Those Sex Harassment Lawsuits Against American Apparel CEO Dov Charney Were Mostly Bogus, It Turns Out
A couple of years ago, Charney's name was synonymous with sexual harrassment — he was accused at one time in seven different cases of unwanted sexual contact with female staffers or the models he shoots for the chain's advertising.
Most notoriously, one woman, Irene Morales, claimed she was briefly kept as Charney's sex slave inside his Los Angeles apartment.
Fast forward to today and it turns out most of the claims against Charney were bogus.
In American Apparel's annual report — which contains an update of the litigation against Charney and the company — only one very old case remains outstanding in court. That case, filed in 2006 by Sylvia Hsu, doesn't even have any specific allegations against Charney — it's a class action on behalf of all female employees and it cites an unidentified co-worker as a defendant.
The annual report describes three harrassment cases in arbitration. One was settled "with no monetary liability to the Company." And, "The Company recently prevailed on the sexual harassment claims in another of these cases." (Normally, when companies settle cases they pay to make them go away, to avoid embarrassing facts from coming out. The fact that AA hasn't made any payout so far on the harrassment claims suggests Charney's defense was a strong one.)
That leaves the Hsu case and one other case in arbitration. Here's the company's update:
The Company has previously disclosed an arbitration filed by the Company on February 17, 2011, related to cases filed in the Supreme Court of New York, County of Kings (Case No. 5018-1) and Superior Court of the State of California for the County of Los Angeles (Case Nos. BC457920 and BC460331) against American Apparel, Dov Charney and certain members of the Board of Directors asserting claims of sexual harassment, assault and battery, impersonation through the internet, defamation and other related claims. The Company recently settled one of these cases with no monetary liability to the Company. The Company recently prevailed on the sexual harassment claims in another of these cases. While the ultimate resolution of the remaining claims cannot be determined, in light of the favorable ruling in one of these cases, the amount of settlement in the other of these cases, and based on information available at this time regarding the remaining cases, we believe, but we cannot provide assurances that, the amount and ultimate liability, if any, with respect to these remaining actions will not materially affect our business, financial position, results of operations, or cash flows.