Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_17-cv-00554/USCOURTS-cand-4_17-cv-00554-11/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

OAKLAND DIVISION 

IN RE RH, INC. SECURITIES 

LITIGATION 

Case No. 4:17-00554-YGR 

ECF CASE 

[PROPOSED] ORDER AND JUDGMENT 

APPROVING CLASS ACTION 

SETTLEMENT, PLAN OF 

ALLOCATION, ATTORNEYS’ FEES 

AND EXPENSES *As Modified by the 

Court*

WHEREAS, a class action is pending in this Court entitled In re RH, Inc. Securities 

Litigation, Case No. 4:17-00554-YGR (the “Action”); 

WHEREAS, in an Order dated October 11, 2018, this Court certified the Action to 

proceed as a class action on behalf of all persons and entities who purchased or otherwise 

acquired the common stock of RH during the period from March 26, 2015 through June 8, 2016, 

inclusive (the “Class Period”)1; 

WHEREAS, (a) Lead Plaintiffs Public School Teachers’ Pension & Retirement Fund of 

Chicago and Arkansas Teacher Retirement System (“Lead Plaintiffs”), on behalf of themselves 

and the Class, and (b) defendants RH (“RH” or the “Company”), and Gary Friedman and Karen 

Boone (collectively, the “Individual Defendants” and, together with RH, “Defendants,” and 

together with Lead Plaintiffs, the “Parties”) have entered into a Stipulation and Agreement of 

Settlement dated May 6, 2019 (the “Stipulation”), which provides for a complete dismissal with 

 

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 Excluded from the Class are (i) Defendants; (ii) Immediate Family Members of the Individual 

Defendants; (iii) any person who was an Officer or director of RH; (iv) any firm or entity in 

which any Defendant has or had a controlling interest; (v) any person who is alleged to have 

participated in the wrongdoing alleged (This exclusion only applies and refers to the two 

Individual Defendants. For the avoidance of doubt, the Individual Defendants expressly deny 

that they were involved in any wrongdoing.); (vi) parents or subsidiaries of RH; (vii) all RH 

plans that are covered by ERISA; and (viii) the legal representatives, agents, affiliates, heirs, 

beneficiaries, successors-in-interest, or assigns of any excluded person or entity, in their 

respective capacity as such. Also excluded from the Class are the persons and entities listed on 

Exhibit 1 hereto, who are excluded from the Class pursuant to request. 

Case 4:17-cv-00554-YGR Document 151 Filed 10/25/19 Page 1 of 52
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prejudice of the claims asserted against Defendants in the Action on the terms and conditions set 

forth in the Stipulation, subject to the approval of this Court (the “Settlement”); 

WHEREAS, unless otherwise defined in this Judgment, the capitalized terms herein shall 

have the same meaning as they have in the Stipulation, which is attached hereto as Exhibit 2; 

WHEREAS, by Order dated June 21, 2019 (the “Preliminary Approval Order”), this 

Court: (a) found, pursuant to Rule 23(e)(1)(B) of the Federal Rules of Civil Procedure, that it 

would likely be able to approve the Settlement as fair, reasonable, and accurate under Rule 

23(e)(2); (b) ordered that notice of the proposed Settlement be provided to potential Class 

Members; (c) provided Class Members with the opportunity either to exclude themselves from 

the Class or to object to the proposed Settlement, Plan of Allocation, and/or motion for 

attorneys’ fees and expenses; and (d) scheduled a hearing regarding final approval of the 

Settlement; 

WHEREAS, due and adequate notice has been given to the Class and no objections to 

approval of the Settlement, the Plan of Allocation, or Lead Counsel’s motion for attorneys’ fees 

and Litigation Expenses have been received; 

WHEREAS, the Court conducted a hearing on October 22, 2019 (the “Settlement 

Hearing”) to consider, among other things, (a) whether the terms and conditions of the 

Settlement are fair, reasonable, and adequate to the Class, and should therefore be approved; 

(b) whether a judgment should be entered dismissing the Action with prejudice as against the 

Defendants; (c) whether the Plan of Allocation should be approved as fair and reasonable; and 

(d) whether Lead Counsel’s motion for attorneys’ fees and Litigation Expenses should be 

approved; 

WHEREAS, the Court having reviewed and considered the Stipulation, all papers filed 

and proceedings held herein in connection with the Settlement, all oral and written comments 

received regarding the Settlement, and the record in the Action, and good cause appearing 

therefor; 

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED: 

Case 4:17-cv-00554-YGR Document 151 Filed 10/25/19 Page 2 of 52
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1. Jurisdiction – The Court has jurisdiction over the subject matter of the Action, 

and all matters relating to the Settlement, as well as personal jurisdiction over all of the Parties 

and each of the Class Members. 

2. Incorporation of Settlement Documents – This Judgment incorporates and 

makes a part hereof: (a) the Stipulation filed with the Court on May 6, 2019; and (b) the Notice 

and the Summary Notice, both of which were filed with the Court on September 17, 2019. 

3. Notice – The Court finds that the dissemination of the Notice and the publication 

of the Summary Notice: (a) were implemented in accordance with the Preliminary Approval 

Order; (b) constituted the best notice practicable under the circumstances; (c) constituted notice 

that was reasonably calculated, under the circumstances, to apprise Class Members of (i) the 

pendency of the Action; (ii) the effect of the proposed Settlement (including the Releases to be 

provided thereunder); (iii) the terms of the proposed Plan of Allocation of the Net Settlement 

Fund; (iv) Lead Counsel’s motion for attorneys’ fees and reimbursement of Litigation Expenses; 

(v) their right to object to any aspect of the Settlement, the Plan of Allocation, and/or Lead 

Counsel’s motion for attorneys’ fees and reimbursement of Litigation Expenses; (vi) their right 

to exclude themselves from the Class; and (vii) their right to appear at the Settlement Hearing; 

(d) constituted due, adequate, and sufficient notice to all persons and entities entitled to receive 

notice of the proposed Settlement; and (e) satisfied the requirements of Rule 23 of the Federal 

Rules of Civil Procedure, the United States Constitution (including the Due Process Clause), the 

Private Securities Litigation Reform Act of 1995, 15 U.S.C. § 78u-4, as amended, and all other 

applicable law and rules. 

4. Final Settlement Approval and Dismissal of Claims – Pursuant to, and in 

accordance with, Rule 23(e)(2) of the Federal Rules of Civil Procedure, this Court hereby fully 

and finally approves the Settlement set forth in the Stipulation in all respects (including, without 

limitation: the amount of the Settlement; the Releases provided for therein; and the dismissal 

with prejudice of the claims asserted against Defendants in the Action), and finds that the 

Settlement is, in all respects, fair, reasonable, and adequate to the Class. Specifically, the Court 

finds that (a) Lead Plaintiffs and Lead Counsel have adequately represented the Class; (b) the 

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Settlement was negotiated by the Parties at arm’s length; (c) the relief provided for the Class 

under the Settlement is adequate, taking into account the costs, risks, and delay of trial and 

appeal, the proposed means of distributing the Settlement Fund to the Class; and the proposed 

attorneys’ fee award; and (d) the Settlement treats members of the Class equitably relative to 

each other. The Parties are directed to implement, perform, and consummate the Settlement in 

accordance with the terms and provisions contained in the Stipulation. 

5. The Action and all of the claims asserted against Defendants in the Action by 

Lead Plaintiffs and the other Class Members are hereby dismissed with prejudice. The Parties 

shall bear their own costs and expenses, except as otherwise expressly provided in the 

Stipulation. 

6. Binding Effect – The terms of the Stipulation and of this Judgment shall be 

forever binding on Defendants, Lead Plaintiffs, and all other Class Members (regardless of 

whether or not any individual Class Member submits a Claim Form or seeks or obtains a 

distribution from the Net Settlement Fund), as well as their respective successors and assigns. 

The persons and entities listed on Exhibit 1 hereto are excluded from the Class pursuant to 

request and are not bound by the terms of the Stipulation or this Judgment. 

7. Releases 

(a) Upon the Effective Date, Lead Plaintiffs and each of the other Class Members, on 

behalf of themselves and their respective spouses, heirs, executors, beneficiaries, administrators, 

predecessors, successors, and assigns, in their capacities as such, and any Person(s) claiming 

(now or in the future) through or on behalf of any of them directly or indirectly, regardless of 

whether such Lead Plaintiff or Class Member ever seeks or obtains by any means (including, 

without limitation, by submitting a Claim Form to the Claims Administrator) any distribution 

from the Net Settlement Fund: (i) shall have fully, finally, and forever compromised, settled, 

released, relinquished, waived, dismissed, and discharged each and all of the Released Plaintiffs’ 

Claims (including Unknown Claims) against each and all of the Defendants’ Releasees, and shall 

have covenanted not to sue any of the Defendants’ Releasees with respect to any of the Released 

Plaintiffs’ Claims (including any Unknown Claims) except to enforce the releases and other 

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terms and conditions contained in the Stipulation or this Judgment; and (ii) shall be forever 

permanently barred, enjoined, and restrained from bringing, commencing, instituting, asserting, 

maintaining, enforcing, prosecuting, or otherwise pursuing, either directly or in any other 

capacity, any of the Released Plaintiffs’ Claims (including any Unknown Claims) against any of 

the Defendants’ Releasees in the Action or in any other action or proceeding, in any state, 

federal, or foreign court of law or equity, arbitration tribunal, administrative forum, or other 

forum of any kind. 

(b) Upon the Effective Date, Defendants, on behalf of themselves, and their 

respective spouses, heirs, executors, beneficiaries, administrators, predecessors, successors, and 

assigns, in their capacities as such, and any Person(s) claiming (now or in the future) through or 

on behalf of any of them directly or indirectly, (i) shall have fully, finally, and forever 

compromised, settled, released, relinquished, waived, dismissed, and discharged each and all of 

the Released Defendants’ Claims against each and all of Lead Plaintiffs and the other Plaintiffs’ 

Releasees, and shall have covenanted not to sue any of the Plaintiffs’ Releasees with respect to 

any of the Released Defendants’ Claims (including any Unknown Claims) except to enforce the 

releases and other terms and conditions contained in the Stipulation or this Judgment; and 

(ii) shall be forever permanently barred, enjoined, and restrained from bringing, commencing, 

instituting, asserting, maintaining, enforcing, prosecuting, or otherwise pursuing, either directly 

or in any other capacity, any of the Released Defendants’ Claims (including any Unknown 

Claims) against any of the Plaintiffs’ Releasees in any action or proceeding, in any state, federal, 

or foreign court of law or equity, arbitration tribunal, administrative forum, or other forum of any 

kind. This Release shall not apply to any person or entity listed on Exhibit 1 hereto. 

(c) For purposes of this Judgment: 

1. “Defendants’ Releasees” means, collectively, each and all of (i) the 

Defendants, each Individual Defendant’s Immediate Family Members, any entity in 

which any Defendant or Individual Defendant’s Immediate Family Members has, or had 

during the Class Period, a controlling interest (directly or indirectly), and any estate or 

trust of which any Individual Defendant is a settlor or which is for the benefit of any 

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Individual Defendant and/or his or her Immediate Family Members; and (ii) for each and 

every Person listed in part (i), their respective past, present, and future heirs, executors, 

administrators, predecessors, successors, assigns, employees, agents, affiliates, analysts, 

assignees, attorneys, auditors, co-insurers, commercial bank lenders, consultants, 

controlling shareholders, directors, divisions, financial advisors, general or limited 

partners, general or limited partnerships, insurers, investment advisors, investment 

bankers, investment banks, joint ventures and joint venturers, managers, managing 

directors, marital communities, members, officers, parents, personal or legal 

representatives, principals, reinsurers, shareholders, subsidiaries (foreign or domestic), 

trustees, underwriters, and other retained professionals, in their respective capacities as 

such. 

2. “Plaintiffs’ Releasees” means (i) Lead Plaintiffs, all other plaintiffs in the 

Action, and all other Class Members, and their respective Immediate Family Members; 

and (ii) for each and every Person listed in part (i), their respective past, present, and 

future heirs, executors, administrators, predecessors, successors, assigns, employees, 

agents, affiliates, analysts, assignees, attorneys, auditors, co-insurers, commercial bank 

lenders, consultants, controlling shareholders, directors, divisions, financial advisors, 

general or limited partners, general or limited partnerships, insurers, investment advisors, 

investment bankers, investment banks, joint ventures and joint venturers, managers, 

managing directors, marital communities, members, officers, parents, personal or legal 

representatives, principals, reinsurers, shareholders, subsidiaries (foreign or domestic), 

trustees, underwriters, and other retained professionals, in their respective capacities as 

such. 

