Former American Apparel Inc. chief executive officer Dov Charney accused Standard General LP of falsely claiming he was fired for cause based on the results of an independent investigation. Charney said the investigation by an outside law firm was a “sham,” according to a complaint filed in in Los Angeles state court. He said American Apparel’s board, controlled by Standard General, sacked him when he wouldn’t drop his fight to regain control of the retailer, and because he refused to release his claims as a shareholder against both the company and the investment firm.
“There was no independent, third party investigation of Charney that led to his termination,” according to the complaint filed Thursday. The investigation was directed by the board, “the very people who wanted to fire Charney, who conspired against him to wrest away control of the company.”
The Los Angeles-based retailer, long-known for its provocative ads, fired Charney Dec. 16, ending a six-month saga that began when the board suspended him in June for misconduct. In removing Charney, the directors alleged that he violated the chain’s policies against sexual harassment and improperly used company funds on travel for family members.
In January, American Apparel strengthened rules to prevent sexual harassment among its employees. Managers and subordinates were prohibited from having romantic relationships, including dating casually, according to the new ethics code. Before the board moved to oust him, Charney had been sued several times for sexual harassment. The cases were either dismissed or sent to private arbitration. “Charney and his associates continue to file frivolous, meritless lawsuits at a breakneck pace,” New York-based Standard General said in a statement.
Two American Apparel shareholders with past ties to Charney sued the company and some board members in April. They claimed Charney was fired because he wouldn’t go along with a plan to sell the chain. The company has called the claims in that case “completely baseless.”
Charney seeks as much as $30 million in compensatory and punitive damages in the lawsuit against Standard General.