Judge Stops American Apparel Sex Slave Suit

Lawyers for American Apparel founder Dov Charney have argued successfully that former employee Irene Morales’ lawsuit cannot proceed — at least temporarily. Charney’s legal team convinced judge Bert Runyan that a hearing is needed to determine whether Morales is bound by an agreement she signed, in which she essentially promised never to sue the company for any reason. Until Runyan rules on that issue, her case cannot move forward.

Because the company is unusually lawsuit-prone, all American Apparel employees are now required to sign, as a condition of employment, an agreement indemnifying the company against any damages for any kind of employment dispute, and promising to enter into binding arbitration — a process that heavily favors employers over employees — rather than to sue, should that employee face sexual harassment or wrongful termination or discrimination in the workplace. (Or, apparently, should that employee face being obligated, on her 18th birthday, to perform fellatio on the C.E.O.)

Lawyers for Irene Morales, the 20-year-old who is currently suing Dov Charney for $260 million, argued that the agreement she signed was “improper and unenforceable, and designed only to silence Ms. Morales.” Morales alleges that over a period of eight months, she was groomed by Charney prior to her 18th birthday, and after it, repeatedly coerced into sexual activity in Charney’s home and various of the apartments he keeps on the company dime.

Charney’s lawyer, Stuart Slotnick, in turn called Morales’ suit “baseless” and alleged that the then-American Apparel retail employee had “made a number of extortion-like threats to expose the company to a threatened avalanche of litigation and negative publicity.” Slotnick asked the judge to sanction Morales and her lawyers for bringing a “frivolous” lawsuit.

The case cannot proceed until the judge rules on the issue of whether, in fact, the arbitration agreement can be considered binding. That hearing has yet to be scheduled. Developing.