The former American Apparel CEO has more bones to pick with the company that fired him and the hedge fund he thought would be his savior.
When it comes to suing his former company, Dov Charney just can’t seem to quit.
Earlier this week, the founder and former CEO of American Apparel sued his former company and its chairwoman Colleen Brown for defamation in a lawsuit seeking more than $20 million in damages.
Charney’s allegations stem from a letter that Brown sent to all American Apparel employees stating that Charney had agreed in writing to never return to the company in any capacity. Charney claims in the filing that he never signed such an agreement.
The lawsuit against American Apparel is not Charney’s first. In fact it’s the third he’s filed since March over his ouster from the company he founded.
American Apparel removed Charney as CEO in June-a decision that the company said ”grew out of an ongoing investigation into alleged misconduct.” In hope of regaining control of his company, Charney struck a deal with Standard General in which the hedge fund loaned him money to increase his stake in American Apparel in exchange for Charney giving up some voting rights on his shares. American Apparel agreed to re-evaluate Charney’s conduct, but an investigation found that he had violated sexual harassment policies and misused funds. Charney, who has denied those claims, was terminated from the company.
Cue the litigation.
In March, Charney sued American Apparel for damages of up to $40 million by reinitiating claims of breach of contract and wrongful termination. The claims had been in arbitration that had been put on hold as the company reviewed Charney’s conduct. Charney’s claims for damages include $6 million worth of severance, $1.3 million in unused vacation time, and at least $10 million for emotional distress.
Earlier this month, Charney sued hedge fund Standard General for defamation, seeking damages up to $30 million. The lawsuit said that Standard General falsely claimed that Charney was terminated for cause based on the outcome of the investigation into Charney’s conduct. Charney claims that the investigation was a ”sham.” The lawsuit says that Charney’s firing was part of the American Apparel board of directors’ ”then-secret plan to wrest control of the company” away from its founder. ”There was no independent, third-party investigation of Charney that led to his termination,” it says.
Then came this week’s lawsuit.
American Apparel APP -5.20% and Standard General have denied the claims Charney has filed against them.
Charney has long been a controversial business figure following repeated accusations that he’s subjected employees to sexual harassment and discriminated against less attractive staff on the grounds that they undermined the ”AA aesthetic.”
Charney spent a quarter century building the t-shirt business he launched at age 20 into a retailer with 200-plus stores worldwide that’s known for its cotton basics and ethical manufacturing in addition to its sexually explicit ads. It’s no surprise then that on Thursday, Charney’s lawyer, Keith Fink, told Fortune that his client’s fight is far from over. ”There are more [lawsuits] to come.”