GNC 2008 Annual Report Download - page 34

Table of Contents
the deaths of several individuals. In early 2003, we instructed all of our locations to stop selling products containing ephedra that were
manufactured by GNC or one of its affiliates. Subsequently, we instructed all of our locations to stop selling any products containing ephedra by
June 30, 2003. In April 2004, the FDA banned the sale of products containing ephedra. All claims to date have been tendered to the third-party
manufacturer or to our insurer, and we have incurred no expense to date with respect to litigation involving ephedra products. Furthermore, we
are entitled to indemnification by Numico for certain losses arising from claims related to products containing ephedra sold prior to December 5,
2003. All of the pending cases relate to products sold prior to such time and, accordingly, we are entitled to indemnification from Numico for all
of the pending cases.
Pro-Hormone/Androstenedione Cases. We are currently defending against five lawsuits (the "Andro Actions") relating to the sale by GNC
of certain nutritional products alleged to contain the ingredients commonly known as Androstenedione, Androstenediol, Norandrostenedione,
and Norandrostenediol (collectively, "Andro Products"). These five lawsuits were filed in California, New Jersey, New York, Pennsylvania, and
Florida.
In each of the five cases, plaintiffs have sought, or are seeking, to certify a class and obtain damages on behalf of the class
representatives and all those similarly-situated who purchased certain nutritional supplements from the Company alleged to contain one or
more Andro Products.
On April 17 and 18, 2006, we filed pleadings seeking to remove each of the Andro Actions to the respective federal district courts for the
districts in which the respective Andro Actions are pending. At the same time, we filed motions seeking to transfer each of the Andro Actions to
the United States District Court for the Southern District of New York based on "related to" bankruptcy jurisdiction, as one of the manufacturers
supplying us with Andro Products, and to whom we sought indemnity, MuscleTech Research and Development, Inc. ("MuscleTech"), filed
bankruptcy. We were successful in removing the New Jersey, New York, Pennsylvania, and Florida Andro Actions to federal court and
transferring these actions to the United States District Court for the Southern District of New York based on bankruptcy jurisdiction. The
California case was not removed and remains pending in state court.
Following the conclusion of the MuscleTech Bankruptcy case, plaintiffs, in September 2007, filed a stipulation dismissing all claims
related to the sale of MuscleTech products in the four cases currently pending in the Southern District of New York (New Jersey, New York,
Pennsylvania, and Florida). Additionally, plaintiffs have filed motions with the Court to remand these actions to their respective state courts,
asserting that the federal court is divested of jurisdiction because the MuscleTech bankruptcy action is no longer pending. The motions to
remand remain pending before the District Court. A more detailed description, listed by original state court proceeding and current style, follows:
• Harry Rodriguez v. General Nutrition Companies, Inc. (previously pending in the Supreme Court of the State of New York, New York
County, New York, Index No. 02/126277 and currently styled Harry Rodriguez, individually and on behalf of all others similarly situated, v.
General Nutrition Companies, Inc., Case No. 1:06-cv-02987-JSR, In the United States District Court for the Southern District of New York).
Plaintiffs filed this putative class action on or about July 25, 2002. The Second Amended Complaint, filed thereafter on or about December 6,
2002, alleged claims for unjust enrichment, violation of General Business Law Section 349 (misleading and deceptive trade practices), and
violation of General Business Law Section 350 (false advertising). On July 2, 2003, the court granted part of the GNC motion to dismiss and
dismissed the unjust enrichment cause of action. Still pending are plaintiffs' claims of false advertising and misleading and deceptive trade
practices. . On January 4, 2006, the court conducted a hearing on the GNC motion for summary judgment and plaintiffs' motion for class
certification, both of which remain pending.
• Everett Abrams v. General Nutrition Companies, Inc. (previously pending in the Superior Court of New Jersey, Mercer County, New
Jersey, Docket No. L-3789-02 and currently styled Everett Abrams, individually and on behalf of all others similarly situated, v. General Nutrition
Companies, Inc., Case No. 1:06-cv-07881-JSR, In the United States District Court for the Southern District of New York). Plaintiffs filed this
putative class action on or about July 25, 2002. The Second Amended Complaint, filed
30