American Apparel’s brand identity has always been closely linked to its provocative chief executive, Dov Charney.
His unconventional, edgy persona helped fuel the Los Angeles clothing maker’s swift rise up the retail ladder, turning what began as a gritty wholesale T-shirt operation into a hipster empire known for colorful cotton staples and overtly sexual advertisements, some photographed by Charney himself.
But it has also repeatedly landed Charney in hot water, with former employees accusing the 42-year-old founder of crude remarks, a hostile work environment and a promiscuous lifestyle that includes having consensual sex with his employees, according to one of his former lawyers.
A public company, American Apparel has seen its business operations, and most recently, its financial troubles, overshadowed by Charney’s antics and bad publicity.
Charney has made no secret of fostering a “sexually charged workplace” intended to stimulate creativity, according to court documents the company filed.
“Dov feels comfortable in having consensual relations with women who work for his company,” said Andy Kaplan, a Los Angeles lawyer who represented Charney and American Apparel in two previous sexual harassment cases. “I spoke with Dov about this on many occasions, many occasions. And it was always my suggestion not to do it. Not for legal reasons, but for purely practical reasons.”
With the latest lawsuit, “whether the claims are true or false, he’s become a target because of his prior history and his outspokenness about it,” Kaplan said.
Now former New York employee Irene Morales contends in a $250-million lawsuit that Charney was a “sexual predator” who forced her to perform oral sex on him in his apartment when she was 18 and then held her captive for hours.
Filed Friday, the suit also said Charney continued to harass Morales, now 20, for months afterward, including threatening to fire her if she didn’t engage in more sex acts.
Charney declined to speak publicly about his alleged conduct and referred matters to the company. It released a statement calling the claims “entirely baseless.”
In recent years, Charney was targeted by several sexual harassment suits, but none has gone to trial. American Apparel’s board of directors has publicly stood behind him. Charney owns 51.8% of the company’s stock and is board chairman.
But the latest scandal comes at a particularly bad time for the company, which has been fighting slumping sales and losses and has warned repeatedly of its ability to continue as a “going concern.”
Morales’ suit, which includes claims of sexual harassment, retaliation, gender discrimination and creating a hostile workplace, also names the company and its eight other board members.
The company’s five independent directors held discussions throughout the day Wednesday and were “looking at this very closely,” according to a company official familiar with the matter. The person requested that his name not be used, saying he was not authorized to speak publicly.
But for now, members are satisfied with the company’s explanation, that person said.
Reached on his cellphone Wednesday, Charney declined to discuss the lawsuit and referred calls to a lawyer.
That lawyer, Peter Schey, did not return calls and e-mails for comment. In recent interviews with The Times, Schey has said that Charney’s singular focus was on “turning the ship around” at American Apparel.
The company released a statement Tuesday saying Morales “left the company without complaint and resigned with a letter of gratitude regarding her positive experience at the company.”
It also said she had signed a severance agreement saying she had no pending claims against the company and would submit any future claims to “confidential binding arbitration.” It said it would ask the court to refer the case to arbitration and would seek disciplinary action against her lawyers.
On Wednesday, Morales’ lawyers released a statement saying American Apparel’s attempts to push the case into arbitration were “improper and unenforceable.”
Separately, a spokesman with the New York Police Department said Morales hadn’t filed a criminal complaint against Charney and that it doesn’t pursue cases without a complainant. Morales and her lawyer, Eric Baum of New York, said they hadn’t ruled out a possible criminal filing with the police.
Born and raised in Montreal, Charney attended Tufts University but left to start a T-shirt business where the products were all made domestically.
Most apparel companies use overseas manufacturers to make their goods, which keeps costs low. But Charney has been a champion of immigrant rights, speaking out repeatedly about the need for reform and paying his seamstresses an average of $12 an hour at the company’s headquarters and manufacturing facilities in downtown Los Angeles.
Charney, who is single and lives in Silver Lake, wears American Apparel clothing every day and serves as a company fit model, the person who tests the look and size of the men’s line. He also continues to direct and photograph some of the company’s risque art campaigns, which often feature women with their breasts and other body parts exposed.
In previous interviews, Charney has acknowledged that the recession and other factors have hurt his business, but maintains that it’s still strong and successful.
The latest financial problems, he has said, stem mainly from the forced layoffs of thousands of workers after a government inspection found that many employees didn’t appear to be authorized to work in the U.S. or had discrepancies in their employment records.
On Wednesday, shares of American Apparel were unchanged, closing at $1.07.