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American Apparel's Charney Faces Sexual Harassment Lawsuit
Vol. 797 
March 10, 2011

A former employee filed a sexual harassment lawsuit on Friday against American Apparel (asi/35297) founder Dov Charney. In the $260 million lawsuit, which was filed in Brooklyn Supreme Court in New York, Irene Morales claims that Charney invited her to his home and proceeded to sexually harass her. "She was then, to all intents and purposes, held prisoner in the apartment for several hours and forced to perform sexual acts," the suit says.

Morales says in the suit that the harassment continued for eight months before she quit the company. She had been hired as a store assistant and then was promoted to manager of a New York City American Apparel store prior to her departure from the organization. In response to the lawsuit, American Apparel is denying Morales' claims and said in a statement that the company would be taking legal action against Morales and her lawyers for breaching a severance agreement she had signed when she left the company.

"We have been informed that a former employee of American Apparel, who left the company without complaint and resigned with a letter of gratitude regarding her positive experience at the company, has filed a sexual harassment lawsuit in New York against the company," American Apparel said in its statement. "Upon her resignation, [Morales] acknowledged in writing that she had no pending claims against the company and signed a severance agreement which included a full release of claims and an agreement to submit any future claims to confidential binding arbitration. The company intends to file a formal complaint with the NY state bar seeking disciplinary action against [Morales'] lawyers, who we believe are engaged in an illegal conspiracy to extort money from American Apparel."

Charney himself has not commented publicly on the lawsuit, which also names American Apparel and its Board of Directors as defendants.

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