American Apparel Hit With Another Lawsuit From Two Shareholders

It claims that a number of current and former board members assisted in getting Dov Charney fired.
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Eliza Brooke
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It claims that a number of current and former board members assisted in getting Dov Charney fired.
An American Apparel store. Photo: Andrew Burton/Getty Images

An American Apparel store. Photo: Andrew Burton/Getty Images

We suggest you settle in for the long haul, because the lawsuits against American Apparel show no signs of letting up. On Tuesday, two AA shareholders — Jan Hubner and Eric Ribner — filed a complaint against the company, current board members Allan Mayer and David Danziger and former board members Marvin Igelman, William Mauer and Robert Greene.

Hubner and Ribner's claim alleges that back before American Apparel founder Dov Charney was fired, those board members intentionally misrepresented their own views on whether Charney should stay with the company. At the time, they said that they believed him to be an integral part of the company. Then, "almost immediately" after Danziger, Greene and Mayer were successfully reelected to continue serving on the board, they terminated him. As a result, the suit alleges, shareholders were denied their right to decide whether Charney was a fit leader for the company and the opportunity to propose and vote on a competing board of directors.

In sum, Hubner and Ribner believe that Mayer, Igelman, Mauer, Danziger and Greene assisted in planning Charney's termination.

This complaint comes just a day after a former American Apparel employee accused former CFO John Luttrell of mismanaging funds and then scheming to get Charney fired as a fix for the company's financial problems. While these suits make the case that Charney, who has been trying to find a way back into the company, was wrongfully terminated, current management's competence is also under attack from three former employees who claim that they weren't given sufficient notice before being laid off.

Of the latest complaint, a rep for American Apparel had this to say: "These claims are completely baseless and we are confident we will succeed on each and every one of these."