3. “Released Defendants’ Claims” means all claims, rights, liabilities, and 

causes of action of every nature and description, whether known claims or Unknown 

Claims, whether arising under federal, state, common, or foreign law, that arise out of or 

relate in any way to the institution, prosecution, or settlement of the claims asserted in the 

Action against Defendants. Released Defendants’ Claims do not include: (i) any claims 

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relating to the enforcement of the Settlement; or (ii) any claims against any person or 

entity who or which submitted a request for exclusion from the Class that was accepted 

by the Court. 

4. “Released Plaintiffs’ Claims” means all claims, rights, liabilities, and 

causes of action of every nature and description, whether known claims or Unknown 

Claims, contingent or absolute, mature or not mature, discoverable or undiscoverable, 

liquidated or unliquidated, accrued or not accrued, including those that are concealed or 

hidden, regardless of legal or equitable theory and whether arising under federal, state, 

common, or foreign law, that Lead Plaintiffs or any other member(s) of the Class: 

(i) asserted in the Action, or (ii) could have asserted in any forum, that arise out of, are 

based upon, or relate to, directly or indirectly, in whole or in part, (A) the allegations, 

transactions, facts, matters or occurrences, representations or omissions involved, set 

forth, or referred to in the Action and that relate to the purchase, sale, acquisition, or 

retention of RH common stock during the Class Period; or (B) Defendants’ and/or their 

attorneys’ defense or settlement of the Action and/or the claims alleged therein. Released 

Plaintiffs’ Claims do not include: (i) any claims asserted on behalf of the Company in In 

re RH Shareholder Derivative Litig., Lead Case No. 4:18-cv-02452-YGR (N.D. Cal.); 

Magnani v. Friedman, et al., Case No. 3:18-cv-02452-YGR (N.D. Cal.); or Izmirliyan v. 

Friedman, et al., Case No. 4:18-cv-3930-YGR (N.D. Cal.), or any cases consolidated into 

any of the foregoing actions; (ii) any claims relating to the enforcement of the Settlement; 

and (iii) any claims of any person or entity who or which submitted a request for 

exclusion that was accepted by the Court. 

5. “Unknown Claims” means, collectively, any and all Released Plaintiffs’ 

Claims that Lead Plaintiffs or any other Class Member does not know or suspect to exist 

in his, her, or its favor at the time of the release of such claims, and any Released 

Defendants’ Claims that any Defendant does not know or suspect to exist in his, her, or 

its favor at the time of the release of such claims, which, if known by him, her or it, might 

have affected his, her, or its decision(s) with respect to this Settlement, including the 

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decision to agree to all the various releases set forth in the Stipulation, or that might have 

affected his, her, or its decision not to object to the Settlement, or not to exclude himself, 

herself, or itself from the Class. Unknown Claims include, without limitation, those 

claims in which some or all of the facts composing the claim may be unsuspected or 

undisclosed, concealed, or hidden. With respect to any and all Released Claims, the 

Parties stipulate and agree that, upon the Effective Date of the Settlement, Lead Plaintiffs 

and Defendants shall expressly waive, and each of the other Class Members shall be 

deemed to have waived, and by operation of this Judgment, shall have expressly waived, 

any and all provisions, rights, and benefits conferred by any law of any state or territory 

of the United States, or principle of common law or foreign law, which is similar, 

comparable, or equivalent to California Civil Code §1542, which provides: 

A general release does not extend to claims that the creditor or releasing 

party does not know or suspect to exist in his or her favor at the time of 

executing the release and that, if known by him or her, would have 

materially affected his or her settlement with the debtor or released party. 

Lead Plaintiffs and Defendants acknowledge, and each of the other Class Members shall 

be deemed by operation of law to have acknowledged, that the foregoing waiver was 

separately bargained for and a key element of the Settlement. 

8. Notwithstanding paragraphs 7(a)-(b) above, nothing in this Judgment shall bar 

any action by any of the Parties to enforce or effectuate the terms of the Stipulation or this 

Judgment. 

9. Plan of Allocation – The Court finds and concludes that the formula for the 

calculation of the claims of Claimants as set forth in the Plan of Allocation mailed to Class 

Members provides a fair and reasonable basis upon which to allocate the proceeds of the Net 

Settlement Fund among Class Members with due consideration having been given to 

administrative convenience and necessity. The Court hereby finds and concludes that the Plan of 

Allocation is, in all respects, fair and reasonable to the Class. Accordingly, the Court hereby 

approves the Plan of Allocation proposed by Lead Plaintiffs as set forth in the Notice.

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10. Attorneys’ Fees and Expenses – Lead Counsel is hereby awarded attorneys’ 

fees in the amount of 15% of the Settlement Fund (including interest earned at the same rate as 

the Settlement Fund). Lead Counsel is also hereby awarded $797,049.35 for payment of its 

litigation expenses. These attorneys’ fees and expenses shall be paid from the Settlement Fund, 

and the Court finds these sums to be fair and reasonable. In addition, Lead Plaintiff Public 

School Teachers’ Pension & Retirement Fund of Chicago and Lead Plaintiff Arkansas Teacher 

Retirement System are hereby awarded $5,960.00 and $1,892.28, respectively, from the 

Settlement Fund as reimbursement for their reasonable costs and expenses directly related to 

their representation of the Class. The Court has reviewed and considered the Retainer 

Agreement, which it finds to be reasonable. Lead Counsel is instructed to maintain copies of the 

Retainer Agreement in the event that it is necessary for any further proceeding. 

11. Rule 11 Findings – The Court finds and concludes that the Parties and their 

respective counsel have complied in all respects with the requirements of Rule 11 of the Federal 

Rules of Civil Procedure in connection with the institution, prosecution, defense, and settlement 

of the Action. 

12. No Admissions – This Judgment, the Term Sheet, the Stipulation (whether or not 

consummated), including the exhibits thereto and the Plan of Allocation contained therein (or 

any other plan of allocation that may be approved by the Court), the negotiations leading to the 

execution of the Term Sheet and the Stipulation, or any proceedings taken pursuant to or in 

connection with the Term Sheet, the Stipulation and/or approval of the Settlement (including any 

arguments proffered in connection therewith) shall not be deemed to be, and may not be argued 

to be or offered or received: 

(a) against any of the Defendants’ Releasees as evidence of, or construed as, 

or deemed to be evidence of, any presumption, concession, or admission by any of the 

Defendants’ Releasees with respect to the truth of any fact alleged by Lead Plaintiffs or the 

validity of any claim that was or could have been asserted or the deficiency of any defense 

that has been or could have been asserted in this Action or in any other litigation, or of any 

liability, negligence, fault, misrepresentation, or omission with respect to any statement or 

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written document approved or made by any of the Defendants or Defendants’ Releasees, or 

other wrongdoing of any kind of any of the Defendants’ Releasees, nor in any way referred 

to for any other reason as against any of the Defendants’ Releasees, in any arbitration 

proceeding or other civil, criminal, administrative, or other action or proceeding, other than 

such proceedings as may be necessary to effectuate the provisions of the Stipulation; 

(b) against any of the Plaintiffs’ Releasees, as evidence of, or construed as, or 

deemed to be evidence of, any presumption, concession, or admission by any of the 

Plaintiffs’ Releasees that any of their claims are without merit, that any of the Defendants’ 

Releasees had meritorious defenses, or that damages recoverable under the Complaint would 

not have exceeded the Settlement Amount or with respect to any liability, negligence, fault, 

or wrongdoing of any kind, nor in any way referred to for any other reason as against any of 

the Plaintiffs’ Releasees, in any arbitration proceeding or other civil, criminal, administrative, 

or other action or proceeding, other than such proceedings as may be necessary to effectuate 

the provisions of the Stipulation; or 

(c) against any of the Releasees as evidence of, or construed as evidence of, 

any presumption, concession, or admission by any of them that the Settlement Amount 

represents the amount which could be or would have been recovered after trial of the Action; 

provided, however, that the Parties and the Releasees and their respective counsel may refer to 

this Judgment and the Stipulation to effectuate the protections from liability granted hereunder 

and thereunder or otherwise to enforce the terms of the Settlement. 

13. Retention of Jurisdiction – Without affecting the finality of this Judgment in any 

way, this Court retains continuing and exclusive jurisdiction for one year from the date of this 

Judgment over: (a) the Parties for purposes of the administration, interpretation, implementation, 

and enforcement of the Settlement, including the interpretation and enforcement of all 

injunctions set forth herein; (b) the disposition of the Settlement Fund; (c) any motion to approve 

the Class Distribution Order; and (d) the Class Members for all matters relating to the Action. 

14. Any appeal from the portions of this Judgment regarding approval of the Plan of 

Allocation and the motion of Lead Counsel for an award of attorneys’ fees and reimbursement of 

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Litigation Expenses shall in no way affect or delay the finality of this Judgment as to its approval 

of the Settlement and shall not affect or delay the Effective Date of the Settlement. 

15. Modification of the Agreement of Settlement – Without further approval from

the Court, Lead Plaintiffs and Defendants are hereby authorized to agree to and adopt such 

amendments or modifications of the Stipulation or any exhibits attached thereto to effectuate the 

Settlement that: (a) are not materially inconsistent with this Judgment; and (b) do not materially 

limit the rights of Class Members in connection with the Settlement. Without further order of 

the Court, Lead Plaintiffs and Defendants may agree to reasonable extensions of time to carry 

out any provisions of the Settlement. 

16. Termination of Settlement – If the Settlement is terminated as provided in the

Stipulation or the Effective Date of the Settlement otherwise fails to occur, this Judgment shall 

be vacated, rendered null and void, and be of no further force and effect, except as otherwise 

provided by the Stipulation, and this Judgment shall be without prejudice to the rights of Lead 

Plaintiffs, the other Class Members, and Defendants, and the Parties shall revert to their 

respective positions in the Action as of March 21, 2019, as provided in the Stipulation. 

17. Entry of Final Judgment – There is no just reason to delay the entry of this

Judgment as a final judgment in this Action. Accordingly, the Clerk of the Court is expressly 

directed to immediately enter this final judgment in this Action. 

SO ORDERED this _______ day of ______________, 2019. 

________________________________________

The Honorable Yvonne Gonzalez Rogers 

United States District Judge

#1279867 

25th October

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Exhibit 1 

Dale Marcus 

Brookfield, IL 

Tailwind Fund LP 

Toronto, Ontario, CANADA 

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Exhibit 2 

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BERNSTEIN LITOWITZ BERGER 

 & GROSSMANN LLP 

JONATHAN D. USLANER (Bar No. 256898) 

jonathanu@blbglaw.com 

12481 High Bluff Drive, Suite 300 

San Diego, CA 92130 

Tel: (858) 793-0070 

Fax: (858) 793-0323 

Counsel for Lead Plaintiffs Public School 

Teachers’ Pension & Retirement Fund of 

Chicago and Arkansas Teacher Retirement 

System and Lead Counsel for the Class 

[Additional counsel appear on signature page] 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

OAKLAND DIVISION 

IN RE RH, INC. SECURITIES 

LITIGATION 

Case No. 4:17-00554-YGR 

ECF CASE 

STIPULATION AND 

AGREEMENT OF SETTLEMENT 

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This Stipulation and Agreement of Settlement, dated as of May 6, 2019 (the 

“Stipulation”), is entered into by and between (a) Lead Plaintiffs Public School Teachers’ 

Pension & Retirement Fund of Chicago and Arkansas Teacher Retirement System (“Lead 

Plaintiffs”) on behalf of themselves and the Class (defined below); and (b) defendants RH (“RH” 

or the “Company”), and Gary Friedman and Karen Boone (collectively, the “Individual 

Defendants” and, together with RH, “Defendants”), and embodies the terms and conditions of 

the settlement of the above-captioned action (the “Action”). Subject to the approval of the Court 

and the terms and conditions expressly provided herein, this Stipulation is intended to fully, 

finally, and forever compromise, settle, release, resolve, waive, discharge, and dismiss with 

prejudice the Action and all Released Plaintiffs’ Claims (defined below) against Defendants and 

the other Defendants’ Releasees (defined below) and all Released Defendants’ Claims (also 

defined below) against Lead Plaintiffs and the other Plaintiffs’ Releasees (also defined below). 

