GNC 2012 Annual Report Download - page 102

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Table of Contents
NOTE 11. COMMITMENTS AND CONTINGENCIES (Continued)
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 the Company in federal court (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 the Company 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. In fall, 2011, plaintiffs filed their Motion for Class Certification.
The motion has been fully briefed and is pending before the court. 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.
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. On February 14, 2011, plaintiffs filed a document with the court to dismiss the appeal. As of
December 31, 2011, this complaint is closed and no liability was accrued or paid during 2011.
Commitments
The Company maintains certain purchase commitments with various vendors to ensure its operational needs are fulfilled. As of December 31, 2011, the
future purchase commitments consisted of $3.5 million of advertising commitments. 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, the Department of Health and Environmental Control ("DHEC") requested that the Company investigate contamination associated with
historical activities at the Company's South Carolina facility. These investigations have identified chlorinated solvent impacts in soils and groundwater that
extend offsite from the Company's facility. The Company is awaiting DHEC approval of the scope of additional investigations in order to understand the
extent of these impacts and develop appropriate remedial measures for DHEC approval. At this state of the investigation, however, it is not possible to
estimate the timing and extent of any remedial action that may be required, the ultimate cost of remediation, or the amount of the Company's potential
liability.
In addition to the foregoing, the Company is subject to numerous federal, state, local, and foreign environmental and health and safety laws and
regulations governing its operations, including the handling, transportation, and disposal of the Company's non-hazardous and hazardous substances and
wastes, as well as emissions and discharges from its operations into the environment, including discharges to air, surface water, and groundwater. Failure to
comply with such laws and regulations could result in costs for remedial actions, penalties, or the imposition of other liabilities. New laws, changes in existing
laws or the interpretation thereof, or the development of new facts or changes in their processes could also cause the Company to incur additional capital and
operation expenditures to maintain compliance with environmental laws and regulations and environmental permits. The Company also is subject to laws and
regulations that impose liability and cleanup responsibility for releases of hazardous substances into the environment without regard to fault or knowledge
about the condition or action causing the liability. Under certain of these laws and regulations, such liabilities can be imposed for cleanup of previously
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