Former American Apparel CEO Charney seeking $40 million in damages

Fri Mar 27, 2015 11:38am EDT
 
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By Rishika Sadam

(Reuters) - The founder and former chief executive of American Apparel Inc APP.A, Dov Charney, plans to file a lawsuit claiming $40 million in damages for breaches of his employment contract, and more lawsuits are planned, his attorney said on Friday.

The company's shares were down 2.8 percent at 69 cents in late morning trading on Friday.

Charney was fired in December, six months after he was suspended for allegedly misusing company funds and for allowing the posting on the Internet of nude photos of a former female employee who had accused him of sexual harassment.

Charney has denied the allegations.

"There will be other lawsuits we will be filing against the company, which they are aware of but have not revealed to the media," attorney Keith Fink told Reuters in an email.

The claims for damages, first reported by Bloomberg, include almost $6 million in severance, $1.3 million in vacation-time pay and at least $10 million for emotional distress.

Charney is also seeking 13 million shares of the company, worth about $9.2 million as of Thursday's close. It was not immediately clear what makes up the balance of the damages being sought.

Fink said Charney was also likely to sue for defamation and breach of privacy related to his personal email and will seek a probe into the $10.4 million of expenses that American Apparel has said it incurred in investigating his alleged misconduct.   Continued...

 
American Apparel owner Dov Charney speaks during a May Day rally protest march for immigrant rights, in downtown Los Angeles May 1, 2009.  REUTERS/Mario Anzuoni