American Apparel is facing a defamation lawsuit filed by Dov Charney, a Montreal-born entrepreneur who founded the retail chain and helmed it until he was fired last year amid sexual misconduct allegations.
The hipster-clothing icon said Wednesday that Charney’s claims are without merit and the company will “vigorously dispute” them.
Key to Charney’s allegations is a letter that American Apparel chair Colleen Brown issued to employees last month, according to the lawsuit.
The suit claims that the letter makes a number of false, exaggerated or inaccurate statements that damage Charney’s reputation, both personally and professionally, and seeks at least US$10 million in compensation. The lawsuit contains allegations that have not been proven in court.
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Charney has been the subject of lawsuits alleging he had inappropriate sexual conduct with female employees. Some cases remain pending, others were dismissed or remanded to private arbitration.
Charney has maintained his innocence in all of the lawsuits, telling CNBC in 2012 that “allegations that I acted improperly at any time are completely a fiction.”
Nonetheless, the company’s board of directors dismissed Charney in December. His defamation suit against the company says that American Apparel’s investigation into sexual harassment allegations against him – which concluded he had violated the company’s sexual harassment policies – wasn’t “independent,” as claimed in the April 24 letter.
It also disputes the letter’s assertion that it would be a “clear breach” of any board’s duties to “re-hire an individual with Mr. Charney’s history of misconduct.”
Charney’s suit alleges that the defendants have been trying to wrest control of American Apparel from him, and it claims the letter to employees was part of an anti-Charney publicity campaign.
American Apparel’s filing with the Securities and Exchange Commission says that “the company believes that such claims are without merit and intends to vigorously dispute the validity of these claims.”
The defamation suit filed in California’s state court is the latest litigation launched by Charney.
Last week, Charney filed a $30-million defamation lawsuit against investment firm Standard General, one of American Apparel’s biggest shareholders. In March, he filed a suit against American Apparel for alleged breach of contract.
— With files from The Associated Press
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