Former GNC parent settles ephedra suits

Tuesday, May 03, 2005

By Teresa F. Lindeman, Pittsburgh Post-Gazette

The former foreign owner of Pittsburgh-based General Nutrition Centers said it was part of a tentative $19.71 million deal that would resolve 77 active lawsuits involving the weight-loss supplement ephedra, including 36 cases that name GNC as a defendant.

Dutch company Royal Numico said yesterday that the settlement required court approval and applies to cases involving the sale of products made by supplier Twin Labs. The various lawsuits make claims against about 20 defendants, including the GNC health supplements chain and other retailers.

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Numico did not divulge its share of the total settlement but said its product liability insurance would cover the payment.

The Dutch baby food maker sold GNC to a private investment group in late 2003, in part by agreeing to retain liability for certain claims related to ephedra.

Though ephedra products represented almost $183 million, or 17 percent, of GNC's retail sales in 2002, adverse publicity over several deaths linked to the supplement as well as increased regulatory scrutiny persuaded the company to pull ephedra off its shelves by mid 2003. Federal regulators banned the product a year later.

Lawsuits against various manufacturers and retailers have continued around the country. As of April 15, GNC had been named as a defendant in 208 pending cases, mainly involving the sale of ephedra products from outside suppliers. That was up from the 180 cases at the end of 2004, according to filings by the company with the Securities and Exchange Commission.

While it has struggled to replace the lost ephedra sales with other weight-loss products, GNC appears to have been shielded from related litigation. "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," the company said in a SEC filing at the end of March.