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American Apparel and Former Exec in Legal Battle

Ex-head of American Apparel's European operations files suit.

American Apparel is in a legal battle with its former head of European operations.

The Los Angeles-based company has been hit by another lawsuit, filed by Bernhard-Axel Ingo Brake, who alleges he was fired after complaining about the company’s employment practices in Europe.

In the complaint filed Tuesday in Los Angeles County Superior Court, Brake also contends he is owed more than $1 million in bonuses and commissions that were verbally promised to him by Dov Charney, founder and chief executive officer of Los Angeles-based American Apparel Inc.

Brake is suing for wrongful termination, breach of oral contract and infliction of emotional distress, among other charges.

This is the latest in a string of high-profile lawsuits against American Apparel and Charney. The company has countered, with a suit of its own against Brake in a German court, charging that the former executive was fired because he embezzled funds from the company.

“We are not sitting back any more; we are taking a proactive stance,” said Joyce Crucillo, general counsel at American Apparel.

Brake joined American Apparel in 2002 when it was still a fairly small, privately held company, and he moved to Germany in 2003 to start up a new division there, American Apparel Deutschland GmbH. He used a headquarters in Düsseldorf to build American Apparel’s operations throughout Europe. However, he said he became concerned about alleged employment practices encouraged by Charney, such as paying employees under the table to avoid taxes. He also alleges female employees favored by Charney misappropriated company funds and wasted company resources, to the detriment of American Apparel’s shareholders.

In its own suit, American Apparel charges that Brake hired his mistress, Irene Cuppone, for a high-level job managing the company’s Switzerland business, although she did not fulfill the duties of that position. In addition, the company alleges Brake hired his daughter, Annina Brake, to work in a company store, violating American Apparel nepotism rules, and paid her unwarranted bonuses, in an effort to enrich himself.

Brake’s lawyer is Keith Fink, who also is representing three other plaintiffs in Los Angeles County Superior Court against American Apparel and Charney: Mary Nelson, a former sales representative who filed a wrongful termination and sexual harassment suit in 2005; Robert Hernandez, a former IT employee who filed suit on Nov. 7, alleging he was fired after refusing to pad inventory figures, and Nikki Yang, a former custom order manager who filed suit on Dec. 1, charging she was subjected to a hostile work environment, in addition to being owed company stock.

American Apparel has filed suit, also on Dec. 1, against Yang for unjust enrichment and fraud.

Other cases pending against American Apparel and Charney include an employment discrimination case filed in Los Angeles this past summer by a former public relations employee, Jeneleen Floyd, and a case now in arbitration filed by former employee Chris Renfro, who claims he was subjected to a racist work environment.