WHEREAS: 

A. On February 2, 2017, a class action complaint, styled City of Miami General 

Employees’ & Sanitation Employees’ Retirement Trust v. RH, Inc., et al., Civil Action No. 17-cv00554-YGR, was filed in the United States District Court for the Northern District of California 

(the “Court”) asserting violations of federal securities laws against RH and the Individual 

Defendants. (ECF No. 1.) In accordance with the Private Securities Litigation Reform Act of 

1995, 15 U.S.C. § 78u-4, as amended (the “PSLRA”), notice to the public was issued stating the 

deadline by which putative class members could move the Court for appointment as lead 

plaintiff. A related securities class action complaint, Errichiello v. RH, No. 3:17-cv-01425-WHO 

(“Errichiello”), was filed in the Court on March 16, 2017.

B. Public School Teachers’ Pension & Retirement Fund of Chicago and Arkansas 

Teacher Retirement System moved for appointment as Lead Plaintiffs on April 3, 2017, as did 

several other groups of competing movants. (ECF Nos. 7-26.) On April 13, 2017, the Court 

entered an Order designating Errichiello as a related case. (ECF No. 30.) On April 26, 2017, the 

Court entered an Order which provided that the case be recaptioned as In re RH, Inc. Securities 

Litigation, Case No. 4:17-00554-YGR; ordered that Errichiello be consolidated into the Action 

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and that any subsequently filed, removed, or transferred actions related to the claims asserted in 

the Action be consolidated; appointed Public School Teachers’ Pension & Retirement Fund of 

Chicago and Arkansas Teacher Retirement System as Lead Plaintiffs for the Action; and 

approved Lead Plaintiffs’ selection of Bernstein Litowitz Berger & Grossmann LLP as Lead 

Counsel for the class. (ECF No. 39.) 

C. On June 12, 2017, Lead Plaintiffs filed and served the Consolidated Class Action 

Complaint for Violation of the Federal Securities Laws (ECF No. 45) (the “Complaint”) 

asserting claims against all Defendants under Section 10(b) of the Securities Exchange Act of 

1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, and against the Individual 

Defendants under Section 20(a) of the Exchange Act. The Complaint alleges that, during the 

Class Period, Defendants made materially false and misleading statements about the launch of 

RH’s new product line, RH Modern, and the Company’s inventory levels. The Complaint further 

alleges that the price of RH common stock was artificially inflated as a result of Defendants’ 

allegedly false and misleading statements, and declined when the truth was revealed. 

D. On August 2, 2017, Defendants filed and served a motion to dismiss the 

Complaint (ECF No. 50) and a request that the Court consider documents incorporated by 

reference in the Complaint and take judicial notice of other documents submitted to the Court 

(ECF No. 51). On September 11, 2017, Lead Plaintiffs filed and served memoranda of law in 

opposition to Defendants’ motion to dismiss and request for judicial notice. (ECF Nos. 53-54.) 

On October 6, 2017, Defendants filed and served reply papers in support of their motion and 

request for judicial notice and made a supplemental request for judicial notice. (ECF Nos. 56-

58.) On October 13, 2017, Lead Plaintiffs filed objections to reply evidence accompanying 

Defendants’ reply papers. (ECF No. 59.) 

E. The Court held oral argument on the motion to dismiss and related requests for 

judicial notice on October 31, 2017. (ECF Nos. 60, 63.) On February 26, 2018, the Court 

entered an Order which denied Defendants’ motion to dismiss. (ECF No. 68.) 

F. Discovery in the Action commenced in March 2018. Lead Plaintiffs prepared and 

served initial disclosures, requests for production of documents, and interrogatories on 

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Defendants, exchanged numerous letters with Defendants concerning discovery issues, and 

served dozens of document subpoenas on third parties. Defendants and third parties produced a 

total of over 10 million pages of documents to Lead Plaintiffs, and Lead Plaintiffs produced over 

12,000 pages of documents to Defendants in response to their requests. Fifteen depositions were 

taken in the Action, which included depositions of representatives of both Lead Plaintiffs and of 

Defendants’ expert witness taken in connection with the motion for class certification, and 

twelve depositions of fact witnesses. 

G. On June 22, 2018, Lead Plaintiffs filed their motion for class certification, which 

was accompanied by a report from Lead Plaintiffs’ expert, Dr. Steven Feinstein, which opined 

that RH common stock traded in an efficient market during the Class Period and that per-share 

damages could be measured for all Class Members using a common methodology. (ECF Nos. 

94-95.) On August 14, 2018, Defendants filed their opposition to the class certification motion, 

which included an expert report challenging Dr. Feinstein’s conclusion regarding the common 

damages methodology. (ECF No. 101.) Lead Plaintiffs filed reply papers in further support of 

their motion on September 11, 2018. (ECF Nos. 103-104.) 

H. While discovery and briefing of Lead Plaintiffs’ class certification motion was 

ongoing, the Parties agreed to private mediation before former United States District Judge Layn 

R. Phillips. On August 6, 2018, the Parties (defined below) exchanged detailed mediation 

statements with numerous exhibits that were also submitted to Judge Phillips. A full-day, inperson mediation session with Judge Phillips was held on August 24, 2018. At the mediation 

session, the Parties engaged in vigorous settlement negotiations with the assistance of Judge 

Phillips but were not able to reach an agreement. 

I. On October 1, 2018, the Court held oral argument on Lead Plaintiffs’ motion for 

class certification. (ECF Nos. 108, 110.) On October 11, 2018, the Court granted the motion, 

certifying the proposed Class, appointing Lead Plaintiffs as Class Representatives, and 

appointing Bernstein Litowitz Berger & Grossmann LLP as Class Counsel. (ECF No. 111.) 

J. On October 25, 2018, Defendants filed a petition to appeal the Court’s order 

certifying the Class to the Court of Appeals for the Ninth Circuit pursuant to Rule 23(f) of the 

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Federal Rules of Civil Procedure. (ECF No. 112.) The Court of Appeals denied that petition on 

January 24, 2019. (ECF No. 121.) 

K. Following certification of the Class, the Parties’ discovery efforts continued. The 

Parties also continued to discuss the possible resolution of the Action through settlement. A 

second mediation with Judge Phillips was scheduled for March 1, 2019. In advance of that 

session, the Parties submitted and exchanged supplemental mediation statements on February 15, 

2019. After a full-day, in-person mediation session on March 1, 2019, the Parties came near to a 

resolution. Judge Phillips issued a mediator’s proposal on March 3, 2019, and the Parties 

continued their negotiations in the weeks immediately following the mediation. 

L. On March 21, 2019, the Parties executed a Term Sheet setting forth their 

agreement in principle to settle the Action in return for Defendants causing payment of 

$50,000,000.00 in cash from Defendants’ D&O carriers for the benefit of the Class, subject to 

certain terms and conditions and the execution of a customary “long form” stipulation and 

agreement of settlement and related papers. 

M. This Stipulation (together with the exhibits hereto) reflects the final and binding 

agreement between the Parties. 

N. Based upon their investigation, prosecution, and mediation of the case, Lead 

Plaintiffs and Lead Counsel have concluded that the terms and conditions of this Stipulation are 

fair, reasonable, and adequate to Lead Plaintiffs and the other members of the Class, and in their 

best interests. Based on Lead Plaintiffs’ direct oversight of the prosecution of this matter and 

with the advice of their counsel, Lead Plaintiffs have agreed to settle and release the Released 

Plaintiffs’ Claims pursuant to the terms and provisions of this Stipulation, after considering, 

among other things: (a) the substantial financial benefit that Lead Plaintiffs and the other 

members of the Class will receive under the proposed Settlement; and (b) the significant risks 

and costs of continued litigation and trial. 

O. This Stipulation constitutes a compromise of all matters that are in dispute 

between the Parties. Defendants are entering into this Stipulation solely to eliminate the 

uncertainty, burden, and expense of further protracted litigation. Each of the Defendants denies 

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any wrongdoing, and this Stipulation shall in no event be construed or deemed to be evidence of 

or an admission or concession on the part of any of the Defendants with respect to any claim or 

allegation of any fault, liability, wrongdoing, or damage whatsoever, or any infirmity in the 

defenses that Defendants have, or could have, asserted. Defendants expressly deny that Lead 

Plaintiffs have asserted any valid claims as to any of the Defendants, and expressly deny any and 

all allegations of fault, liability, wrongdoing, or damages whatsoever. Similarly, this Stipulation 

shall in no event be construed or deemed to be evidence of or an admission or concession on the 

part of Lead Plaintiffs of any infirmity in any of the claims asserted in the Action, or an 

admission or concession that any of the Defendants’ defenses to liability had any merit. 

NOW THEREFORE, it is hereby STIPULATED AND AGREED, by and among Lead 

Plaintiffs (individually and on behalf of all other members of the Class) and Defendants, by and 

through their respective undersigned attorneys and subject to the approval of the Court pursuant 

to Rule 23(e) of the Federal Rules of Civil Procedure, that, in consideration of the benefits 

flowing to the Parties from the Settlement, all Released Plaintiffs’ Claims as against the 

Defendants’ Releasees and all Released Defendants’ Claims as against the Plaintiffs’ Releasees 

shall be finally and fully compromised, settled, and released, and the Action shall be dismissed 

with prejudice as to the Defendants, upon and subject to the terms and conditions set forth below. 

DEFINITIONS 

1. As used in this Stipulation and any exhibits attached hereto and made a part 

hereof, the following capitalized terms shall have the following meanings: 

(a) “Action” means the securities class action in this Court styled In re RH, 

Inc. Securities Litigation, Case No. 4:17-00554-YGR. 

(b) “Alternate Judgment” means a form of final judgment that may be entered 

by the Court herein but in a form other than the form of Judgment provided for in this 

Stipulation. 

(c) “Authorized Claimant” means a Class Member who submits a Claim to the 

Claims Administrator that is approved by the Court for payment from the Net Settlement Fund. 

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(d) “Claim” means a paper claim submitted on a Claim Form, or an electronic 

claim, in either instance that is submitted to the Claims Administrator. 

(e) “Claim Form” or “Proof of Claim Form” means the form, substantially in 

the form attached hereto as Exhibit 2 to Exhibit A, which a Claimant must complete and submit 

should that Claimant seek to share in a distribution of the Net Settlement Fund. 

(f) “Claimant” means a person or entity who or which submits a Claim to the 

Claims Administrator seeking to be eligible to share in the proceeds of the Net Settlement Fund. 

(g) “Claims Administrator” means the firm retained by Lead Counsel, subject 

to approval of the Court, to provide all notices approved by the Court to potential Class Members 

and to administer the Settlement. 

(h) “Class” means the class certified in the Court’s October 11, 2018 Order 

(ECF No. 111). Specifically, the Class includes all persons and entities who purchased or 

otherwise acquired the common stock of RH during the period from March 26, 2015 through 

June 8, 2016, inclusive. Excluded from the Class are (i) Defendants; (ii) Immediate Family 

Members of the Individual Defendants; (iii) any person who was an Officer or director of RH; 

(iv) any firm or entity in which any Defendant has or had a controlling interest; (v) any person 

who is alleged to have participated in the wrongdoing alleged1; (vi) parents or subsidiaries of 

RH; (vii) all RH plans that are covered by ERISA; (viii) the legal representatives, agents, 

affiliates, heirs, beneficiaries, successors-in-interest, or assigns of any excluded person or entity, 

in their respective capacity as such; and (ix) any persons or entities who or which exclude 

themselves by submitting a request for exclusion that is accepted by the Court. 

(i) “Class Distribution Order” means an order entered by the Court authorizing 

and directing that the Net Settlement Fund be distributed, in whole or in part, to Authorized 

Claimants. 

1

 This exclusion only applies and refers to the two Individual Defendants. For the avoidance of 

doubt, the Individual Defendants expressly deny that they were involved in any wrongdoing. 

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(j) “Class Member” means each person and entity who or which is a member 

of the Class. 

