American Apparel Gets Some Relief, Sues Dov Charney
After being sued by Dov Charney American Apparel Inc. is fighting back by accusing the controversial founder of running a “scorched earth campaign” as he tries to regain control of the company.
On friday the Los Angeles retailer filed a lawsuit against Charney in the Delaware Court of Chancery. The company said that Charney violated 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 and asked the court to issue an injunction against him to prevent future breaches, while also requiring him to comply with provisions of the agreement.
Keith Fink, Charney’s lawyer, said the “scorched earth” lawsuit is a weak public relations move and an attempt to distract from Charney’s legal challenges against the company, his arbitration case for breach of employment contract and additional suits that American Apparel knows are coming.
Just last month Charney and his allies filed a flurry of lawsuits and sued American Apparel for $30 million in damages.Charney also filed a lawsuit against Standard General, which is the hedgefund that controls the retailer’s board of directors.
AA called the lawsuits “meritless claims” that serve as “public relations opportunities” saying that Charney, his lawyer and his allies bring claims that are wrong on the facts and wrong on the law.
However, in a saga that started in June and in what seems to be a sign of relief for AA, on Tuesday the National Labor Relations Board dismissed five labor complaints filed against the company based on “lack of cooperation by the Charging Party.” The complaints were filed by law firm Fink & Steinberg on behalf of workers who have been employed by the apparel retailer. According to Fink the six complaints, part of 12 originally submitted, will be filed again within the next six months.
