GNC 2009 Annual Report Download - page 37

Table of Contents
opt-in plaintiffs, the total amount paid to the class approximated $0.1 million. Final Judgment was entered by the Court on December 18, 2007
disposing of the claims of the opt-in plaintiffs.
California Wage and Break Claim ("Casarez Matter"). On April 24, 2007, Kristin Casarez and Tyler Goodell filed a lawsuit against the
Company in the Superior Court of the State of California for the County of Orange. The Company removed the lawsuit to the U.S. District Court,
Central District of California. Plaintiffs purported to bring the action on their own behalf, on behalf of a class of all current and former non-
exempt employees of the Company throughout the State of California employed on or after August 24, 2004, and as private attorney general on
behalf of the general public. Plaintiffs allege that they and members of the putative class were not provided all of the rest periods and meal
periods to which they were entitled under California law, and further allege that the Company failed to pay them split shift and overtime
compensation to which they were entitled under California law. On September 9, 2008, plaintiffs' Motion for Class Certification was denied from
which plaintiffs did not file an interlocutory appeal. Discovery closed on March 9, 2009, and GNC will file a partial motion for summary judgment
in March 2009. Trial is set for May 26, 2009.
California Wage and Break Claim ("Abad Matter"). On November 4, 2008, ninety individual members of the purported class in the Casarez
Matter refiled their individual claims against the Company in the Superior Court of the State of California for the County of Orange which was
removed to U.S. District Court, Central District of California on February 17, 2009 and assigned to the same judge hearing the related Casarez
matter. The Company is vigorously defending these matters. Any liabilities that may arise from these matters are not probable or reasonably
estimable at this time.
Franchise Class Action. On November 7, 2006, Abdul Ahussain, on behalf of himself and all others similarly situated, sued GNC
Franchising, LLC ("GNCF") and General Nutrition Corporation in the U.S. District Court, Central District of California, Western Division. Plaintiff
alleged that GNC engages in unfair business practices designed to earn a profit at its franchisees' expense, among other things, in violation of
California Business & Professions Code, §§ 17200 et seq. (the "CBPC"). These alleged practices include: (1) requiring its franchises to carry
slow moving products, which cannot be returned to GNC after expiration, with the franchise bearing the loss; (2) requiring franchised stores to
purchase new or experimental products, effectively forcing the franchisees to provide free market research; (3) using the Gold Card program to
collect information on franchised store customers and then soliciting business from such customers; (4) underselling its franchised stores by
selling products through the GNC website at prices below or close to the wholesale price, thereby forcing franchises to sell the same products
at a loss; and (5) manipulating prices at which franchised stores can purchase products from third-party suppliers, so as to maintain GNC's
favored position as a product wholesaler. Plaintiffs are seeking damages in an unspecified amount and equitable and injunctive relief. On
March 19, 2008, the court certified a class as to only plaintiffs' claim for violation of the CBPC. The class consists of all persons or entities who
are or were GNC franchisees in the State of California from November 13, 2002 to the date of adjudication. Plaintiffs' other claims remain as
individual claims in this lawsuit. On March 18, 2009, our motion for summary judgment was granted. We are vigorously defending this matter.
Any liabilities that may arise from this matter are not probable or reasonably estimable at this time.
Creatine Claim. On October 29, 2008, plaintiff S.K., on behalf of himself and all others similarly situated, filed a complaint against the
Company and General Nutrition Corporation in U.S. District Court, Southern District of New York. Plaintiff makes certain allegations regarding
consumption of GNC products containing creatine and GNC's alleged failure to warn consumers of those risks. Plaintiff asserts, among other
things, claims for deceptive sales practices, fraud, breach of implied contract, strict liability and related tort claims, and seeks unspecified
monetary damages. Any liabilities that may arise from this matter are not probable or reasonably estimable at this time.
Jackson Claim. On November 10, 2008, Grady Jackson, on behalf of himself and all others similarly situated, filed a Complaint against
General Nutrition Corporation and General Nutrition Centers, Inc. in California Superior Court for Alameda County. On December 15, 2008, the
matter was removed to the U.S. District Court, Northern District of California. This consumer class and representative action, brought under
California Unfair Competition and False Advertising Law asserts among other things, that
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