Ousted CEO to sue American Apparel

The directors of fashion retailer American Apparel Inc have rejected a demand to reinstate ousted CEO Dov Charney, several newspapers are reporting today.

The board stripped Charney of his title as CEO and president on Friday, citing alleged misuse of company funds and his involvement in displaying naked photographs of former saleswoman, Irene Morales, who had sued him.

Charney is expected to sue American Apparel in the next few days after his lawyer reportedly sent a letter to the board on Thursday, which said the company had failed to give Charney 21 days’ notice of his severance package as required by law, making his dismissal "not only unconscionable but illegal."

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John Luttrell, who has been with the company since February 2011, has been named as interim CEO.

The board has also appointed Allan Mayer and David Danziger as co-chairmen to replace Charney as chairman.

"Dov Charney created American Apparel, but the company has grown much larger than any one individual and we are confident that its greatest days are still ahead,” the board said in a statement.

Meanwhile, Luttrell emphasised that the company has one of the “best known and most relevant brands in the world, with employees who are second to none”.

He added: "Our core business—designing, manufacturing, and selling American-made branded apparel—is strong and continues to demonstrate great potential for growth, both in the US and abroad. This new chapter in the American Apparel story will be the most exciting one yet."

Charney has long been considered a scandalous figure within the industry, being cited in a number of sexual harassment lawsuits by former employees and regularly receiving flack for using adverts that verge upon the pornographic.

 

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