(k) “Class Period” means the period from March 26, 2015 through June 8, 

2016, inclusive. 

(l) “Complaint” means the Consolidated Class Action Complaint for 

Violations of the Federal Securities Laws filed by Lead Plaintiffs in the Action on June 12, 2017. 

(m) “Court” or “District Court” means the United States District Court for the 

Northern District of California. 

(n) “Defendants” means RH and the Individual Defendants. 

(o) “Defendants’ Counsel” means Morrison & Foerster LLP. 

(p) “Defendants’ Releasees” means, collectively, each and all of (i) the 

Defendants, each Individual Defendant’s Immediate Family Members, any entity in which any 

Defendant or Individual Defendant’s Immediate Family Members has, or had during the Class 

Period, a controlling interest (directly or indirectly), and any estate or trust of which any 

Individual Defendant is a settlor or which is for the benefit of any Individual Defendant and/or 

his or her Immediate Family Members; and (ii) for each and every Person listed in part (i), their 

respective past, present, and future heirs, executors, administrators, predecessors, successors, 

assigns, employees, agents, affiliates, analysts, assignees, attorneys, auditors, co-insurers, 

commercial bank lenders, consultants, controlling shareholders, directors, divisions, financial 

advisors, general or limited partners, general or limited partnerships, insurers, investment 

advisors, investment bankers, investment banks, joint ventures and joint venturers, managers, 

managing directors, marital communities, members, officers, parents, personal or legal 

representatives, principals, reinsurers, shareholders, subsidiaries (foreign or domestic), trustees, 

underwriters, and other retained professionals, in their respective capacities as such. 

(q) “Effective Date” with respect to the Settlement means the first date by 

which all of the events and conditions specified in ¶ 37 of this Stipulation have been met and 

have occurred or have been waived. 

(r) “ERISA” means the Employee Retirement Income Security Act of 1974. 

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(s) “Escrow Account” means an account maintained at Citibank, N.A. wherein 

the Settlement Amount shall be deposited and held in escrow under the control of Lead Counsel. 

(t) “Escrow Agent” means Citibank, N.A. 

(u) “Escrow Agreement” means the agreement between Lead Counsel and the 

Escrow Agent setting forth the terms under which the Escrow Agent shall maintain the Escrow 

Account. 

(v) “Final” means, with respect to any court order, including, without 

limitation, the Judgment, that such order represents a final and binding determination of all 

issues within its scope and is not subject to further review on appeal or otherwise. Without 

limitation, an order becomes “Final” when: (i) no appeal has been filed, and the prescribed time 

for commencing any appeal has expired; or (ii) an appeal has been filed and either (a) the appeal 

has been dismissed, and the prescribed time, if any, for commencing any further appeal has 

expired, or (b) the order has been affirmed in all material respects, and the prescribed time, if 

any, for commencing any further appeal has expired. For purposes of this definition of “Final,” 

an “appeal” includes any motion to alter or amend under Rule 52(b) or Rule 59(e) of the Federal 

Rules of Civil Procedure, any appeal as of right, discretionary appeal, interlocutory appeal, 

petition for writ of certiorari, or other proceeding involving writs of certiorari or mandamus, 

and any other proceedings of like kind. Any appeal or other proceeding pertaining solely to an 

order or the part of an order adopting or approving a Plan of Allocation or solely to any order or 

the part of an order issued solely with respect to an application for attorneys’ fees and expenses 

pursuant to ¶¶ 19-22 herein shall not in any way delay or preclude the Judgment from becoming 

Final. 

(w) “Immediate Family Members” means children, stepchildren, parents, 

stepparents, spouses, siblings, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law, 

brothers-in-law, and sisters-in-law. As used in this paragraph, “spouse” shall mean a husband, a 

wife, or a partner in a state-recognized domestic relationship or civil union. 

(x) “Individual Defendants” means Gary Friedman and Karen Boone. 

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(y) “Judgment” means the final judgment, substantially in the form attached 

hereto as Exhibit B, to be entered by the Court approving the Settlement. 

(z) “Lead Counsel” means the law firm of Bernstein Litowitz Berger & 

Grossmann LLP. 

(aa) “Lead Plaintiffs” means Public School Teachers’ Pension & Retirement 

Fund of Chicago and Arkansas Teacher Retirement System. 

(bb) “Litigation Expenses” means costs and expenses incurred in connection 

with commencing, prosecuting, and settling the Action (which may include the costs and 

expenses of Lead Plaintiffs directly related to their representation of the Class), for which Lead 

Counsel intends to apply to the Court for reimbursement or payment from the Settlement Fund. 

(cc) “Net Settlement Fund” means the Settlement Fund less: (i) any Taxes; 

(ii) any Notice and Administration Costs; (iii) any Litigation Expenses awarded by the Court; 

(iv) any attorneys’ fees awarded by the Court; and (v) any other costs or fees approved by the 

Court. 

(dd) “Notice” means the Notice of (I) Pendency of Class Action and Proposed 

Settlement; (II) Settlement Fairness Hearing; and (III) Motion for Attorneys’ Fees and Litigation 

Expenses, substantially in the form attached hereto as Exhibit 1 to Exhibit A, which is to be 

mailed to Class Members. 

(ee) “Notice and Administration Costs” means the costs, fees, and expenses that 

are incurred by the Claims Administrator and/or Lead Counsel in connection with: (i) providing 

notice to the Class; and (ii) administering the Settlement, including but not limited to the Claims 

process, as well as the costs, fees, and expenses incurred in connection with the Escrow Account. 

(ff) “Officer” means any officer as that term is defined in Securities and 

Exchange Act Rule 16a-1(f). 

(gg) “Parties” means Defendants and Lead Plaintiffs, on behalf of themselves 

and the Class. 

(hh) “Person” means an individual, corporation, limited liability company, 

professional corporation, partnership, domestic partnership, limited partnership, limited liability 

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partnership, marital community, association, joint stock company, joint venture, joint venturer, 

estate, legal representative, trust or trustee, unincorporated association, government or any 

political subdivision or agency thereof, or any other business or legal entity. 

(ii) “Plaintiffs’ Releasees” means (i) Lead Plaintiffs, all other plaintiffs in the 

Action, and all other Class Members, and their respective Immediate Family Members; and 

(ii) for each and every Person listed in part (i), their respective past, present, and future heirs, 

executors, administrators, predecessors, successors, assigns, employees, agents, affiliates, 

analysts, assignees, attorneys, auditors, co-insurers, commercial bank lenders, consultants, 

controlling shareholders, directors, divisions, financial advisors, general or limited partners, 

general or limited partnerships, insurers, investment advisors, investment bankers, investment 

banks, joint ventures and joint venturers, managers, managing directors, marital communities, 

members, officers, parents, personal or legal representatives, principals, reinsurers, shareholders, 

subsidiaries (foreign or domestic), trustees, underwriters, and other retained professionals, in 

their respective capacities as such. 

(jj) “Plan of Allocation” means the proposed plan of allocation of the Net 

Settlement Fund set forth in the Notice. 

(kk) “Preliminary Approval Order” means the order, substantially in the form 

attached hereto as Exhibit A, to be entered by the Court preliminarily approving the Settlement 

and directing that notice of the Settlement be provided to the Class. 

(ll) “PSLRA” means the Private Securities Litigation Reform Act of 1995, 15 

U.S.C. § 78u-4, as amended. 

(mm) “Recognized Claim” means the amount of an Authorized Claimant’s loss 

that is determined by the Claims Administrator to be compensable under the Plan of Allocation. 

(nn) “Released Claims” means all Released Defendants’ Claims and all 

Released Plaintiffs’ Claims. 

(oo) “Released Defendants’ Claims” means all claims, rights, liabilities, and 

causes of action of every nature and description, whether known claims or Unknown Claims, 

whether arising under federal, state, common, or foreign law, that arise out of or relate in any 

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way to the institution, prosecution, or settlement of the claims asserted in the Action against 

Defendants. Released Defendants’ Claims do not include: (i) any claims relating to the 

enforcement of the Settlement; or (ii) any claims against any person or entity who or which 

submits a request for exclusion from the Class that is accepted by the Court. 

(pp) “Released Plaintiffs’ Claims” means all claims, rights, liabilities, and 

causes of action of every nature and description, whether known claims or Unknown Claims, 

contingent or absolute, mature or not mature, discoverable or undiscoverable, liquidated or 

unliquidated, accrued or not accrued, including those that are concealed or hidden, regardless of 

legal or equitable theory and whether arising under federal, state, common, or foreign law, that 

Lead Plaintiffs or any other member(s) of the Class: (i) asserted in the Action, or (ii) could have 

asserted in any forum, that arise out of, are based upon, or relate to, directly or indirectly, in 

whole or in part, (A) the allegations, transactions, facts, matters or occurrences, representations 

or omissions involved, set forth, or referred to in the Action and that relate to the purchase, sale, 

acquisition, or retention of RH common stock during the Class Period; or (B) Defendants’ and/or 

their attorneys’ defense or settlement of the Action and/or the claims alleged therein. Released 

Plaintiffs’ Claims do not include: (i) any claims asserted on behalf of the Company in In re RH 

Shareholder Derivative Litig., Lead Case No. 4:18-cv-02452-YGR (N.D. Cal.); Magnani v. 

Friedman, et al., Case No. 3:18-cv-02452-YGR (N.D. Cal.); or Izmirliyan v. Friedman, et al., 

Case No. 4:18-cv-3930-YGR (N.D. Cal.), or any cases consolidated into any of the foregoing 

actions; (ii) any claims relating to the enforcement of the Settlement; and (iii) any claims of any 

person or entity who or which submits a request for exclusion that is accepted by the Court. 

(qq) “Releasee(s)” means each and any of the Defendants’ Releasees and each 

and any of the Plaintiffs’ Releasees. 

(rr) “Releases” means the releases set forth in ¶¶ 4-5 of this Stipulation. 

(ss) “RH” or the “Company” means RH (formerly known as Restoration 

Hardware Holdings, Inc.). 

(tt) “Settlement” means the settlement between Lead Plaintiffs and Defendants 

on the terms and conditions set forth in this Stipulation. 

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(uu) “Settlement Amount” means $50,000,000.00 in cash. 

(vv) “Settlement Fund” means the Settlement Amount plus any and all interest 

earned thereon. 

(ww) “Settlement Hearing” means the hearing set by the Court under 

Rule 23(e)(2) of the Federal Rules of Civil Procedure to consider final approval of the 

Settlement. 

(xx) “Summary Notice” means the Summary Notice of (I) Pendency of Class 

Action and Proposed Settlement; (II) Settlement Fairness Hearing; and (III) Motion for 

Attorneys’ Fees and Litigation Expenses, substantially in the form attached hereto as Exhibit 3 to 

Exhibit A, to be published as set forth in the Preliminary Approval Order. 

(yy) “Taxes” means: (i) all federal, state and/or local taxes of any kind 

(including any interest or penalties thereon) on any income earned by the Settlement Fund; 

(ii) any taxes or tax detriments that may be imposed upon the Defendants or their counsel with 

respect to any income earned by the Settlement Fund for any period during which the Settlement 

Fund does not qualify as a “qualified settlement fund” for federal or state income tax purposes, 

provided that any such taxes or tax detriments are reported to Lead Counsel and the Escrow 

Agent at least fourteen (14) days before distribution of the Net Settlement Fund to the 

Authorized Claimants; and (iii) the expenses and costs incurred by Lead Counsel in connection 

with determining the amount of, and paying, any taxes owed by the Settlement Fund (including, 

without limitation, expenses of tax attorneys and accountants). 

(zz) “Term Sheet” means the Confidential Term Sheet executed by the Parties 

on March 21, 2019. 

