American Apparel Inc. said Tuesday that a Delaware court has
issued a restraining order that prevents former Chief Executive Dov
Charney from trying to remove any of the fashion retailer's board
members.
The order, issued Monday by the Delaware Court of Chancery, also
restrains Mr. Charney from making or prompting any statements that
disparages the company or its current, former or future employees,
American Apparel said.
The order is aimed at keeping Mr. Charney from breaching the
terms of his standstill agreement with the company from July 2014,
the company said. As part of the agreement, which expires in July,
Mr. Charney agreed not to launch a fight for board seats, American
Apparel said.
Attempts to reach Mr. Charney were unsuccessful.
Mr. Charney was terminated in December following allegations of
misconduct and of violating company policy.
Mr. Charney founded American Apparel as a wholesale T-shirt
business in 1998 but found himself at the center of
sexual-harassment lawsuits brought by former employees. The board
moved to fire him on the grounds that he had misused company funds
and failed to stop the publication of nude photos of a former
employee who had sued him for sexual harassment, among other
allegations.
Mr. Charney owns 43% of the company thanks to a deal with hedge
fund Standard General that boosted his stake from 27%. But the deal
required Mr. Charney to give up voting control of his shares, and
he is now suing Standard General, accusing it of collaborating with
the board on an investigation that led to his removal.
Mr. Charney has filed an arbitration claim accusing the company
of breach of contract and wrongful termination, and has sued
American Apparel and its lead director, alleging they defamed him.
Two shareholder lawsuits accuse the company of proxy fraud in
connection with Mr. Charney's termination.
Another lawsuit filed by Mr. Charney's lawyer on behalf of
former employees that seeks class-action status accuses the company
of failing to give about 200 workers proper notice before firing
them. And more than a dozen labor complaints also filed by Mr.
Charney's lawyer with the U.S. National Labor Relations Board on
behalf of employees claim American Apparel, which has pushed for
immigration reform and higher wages, has blocked factory workers
seeking to unionize. Some of the complaints were dismissed, though
Mr. Charney's lawyer has refiled them.
American Apparel has denied the claims and shot back in mid-May
with a lawsuit alleging that Mr. Charney coordinated the various
complaints as part of an attempt to "wrest control of the company
away from the board and management and reinstate himself as CEO and
a director" in violation of the standstill agreement.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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