American Apparel Paid $4.5 Million to End Suits

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Downtown L.A. apparel maker American Apparel Inc. paid more than $4 million to plaintiffs and attorneys to resolve three lawsuits filed against the company and ousted former Chief Executive Dov Charney, according to documents that were recently made public.

The cases’ awards and settlements were reached in 2014 and 2015, while the cases were filed in 2011. All cases went to arbitration in accordance with a company policy.

Defendants in the cases included American Apparel, Charney and members of the company’s board. The cases alleged sexual harassment, assault and battery, impersonation through the Internet, defamation and other related claims. Awards totaled about $4.5 million, including attorney fees and other costs.

Attorneys could not comment publicly about the details of the cases other than on their resolution because the arbitration proceedings were sealed, except for the award amounts. One of the cases involved American Apparel employee Irene Morales, who filed a lawsuit in Brooklyn Supreme Court and sought $260 million in damages from Charney alleging forced sex, the Business Journal reported in March 2011.

“Our three clients are pleased that they can move on to a new chapter in their lives now that their cases against American Apparel have been resolved,” said Eric Baum, plaintiffs’ lead counsel with New York City’s Eisenberg & Baum.

While the amount American Apparel paid to resolve the suits had not been disclosed publicly before now, an American Apparel spokeswoman noted that the company has disclosed in public filings that the cases existed and had been resolved.

“These judgments and settlements took place in June and October of 2014 and February of 2015 and have been fully disclosed in American Apparel’s regulatory filings,” the spokeswoman said. “The amounts were virtually entirely covered by insurance.​”

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