(aaa) “Unknown Claims” means, collectively, any and all Released Plaintiffs’ 

Claims that Lead Plaintiffs or any other Class Member does not know or suspect to exist in his, 

her, or its favor at the time of the release of such claims, and any Released Defendants’ Claims 

that any Defendant does not know or suspect to exist in his, her, or its favor at the time of the 

release of such claims, which, if known by him, her or it, might have affected his, her, or its 

decision(s) with respect to this Settlement, including the decision to agree to all the various 

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releases set forth in this Stipulation, or that might have affected his, her, or its decision not to 

object to this Settlement, or not to exclude himself, herself, or itself from the Class. Unknown 

Claims include, without limitation, those claims in which some or all of the facts composing the 

claim may be unsuspected or undisclosed, concealed, or hidden. With respect to any and all 

Released Claims, the Parties stipulate and agree that, upon the Effective Date of the Settlement, 

Lead Plaintiffs and Defendants shall expressly waive, and each of the other Class Members shall 

be deemed to have waived, and by operation of the Judgment or the Alternate Judgment, if 

applicable, shall have expressly waived, any and all provisions, rights, and benefits conferred by 

any law of any state or territory of the United States, or principle of common law or foreign law, 

which is similar, comparable, or equivalent to California Civil Code § 1542, which provides: 

A general release does not extend to claims that the creditor or releasing party 

does not know or suspect to exist in his or her favor at the time of executing the 

release and that, if known by him or her, would have materially affected his or her 

settlement with the debtor or released party. 

Lead Plaintiffs and Defendants acknowledge, and each of the other Class Members shall be 

deemed by operation of law to have acknowledged, that the foregoing waiver was separately 

bargained for and a key element of the Settlement. 

PRELIMINARY APPROVAL OF SETTLEMENT 

2. Within fifteen (15) days of the execution of this Stipulation, Lead Plaintiffs will 

file a motion, after providing Defendants a reasonable opportunity to review and comment, 

seeking preliminary approval of the Settlement, authorization to mail notice of the Settlement to 

members of the Class, and the scheduling of a hearing for consideration of final approval of the 

Settlement. Concurrently with the motion for preliminary approval, Lead Plaintiffs shall apply 

to the Court for, and Defendants shall agree to, entry of the Preliminary Approval Order, 

substantially in the form attached hereto as Exhibit A. 

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RELEASE OF CLAIMS 

3. The obligations incurred pursuant to this Stipulation are in consideration of: 

(a) the full and final disposition of the Action as against Defendants; and (b) the Releases and 

other relief provided for herein. 

4. Upon the Effective Date, Lead Plaintiffs and each of the other Class Members, on 

behalf of themselves and their respective spouses, heirs, executors, beneficiaries, administrators, 

predecessors, successors, and assigns, in their capacities as such, and any Person(s) claiming 

(now or in the future) through or on behalf of any of them directly or indirectly, regardless of 

whether such Lead Plaintiff or Class Member ever seeks or obtains by any means (including, 

without limitation, by submitting a Claim Form to the Claims Administrator) any distribution 

from the Net Settlement Fund: (a) shall be deemed by this Settlement to have, and by operation 

of law and of the Judgment, or the Alternate Judgment, if applicable, shall have fully, finally, and 

forever compromised, settled, released, relinquished, waived, dismissed, and discharged each 

and all of the Released Plaintiffs’ Claims (including Unknown Claims) against each and all of the 

Defendants’ Releasees, and shall have covenanted not to sue any of the Defendants’ Releasees 

with respect to any of the Released Plaintiffs’ Claims (including any Unknown Claims) except to 

enforce the releases and other terms and conditions contained in this Stipulation or the Judgment 

or Alternate Judgment entered pursuant hereto; and (b) shall be forever permanently barred, 

enjoined, and restrained from bringing, commencing, instituting, asserting, maintaining, 

enforcing, prosecuting, or otherwise pursuing, either directly or in any other capacity, any of the 

Released Plaintiffs’ Claims (including any Unknown Claims) against any of the Defendants’ 

Releasees in the Action or in any other action or proceeding, in any state, federal, or foreign 

court of law or equity, arbitration tribunal, administrative forum, or other forum of any kind. The 

foregoing provisions shall not apply to any Person who would be a member of the Class and 

timely excludes himself, herself, or itself. 

5. Upon the Effective Date, Defendants, on behalf of themselves and their respective 

spouses, heirs, executors, beneficiaries, administrators, predecessors, successors, and assigns, in 

their capacities as such, and any Person(s) claiming (now or in the future) through or on behalf of 

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any of them directly or indirectly, (a) shall be deemed by this Settlement to have, and by 

operation of law and of the Judgment, or the Alternate Judgment, if applicable, shall have fully, 

finally, and forever compromised, settled, released, relinquished, waived, dismissed, and 

discharged each and all of the Released Defendants’ Claims against each and all of Lead 

Plaintiffs and the other Plaintiffs’ Releasees, and shall have covenanted not to sue any of the 

Plaintiffs’ Releasees with respect to any of the Released Defendants’ Claims (including any 

Unknown Claims) except to enforce the releases and other terms and conditions contained in this 

Stipulation or the Judgment or Alternate Judgment entered pursuant hereto; and (b) shall be 

forever permanently barred, enjoined, and restrained from bringing, commencing, instituting, 

asserting, maintaining, enforcing, prosecuting, or otherwise pursuing, either directly or in any 

other capacity, any of the Released Defendants’ Claims (including any Unknown Claims) against 

any of the Plaintiffs’ Releasees in the Action or in any other action or proceeding, in any state, 

federal, or foreign court of law or equity, arbitration tribunal, administrative forum, or other 

forum of any kind. This release shall not apply to any person or entity who or which submits a 

request for exclusion from the Class that is accepted by the Court. 

6. It is understood that Lead Plaintiffs and the other Class Members or Defendants, 

or any of them, may hereafter discover additional or different facts from those that he, she, or it 

now knows or believes to be true with respect to the subject matter of the Released Plaintiffs’ 

Claims or Released Defendants’ Claims (including Unknown Claims), but each of the Lead 

Plaintiffs and the Defendants shall, upon the Effective Date, expressly fully, finally, and forever 

discharge, settle, and release, and each Class Member, upon the Effective Date, shall be deemed 

to have, and by operation of law and of the Judgment or the Alternate Judgment, if applicable, 

shall have, expressly fully, finally, and forever discharged, settled, and released, any and all 

Released Claims. Lead Plaintiffs and Defendants acknowledge, and the Class Members by 

operation of law and of the Judgment or the Alternate Judgment, if applicable, shall be deemed to 

have acknowledged, that the foregoing waiver of Released Claims that are Unknown Claims, 

including the provisions, rights, and benefits of California Civil Code § 1542 (and the inclusion 

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of “Unknown Claims” in the definition of Released Plaintiffs’ Claims and Released Defendants’ 

Claims), was separately bargained for and is a material element of the Settlement. 

7. By entering into this Stipulation, Lead Plaintiffs and Lead Counsel represent and 

warrant that they have not assigned, hypothecated, conveyed, transferred, or otherwise granted or 

given any interest in the Released Plaintiffs’ Claims to any other Person, and the Defendants 

represent and warrant that they have not assigned, hypothecated, conveyed, transferred, or 

otherwise granted or given any interest in the Released Defendants’ Claims to any other Person. 

8. The Claim Form to be executed by Claimants shall release all Released Plaintiffs’ 

Claims against all Defendants’ Releasees and shall be substantially in the form attached hereto as 

Exhibit 2 to Exhibit A. 

9. Notwithstanding ¶¶ 4-5 above, nothing in the Judgment, or the Alternate 

Judgment, if applicable, shall bar any action by any of the Parties to enforce or effectuate the 

terms of this Stipulation or the Judgment, or Alternate Judgment, if applicable. 

THE SETTLEMENT CONSIDERATION 

10. As full and complete consideration for the Settlement, Defendants shall cause the 

payment of the Settlement Amount from the D&O carriers into the Escrow Account within 

twenty (20) business days after the later of (a) the date of entry by the Court of an order 

preliminarily approving this Settlement; and (b) Defendants’ Counsel’s receipt from Lead 

Counsel of the information necessary to effectuate a transfer of funds to the Escrow Account, 

including instructions for payment by wire transfer and a signed W-9 form reflecting a valid 

taxpayer identification number for the qualified settlement fund in which the Settlement Amount 

is to be deposited. 

11. Other than the obligation of the Defendants to cause the Settlement Amount to be 

paid into the Escrow Account, under no circumstances will any of the Defendants’ Releasees 

have any obligation to make any payment pursuant to this Settlement set forth herein, and will 

have no responsibility for, or liability or obligation whatsoever to anyone with respect to: the 

Settlement Fund, the Net Settlement Fund, the Escrow Account, the Claims Administrator, the 

Claims Administrator’s actions, any transaction executed or approved by the Escrow Agent, the 

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maintenance, administration, investment, or distribution of the Settlement Fund or the Net 

Settlement Fund, the establishment or administration of the Plan of Allocation, the 

determination, administration, or calculation of Claims, the payment or withholding of Taxes, the 

administration of the Settlement, or any losses incurred in connection with such matters. The 

Defendants’ Releasees shall have no further or other liability or obligations to Lead Plaintiffs, 

Lead Counsel, or any Class Member with respect to the Released Plaintiffs’ Claims, except as 

expressly stated herein. Notwithstanding anything herein to the contrary, the Escrow Agent shall 

be obligated to withhold from distribution to Authorized Claimants all funds necessary to pay all 

Notice and Administration Costs and all other fees, costs, and expenses associated with 

administration of the Settlement and the Settlement Fund; neither Defendants nor Defendants’ 

Counsel nor any other of the Defendants’ Releasees is responsible therefor, nor shall they have 

any liability whatsoever with respect thereto, above and beyond the Defendants’ obligation to 

cause the Settlement Amount to be paid into the Escrow Account as set forth above. The 

Settlement Fund shall indemnify and hold harmless all Defendants’ Releasees for any costs of 

administration of the Settlement and the Settlement Fund (including, without limitation, costs 

associated with any such indemnification). 

USE OF SETTLEMENT FUND

12. The Settlement Fund shall be used to pay: (a) any Taxes; (b) any Notice and 

Administration Costs; (c) any Litigation Expenses awarded by the Court; (d) any attorneys’ fees 

awarded by the Court; and (e) any other costs and fees approved by the Court. The balance 

remaining in the Settlement Fund, that is, the Net Settlement Fund, shall be distributed to 

Authorized Claimants as provided in ¶¶ 23-35 below. 

13. Except as provided herein or pursuant to orders of the Court, the Net Settlement 

Fund shall remain in the Escrow Account prior to the Effective Date. All funds held by the 

Escrow Agent shall be deemed to be in the custody of the Court and shall remain subject to the 

jurisdiction of the Court until such time as the funds shall be distributed or returned pursuant to 

the terms of this Stipulation and/or further order of the Court. The Escrow Agent shall invest any 

funds in the Escrow Account exclusively in United States Treasury Bills (or a mutual fund 

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invested solely in such instruments) and shall collect and reinvest all interest accrued thereon, 

except that any residual cash balances up to the amount that is insured by the FDIC may be 

deposited in any account that is fully insured by the FDIC. In the event that the yield on United 

States Treasury Bills is negative, in lieu of purchasing such Treasury Bills, all or any portion of 

the funds held by the Escrow Agent may be deposited in any account that is fully insured by the 

FDIC or backed by the full faith and credit of the United States. Additionally, if short-term 

placement of the funds is necessary, all or any portion of the funds held by the Escrow Agent 

may be deposited in any account that is fully insured by the FDIC or backed by the full faith and 

credit of the United States. 

14. The Parties agree that the Settlement Fund is intended to be a Qualified 

Settlement Fund within the meaning of Treasury Regulation § 1.468B-1 and that Lead Counsel, 

as administrator of the Settlement Fund within the meaning of Treasury Regulation § 1.468B2(k)(3), shall be solely responsible for ensuring that the Escrow Account complies with the 

requirements and regulations governing Qualified Settlement Funds, and for filing or causing to 

be filed all such informational and other tax returns as may be necessary or appropriate 

(including, without limitation, the returns described in Treasury Regulation § 1.468B-2(k)) for 

the Settlement Fund. Lead Counsel shall also be responsible for causing payment to be made 

from the Settlement Fund of any Taxes owed with respect to the Settlement Fund. The 

Defendants’ Releasees shall not have any liability or responsibility for any such Taxes. Upon 

written request, Defendants shall cause to be provided to Lead Counsel the statement described 

in Treasury Regulation § 1.468B-3(e). Lead Counsel, as administrator of the Settlement Fund 

within the meaning of Treasury Regulation § 1.468B-2(k)(3), shall timely make such elections as 

are necessary or advisable to carry out this paragraph, including, as necessary, making a “relation 

back election,” as described in Treasury Regulation § 1.468B-1(j), to cause the Qualified 

Settlement Fund to come into existence at the earliest allowable date, and shall take or cause to 

be taken all such actions as may be necessary or appropriate in connection therewith. 

