American Apparel Faces Lawsuit, Layoffs
Dov Charney, founder and former CEO of American Apparel, is suing his former business—which fired him in December—for $40 million in damages.
The figure includes $6 million in severance, $1.3 million in vacation time pay, $10 million for emotional distress and 13 million company shares (valued at more than $9 million), according to Bloomberg. He also wants to reclaim art that adorned his office walls.
“I am very concerned about this,” Fink said. “While someone may be able to pencil the value of the art Mr. Charney accumulated over the years in the tens of millions of dollars, the sentimental value is priceless to him.”
Reuters noted that more lawsuits could be on the way, possibly for defamation and breach of privacy in reference to Charney's personal email. Charney also wants to launch a probe into the $10.4 million the company claims to have spent investigating him. Fink claimed the investigation was not independent, he was denied access to documents and Charney was never questioned.
"These claims are baseless, and we are confident that Dov will lose on each and every one of these," American Apparel said in an email statement to Bloomberg and Reuters.
Charney launched his company in 1989. It went public in 2007, but has suffered financial troubles in recent years, most notably not making a profit since 2009. In June, the board voted to suspend him with the intent of terminating his employment. The board fired him for cause and hired Paula Schneider to replace him as CEO in December.
Schneider told ABC News' 20/20 in an interview that aired Monday that Charney "was fired for violating our sexual harassment and our anti-discrimination policy. He was also fired for misuse of corporate assets."
"You know I have great respect for what he built here, but there were challenges," she added. "In last five years, the company has lost over $300-plus million, so it wasn't a financially healthy company, and my goal is to take it [and] turn it around."
- Companies:
- American Apparel
- People:
- Dov Charney





