American Apparel Hires Executive Amid Legal Issues
Vol. 802 
March 29, 2011

In a continued effort to bolster its management team, Counselor Top 40 supplier American Apparel (asi/35297) has hired Martin Staff as chief development officer. Staff, whose background includes leadership roles at JA Apparel Corp. and Hugo Boss Fashions Inc., is the third significant executive hired by American Apparel in recent months. In October, former Blockbuster executive Tom Casey was named acting president at American Apparel, and last month former Old Navy executive John Luttrell was hired as the supplier’s chief financial officer.

While American Apparel is taking steps to strengthen its executive staff, the Los Angeles-based company is also facing increased scrutiny over the alleged actions of its founder and CEO Dov Charney. In less than a month’s time, Charney has been sued twice, accused of sexual harassment by several former American Apparel employees.

In the first suit, plaintiff Irene Morales accuses Charney of consistently inappropriate behavior toward her. In the second suit, filed just last week, former employees Kimbra Lo, Alyssa Ferguson, Marissa Wilson and Tesa Lubans-Dehaven also accuse Charney of inappropriate behavior.

In statements, American Apparel has called the suits baseless, partly because of arbitration and confidentiality agreements the employees signed when they were hired at the company. Last week, a Brooklyn, NY, judge said she may dismiss the lawsuit filed by Morales, who seeks $250 million in damages. Charney has not publicly commented about either case, although lawyers for American Apparel and Charney say they expect the cases to be dismissed. Records show Charney, who increased his ownership stake in American Apparel last week from 51% to 54%, has been sued at least four times since the mid-2000s, with each of those suits being dismissed or settled out of court.

American Apparel, ranked by Counselor as the 12th largest supplier in the ad specialty industry, reported North American promotional product sales of $88.6 million in 2010, a 1.6% decline from 2009.