15. All Taxes shall be paid out of the Settlement Fund, and shall be timely paid, or 

caused to be paid, by Lead Counsel and without further order of the Court. Any tax returns 

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prepared for the Settlement Fund (as well as the election set forth therein) shall be consistent 

with the previous paragraph and in all events shall reflect that all Taxes on the income earned by 

the Settlement Fund shall be paid out of the Settlement Fund as provided herein. Defendants’ 

Releasees shall have no responsibility or liability for the acts or omissions of Lead Counsel or its 

agents with respect to the payment of Taxes, as described herein. 

16. The Settlement is not a claims-made settlement. Upon the occurrence of the 

Effective Date, no Defendant, Defendants’ Releasee, or any other person or entity who or which 

paid any portion of the Settlement Amount shall have any right to the return of the Settlement 

Fund or any portion thereof for any reason whatsoever, including without limitation, the number 

of Claims submitted, the collective amount of Recognized Claims of Authorized Claimants, the 

percentage of recovery of losses, or the amounts to be paid to Authorized Claimants from the Net 

Settlement Fund. 

17. Notwithstanding the fact that the Effective Date of the Settlement has not yet 

occurred, Lead Counsel may pay from the Settlement Fund, without further approval from 

Defendants or further order of the Court, all reasonable Notice and Administration Costs actually 

incurred and paid or payable. Such costs and expenses shall include, without limitation, the 

actual costs of printing and mailing the Notice and publishing the Summary Notice, 

reimbursements to nominee owners for forwarding the Notice to their beneficial owners, the 

administrative expenses incurred and fees charged by the Claims Administrator in connection 

with providing notice and administering the Settlement (including processing the submitted 

Claims), and the fees, if any, of the Escrow Agent. 

18. In the event the Judgment does not become Final or the Settlement is terminated 

as provided herein, within thirty (30) days of entry of the order rendering the Settlement and 

Judgment non-Final or notice of the Settlement being terminated, all monies then held in the 

Escrow Account, including interest earned but less any reasonable Notice and Administration 

Costs actually paid or incurred, shall be returned to the appropriate sources of funds pursuant to 

Defendants’ instructions as provided in ¶ 39(d). Once the Settlement and Judgment become 

Final, no monies shall revert to Defendants. 

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ATTORNEYS’ FEES AND LITIGATION EXPENSES 

19. Lead Counsel will apply to the Court for an award of attorneys’ fees to be paid 

solely from (and out of) the Settlement Fund. Lead Counsel will also apply to the Court for 

reimbursement or payment of Litigation Expenses, which may include a request for Lead 

Plaintiffs’ costs and expenses directly related to their representation of the Class, to be paid 

solely from (and out of) the Settlement Fund. Lead Counsel’s application for an award of 

attorneys’ fees and/or Litigation Expenses is not the subject of any agreement between 

Defendants and Lead Plaintiffs other than what is set forth in this Stipulation. Defendants shall 

have no responsibility for the payment of attorneys’ fees or Litigation Expenses to Lead Counsel 

beyond the obligation of Defendants to cause payment of the Settlement Amount from the D&O 

carriers into the Escrow Account as set forth in ¶ 10 above. 

20. Any attorneys’ fees and Litigation Expenses that are awarded by the Court shall 

be paid to Lead Counsel within ten (10) business days of the award by the Court, 

notwithstanding any appeals, subject to Lead Counsel’s obligation to make appropriate refunds 

or repayments to the Settlement Fund, plus accrued interest at the same net rate as is earned by 

the Settlement Fund, if the Settlement is terminated pursuant to the terms of this Stipulation or if, 

as a result of any appeal or further proceedings on remand, or successful collateral attack, the 

award of attorneys’ fees and/or Litigation Expenses is reduced or reversed and such order 

reducing or reversing the award has become Final. Lead Counsel shall make the appropriate 

refund or repayment in full no later than thirty (30) calendar days after: (a) receiving from 

Defendants’ Counsel notice of the termination of the Settlement; (b) providing Defendants’ 

Counsel with notice of Lead Plaintiffs’ termination of the Settlement; or (c) any order reducing 

or reversing the award of attorneys’ fees and/or Litigation Expenses has become Final. Lead 

Counsel agrees to incorporate their obligation under this paragraph into any proposed order 

awarding attorneys’ fees and Litigation Expenses filed with the Court. Lead Counsel, as a 

condition of receiving such fees and Litigation Expenses, on behalf of itself and each partner 

and/or shareholder of it, agrees that the law firm and its partners and/or shareholders are subject 

to the jurisdiction of the Court for the purposes of enforcing the provisions of this paragraph. 

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The Settlement is not conditioned upon any award of attorneys’ fees or Litigation Expenses, and 

any objection to or appeal from such an award shall not affect the finality of the Settlement or the 

judgment of dismissal. An award of attorneys’ fees and/or Litigation Expenses is not a necessary 

term of this Stipulation and is not a condition of the Settlement embodied herein. Neither Lead 

Plaintiffs nor Lead Counsel may cancel or terminate the Settlement based on this Court’s or any 

appellate court’s ruling with respect to attorneys’ fees and/or Litigation Expenses. 

21. Defendants’ Releasees shall have no responsibility for or liability whatsoever with 

respect to the allocation or award of attorneys’ fees or Litigation Expenses. The attorneys’ fees 

and Litigation Expenses that are awarded to Lead Counsel shall be payable solely from the 

Settlement Fund. 

22. The procedure for and the allowance or disallowance by the Court of any 

application by Lead Counsel for attorneys’ fees or Litigation Expenses to be paid out of the 

Settlement Fund is not a necessary term of the Settlement or this Stipulation, and it is not a 

condition of this Stipulation that any particular application for attorneys’ fees or expenses be 

approved. 

NOTICE AND SETTLEMENT ADMINISTRATION

23. As part of the Preliminary Approval Order, Lead Counsel shall seek appointment 

of a Claims Administrator. The Claims Administrator shall administer the Settlement, including 

but not limited to the process of receiving, reviewing, and approving or denying Claims, under 

Lead Counsel’s supervision and subject to the jurisdiction of the Court. Other than RH’s 

obligation to provide its shareholder records as provided in ¶ 24 below, none of the Defendants, 

nor any of the other Defendants’ Releasees, shall have any involvement in or any responsibility, 

authority, obligation, or liability whatsoever for the selection of the Claims Administrator, the 

Plan of Allocation, the administration of the Settlement, the Claims process, or the management, 

disposition, investment, distribution, allocation, or disbursement of the Net Settlement Fund, the 

determination, administration, calculation, or payment of Claims, the payment or withholding of 

Taxes, any nonperformance of the Claims Administrator, or any losses incurred in connection 

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with any such matters. No Person shall have any claim against the Defendants’ Releasees or 

Defendants’ Counsel arising from or relating to any of the foregoing. 

24. In accordance with the terms of the Preliminary Approval Order to be entered by 

the Court, Lead Counsel shall cause the Claims Administrator to mail the Notice and Claim Form 

to such members of the Class as may be identified through reasonable effort. Lead Counsel shall 

also cause the Claims Administrator to have the Summary Notice published in accordance with 

the terms of the Preliminary Approval Order to be entered by the Court. For the purposes of 

identifying Class Members and providing notice to the Class, within ten (10) business days of the 

date of entry of the Preliminary Approval Order, RH shall provide or cause to be provided to the 

Claims Administrator in electronic format (at no cost to the Settlement Fund, Lead Counsel or 

the Claims Administrator) a list (consisting of names and addresses) of the record holders or 

purchasers of RH common stock during the Class Period, to the extent reasonably available to 

RH. 

25. No later than ten (10) calendar days following the filing of this Stipulation with 

the Court, Defendants shall serve, or cause the Claims Administrator to serve, the notice pursuant 

to the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1715. Defendants are solely responsible 

for the costs of the CAFA notice and for administering the CAFA notice. At least seven (7) 

calendar days before the Settlement Hearing, Defendants shall cause to be served on Lead 

Counsel and filed with the Court proof, by affidavit or declaration, regarding compliance with 

CAFA § 1715(b). 

26. The Claims Administrator shall receive Claims and determine first, whether each 

Claim is a valid Claim, in whole or part, and second, each Authorized Claimant’s pro rata share 

of the Net Settlement Fund based upon such Authorized Claimant’s Recognized Claim compared 

to the total Recognized Claims of all Authorized Claimants (as set forth in the Plan of Allocation 

set forth in the Notice attached hereto as Exhibit 1 to Exhibit A, or in such other plan of 

allocation as the Court approves). 

27. The Plan of Allocation proposed in the Notice is not a necessary term of the 

Settlement or of this Stipulation, and it is not a condition of the Settlement or of this Stipulation 

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that any particular plan of allocation be approved by the Court. Lead Plaintiffs and Lead 

Counsel may not cancel or terminate the Settlement (or this Stipulation) based on the Court’s or 

any appellate court’s ruling with respect to the Plan of Allocation or any other plan of allocation 

in this Action. The Plan of Allocation is to be considered by the Court separately from its 

determination of the fairness, reasonableness, and adequacy of the Settlement as set forth in this 

Stipulation. No Defendant, nor any other Defendants’ Releasees, shall have any involvement 

with or liability, obligation or responsibility whatsoever for the application of the Courtapproved plan of allocation. 

28. Any Class Member who does not submit a timely and valid Claim will not be 

entitled to receive any distribution from the Net Settlement Fund (unless by order of the Court an 

untimely Claim is accepted), but will otherwise be bound by all of the terms of this Stipulation 

and the Settlement, including the terms of the Judgment, or the Alternate Judgment, if applicable, 

to be entered in the Action and the Releases provided for herein and therein, and will be 

permanently barred and enjoined from bringing, commencing, instituting, prosecuting, or 

continuing to prosecute any action, claim, or other proceeding of any kind against the 

Defendants’ Releasees with respect to the Released Plaintiffs’ Claims in the event that the 

Effective Date occurs with respect to the Settlement. 

29. Lead Counsel shall be responsible for supervising the administration of the 

Settlement and the disbursement of the Net Settlement Fund subject to Court approval. No 

Defendant, or any other Defendants’ Releasees, shall be permitted to review, contest, or object to 

any Claim, or any decision of the Claims Administrator or Lead Counsel with respect to 

accepting or rejecting any Claim for payment. Lead Counsel shall have the right, but not the 

obligation, to waive what it deems to be formal or technical defects in any Claims submitted, in 

the interests of achieving substantial justice. 

30. For purposes of determining the extent, if any, to which a Class Member shall be 

entitled to be treated as an Authorized Claimant, the following conditions shall apply: 

(a) Each Claimant shall be required to submit a Claim in paper form, 

substantially in the form attached hereto as Exhibit 2 to Exhibit A, or in electronic form, in 

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accordance with the instructions for the submission of such Claims, and supported by such 

documents as are designated therein, including proof of the Claimant’s loss, or such other 

documents or proof as the Claims Administrator or Lead Counsel, in their discretion, may deem 

acceptable; 

(b) All Claims must be submitted by the date set by the Court in the 

Preliminary Approval Order and specified in the Notice. Any Class Member who fails to submit 

a Claim by such date shall be forever barred from receiving any distribution from the Net 

Settlement Fund or payment pursuant to this Stipulation (unless by order of the Court such Class 

Member’s Claim is accepted), but shall in all other respects be bound by all of the terms of this 

Stipulation and the Settlement, including the terms of the Judgment or Alternate Judgment, if 

applicable, and the Releases provided for herein and therein, and will be permanently barred and 

enjoined from bringing, commencing, instituting, prosecuting, or continuing to prosecute any 

action, claim, or other proceeding of any kind against any Defendants’ Releasees with respect to 

any Released Plaintiffs’ Claim. Provided that it is mailed by the claim-submission deadline, a 

Claim Form shall be deemed to be submitted when postmarked, if received with a postmark 

indicated on the envelope and if mailed by first-class mail and addressed in accordance with the 

instructions thereon. In all other cases, the Claim Form shall be deemed to have been submitted 

on the date when actually received by the Claims Administrator; 

(c) Each Claim shall be submitted to and reviewed by the Claims 

Administrator, who shall determine in accordance with this Stipulation and the plan of allocation 

the extent, if any, to which each Claim shall be allowed, subject to review by the Court pursuant 

to subparagraph (e) below as necessary; 

(d) Claims that do not meet the submission requirements may be rejected. 

