Charney Has More to Say About Woody

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When Dov Charney was watching the Woody Allen classic ?nnie Hall?two years ago, the American Apparel Inc. chief executive identified with a scene and immediately hit the ?ecord?button.

Charney later captured a picture from the scene, showing Allen in Hasidic garb, and posted it on a handful of billboards in Los Angeles and New York. That casual act was supposed to be a respectful tribute. But Allen took exception and sued. It became an international incident, and last week American Apparel? insurer agreed to pay $5 million in a settlement that left Charney deflated.

? feel emasculated by the entire process,? he told the Business Journal. ? was just trying to state an opinion.?p>While Charney said he still admires Allen, he wonders about the filmmaker? motive to sue him. He believes Allen and those around him ?ot intoxicated by the money?they stood to get from the insurance company.

In a long interview with the Business Journal, Charney said the incident began innocently enough. He watched and was moved by ?nnie Hall.?At the time, Charney was experiencing an onslaught of negative press over allegations that he sexually harassed a former employee, and he felt misunderstood and publicly ridiculed. In the movie, Allen was misunderstood, too, and Charney said he felt the image he captured depicted that.

? was watching ?nnie Hall?and I said this moment in the scene spoke to the sensibilities of being misperceived,?Charney said. ? felt this was an opportune moment to speak in a comedic matter and it was a satiric spoof.?p>After the settlement, Charney expressed frustration with how the insurance company defended the L.A. clothing manufacturer and retailer.

?he insurance company got caught with their socks off because they had not invested enough in this case in the early part of it,?Charney said. ?hey got terrified by the media attention and they muzzled me when this was a matter of public debate. They said if I speak to the media they were going to pull my coverage.

In particular, Charney was itching to set the record straight over news reports that American Apparel planned to exploit Allen? personal life during the trial by calling his former girlfriend Mia Farrow and his current wife, Soon Yi Previn to the witness stand. Charney maintains that he never would have done that, and that Allen? attorneys used a court document to spin the media.

? would never exploit Mr. Allen or deploy shame tactics against him and I would have refused to participate in a trial that did so,?he told the Business Journal.

The Business Journal could not contact American Apparel? insurance carrier because its name did not appear on court documents. Charney would not name it because of a condition in the settlement agreement.

When the settlement was announced, Allen took another swing at American Apparel.

? sued American Apparel because they calculatingly took my name, my likeness, and image and used them publicly to promote their business,?the 73-year-old filmmaker said outside a federal courthouse in Manhattan.

Charney doesn? have any hard feelings, however, and still expresses his admiration for Allen. However, he points out that as soon as Allen contacted him about the billboards, they were taken down. So he questions Allen? motive for filing the lawsuit.

? think that his lawyer, him and the people around him, got intoxicated by the money and the fact that there was a large company and an insurance policy involved,?Charney said. ?ut they tried to make it like we were using his image to sell garments. He was saying, ?t? not a product I would endorse,?and that we damaged his ability to endorse other products.?p>But Charney believes that the billboards were artistic expression and commentary on his own predicament, rather than advertising. American Apparel doesn? sell clothing remotely resembling what Allen was wearing in the billboard, for example. Hence, Charney? desire to try the case on First Amendment grounds and his frustration that the insurance company wouldn? allow him to do so.

Allen? spokeswoman did not return a request for comment.


Effect on business

At the close of the stock markets on the day of the settlement, American Apparel reported a first-quarter loss worse than Wall Street? expectations. The news sent its stock plummeting 20 percent, and it continued to slide after.

The company reported a net loss of $9 million compared with net income of $1.1 million a year ago. Net sales rose 2.4 percent to $114 million.

Matthew Wiger, an analyst with Monness Crespi Hardt & Co. in New York, said Allen? lawsuit contributed to the company? problems because it took Charney? time and energy.

?e is the key merchant in the store and for the company,?Wiger said. ?e is the creative force behind the whole thing. He sets the tone for the brand and marketing and how the stores look and feel. The litigation is a factor when it comes to Dov? attention.?p>The company said it now expects 2009 revenue in the range of $550 million to $575 million, down from a $575 million-$600 million range given in March.

Charney doesn? believe the litigation caused him to lose focus on the company he founded in 1997 as a T-shirt maker, and since turned into an edgy clothing empire that is among the rare businesses in the garment industry that still makes its products in the United States.

And he? not one to be unsettled by litigation, either. The first of several lawsuits lodged against Charney began in 2005, when a former American Apparel sales manager sued claiming sexual harassment, sexual discrimination and wrongful termination. Since then, Charney and American Apparel have faced allegations of financial improprieties by another former employee. Charney and American Apparel have denied any wrongdoing and claim the lawsuits are fraught with false allegations.

For Charney, the key question in the Allen lawsuit was whether the billboards were ads or personal statements. He believes it was a clear case of First Amendment expression.

?t wasn? commercially strong enough of a piece that someone could say he? going to make a fortune off that image or associating himself with Woody Allen,?Charney said.

When the judge accepted the settlement, he asked if Charney had learned his lesson.

? told the judge that I learned a lot and he said: ?hat? what life is all about,??Charney said.

Later, he realized that one of his lessons was about going to court with an insurance company controlling the defense.

? learned that insurance companies, with respect to their duties of defense, don? always do the same job you would do yourself,?he said.

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