CHARNEY WINS ARBITRATION MOTION: A New York state judge in Brooklyn ruled on Tuesday that a $260 million lawsuit accusing American Apparel Inc. chief executive officer Dov Charney of holding a teenage employee named Irene Morales as a “sex slave” in 2008 should be handled in arbitration, instead of open court. “The court granted our motion in its entirety and we expect the case to be dismissed in arbitration,” said Stuart Slotnick, an attorney at Buchanan Ingersoll & Rooney, who represented American Apparel and filed the motion to move the case to arbitration. “The claims are bogus and frivolous and we expect they will be dealt with accordingly.”

Morales was a store employee of American Apparel prior to her lawsuit. She reportedly sent Charney explicit pictures and messages, which were made public during the case. Morales’ attorneys may appeal the arbitration ruling. “I think it speaks for itself,” Charney said Wednesday of the judge’s decision.

This story first appeared in the March 22, 2012 issue of WWD. Subscribe Today.