Prior to rejecting a Claim in whole or in part, the Claims Administrator shall communicate with 

the Claimant in writing, to give the Claimant the chance to remedy any curable deficiencies in 

the Claim submitted. The Claims Administrator shall notify, in a timely fashion and in writing, 

all Claimants whose Claim the Claims Administrator proposes to reject in whole or in part, 

setting forth the reasons therefor, and shall indicate in such notice that the Claimant whose Claim 

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is to be rejected has the right to a review by the Court if the Claimant so desires and complies 

with the requirements of subparagraph (e) below; and 

(e) If any Claimant whose Claim has been rejected in whole or in part desires 

to contest such rejection, the Claimant must, within twenty (20) days after the date of mailing of 

the notice required in subparagraph (d) above or a lesser time period if the Claim was untimely, 

serve upon the Claims Administrator a notice and statement of reasons indicating the Claimant’s 

grounds for contesting the rejection along with any supporting documentation, and requesting a 

review thereof by the Court. If a dispute concerning a Claim cannot be otherwise resolved, Lead 

Counsel shall thereafter present the request for review to the Court. 

31. Each Claimant shall be deemed to have submitted to the jurisdiction of the Court 

with respect to the Claimant’s Claim, and the Claim will be subject to investigation and 

discovery under the Federal Rules of Civil Procedure, provided, however, that such investigation 

and discovery shall be limited to that Claimant’s status as a Class Member and the validity and 

amount of the Claimant’s Claim. No discovery shall be allowed on the merits of this Action or 

of the Settlement in connection with the processing of Claims. 

32. Lead Counsel will apply to the Court, on notice to Defendants’ Counsel, for a 

Class Distribution Order: (a) approving the Claims Administrator’s administrative 

determinations concerning the acceptance and rejection of the Claims submitted; (b) approving 

payment of any administrative fees and expenses associated with the administration of the 

Settlement from the Escrow Account; and (c) if the Effective Date has occurred, directing 

payment of the Net Settlement Fund to Authorized Claimants from the Escrow Account. 

33. Payment pursuant to the Class Distribution Order shall be final and conclusive 

against all Claimants. All Class Members whose Claims are not approved by the Court for 

payment shall be barred from participating in distributions from the Net Settlement Fund, but 

otherwise shall be bound by all of the terms of this Stipulation and the Settlement, including the 

terms of the Judgment or Alternate Judgment, if applicable, to be entered in this Action and the 

Releases provided for herein and therein, and will be permanently barred and enjoined from 

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bringing any action against any and all Defendants’ Releasees with respect to any and all of the 

Released Plaintiffs’ Claims. 

34. No person or entity shall have any claim against Lead Plaintiffs, Lead Counsel, 

the Claims Administrator, or any other agent designated by Lead Counsel, or Defendants’ 

Releasees and/or their respective counsel, arising from distributions made substantially in 

accordance with the Stipulation, the plan of allocation approved by the Court, or any order of the 

Court. Lead Plaintiffs and Defendants, and their respective counsel, and Lead Plaintiffs’ 

damages expert and all other Releasees shall have no liability whatsoever for the investment or 

distribution of the Settlement Fund or the Net Settlement Fund, the plan of allocation, or the 

determination, administration, calculation, or payment of any Claim or nonperformance of the 

Claims Administrator, the payment or withholding of Taxes (including interest and penalties) 

owed by the Settlement Fund, or any losses incurred in connection therewith. 

35. All proceedings with respect to the administration, processing, and determination 

of Claims and the determination of all controversies relating thereto, including disputed 

questions of law and fact with respect to the validity of Claims, shall be subject to the 

jurisdiction of the Court. All Class Members, other Claimants, and Parties to this Settlement 

expressly waive trial by jury (to the extent any such right may exist) and any right of appeal or 

review with respect to such determinations. 

TERMS OF THE JUDGMENT

36. If the Settlement contemplated by this Stipulation is approved by the Court, Lead 

Counsel and Defendants’ Counsel shall request that the Court enter a Judgment, substantially in 

the form attached hereto as Exhibit B. 

CONDITIONS OF SETTLEMENT AND EFFECT OF 

DISAPPROVAL, CANCELLATION, OR TERMINATION 

37. The Effective Date of the Settlement shall be deemed to occur on the occurrence 

or express written waiver of all of the following events: 

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(a) this Stipulation, and such other documents as may be required to obtain 

final Court approval of this Stipulation in a form satisfactory to the Parties, have been duly 

executed; 

(b) the Court has entered the Preliminary Approval Order, substantially in the 

form set forth in Exhibit A attached hereto, as required by ¶ 2 above; 

(c) the Settlement Amount has been deposited into the Escrow Account in 

accordance with the provisions of ¶ 10 above; 

(d) RH has not exercised its option to terminate the Settlement pursuant to the 

provisions of this Stipulation; 

(e) Lead Plaintiffs have not exercised their option to terminate the Settlement 

pursuant to the provisions of this Stipulation; and 

(f) the Court has approved the Settlement as described herein, following notice 

to the Class and a hearing, as prescribed by Rule 23 of the Federal Rules of Civil Procedure, and 

entered the Judgment and the Judgment has become Final, or the Court has entered an Alternate 

Judgment and none of the Parties seek to terminate the Settlement and the Alternate Judgment 

has become Final. 

38. Upon the occurrence of all of the events referenced in ¶ 37 above, any and all 

remaining interest or right of Defendants in or to the Settlement Fund, if any, shall be absolutely 

and forever extinguished, and the Releases herein shall be effective. 

39. If (i) RH exercises its right to terminate the Settlement as provided in this 

Stipulation; (ii) Lead Plaintiffs exercise their right to terminate the Settlement as provided in this 

Stipulation; (iii) the Court disapproves the Settlement; or (iv) the Effective Date as to the 

Settlement otherwise fails to occur, then: 

(a) The Settlement and the relevant portions of this Stipulation shall be 

canceled and terminated. 

(b) Lead Plaintiffs and Defendants shall revert to their respective positions in 

the Action as of March 21, 2019. 

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(c) The terms and provisions of this Stipulation, with the exception of this ¶ 39 

and ¶¶ 18, 20, 43, 44, 60, 61, 63, 64, 67, 68, 70, and 72, shall have no further force and effect 

with respect to the Parties and shall not be used in the Action or in any other proceeding for any 

purpose, and any Judgment, or Alternate Judgment, if applicable, or order entered by the Court in 

accordance with the terms of this Stipulation shall be treated as vacated, nunc pro tunc. 

(d) Within thirty (30) days after joint written notification of termination is sent 

by Defendants’ Counsel and Lead Counsel to the Escrow Agent, the Settlement Fund (including 

accrued interest thereon, and change in value as a result of the investment of the Settlement 

Fund, and any funds received by Lead Counsel consistent with ¶ 20 above), less any Notice and 

Administration Costs actually incurred, paid, or payable and less any Taxes paid, due, or owing, 

shall be refunded by the Escrow Agent to Defendants (or such other persons or entities as 

Defendants may direct). At the request of Defendants’ Counsel, Lead Counsel or its designee 

shall apply for any tax refund owed on the Settlement Fund and pay the proceeds within five (5) 

business days of receipt of such proceeds, after deduction of any fees or expenses incurred in 

connection with such application for a tax refund, to Defendants (or such other persons or 

entities as Defendants may direct) in accordance with written instructions from Defendants’ 

Counsel. Notwithstanding any of the foregoing in this ¶ 39(d), the repayment obligations of the 

Escrow Agent and Lead Counsel pursuant to this paragraph shall not be triggered until receipt of 

the written repayment instructions from Defendants’ Counsel. 

40. It is further stipulated and agreed that Lead Plaintiffs, provided they unanimously 

agree, and RH shall each have the right to terminate the Settlement and this Stipulation, by 

providing written notice of their or its election to do so (“Termination Notice”) to the other 

Parties to this Stipulation within thirty (30) days of any of the following: (a) the Court’s final 

refusal to enter the Preliminary Approval Order in any material respect; (b) the Court’s final 

refusal to approve the Settlement or any material part thereof; (c) the Court’s final refusal to 

enter the Judgment in any material respect as to the Settlement; (d) the date upon which the 

Judgment is modified or reversed in any material respect by the United States Court of Appeals 

for the Ninth Circuit or the United States Supreme Court; or (e) the date upon which an Alternate 

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Judgment is modified or reversed in any material respect by the United States Court of Appeals 

for the Ninth Circuit or the United States Supreme Court, and the provisions of ¶ 39 above shall 

apply. However, any decision or proceeding, whether in this Court or any appellate court, with 

respect to an application for attorneys’ fees or Litigation Expenses or with respect to any plan of 

allocation shall not be considered material to the Settlement, shall not affect the finality of any 

Judgment or Alternate Judgment, if applicable, and shall not be grounds for termination of the 

Settlement. 

41. In addition to the grounds set forth in ¶ 39 above, RH shall have the unilateral 

right to terminate the Settlement in the event that Class Members timely and validly requesting 

exclusion from the Class meet the conditions set forth in a confidential supplemental agreement 

with Lead Plaintiffs (the “Supplemental Agreement”), in accordance with the terms of that 

agreement. The Supplemental Agreement, which is being executed concurrently herewith, shall 

not be filed with the Court, and its terms shall not be disclosed in any other manner (other than 

the statements herein and in the Notice, to the extent necessary in order for Defendants to 

comply with the provisions of CAFA, or as otherwise provided in the Supplemental Agreement) 

unless the Court otherwise directs or a dispute arises between Lead Plaintiffs and RH concerning 

the Supplemental Agreement’s interpretation or application, in which event the Parties shall 

submit the Supplemental Agreement to the Court in camera and request that the Court afford it 

confidential treatment. 

42. In addition to the grounds set forth in ¶ 39 above, Lead Plaintiffs shall also have 

the right to terminate the Settlement in the event that the Settlement Amount has not been paid as 

provided for in ¶ 10 above, by providing written notice of the election to terminate to 

Defendants’ Counsel and if, thereafter, there is a failure to pay the Settlement Amount within 

fourteen (14) calendar days of such written notice. 

NO ADMISSION OF WRONGDOING 

43. This Settlement compromises claims that are contested and, as such, shall not be 

deemed an admission by any Party as to the merits of any claim or defense. Lead Plaintiffs 

acknowledge that Defendants have denied and continue to deny each and all claims of alleged 

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wrongdoing, while Defendants acknowledge that Lead Plaintiffs continue to maintain the 

validity of their lawsuit and the merits of their claims. The Parties acknowledge that Defendants 

make no admission of liability or wrongdoing. 

44. The Term Sheet, this Stipulation (whether or not consummated), including the 

exhibits hereto and the Plan of Allocation contained therein (or any other plan of allocation that 

may be approved by the Court), the negotiations leading to the execution of the Term Sheet or 

this Stipulation, or any proceedings taken pursuant to or in connection with the Term Sheet, this 

Stipulation, and/or approval of the Settlement (including any arguments proffered in connection 

therewith) shall not be deemed to be, and may not be argued to be or offered or received: 

(a) against any of the Defendants’ Releasees, as evidence of, or construed as, 

or deemed to be evidence of any presumption, concession, or admission by any of the 

Defendants’ Releasees with respect to the truth of any fact alleged by Lead Plaintiffs or 

the validity of any claim that was or could have been asserted or the deficiency of any 

defense that has been or could have been asserted in this Action or in any other litigation, 

or of any liability, negligence, fault, misrepresentation, or omission with respect to any 

statement or written document approved or made by any of the Defendants or 

Defendants’ Releasees, or other wrongdoing of any kind of any of the Defendants’ 

Releasees, nor in any way referred to for any other reason as against any of the 

Defendants’ Releasees, in any arbitration proceeding or other civil, criminal, 

administrative, or other action or proceeding, other than such proceedings as may be 

necessary to effectuate the provisions of this Stipulation; 

(b) against any of the Plaintiffs’ Releasees, as evidence of, or construed as, or 

deemed to be evidence of any presumption, concession, or admission by any of the 

Plaintiffs’ Releasees that any of their claims are without merit, that any of the 

Defendants’ Releasees had meritorious defenses, or that damages recoverable under the 

Complaint would not have exceeded the Settlement Amount, or with respect to any 

liability, negligence, fault, or wrongdoing of any kind, nor in any way referred to for any 

other reason as against any of the Plaintiffs’ Releasees, in any arbitration proceeding or 

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other civil, criminal, administrative, or other action or proceeding, other than such 

proceedings as may be necessary to effectuate the provisions of this Stipulation; or 

(c) against any of the Releasees as evidence of, or construed as evidence of, 

any presumption, concession, or admission by any of them that the Settlement Amount 

represents the amount which could be or would have been recovered after trial of the 

Action; 

provided, however, that if this Stipulation is approved by the Court, the Parties and the Releasees 

and their respective counsel may refer to it to effectuate the protections from liability granted 

hereunder or otherwise to enforce the terms of the Settlement. 

