American Apparel sues Dov Charney, alleges “scorched earth campaign”
After facing a volley of lawsuits from Dov Charney and his allies, American Apparel Inc. is firing back by accusing its ousted chief executive of running a “scorched earth campaign” as he tries to regain control of the company.
The Los Angeles clothing maker said Charney is violating the terms of a deal that he agreed to in July shortly after the board suspended him as CEO and removed him as chairman, citing evidence of inappropriate behavior with employees and misuse of company funds, according to a lawsuit filed Monday in Delaware Chancery Court.
After being suspended as CEO, Charney teamed up with hedge fund Standard General to buy additional shares as he attempted a comeback. As part of the deal reached with both companies, Charney stepped down as a board member and agreed to a number of other restrictions, including not disparaging American Apparel.
But his initial comeback attempt failed, and he was fired as CEO in December. He and his allies have filed a flurry of lawsuits in the last month, including two defamation lawsuits against American Apparel and Standard General.
Now American Apparel is hitting back.
The lawsuit accuses Charney of a host of misdeeds, including sabotaging the company’s relationship with suppliers, trespassing on company property and threatening employees who do not support his return by taking their photos and promising to fire them once he returns.
“He is attempting in many respects to act as the ‘man behind the curtain,’ manipulating friends and Company employees behind the scenes,” the lawsuit said.
Keith Fink, Charney’s lawyer, said the lawsuit “doesn’t faze me the slightest bit.”
“The lawsuit itself is a weak public relations move to try and deflect attention away from the two defamation actions that Mr. Charney has filed in the past 10 days against the company and Standard General, the arbitration proceeding against the company for breach of his employment contract that is in full swing, and additional legal actions they know are coming,” he wrote in an email Monday.
Fink has also filed several complaints with the National Labor Relations Board on behalf of employees who claim the company is interfering with their attempts to organize. The board has dismissed six of the complaints due to a lack of cooperation on the part of the employees.
American Apparel said it is seeking an injunction to prohibit Charney from breaking the terms of his original deal, along with a judgment for his alleged breaches of the agreement.
Follow Shan Li on Twitter @ByShanLi
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