Ousted American Apparel Founder Threatens to Sue If Post Is Not Reinstated

Ousted American Apparel Founder Threatens to Sue If Post Is Not Reinstated

Ousted American Apparel, Inc. Chief Executive and Chairman Dov Charney will reportedly seek legal action against his company’s board unless they reinstate him to his post come Monday. 

The embattled and controversial Charney has hired Patricia Glaser to take on his case, according to the Los Angeles Times. Glaser is one of the most sought-after trial attorneys in the nation and is usually summoned for high-stakes litigation cases. Glaser’s past clients have included talk show host Conan O’Brien, celebrity chef Paula Deen, and sports and political commentator Keith Olbermann.

Charney was given less than 24-hours notice to decide whether he would resign (and receive a multimillion-dollar severance and stay on as a consultant for the company for four years) or be fired (which he was, along with “false and defamatory statements concerning” him), notes the Times

Charney,45, a Canada-native, has faced numerous sexual harassment allegations over the years and the company he founded is embroiled in financial troubles, with more than $200 million in debt and this year almost losing its listing on the New York Stock Exchange, according to the Times

He was handed a termination notice when he declined resignation. In the letter, which was obtained by the Times and addressed by Glaser to the American Apparel board, Glaser alleges that the document contained “numerous false and misleading statements” surrounding his job performance and that the accusations against him are “completely baseless.”

Under the stipulation of his employment, Charney should have been given 21 days to consider any proposed severance agreement before his termination instead of the 9 p.m. deadline he was given on Wednesday following the board’s 5-0 vote to suspend and fire him during their annual board meeting; his attorney Glaser says this acted in violation of the Age Discrimination in Employment Act which requires the aforementioned.

In a letter Glaser also wrote that “by presenting Mr. Charney with this absurd and unreasonable demand, the company acted in a manner that was not merely unconscionable but illegal,” and “denied Mr. Charney any meaningful opportunity to consider his options.”

Co-Chairman Allan Mayer stood firmly behind the board’s decision to oust Charney, telling the Times that the response from Charney’s attorney was expected in said situation but that they are “confident” and “continue to believe firmly that we did the right thing, for the right reasons, in the right way.”

The company was warned that firing Charney could thrust the company into bankruptcy by triggering defaults in excess of $40 million in outstanding loans. Despite talks that the company may be ripe for a takeover, Interim Chief Executive John Luttrell has denied those rumors. 

Glaser has set a deadline of Monday, notes the Times, for a meeting with the American Apparel board to discuss fully reinstating Charney as the company’s chief executive and chairman. In the letter, Glaser wrote, “Unless these matters are addressed immediately, we intend to pursue legal action against the company.”