MISCELLANEOUS PROVISIONS 

45. All of the exhibits attached hereto are hereby incorporated by reference as though 

fully set forth herein. Notwithstanding the foregoing, in the event that there exists a conflict or 

inconsistency between the terms of this Stipulation and the terms of any exhibit attached hereto, 

the terms of the Stipulation shall prevail. 

46. Defendants warrant that, as to the payments to be made on their behalves, at the 

time of entering into this Stipulation and at the time of such payment they, or to the best of their 

knowledge any persons or entities contributing to the payment of the Settlement Amount, were 

not insolvent, nor will the payment required to be made by or on behalf of them render them 

insolvent, within the meaning of and/or for the purposes of the United States Bankruptcy Code, 

including §§ 101 and 547 thereof. This representation is made by each of the Defendants and not 

by their counsel. 

47. In the event of the entry of a final order of a court of competent jurisdiction 

determining the transfer of money to the Settlement Fund or any portion thereof by or on behalf 

of Defendants to be a preference, voidable transfer, fraudulent transfer, or similar transaction, 

and any portion thereof is required to be returned, and such amount is not promptly deposited 

into the Settlement Fund by others, then, at the election of Lead Plaintiffs, Lead Plaintiffs and 

Defendants shall jointly move the Court to vacate and set aside the Releases given and the 

Judgment or Alternate Judgment, if applicable, entered in favor of Defendants and the other 

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Releasees pursuant to this Stipulation, in which event the Releases and Judgment, or Alternate 

Judgment, if applicable, shall be null and void, and the Parties shall be restored to their 

respective positions in the litigation as provided in ¶ 39 above, Lead Counsel shall promptly 

return any attorneys’ fees and Litigation Expenses received pursuant to ¶ 20 above, plus accrued 

interest at the same net rate as is earned by the Settlement Fund, and any cash amounts in the 

Settlement Fund (including accrued interest) less any Taxes paid, due, or owing with respect to 

the Settlement Fund and less any Notice and Administration Costs actually incurred, paid, or 

payable shall be returned as provided in ¶ 39. 

48. The Parties intend this Stipulation and the Settlement to be a final and complete 

resolution of all disputes which have been asserted, could have been asserted, or could be 

asserted by Lead Plaintiffs and any other Class Members against the Defendants’ Releasees with 

respect to the Released Plaintiffs’ Claims. Lead Plaintiffs and Lead Counsel and Defendants’ 

Counsel agree not to assert in any forum that this Action was brought by Lead Plaintiffs or 

defended by Defendants in bad faith or without a reasonable basis. No Party shall assert any 

claims of any violation of Rule 11 of the Federal Rules of Civil Procedure relating to the 

institution, prosecution, defense, or settlement of this Action. Moreover, none of the Parties shall 

seek any cost-shifting claims against the others. The Parties agree that the amounts paid and the 

other terms of the Settlement were negotiated at arm’s length and in good faith by the Parties, 

including through a mediation process supervised and conducted by Judge Layn R. Phillips, and 

reflect the Settlement that was reached voluntarily after extensive negotiations and consultation 

with experienced legal counsel, who were fully competent to assess the strengths and weaknesses 

of their respective clients’ claims or defenses. 

49. While retaining their right to deny that the claims asserted in the Action were 

meritorious, Defendants and their counsel, in any statement made to any media representative 

(whether or not for attribution), will not assert that the Action was commenced or prosecuted in 

bad faith, nor will they deny that the Action is being settled voluntarily after consultation with 

competent legal counsel. In all events, Lead Plaintiffs and their counsel and Defendants and 

their counsel shall not make any accusations of wrongful or actionable conduct by any Party 

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concerning the prosecution, defense, and resolution of the Action, and shall not otherwise 

suggest that the Settlement constitutes an admission of any claim or defense alleged. 

50. The terms of the Settlement, as reflected in this Stipulation, may not be modified 

or amended, nor may any of its provisions be waived, except by a writing signed on behalf of 

both Lead Plaintiffs and Defendants (or their successors-in-interest), nor may any Party be 

deemed to have waived any provision (including this provision) except by a writing signed by 

that Party or its successor-in-interest. 

51. Neither the Class Members nor the Defendants shall be bound by this Stipulation 

if the Court modifies material terms hereof, provided, however, that it shall not be a basis to 

terminate the Settlement if the Court modifies any proposed Plan of Allocation or criteria for 

allocation of the Net Settlement Fund amongst Class Members, or if the Plan of Allocation is 

modified on appeal. Nor shall it be a basis to terminate this Stipulation if the Court disapproves 

of or modifies the terms of this Stipulation with respect to the distribution of the Net Settlement 

Fund. Nor shall it be a basis to terminate this Stipulation if the Court denies, in whole or in part, 

Lead Counsel’s application for attorneys’ fees or Litigation Expenses. 

52. Lead Counsel is expressly authorized by Lead Plaintiffs to take all appropriate 

action required or permitted to be taken by the Class pursuant to this Stipulation to effectuate its 

terms. 

53. The headings herein are used for the purpose of convenience only and are not 

meant to have legal effect. 

54. The administration and consummation of the Settlement as embodied in this 

Stipulation shall be under the authority of the Court, and the Court shall retain jurisdiction for the 

purpose, among other things, of entering orders providing for the implementation and 

enforcement of the terms of this Stipulation, including without limitation, the Releases provided 

for herein, and any awards of attorneys’ fees and Litigation Expenses to Lead Counsel, and 

orders enforcing the terms of this Stipulation, including the Plan of Allocation (or such other plan 

of allocation as may be approved by the Court) and the distribution of the Net Settlement Fund to 

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Class Members. The Court shall also retain exclusive jurisdiction to interpret and enforce all 

injunctions set forth herein. 

55. The waiver by one Party of any breach of this Stipulation by any other Party shall 

not be deemed a waiver of any other prior or subsequent breach of this Stipulation. 

56. Without further order of the Court, the Parties may agree to reasonable extensions 

of time to carry out any provisions of this Stipulation, unless such extensions conflict with an 

order of the Court, in which case the Parties shall move the Court to amend any such order. 

57. This Stipulation and its exhibits and the Supplemental Agreement constitute the 

entire agreement among Lead Plaintiffs and Defendants concerning the Settlement and this 

Stipulation and its exhibits. All Parties acknowledge that no other agreements, representations, 

warranties, or inducements have been made by any Party hereto concerning this Stipulation, its 

exhibits or the Supplemental Agreement other than those contained and memorialized in such 

documents. 

58. This Stipulation may be executed in one or more counterparts, including by 

signature transmitted via facsimile, or by a .pdf/.tif image of the signature transmitted via email. 

All executed counterparts and each of them shall be deemed to be one and the same instrument. 

59. This Stipulation shall be binding upon and inure to the benefit of the successors, 

heirs, and assigns of the Parties, including any and all Releasees and any corporation, 

partnership, or other entity into or with which any Releasee may merge, consolidate, or 

reorganize. 

60. The construction, interpretation, operation, effect, and validity of this Stipulation, 

the Supplemental Agreement, and all documents necessary to effectuate them shall be governed 

by the internal laws of the State of California without regard to conflicts of laws, except to the 

extent that federal law requires that federal law govern. 

61. Any action arising under or to enforce this Stipulation, or any portion hereof, shall 

be commenced and maintained only in the Court, and each of the Parties agrees not to contest 

subject matter jurisdiction or personal jurisdiction, or assert that such forum is inconvenient for 

any such dispute brought in this Court. 

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62. The Parties warrant that, in entering into this Settlement, they have relied solely 

upon their own knowledge and investigation, and not upon any promise, representation, 

warranty, or other statement by any other Party, not expressly contained in this Stipulation or any 

of the incorporated Settlement documents. It is understood by the Parties that, except for the 

matters expressly represented herein, the facts or law with respect to which this Stipulation is 

entered into may turn out to be other than or different from the facts and law now known to each 

Party or believed by such Party to be true; each Party therefore expressly assumes the risk of the 

facts or law turning out to be different, and agrees that this Stipulation shall be in all respects 

effective and not subject to termination by reason of any such different facts or law. 

63. This Stipulation shall not be construed more strictly against one Party than 

another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel 

for one of the Parties, it being recognized that this Stipulation is the result of arm’s-length 

negotiations between the Parties and that all Parties have contributed substantially and materially 

to the preparation of this Stipulation. 

64. All counsel and any other Person executing this Stipulation and any of the 

exhibits hereto, or any related Settlement documents, warrant and represent that they have the 

full authority to do so and that he, she, or it has the authority to take appropriate action required 

or permitted to be taken pursuant to the Stipulation to effectuate its terms. 

65. Lead Counsel and Defendants’ Counsel agree to cooperate fully with one another 

in seeking Court approval of the Preliminary Approval Order and the Settlement, as embodied in 

this Stipulation, and to use best efforts to promptly agree upon and execute all such other 

documentation as may be reasonably required to obtain final approval by the Court of the 

Settlement. 

66. Pending preliminary and final approval by the Court of the Settlement, as set forth 

in this Stipulation and its attached Exhibits, all proceedings in the Action shall be stayed. 

67. All dollar amounts in this Stipulation are in U.S. dollars. 

68. If any Party is required to give notice to another Party under this Stipulation, such 

notice shall be in writing and shall be deemed to have been duly given upon receipt of hand 

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delivery, overnight courier, or email transmission, with confirmation of receipt. Notice shall be 

provided as follows: 

If to Lead Plaintiffs or Lead 

Counsel: 

Bernstein Litowitz Berger & Grossmann LLP 

Attn: Jonathan D. Uslaner 

12481 High Bluff Drive, Suite 300 

San Diego, CA 92130 

Telephone: (858) 793-0070 

Facsimile: (858) 793-0323 

Email: jonathanu@blbglaw.com 

If to Defendants or Defendants’ 

Counsel: 

Morrison & Foerster LLP 

Attn: Mark Foster 

425 Market Street 

San Francisco, CA 94105-2482 

Telephone: (415) 268-7000 

Facsimile: (415) 268-7522 

Email: mfoster@mofo.com 

69. Except as otherwise provided herein, each Party shall bear its own costs. 

70. Whether or not the Stipulation is approved by the Court and whether or not the 

Stipulation is consummated, or the Effective Date occurs, the Parties and their counsel shall use 

their best efforts to keep all negotiations, discussions, acts performed, agreements, drafts, 

documents signed, and proceedings in connection with the Stipulation confidential. 

71. All agreements made and orders entered during the course of this Action relating 

to the confidentiality of information shall survive this Settlement. 

72. No opinion or advice concerning the tax consequences of the proposed Settlement 

to individual Class Members is being given or will be given by the Parties or their counsel; nor is 

any representation or warranty in this regard made by virtue of this Stipulation. Each Class 

Member’s tax obligations, and the determination thereof, are the sole responsibility of the Class 

Member, and it is understood that the tax consequences may vary depending on the particular 

circumstances of each individual Class Member. 

IN WITNESS WHEREOF, the Parties hereto have caused this Stipulation to be 

executed, by their duly authorized attorneys, as of May 6, 2019. 

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Fax: (415) 268-7522 

Counsel for Defendants RH, Gary Friedman, and 

Karen Boone

#1278957 

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