KLEIN v. GENERAL NUTRITION COMPANIES, INC.

No. 98-3266.

186 F.3d 338 (1999)

Steven KLEIN; Warren Brandwine; on behalf of themselves and all others similarly situated v. GENERAL NUTRITION COMPANIES, INC.; Jerry D. Horn; William E. Watts; Louis Mancini; Edwin J. Kozlowski; Thomas H. Lee; Thomas R. Shepherd; Thomas H. Lee Equity Partners, L.P.; ML-Lee Acquisition Fund, L.P.; State Street Bank and Trust Company, As Trustee for the 1989 Thomas H. Lee Nominee Trust; John W. Childs; David V. Harkins; Anthony J. DiNovi; Morgan Stanley & Co., Incorporated; Alex Brown & Sons Incorporated; Donaldson, Lufkin & Jenrette Securities Corporation; PaineWebber Incorporated; Smith Barney, Inc. Steven Klein, Warren Brandwine, Gaetan Lavalla and Edward Loewenton, Appellants.

United States Court of Appeals, Third Circuit.

Decided: August 10, 1999.


Attorney(s) appearing for the Case

M. Richard Komins (Argued), Leonard Barrack, Daniel Bacine, Barrack, Rodos & Bacine, Philadelphia, PA; Robert P. Sugarman, Salvatore P. Graziano, Milberg, Weiss, Bershad, Hynes, & Lerach, LLP, New York, N.Y., for Appellants.

Gordon W. Schmidt, Doepken, Keevican, & Weiss, Pittsburgh, PA, for Appellees General Nutrition Companies, Inc.; Jerry D. Horn; William E. Watts; Louis Mancini; Edwin J. Kozlowski; Thomas H. Lee; Thomas R. Shepherd; Thomas H. Lee Equity Partners, L.P.; ML-Lee Acquisition Fund, L.P.; State Street Bank and Trust Company, As Trustee for the 1989 Thomas H. Lee Nominee Trust; John W. Childs; David V. Harkins; and Anthony J. DiNovi.

Daniel J. Leffell (Argued); Marc Falcone, Paul, Weiss, Rifkind, Wharton, & Garrison, New York, N.Y., for Appellees General Nutrition Companies, Inc.; Jerry D. Horn; William E. Watts; Louis Mancini; and Edwin J. Kozlowski.

Sanford F. Remz, Hutchins, Wheeler, & Dittmar, P.C., Boston, MA, for Appellees Thomas H. Lee; Thomas R. Shepherd; Thomas H. Lee Equity Partners, L.P.; Ml-Lee Acquisition Fund, L.P.; State Street Bank and Trust Company, as Trustee for the 1989 Thomas H. Lee Nominee Trust; John W. Childs; David V. Harkins; and Anthony J. DiNovi.

David J. Armstrong, Christopher T. Lee, Dickie, McCamey & Chilcote, P.C., Pittsburgh, PA; James W.B. Benkard (Argued), James H.R. Windels, William C. Komaroff, Davis, Polk & Wardwell, New York, N.Y., for Appellees Morgan Stanley & Co., Incorporated; Alex Brown & Sons Incorporated; Donaldson, Lufkin & Jenrette Securities Corporation; Paine-Webber Incorporated; and Smith Barney, Inc.

Before: NYGAARD, RENDELL, and WOOD, JR., Circuit Judges.


OPINION OF THE COURT

HARLINGTON WOOD, JR., Circuit Judge.

Appellants are individuals who purchased shares of General Nutrition Companies, Inc. ("GNC") common stock between a February 7, 1996 public offering (the "public offering") and May 28, 1996. Appellants filed this class action lawsuit in August 1996, alleging violations of federal securities laws and state law. Appellants assert that the defendants failed to disclose material adverse facts concerning...

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