WeightWatchers 2011 Annual Report Download - page 40

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Sabatino v. Weight Watchers North America, Inc.
In September 2009, a lawsuit was filed in the Superior Court of California by one of our former leaders
alleging violations of certain California wage and hour laws on behalf of herself, and, if approved by the court,
other leaders and those employees who have performed the location coordinator function in California since
September 17, 2005. In this matter, the plaintiff sought unpaid wages and certain other damages. In October
2009, we answered the complaint and removed the case to the U.S. District Court for the Northern District of
California, or the Federal Court. In July 2010, the plaintiff filed an amended complaint adding two additional
named plaintiffs for this matter. In October 2010, the parties engaged in mediation and reached an agreement in
principle to settle this matter in its entirety and, accordingly, we recorded a reserve with respect to this matter of
$6.5 million. In May 2011, the parties received the Federal Court’s final approval of the settlement and we made
payments in connection with the settlement of approximately $6.4 million in the aggregate in the second quarter
of fiscal 2011.
Hanson-Kelly & Jackson v. Weight Watchers North America, Inc. and Weight Watchers International, Inc.
In January 2010, a lawsuit was filed in the U.S. District Court for the Middle District of North Carolina by
two leaders alleging violations of certain federal and North Carolina wage and hour laws on behalf of
themselves, and, if approved by the court, other leaders and receptionists in North Carolina since January 25,
2007. In this matter, the plaintiffs are seeking unpaid wages and certain other damages. In April 2010, we filed a
Motion to Dismiss the claim for unpaid wages under the North Carolina wage and hour laws. The court has not
ruled yet on this Motion. Although we disagree with the allegations that we have violated federal and North
Carolina wage and hour laws and we believe we have valid defenses with respect to this matter, litigation is
inherently unpredictable. At this time, we do not expect our results of operations, financial condition or cash
flows to be materially adversely affected by this action in any particular period, and we have not made any
provision for losses in connection with it.
Other Litigation Matters
Due to the nature of our activities, we are also, at times, subject to pending and threatened legal actions that
arise out of the ordinary course of business. In the opinion of management, based in part upon advice of legal
counsel, the disposition of any such matters is not expected to have a material effect on our results of operations,
financial condition or cash flows. However, the results of legal actions cannot be predicted with certainty.
Therefore, it is possible that our results of operations, financial condition or cash flows could be materially
adversely affected in any particular period by the unfavorable resolutions of one or more legal actions.
Item 4. Mine Safety Disclosures
Not applicable.
22