American Apparel founder, former employee trade lawsuits

American Apparel and an employee who had worked for the retailer since its early years filed dueling lawsuits this week, the latest legal trouble for the cotton clothier.

Dov Charney, the company’s founder, and a woman who says she is his ex-girlfriend accuse each other of theft, fraud, sexual harassment, wrongful termination and breach of contract.

Wei-Ween Y. Victorino, also known as Nikky Yang, filed a suit against American Apparel on Monday. Later that day, the company filed a suit asking that her case be dismissed.

Charney and Yang have known each other since 1996, when the company was founded, both sides agree. Yang’s lawyer, Keith Fink, says she was Charney’s girlfriend at the time. American Apparel’s general counsel, Joyce Crucillo, says she does not know the exact nature of their earlier relationship.

Crucillo and Fink agree that Yang worked for years to help the company get started, build a customer base and survive a bankruptcy filing.

They disagree about whether Yang is owed a stake in the company. Fink said Charney made repeated promises to Yang and to other employees that they would get a stake in the company and profit when it succeeded. To date, Yang has not received any shares.

The lawsuits showed the familial way in which the company, now based in Los Angeles, handled some employees. For example, after Yang moved to Florida and stopped working full-time for the company in March 2007, she continued to receive an annual salary of $50,000 plus benefits for about another year.

After the company went public in December 2007, Yang was paid for several more months stretching into spring. She was terminated by Crucillo on May 15, Fink said.

“She needed us. She was there for us when we needed her; that is within our culture to encourage that kind of support, dedication, commitment -- to let employees know we’ll be there for them when they need us,” Crucillo said.

Her lawyer claims she was promised stock in the company by Charney, but once she demanded it, she was terminated. Also, she says she was so committed to the company’s success that she used $70,000 in personal credit accounts to help fund operations, including opening FedEx and UPS accounts, paying office suppliers and leasing two cars for Charney.

The suit, reported earlier in the week by the New York Post, further contends Charney created a sexually hostile work environment, including forcing Yang to work with him while he was naked and calling her while he was watching porn.