GNC 2011 Annual Report Download - page 107

Table of Contents
NOTE 16. COMMITMENTS AND CONTINGENCIES (Continued)
October 9, 2009, GNC answered plaintiff's first amended complaint and cross-claimed against co-defendants Proviant Technologies and Ergopharm.
Discovery in this case is ongoing and the Company is vigorously defending the matter. As any liabilities that may arise from this case are not probable or
reasonably estimable at this time, no liability has been accrued in the accompanying financial statements.
California Wage and Break Claim. On November 4, 2008, 98 plaintiffs filed individual claims against the Company in the Superior Court of the
State of California for the County of Orange, which was removed to the U.S. District Court, Central District of California on February 17, 2009. Each of the
plaintiffs had previously been a member of a purported class in a lawsuit filed against the Company in 2007 and resolved in September 2009. The plaintiffs
allege that they were not provided all of the rest 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. Discovery in this case is ongoing and the Company is
vigorously defending these matters. The court has developed a mediation procedure for handling the pending claims and has ordered the parties to mediate
with small groups of plaintiffs and stayed the case as to the plaintiffs not participating in the mediations. The first of the mediation sessions occurred
February 10, 2010 and March 4, 2010 and did not result in any settlements. Any liabilities that may arise from these matters are not probable or reasonably
estimable at this time.
FLSA Matters. On June 29, 2010, Dominic Vargas and Anne Hickok, on behalf of themselves and all others similarly situated sued General Nutrition
Corporation and GNC (U.S. District Court, Western District of Pennsylvania, Case No. 2:05-mc-02025). The two-count complaint alleges, generally, that
plaintiffs were required to perform work on an uncompensated basis and that GNC failed to pay overtime for such work. The second count of the complaint
alleges the Company retaliated against plaintiffs when they complained about the overtime policy. The Company filed a motion to dismiss count II of the
Complaint and on January 6, 2011 the court granted the motion.
On July 16, 2010, a second, similar wage and hour complaint was filed by Jennifer Mell and Jose Munoz, on behalf of themselves and all others
similarly situated against GNC Corporation (U.S. District Court, Western District of Pennsylvania, Case No. 10CV945). The complaint alleges that plaintiffs'
job duties were non-exempt in nature and that they were misclassified as exempt employees. The Company filed a motion to dismiss which was granted on
November 9, 2010. Plaintiffs filed an appeal on December 9, 2010.
Commitments
The Company maintains certain purchase commitments with various vendors to ensure its operational needs are fulfilled of approximately
$19.8 million. As of December 31, 2010, the future purchase commitments consisted of $10.6 million of advertising commitments and $9.2 million under a
management services agreement with Parent. Other commitments related to the Company's business operations cover varying periods of time and are not
significant. All of these commitments are expected to be fulfilled with no adverse consequences to the Company's operations of financial condition.
Environmental Compliance
In March 2008, DHEC requested that the Company investigate contamination associated with historical activities at our South Carolina facility. These
investigations have identified chlorinated solvent impacts in soils and groundwater that extend offsite from our facility. The Company is awaiting DHEC
approval of the scope of additional investigations in order to understand the extent
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