaded fraud by hindsight. Statements that lacked independent contemporaneous allegations of falsity were dismissed on that ground.
The corrective disclosure sequence alleged in the complaint unfolded across five partial disclosures between June 2022 and August 2023 that progressively revealed deteriorating conditions: slashed earnings guidance, a leverage ratio that climbed from a pre-class-period average of roughly 2.65x to an amended ceiling of 7x, a 40 to 45% projected Hawthorne sales decline, the abrupt departure of CFO Miller, and ultimately a full-year adjusted EBITDA guidance cut of 25%. On August 2, 2023, according to the complaint, CEO Hagedorn stated on an earnings call that the company's poor results were attributable to a post-COVID shift in consumer sentiment away from lawn maintenance and gardening, and that Scotts' own consumer research — and a study commissioned by McKinsey & Company — confirmed that consumers were simply spending their money elsewhere. The stock fell 17% that day.
Note to editors: The docket number listed in the source materials header (2:24-cv-03766) differs from the case number appearing on the face of the opinion (2:24-cv-3132); this discrepancy should be confirmed against PACER before publication. Additionally, the opinion text available ends at page 35 of 58, so the full scope of which specific challenged statements survived or were dismissed may not be entirely determinable from the available text; obtaining the complete opinion before publication is advisable.