Dive Brief:
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American Apparel Inc. founder and ex-CEO Dov Charney Thursday filed a lawsuit against major shareholder investment firm Standard General seeking $30 million in damages.
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Charney is alleging defamation of character, “false light” (similar to defamation that in some jurisdictions carries a lighter burden of proof), and intentional interference with actual and prospective economic relations.
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Standard General and American Apparel have both dismissed the claims as being without merit.
Dive Insight:
It’s been a year since Dov Charney made it clear that he wouldn’t go quietly, and it appears he may simply not go. Whether Charney’s lawsuit is frivolous, as Standard General claims, is for the court to decide, but the firm’s characterization of “Dov Charney and his associates” continuing to file lawsuits “at a breakneck pace” seems fair to say. In fact, Charney promised to do just that late last year.
Meanwhile, the New York Post reports further disturbing details from “sources close to the company’s board” on Charney’s alleged abusive behavior toward employees, a revelation that a source close to Charney, dismissing those details as distortions, told Retail Dive was hardly a coincidence considering its timing.
Whether or not Charney prevails, the situation continues to be messy and expensive at a time when American Apparel needs to devote energy to positive change and positive sales, which have fallen more than 10% since his departure.
