New dirt continues to surface in the power struggle over American Apparel.
The Los Angeles-based firm’s founder and ousted chief executive officer Dov Charney attempted another blow to the company and New York hedge fund Standard General, along with former board members and a former chief financial officer in a lawsuit filed in California Superior Court late Wednesday.
The complaint tacks on hundreds of millions of dollars in damages to a growing pile of litigation Charney and others have out on the company, Standard General, and some past and present board members scattered across various legal complaints. The latest reveals new e-mails and other exchanges between Charney and some members of Standard General in his complaint alleging breach of fiduciary duty, misrepresentation and conspiracy among other grievances.
A spokesperson for Standard General could not be immediately reached for comment, but the hedge fund has dismissed other lawsuits from Charney as “meritless.”
“Yesterday’s complaint is yet another example of the habitual nuisance lawsuits that Dov Charney and his lawyer continue to file, and which we continue to defeat (as has been reflected by the recent rulings and stipulations in our favor),” an American Apparel spokesperson said.
A judge approved the company’s request for a temporary restraining order against Charney in a separate legal matter in the Delaware Court of Chancery.
It follows an anti-SLAPP motion American Apparel filed in Los Angeles Superior Court Friday in a separate matter where Charney is suing American Apparel board chair Colleen Brown for defamation. The motion outlines sexually explicit text messages the company alleges were made between Charney and some employees along with other inappropriate behavior the firm contends formed the basis of his firing last year.
Charney has said repeatedly in court documents that his termination was illegal and he was induced to slowly give up control of the company based on promises made by Standard General that never bore out.
It’s clear the gloves are now off on both sides. Less clear is American Apparel’s turnaround, which is still in early days.
The company reported in May net sales down 9 percent to $124.3 million in the first quarter. Losses widened in the same period to $26.4 million. Same-store sales were off 5 percent, which the company said resulted from sales to rid itself of slower-selling merchandise.