American Apparel Gets Restraining Order Against Charney

14th-Largest Supplier In Industry

Dov CharneyA judge this week granted Counselor Top 40 supplier American Apparel (asi/35297) a temporary restraining order against ousted CEO and founder Dov Charney. Charney is now barred from criticizing the company and its employees and seeking to replace directors ahead of its annual meeting on July 18, according to a filing in Delaware Chancery Court.

Charney was initially suspended as CEO last June, after which he teamed up with hedge fund Standard General to buy additional shares of the company in an attempted comeback. As part of a standstill deal between both companies, Charney stepped down as a board member and agreed to a number of other conditions. His comeback attempt failed, and Charney was fired in December by American Apparel’s board of directors for alleged misconduct and violations of company policy. In May, American Apparel sued Charney for violating terms of the standstill agreement.

Stephen Brauerman, a Delaware lawyer representing Charney, said his client plans to comply with the court’s order fully. “The court’s order is preliminary and based on pleadings we have not had an opportunity to fully challenge at this stage of the proceedings,” according to a written statement Brauerman released. “We do not believe this decision has any effect on the other litigation he has filed against the company.”

Charney has been seeking millions of dollars in damages in a series of defamation lawsuits against American Apparel and Standard General. In one suit, Charney claims an internal investigation directed by American Apparel’s board was intended to “manufacture” reasons to fire him.

American Apparel, though struggling overall, is still seeing year-over-year increases in the North American ad specialties space, reporting to Counselor that its 2014 promo products sales were $105 million, 6% higher than in 2013. Counselor currently ranks the company as the 14th largest supplier in the industry.