Re­tailer goes on the of­fen­sive

Amer­i­can Ap­parel makes graphic al­le­ga­tions about for­mer CEO.

Los Angeles Times - - BUSINESS - By Tif­fany Hsu and An­drew Khouri

In an at­tempt to stanch an on­slaught of law­suits from Amer­i­can Ap­parel founder Dov Char­ney, the com­pany filed court doc­u­ments re­leas­ing a trove of lurid de­tails about his al­leged con­duct at the firm.

The de­scrip­tions are among the most spe­cific re­leased dur­ing the year- long saga be­tween the re­tailer and its for­mer chief ex­ec­u­tive, who was sus­pended in June 2014 and then ter­mi­nated in De­cem­ber.

The doc­u­ments, filed Fri­day in Los An­ge­les County Su­pe­rior Court, al­lege that Char­ney en­gaged in vi­o­lent, deroga­tory and sex­u­ally in­ap­pro­pri­ate be­hav­ior. They were filed as part of a so­called anti- SLAPP mo­tion, in­tended to halt what the com­pany calls Char­ney’s friv­o­lous law­suits.

The ac­cu­sa­tions were ve­he­mently de­nied by Char­ney’s at­tor­neys.

Ac­cord­ing to the fil­ing, Char­ney told ac­count­ing em­ploy­ees that they were “Filipino pigs … with your faces in the trough”; mimed hold­ing a shot­gun to an em­ployee’s fore­head; stored footage on com­pany equip­ment of him­self hav­ing sex with mod­els and em­ploy­ees; and sent sex­u­ally graphic mes­sages to em­ploy­ees. The fil­ing also al­leged Char­ney tried to de­stroy the ev­i­dence, telling em­ploy­ees to delete “naughty” mes­sages.

Amer­i­can Ap­parel de­clined to com­ment be­yond the fil­ings. But in the doc­u­ments, the com­pany said that Char­ney should be barred from fil­ing more law­suits be­cause the ev­i­dence cited in the law­suit proves he was fired for good cause.

Char­ney’s at­tor­neys counter that the Los An­ge­les com­pany is “des­per­ately try­ing to dis­tort public at­ten­tion to the fact that Mr. Char­ney’s fir­ing was illegal.”

“The com­pany has knowl­edge that much of this in­for­ma­tion and al­le­ga­tions are

com­pletely false,” said at­tor­ney Keith A. Fink in a state­ment.

Michael Chasa­low, a busi­ness law pro­fes­sor at USC’s Gould School of Law, said the in­clu­sion of graphic state­ments at­trib­uted to Char­ney could sup­port Amer­i­can Ap­parel’s ar­gu­ment that it did not de­fame Char­ney.

But the ex­treme level of de­tail wasn’t nec­es­sary, he said, and such al­leged state­ments could have been dealt with con­fi­den­tially, lead­ing Chasa­low to call the com­pany’s mo­tion an “ag­gres­sive le­gal po­si­tion to try and knock down the ad­ver­sary.”

“I think what they are re­ally try­ing to do is to make it clear to him that they were will­ing to play hard­ball,” Chasa­low said.

Amer­i­can Ap­parel filed its mo­tion Fri­day in re­sponse to a defama­tion suit Char­ney’s team filed in May against the com­pany and its chair­woman Colleen Brown. The May com­plaint al­leged that Brown falsely in­formed Amer­i­can Ap­parel em­ploy­ees that Char­ney had agreed in writ­ing never to re­turn to the com­pany in any ca­pac­ity.

Later Fri­day, with­out ref­er­enc­ing the anti- SLAPP mo­tion, Char­ney filed another defama­tion suit against the com­pany and for­mer board mem­ber David Danziger, al­leg­ing that they lied to pre­vent him from win­ning the nec­es­sary votes to re­claim con­trol of the com­pany.

Brown, in a state­ment in­cluded in Fri­day’s fil­ing, said the ev­i­dence of Char­ney’s sex­ual mis­con­duct and em­ployee abuse was “vo­lu­mi­nous.”

Among her al­le­ga­tions: that in­ves­ti­ga­tors found videos and photos of the thenchief ex­ec­u­tive “en­gaged in all man­ner of sex­ual be­hav­ior with nu­mer­ous mod­els and em­ploy­ees, which for some in­cred­i­ble rea­son had been saved by Mr. Char­ney to the com­pany’s net­work server by him with the use of his com­pany com­puter.”

At least one of those en­coun­ters seemed to have oc­curred in his of­fice at Amer­i­can Ap­parel’s down­town Los An­ge­les head­quar­ters, ac­cord­ing to Brown. Brown also al­leged Char­ney sent in­ap­pro­pri­ate mes­sages and files to em­ploy­ees, in­clud­ing nude photos, in­fan­tilized women, and made graphic sex­ual sug­ges­tions.

The be­hav­ior led the com­pany to in­cur nearly $ 10 mil­lion in lit­i­ga­tion costs through Septem­ber 2014, Brown said.

In one in­ci­dent, a re­tail store em­ployee al­leged that he was re­ferred to as a “long­haired wanna- be Jew” by Char­ney, who also al­legedly sug­gested, in an ex­ple­tivepep­pered tirade, that the em­ployee was ho­mo­sex­ual, ac­cord­ing to Brown’s tes­ti­mony. Then, Char­ney al­legedly at­tempted to stran­gle the em­ployee with his hands and rub dirt into his face.

Fink, Char­ney’s at­tor­ney, ques­tioned the ve­rac­ity of Brown’s and Amer­i­can Ap­parel’s claims.

“The an­swer is sim­ple: these events ei­ther didn’t hap­pen, were ir­rel­e­vant ( e. g. such as the blog which the com­pany ap­proved based on the First Amend­ment) or were of a per­sonal na­ture ( such as an amorous mes­sage only dis­cov­ered when the com­pany broke into Mr. Char­ney’s e- mail),” Fink wrote.

Chasa­low, of USC, said Amer­i­can Ap­parel prob­a­bly was also try­ing to frame Char­ney as the bad guy to the public and may also be em­ploy­ing a set­tle­ment strat­egy. But Char­ney, he said, “doesn’t seem like a guy that is go­ing away.”

“At worst, it’s go­ing to make him think twice be­fore push­ing the defama­tion suits and, at best, soften him to a com­pro­mise,” he said. “It might take some wind out of his sails.”

Anne Cu­sack Los An­ge­les Times

I N THE DOC­U­MENTS, Amer­i­can Ap­parel said Dov Char­ney should be barred from f il­ing more law­suits.

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