Dov Charney Is Suing a Major American Apparel Investor for $30 Million

By Kate Dries  |  May 8, 2015 | 4:30pm
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Getting a taste of his own medicine, ousted American Apparel founder Dov Charney is not going quietly: he’s filed a lawsuit against Standard General, the hedge fund that has a large presence on American Apparel’s Board of Directors and was directly responsible for Charney’s firing.

Apparently his attempts to get his company back aren’t working out like he planned. Charney—who is, according to him, broke—is demanding $30 million for “defamation and intentionally interfering with economic relations,” plus attorney’s fees, as the LA Times reports. He’s claiming that Standard General threatened to “ruin” him if he didn’t leave the company, and that their investigation into his bad behavior was set up to “manufacture” reasons to fire him.

“The Charney ‘investigation’ was a sham, a witch hunt, a whitewash designed” by Standard General, according to the lawsuit.
Standard General told Charney that if he did not give up control and sign over his voting rights, the hedge fund “would destroy his character and ruin Charney,” the lawsuit says.

How would one go about destroying the reputation of a man whose reputation has already been destroyed by himself? Thoughts welcome.

Charney’s paranoia is not entirely unfounded; coincidentally or not: the same day Charney filed his lawsuit, internal documents were leaked to the New York Post that do not make Charney look very good at all:

As CEO, he described certain employees as “sluts” and “pigs” and threatened others while “punching holes in tables and throwing things,” according to internal e-mails and human resource reports. Charney denied using such language.
One e-mail from an HR executive said employees were too afraid to file complaints against Charney for fear of losing their jobs and because he warned them not to. He threatened to “replace” employees who didn’t work 12-hour days, seven days a week, the exec said in an October 2013 e-mail.
“Based upon the sheer volume of concerns across the board, I’d say the company is officially on notice that there is arguably a hostile work environment and I feel it’s pressing to take some sort of action immediately,” the exec wrote.

Standard General is denying the validity of Charney’s lawsuit, as well as the numerous other suits that have been filed against them and American Apparel in recent weeks; four former employees and friends of Charney’s have alleged that Standard General is willfully pointing the company in the wrong direction.

But Standard General isn’t backing down. “Dov Charney and his associates continue to file frivolous, meritless lawsuits at a breakneck pace,” they said in a statement. “We are confident that Mr. Charney will be held accountable for this knowing, intentional abuse of the legal system.” In the battle of Dov Charney vs. American Apparel, will there ever be a real winner (besides those benefiting from the company’s recent onslaught of super-sales, of course)?

Correction: A previous headline for this post stated that Standard General was the “main investor” for American Apparel, however, the hedge fund does not own the majority of American Apparel’s stock.

Image via DovCharney.com

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