According to a press release dated May 11, 2010, the complaint alleges that, throughout the Class Period, defendants failed to disclose material adverse facts about the Company’s true financial condition, business and prospects. Specifically, the complaint alleges that defendants failed to disclose: (i) that the Company was experiencing a significant disruption in its private label business and a related decrease in demand for its private label products; (ii) that the Company’s advertising costs were escalating far in excess of the Company’s internal forecasts; and (iii) as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and its prospects.
On April 27, 2010, the Company issued a press release announcing its financial results for the fiscal second quarter of 2010, the period ended March 31, 2010. The Company announced that its private label sales accounted for only 38% of wholesale sales in the fiscal second quarter of 2010, compared to 42% of wholesale sales in the fiscal second quarter of 2009 – a decline of 4%. Moreover, according to the press release, net income was “adversely affected by the Company's increased television advertising to support its Nature's Bounty, Osteo Bi Flex, Ester C and Pure Protein brands.”
In response to the unexpected rise in advertising costs and a slowdown of sales in its private label business, shares of the Company’s stock fell $9.66 per share, or 21%, to close at $37.24 per share, on unusually heavy trading volume.
By the Order entered on November 29, 2010, Senior Judge Leonard D. Wexler granted the motion to appoint John F. Hutchins as Lead Plaintiff for the class. The law firms of Robbins Geller Rudman & Dowd LLP and Holzer Holzer & Fistel LLC are hereby appointed Lead Counsel for the Class. The Lead Plaintiff filed an Amended Complaint on February 1, 2011. The defendants responded by filing a motion to dismiss on June 1, 2011.
On March 30, 2012, Senior Judge Leonard D. Wexler denied the defendants' motion to dismiss.
On February 11, 2013, the parties entered into a Stipulation of Settlement. This Settlement was preliminarily approved by the Court 2 days later. On June 5, the Court issued a Final Judgment and ordered this case dismissed with prejudice. The Final Judgment was followed by an Order approving the Plan of Distribution of Settlement Proceeds. Finally, the Court issued an Order awarding attorneys' fees and expenses.